From: Captive.com/IRMI
The COVID-19 pandemic might have slowed the growth of captive insurance in 2020, but use of existing captives has expanded as owners respond to the pandemic and the hardening commercial insurance market.
I think going forward, a lot of entities are going to be looking for opportunities to expand coverage and reduce uncertainties related to their flow of income.”
Michael O’Malley, Strategic Risk Solutions
Looking back at his firm’s predictions for the captive industry made early last year, Andrew Berry, chief operating officer and managing director at Strategic Risk Solutions (SRS), said that most of the predictions generally came true.
“The one thing, of course, that we didn’t predict was the COVID-19 pandemic,” Mr. Berry said. “Our experience is that’s kind of tempered some of the growth in captives, use of captives, with competing demands for capital from the parent organizations.”
Speaking as part of an SRS webinar titled “Captive Insurance—The Year in Review,” Mr. Berry said that despite the impact of the pandemic, “There’s been an expanded use of captives in the past year, not just in potentially writing new coverages but mainly in increasing retentions.”
Another panelist, Michael O’Malley, managing director at SRS Advisors, said that with insurance buyers facing across-the-board premium increases in the commercial market, they’re increasingly looking for alternatives, whether forming a new captive insurance company or expanding the use of an existing one.
“What we’re seeing specifically is uses of captives we haven’t seen before,” Mr. O’Malley said, such as writing coverage in the excess tower or writing a piece of the umbrella coverage in the captive, “to try to retain some control over the program.”