From: Captive.com/IRMI
With a traditional insurance market that appears likely to continue hardening, and that market facing disruption from events like the COVID-19 pandemic and potential new competitors, there are opportunities for captive insurance companies.
Hard insurance markets are characterized by high demand for insurance and a reduced supply, said Chris Mandel, senior vice president and director at the Sedgwick Institute. During hard markets, insurers often impose strict underwriting standards and issue a limited number of policies while premiums are high.
Speaking as part of a new Captive Insurance Companies Association (CICA) webinar, Mr. Mandel noted that a hard market in 1985–86 was associated with a tort liability crisis. While there were minor blips in the market over the next 15 years, the September 11, 2001, terrorist attacks led to another hard market.
“These things and the way the markets go are driven by economic events and other events,” Mr. Mandel said during the webinar titled “Captive Strategies for Hardening Markets,” part of CICA’s 2020 “Building on the Best” webinar series.
“These things and the way the markets go are driven by economic events and other events,” Mr. Mandel said during the webinar titled “Captive Strategies for Hardening Markets,” part of CICA’s 2020 “Building on the Best” webinar series.
Considering the impact the COVID-19 pandemic might have on market conditions, Mr. Mandel said, “What will really matter the most is how long this particular crisis event lasts.” Other factors such as government and central bank stimulus efforts also will likely affect the pandemic’s impact on the insurance market. “I think that has very significant and, to some degree, unpredictable implications for all markets, not just insurance,” Mr. Mandel said.