From: Captive Insurance Times

Günter Dröse of ECIROA and Laurent Nihoul of FERMA discuss the current landscape of the European captive insurance market and potential challenges

The current high interest surrounding alternative risk financing in Europe is a product of reduced capacity and increased premiums in the traditional reinsurance market, as well as the overarching landscape of the hardening insurance market. Many European companies are looking to leverage their captives further, through reassessment of their business models and by facilitating new lines of business in promising market areas.

Günter Dröse, executive director of the European Captive Insurance and Reinsurance Owners Association (ECIROA), explains that “the use of captives as a risk management tool is driven by the realisation that the parent company itself can bear part of the risks, which is mainly reinforced by market cycles. Therefore, we must examine both claims development and the changing underwriting behaviour of insurers over the last few years”.

Dröse notes that as well as an increase in several new captive formations, the European captive market has also seen a rise in the insurance volumes insured or reinsured through captive structures and protected cell companies.