Captives: Navigating Continued Soft Market Conditions

May 08, 2017
Captives: Navigating Continued Soft Market Conditions
From: Captive.com, May 1, 2017

Two recent reports released by Willis Towers Watson and Willis Re confirm the soft market conditions that have plagued both the primary and reinsurance property-casualty insurance markets have continued into 2017. This article provides highlights from both reports and some of our own commentary concerning this prolonged period of weak pricing in the insurance markets.

Highlighting the importance of the issue to captives, this editor just returned from attending a captive board meeting. Part of the discussion at the meeting revolved around the recent loss of several good members (low loss ratios) to external commercial competitors. This is a problem all group captives, including risk retention groups, face when market conditions are soft. Can the captive price its products low enough, especially for good risks, to stop defections back to the traditional commercial insurance markets? Part of the Willis Towers Watson report looks at the changing dynamics out of Washington, DC, from the new administration and asks, "Will the transformation at hand turn this long, soft market?"

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