Captive premium growth slows to 2.9% in 2022 in lag from rate peak

Captive insurance units may have suffered a slowdown in premium growth to 2.9% in 2022, down from 11.5% in the prior year and the 9.3% compound annual growth rates seen over the past four years pricing cycle, global insurance broker and risk consultancy Marsh said of what it considers it’s one quarter of the captives market.

“Interest in using captives is higher than ever,” Marsh analysts said in a report on their captive solutions, with note that peak growth followed peak primary market rate gain, pegged to late 2020.

Marsh prefers its lingering two-year growth rates – at nearly 15% for its full group of captives – and can name positive readings across all regions, led by 58% premium gain for captives with Asia-based parents and 36% growth for captives with parents based in Latin America.

Core markets can still boast some double-digit two-year growth rates: Premiums for captives with North America-based parents were up 15%, while the major island domiciles of Bermuda, Cayman Islands, and Barbados have collectively seen premiums grow by 11%.

Within Europe, Marsh-managed captives in specialty domiciles Guernsey and Luxembourg have seen captive premium growth of 13% and 36%, respectively.

Captives with UK parents have trailed with an 8% two-year premium gain.

Traditional property and casualty coverages account for the largest segment of captive premium, at 36%. Other coverages that Marsh-managed captives fund are: life insurance, 30%; employee benefits, 19%; and financial lines, 15%. Interest in non-traditional lines of coverage also continues to grow, Marsh claims, citing gains in medical stop-loss premiums, D&O liability and cyber.

Growth in protected cell captives gets a special call-out, now at 25% of new captive entity formations for Marsh in the US and globally.

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