Valuable guide to captives launched by Artex at Airmic
As companies grapple with every-more complex and interconnected risks, more are considering the use of captives – but in a landscape that is also rapidly changing, there are many decisions that must be made correctly to get the true benefits.
That is what James Stewart, client services director, Artex, said yesterday as he unveiled a new publication designed to help companies better understand captives and make better decisions around them. The publication, called EXPLAINED Guide: Captive insurance, was launched at a press conference at Airmic’s annual conference, being held in Edinburgh this week.
Stewart noted that the guide has been developed to be of value to Airmic members – whether they already have a captive or are thinking of founding one. It looks at the wider captives landscape and explains recent developments, such as, for example, the rise of onshore domiciles.
“It is designed to help companies take control of their insurance programme, to gain greater control of their risk financing strategy. It also has an overview of the various risks and classes of insurance they can underwrite – from property and liability to those emerging and gaining more traction such as cyber and environmental exposures.”
He noted that there was a period in the aftermath of 2016 when there was less interest in captives. The costs of running a captive had increased, investment returns were low, there was more scrutiny from tax authorities and bodies such as the OECD, and the commercial insurance market was a cost-effective place to transfer risk. Captives were still relevant and well utilised, but new formations in the UK and Europe were rare and there was consolidation and closures in some instances.
That all started to change in 2019 as the first signs of a hardening insurance market appeared. Professional indemnity and D&O were first to bite hard, then other lines followed. Property and cyber remain particularly problematic, while insurers continue to tighten their belt and remain conservative across most lines.
He also said the guide will help readers understand the different structures captives can use and offers insights into the decision making process behind choosing the right domicile. “We just hope members find this captives guide a useful resource – an insight into our little part of the insurance industry,” he said.
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