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Marsh Captive Report Shows Continued Growth and Increasing Use for Cyber Risks

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June 06, 2017

In its May 2017 benchmarking captive report, Captives at the Core: The Foundation of a Risk Financing Strategy, Marsh Captive Solutions offers a comprehensive review of how organizations around the world use their captive insurance companies. Additionally, Marsh reports a 40-percent increase in total number of captives globally over the past 10 years as more companies see captive use at the core of innovative risk management strategies.

“As the risk environment continues to evolve and become more complex, organizations are increasingly using captives to help them meet corporate objectives, support business units, access alternative risk capital, and protect employees,” said Nick Durant, president of Marsh Captive Solutions.

The report examines more than 1,100 captives around the world under Marsh management. The 2017 report, which focuses on understanding how captives are being used and where opportunities for greater utilization exist, finds that more than ever, captives are playing an integral role in organizations’ risk management strategies.

Highlights from the report include the following.

  • The number of owners using captives for cyber liability programs increased by nearly 20 percent in 2016, representing the fastest growing nontraditional risk in Marsh-managed captives. Since 2012, cyber liability programs in captives have grown by 210 percent.
  • A majority of existing Marsh-managed captives—62 percent of non-US captives and 74 percent of US captives—see funding corporate retained risk, such as large deductibles and self-insured retentions, as their captive’s primary benefit.
  • The number of new captive formations by parent companies in Latin America increased by 11 percent in 2016—the largest growth among all geographies. 
  • Within the US, competition among domiciles has increased as newer domiciles are experiencing growth. The top-growing US domiciles in 2016 were Texas (80 percent), Connecticut (67 percent), Nevada (50 percent), New Jersey (43 percent), Tennessee (15 percent), and New York (3 percent).
  • Small captives—those generating less than US $1.2 million in premiums annually—continue to dominate the landscape and now account for almost 44 percent of Marsh-managed captives, up from 24 percent in 2012.

View articles reviewing the findings from Marsh's 2015 and 2016 reports.

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