Predicted Growth for the Captive Insurance Industry in 2018

2018 is poised to be an important year for the captive insurance industry. According to Strategic Risk Solutions (SRS) International president, Ron Sulisz, the captive insurance industry is set to see a moderate increase in the total number of insurance captives this year.

Sulisz made his predictions in SRS’s webinar “2018—The State of the Captive Insurance Market.” His predictions can be broken down as follows:

  • There will be an increase in the total number of captives within United States domiciles; other domiciles around the world will remain steady
  • There will be a rise in interest in the Latin American and Asian captive insurance markets
  • Interest in compliance and filing requirements for captives will also increase this year
  • Cell captives are predicted to expand
  • Small captives will either remain level or slightly decline
  • Single-parent captives are likely to either remain steady or slightly decline due to recent activity with mergers and acquisitions. While single-parent captives will be smaller in number in 2018, however, it is predicted that the market will be greater in terms of premium volume or assets
  • Group captives and risk-retention groups will similarly remain steady in number but see an increase in market for premiums and assets.

In 2017, the captive insurance market saw a modest increase in the number of captive insurers being set up in major domiciles. Vermont, the largest captive domicile in the nation, licensed 24 captives, which was a minor decrease from 2016 (26) and a significant decrease from 2015 (37). Montana, Nevada, Utah, and Texas also saw decreases in their growth level. However, Hawaii and Missouri both saw a significant increase in their captive formations. North Carolina’s Department of Insurance senior deputy commissioner, Debra Walker, also stated that the state saw considerable growth, though the state’s 2017 captive formation statistics have not yet been released.

Regulators and other professionals have attributed the small or negative growth in captives licensed in certain domiciles to factors such as the competitive traditional market and the heavy saturation of captives among large employers, as well as corporate mergers sometimes resulting in employers abandoning their captives when multiple firms in a single merger had at least one captive already.

Jeff Kahler, captive administrator at the South Carolina Department of Insurance in Columbia, stated, “It is no longer realistic for us to expect to license 20-30 captives per year given the external factors at play these days, i.e., the sustained soft market [and] the saturation of the large corporate sector.”

However, like Sulisz, many members of the industry are optimistic about the future of captives in the United States, citing rate hikes in the traditional market, strong GDP growth, and stock market gains increasing companies’ level of interest in captives.

Caitlin Morgan Captive Services provides clients with captive insurance solutions supported by years of experience in establishing the successful formation and implementation of a wide range of captives. To learn more about how we can help you, please contact us at (317) 575-4440.

Sources: Captive Insurance Times, Captive