From: Captive Intelligence
- Captive viability often scrutinised more during soft market cycles
- Important multi-member captives prepare for possible company exits
- Soft market can provide new opportunities for captives
Despite indications of a softening global insurance market, captives are expected to continue to be a popular tool for those companies looking for substitutes for the traditional insurance market.
Captives are often considered as an alternative solution to negating rising costs in the commercial market.
They offer more to an organisation’s risk financing strategy beyond pricing and capacity, and it is important they are seen as long-term tools and not solely reactive to market trends.
For example, during a softer market, captives have better access to reinsurance and are also in a better position to negotiate more positive terms.
While some lines such as property remain particularly problematic in the United States and Asia, and continue to prompt new captive formations, other markets such as cyber which had previously seen triple digit rate increases, are now beginning to soften somewhat.
