According to a new benchmarking report published by Marsh, the number of captive insurers writing non-traditional coverage lines rose 11% overall in 2014.
The number of captives writing political risk coverage increased 83% last year, while supply chain rose 50% and cyber liability increased 18%. High excess coverages were up 37.5%.
Captives were once the province of Fortune 500 and Financial Times Stock Exchange 100 companies, but Marsh reports that captives now can provide benefits to organizations of all sizes, industries and geographic orientation. Captives have been rapidly expanding throughout the middle market space.
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The Marsh report, "The World of Captives: Growth and Opportunities Without Borders," is based on the activities of more than 1,100 captives under its management.
Among its observations is that the number of captive owners taking advantage of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015 is expected to rise in 2015. Currently, only 83—or 22%—of the 374 U.S. captives under Marsh management access TRIPRA, by writing either conventional terrorism coverage for property damage or the excluded nuclear, biological, chemical and radiological perils.
Other key findings:
- Captive domiciles are flourishing in the European Union under Solvency II
- Emerging markets in Latin America, China and the Middle East are further embracing the use of captives
- Small captives are the fastest growing segment—more evidence that captives make sense for companies of all sizes
- 47% of U.S.-owned captivesachieve insurance tax status and deduct premiums paid to the captive.
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