According to a new report, growing uncertainties in the global economy and frequent rises in the commercial insurance industry have encouraged companies from diverse industries to set up their own captive insurance businesses.
The Captive Insurance Market: 2020 Analysis, Trends and Developments report claims these firms are being exposed to various risks and unforeseen circumstances and it is often not feasible for them to obtain insurance cover for these risks due to high premiums in the commercial market and the non-availability of insurance cover for some industry specific risks.
The report highlights that companies operating in the fields of financial services, healthcare, retail and consumer products and infrastructure, comprising construction and power and utilities, have been increasingly adopting the captive insurance model.
It also states that the risk management competencies of these institutions and the requirement of meeting Basel II/III standards have been driving them towards the increased use of captives.
The number of captives set up by healthcare entities is also expected to increase significantly, with many driven by the Patient Protection and Affordable Care Act passed by the US government in 2010.
