The impact of the COVID-19 pandemic has been significant for both traditional insurance companies and captive insurance companies. That impact will likely continue to be felt for some time to come, according to speakers discussing "Captives and Unforeseen (Pandemics) Events" at the Vermont Captive Insurance Association 2020 Virtual Conference.
Disasters resulted in $31 billion in global insured property losses in the first half of 2020, up from $23 billion during the same period last year, according to the Swiss Re Institute. Natural catastrophes were responsible for $28 billion of the insured losses, most from secondary peril events.
The Vermont Captive Insurance Association’s (VCIA) 2020 Virtual Conference began Tuesday against a backdrop of an active year for new captive insurance company formations in the state. Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, said the state has licensed approximately 20 new captives thus far in 2020.
Two leading forecasters have upgraded their projections for this year's Atlantic hurricane season, with both now expecting an "extremely active" storm season. Both the National Atmospheric and Oceanic Administration and researchers at Colorado State University have increased the number of hurricanes they expect this year.
As with previous commercial insurance market disruptions, captive insurance companies are responding to the current hardening traditional market, according to A.M. Best. Current conditions will likely result in more new captive insurance companies or parents of existing captives adding coverage lines.