Insurance Market Update and Predictions 2015–2016

The property-casualty insurance marketplace remains very competitive with declining rates is the consensus of the panel that updated 2015 Cayman Captive Forum participants on the current status of the insurance marketplace and made some prognostications about the year to come.

The "Insurance Market Update 2015–2016" speakers were Chris Lay, president of Marsh Captive Solutions; Brendan Barry, chief underwriting officer of Greenlight Re; Kimberly Morgan, senior vice president of Endurance Re and leader of its Bermuda healthcare practice; and Nigel Malcolm, senior class underwriter at Chaucer. The session was on the last day of the December 1–3 conference, hosted by Insurance Managers Association of Cayman.

Marsh reports its clients have seen 10 consecutive quarters of declining rates, with a global composite decline in Q3 of 4.8 percent. The panelists all believe that prices will continue to decline in 2016 but expect the rate of decline to slow. The one exception to the soft market is with respect to cyberinsurance, for which rate increases are common.

In spite of this market trend, both the number of captives and premium volume in captives have continued to grow worldwide, and the panelists expect this trend to continue. In the United States, many of the new formations are small or microcaptives, but a big driver of premium growth in the captive sector is from adding nontraditional risks into the scope of coverage being written in captives. These include political risk, employee benefits, cyber, third-party programs, and very high liability limits (i.e., excess of $100 million). According to data in the Marsh 2014 captive survey, there was an 11 percent average growth in nontraditional lines in 2014 as compared to 2013.

Pictured above is the panel as they presented "Insurance Market Update 2015–2016" at the recent 2015 Cayman Captive Forum. They are, from left, Chris Lay (standing), Marsh Captive Solutions; Brendan Barry, Greenlight Re; Kimberly Morgan, Endurance Re; and Nigel Malcolm, Chaucer.