The number of captive insurance companies writing third-party business rose by 22 percent in 2018 as the digital era expands the ways that organisations deliver insurance solutions, according to a report by Marsh.
The 2019 Captive Landscape Report also revealed that the increase in the number of captives writing third-party business was up 12 percent year-on-year and 62 percent over the last five years.
The report, which examines market trends more than 1,100 captives managed by Marsh worldwide, notes that this increase could be due to the fact that technological advances, including mobile applications, are making it easier for organisations to offer insurance to their customers and suppliers today.
It adds that by writing those third-party risks in a captive, parent companies can bring in additional premium and generate profits should the captive perform well.
Coverage for contractor, vendor, and customer risk, in particular, continued to rise steeply, increasing 138 percent among Marsh managed captives in the past five years.
Marsh-managed captives writing such third-party risk generated net premiums of $162 million in 2018.
Additionally, there has been a 22 percent increase in the number of Marsh captives writing extended warranty coverage over the last five years.
In 2018, captives writing such coverage, which includes protection for a variety of assets from computers to automobiles, wrote more than $3 billion in net premiums.
Ellen Charnley, president of Marsh Captive Solutions, commented: “More risk professionals today are embracing captives as a tool to secure their organisation’s futures, whether it’s generating profits by underwriting third-party risks, accessing reinsurance, or providing cost efficiencies.”
She added: “No matter the structure or premium volume, captives offer flexibility to access and protect capital, accelerate business objectives, and facilitate the funding of programs that promote employee health, well-being, and safety.”
