Australia and the growth of captive solutions
Australia is the third largest market for captive creation for Marsh, behind the United States and United Kingdom. Corporate Australia has proved to have an agile approach to risk management and companies are increasingly looking towards the most optimal risk retention. Increasingly Marsh is being called to help answer questions on captive solutions, such as what vehicle should retain risk – whether through a captive, protected cell, or trust.
The continuation of the COVID-19 pandemic throughout 2021 will further fuel the growth in the captive insurance market.
For Australia, Singapore is often the most common domicile for such vehicles. This is due to a number of factors including its proximity to Australia, experience with captives, low capitalisation, fair solvency levels, efficient tax system, reputable regular in the Monetary Authority of Singapore, and familiarity with Australian-parented companies.
With this challenging commercial market, now is the time for companies to review the optimal usage of their captive, or if companies do not currently have a risk retention solution such as a captive, protected cell, or trust, then we suggest they start discussions as to whether one could work for them. Companies should aim to do this well in advance of renewal to make sure they are in the best position possible when negotiating with the market.
Marsh Captive Upside: 20/20/20 webcast series
Our global webcast series Marsh Captive Upside: 20/20/20 provides 20 minutes of insight, 20 after the hour, all throughout 2020.
The impact of the COVID-19 pandemic, coupled with a transitioning insurance market, has driven interest in captive utilisation to unseen levels. These webcast sessions are designed to provide digestible pieces of advice and resources to captive owners during this period of uncertainty. Our experts deliver the information captive owners need now to respond to current conditions as well as to strategise for the future.
In the final session, Ellen Charnley and Lorrain Stack from Marsh’s Captives Solutions in the United States and Ireland discuss the impact of 2020 on the global captive landscape – a year defined by record growth in formations and expanded coverage within existing captives. Domiciled Singapore captives are particularly noted for their recent growth. This is largely driven due to the hardening of the insurance market with the impact of natural catastrophes, hard property market and more having an impact.
The full series is available to watch below:
The ninth session featured experts Nicole Perrault, Chief Risk Officer, Hippo Insurance, and from Marsh Captive Solutions, both Michael Serricchio and David Galea. The panel discussed utilising a captive for third-party risks and how insuring third-party exposures in a captive can create a potential profit centre for the parent organisation.
The eighth webcast featured a discussion on how the challenging medical stop-loss market has driven some employers to turn to captives as an alternative to finance the risk.
The seventh webcast featured our experts sharing highlights from the 2020 Captive Landscape Report, including how organisations are using their captives to help pilot them through the pandemic, a challenging insurance market, and other risks.
The sixth webcast provided a market update for property and D&O, including:
- Factors impacting the insurance market and what is anticipated for the remainder of the year.
- What captive owners should consider during the current challenging insurance market.
The fifth webcast discussed Diversity & Inclusion (D&I) for captive owners, including:
- Business case for a diverse and inclusive workforce/opportunities.
- Effective D&I strategies.
- Current trends and opportunities.
The fourth webcast in the series discusses captive growth and provides a domicile update, including:
- Premium growth.
- Lines of business that are growing in utilisation.
- Domicile growth and accommodations made to address the current pandemic.
The third webcast in the series further explores initiatives around proposed government-sponsored insurance pools and backstops:
- The current plan in the US, the UK, and beyond.
- The role captives will likely play in addressing pandemic risk.
The second webcast in the series focuses on funding employee indemnities and utilising your captive for pandemic coverage, including:
- Coronavirus Aid, Relief and Economic Security Act (CARES) tax considerations.
- Pandemic coverage in your captive:
- Coordination with data and analytics insure-tech to complete a detailed assessment.
- Structure, limit, aggregate, deductibles, and policy wording.
- Accessing broader capacity in the reinsurance and capital markets.
- Protecting your captive balance sheet.
- Funding employee indemnities through your captive:
- Indemnity coverage samples and funding structures involving captives.
- Potential access to reinsurance protection.
The first webcast in the series focuses on pandemics as we:
- Provide insight on captive involvement within traditional insurance lines impacted by COVID-19.
- Share practical captive techniques you can deploy immediately to support your organisation.
- Discuss how pandemic coverage is currently written in captives.
- Cover ways in which captives can play a key role in the development of pandemic insurance coverage by helping to alleviate capacity constraints as the market evolves.