Captive Insurance Industry and Alternative Risk Transfer Market News

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Artificial Intelligence Brings Risk Management Opportunities, Risks

Artificial intelligence (AI) can provide opportunities for organizations to improve their risk management but also may create some new risks. Risk managers need to consider how to integrate risks generated by AI into the enterprise risk management process and how to understand the scope of AI risks.
May 20, 2020 Read More
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Hard Market, Industry Disruptions Create Captive Opportunities

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. Changes in market rates are drivers of alternative risk transfer activities, including captive insurance companies.
May 18, 2020 Read More
Joel Chansky - Consulting Actuary at Milliman

How a Captive Insurance Company Can Save Money for Its Owners

Joel Chansky, consulting actuary with Milliman, explores the question of whether captives save money. The answer is yes and no. Group captives are intended to save money. Owners of single-parent captives face start-up and annual costs, but the captive could provide tax savings and even a profit center.
May 13, 2020 Read More
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New Structures, Technology, Captives May Help Cover Intangible Assets

Though intangible assets are becoming an ever-growing part of many companies' value, there are significant disconnects between the way many organizations approach coverage of their tangible and intangible assets. Addressing those growing exposures could be a function of parametric coverage designs, new technology, and captive insurance structures.
May 11, 2020 Read More
Hands Holding We Are Open Sign after Pandemic

For Businesses Coping with COVID-19, Varying Responses Add Complexity

As businesses cope with the COVID-19 pandemic and move toward reopening, the management of the process—and the risks involved—can vary significantly from country to country. A panel of risk managers noted that different pandemic responses employed by various countries add complexity to the process.
May 06, 2020 Read More
David Lang, Principal and Consulting Actuary, Milliman

Writing Third-Party Business May Provide Captives Tax Advantage

The biggest advantage to writing third-party business through a captive insurance company is that it may provide a tax advantage, according to David Lang, principal, consulting actuary with Milliman. An organization may be able to defer taxes on its unpaid claim liabilities, much like an insurance company.
May 04, 2020 Read More
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Why Underwriting Discipline Is Critical for Captives

The current insurance climate makes it imperative that captive insurers practice some type of underwriting discipline. This article lays out the reasons for maintaining an underwriting profit and what it takes to do so.
April 29, 2020 Read More
Business Card with Word Pandemic Held in Businessman

Captive Insurance Could Provide Solutions to Some Pandemic Risk Issues

For all the challenges the COVID-19 pandemic is presenting to businesses, the insurance industry, and society, like other crises before it the pandemic might ultimately create opportunities for captive insurance. A recent Strategic Risk Solutions webinar titled "Captive Insurance Response to a Pandemic" explored this topic.
April 27, 2020 Read More
COVID-19 and Virus Molecule in Magnifying Glass

COVID-19 Business Interruption Losses Would Dwarf Previous Black Swans

Potential business interruption (BI) loss estimates from the COVID-19 pandemic dwarf previous insurance industry "black swan" scenarios such as two Hurricane Katrinas in a single month. BI losses from the current pandemic would be nearer to five Katrinas in a month, according to an insurance industry economist.
April 22, 2020 Read More

Recent News

Future Uncertain for Bill To Allow Risk Retention Group Expansion

The Word Legislation Surrounded by Question Marks 
Four months after a congressional hearing was held on legislation introduced last year that would allow certain risk retention groups (RRGs) to expand coverages offered to their policyholders, the future of the bill remains uncertain. Under that measure, H.R. 4523, RRGs would be allowed to offer property coverages.
May 26, 2020 Read More

NOAA Forecast Calls for Active North Atlantic Hurricane Season

Image of blue "Hurricane Evacuation Route" sign against blue sky 
The National Oceanic and Atmospheric Administration (NOAA) is predicting an above-normal Atlantic hurricane season this year with a range of 13 to 19 named storms of which 6 to 10 could become hurricanes, including 3 to 6 major hurricanes. The Atlantic hurricane season runs from June 1 through November 30.
May 26, 2020 Read More

Insurance Groups Offer Alternative Pandemic Backstop Proposal

Money and an Hourglass 
A group of insurance trade associations has proposed a new federal program that would provide revenue replacement for businesses affected by future pandemics. The taxpayer-backed Business Continuity Protection Program would provide participating businesses with revenue replacement assistance for payroll, employee benefits, and operating expenses following a presidential viral emergency declaration.
May 22, 2020 Read More

Life/Health Cat Bonds Likely Most Affected by COVID-19: A.M. Best

A stethoscope wrapped around a small stack of $100 bills. 
Life/health-related catastrophe (cat) bonds face the greatest risk of losses from the COVID-19 pandemic, compared with other insurance-linked securities (ILS), according to A.M. Best. Best suggests that the COVID-19 pandemic's overall impact on the ILS market—including most catastrophe bonds—should be limited.
May 22, 2020 Read More

ICCIE Webinars Focus on Regulators' Views of COVID-19 and Captives

Webinar Series Spelled Out in Multicolored Letterpress 
The International Center for Captive Insurance Education (ICCIE) has scheduled two hot-topic webinars focused on how regulators are addressing the COVID-19 pandemic and captive insurance companies. The first webinar focuses on captive insurance companies during the pandemic and the second looks at captives after the crisis.
May 21, 2020 Read More

S&P Revises Global Reinsurance Outlook to Negative on COVID-19 Impact

Negative Trend 480x377 
COVID-19 pandemic has led S&P Global Ratings to revise its outlook for the global reinsurance industry to negative from stable. S&P said that pandemic-related losses combined with volatile capital markets and lower investment returns will likely prevent the global reinsurance sector from meeting earnings expectations.
May 21, 2020 Read More

COVID-19 Stress Test Finds Most Insurers' Capital Levels Adequate

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Stress testing gauging the COVID-19 pandemic's impact on insurance companies' financial strength found most insurers' capital levels provide an adequate buffer against potential balance sheet shocks. A.M. Best analyzed approximately 1,400 rated insurers worldwide, focusing on the impact of COVID-19 on insurers' underwriting and assets.
May 20, 2020 Read More

2020 Catastrophe Bond Volume Remains Strong Despite Pandemic

natural disaster icons-SF 
The COVID-19 pandemic appears to be doing little to slow issuance of catastrophe bonds and other insurance-linked securities, with issuers bringing $6.1 billion to market thus far in 2020, according to data from the Artemis Deal Directory. There has been $1.06 billion in issuance so far during the second quarter.
May 19, 2020 Read More

New Triple-I Initiative Offers Resource on Insurance and Pandemic

Man holding globe with COVID-19 virus around it 
The Insurance Information Institute (Triple I) has launched an initiative providing an educational resource with regard to insurance and the COVID-19 pandemic. The Future of American Insurance & Reinsurance campaign will focus on ensuring the insurance industry can sustain its role contributing to economic growth and stability.
May 19, 2020 Read More

Oklahoma Legislation Specifies Captive Premium Tax Distribution

Image of New Legislation Introduced 
Legislation approved by Oklahoma lawmakers and signed into law May 19 by Governor Kevin Stitt specifies how premium taxes paid by captive insurance companies must be allocated by the state insurance commissioner.
May 18, 2020 Read More

Lloyd's Projects Industry COVID-19 Underwriting Loss at $107 Billion

COVID-19 and gold arrow zigzagging and pointing down 
The Lloyd's market says that it anticipates paying out up to $4.3 billion as a result of COVID-19, while projecting $107 billion in overall industry underwriting losses. Lloyd's said the industry's projected $107 billion in COVID-19 losses are on par with some of the biggest major claims years for the industry.
May 15, 2020 Read More

Actuaries Group Offers Guidance on Federal Pandemic Risk Backstop

Hand holding globe with face mask on it on top of pile of dollar bills 
The American Academy of Actuaries has suggested that existing US insurance backstop programs may provide insights into crafting a pandemic risk backstop. Those programs help the insurance marketplace provide coverage by capping the risk the market is expected to handle and providing a federal backstop for losses exceeding that cap.
May 15, 2020 Read More

Treasury Voices Concern over Legislation Forcing Pandemic BI Coverage

A businessman 
In a letter, the US Treasury Department has indicated its concern over legislation forcing insurers to pay COVID-19 pandemic-related business interruption (BI) claims when policies exclude the risk. The letter says insurers should pay valid claims, but forcing insurers to pay excluded claims conflicts with contractual obligations.
May 14, 2020 Read More