Regulatory risks, such as the Internal Revenue Service (IRS) and the US government, will be the major obstacle for captive insurance companies in 2019, according to John Talley, captive programme manager for the Missouri Department of Insurance.
Talley predicted that captive formations would continue to be strong this year, growth that would be fueled by different industries, some new to the idea of alternative risk financing.
However, he highlighted regulatory risks as the major obstacle for captives.
Talley said: “Regulatory risks, such as the IRS, will continue to be the leading issue affecting captive formations and operation.”
“The other regulatory risk will be the US government in general. No one knows what will happen next.”
He also suggested that emerging risks such as cannabis and new technology would continue to have an effect on the captive market in 2019.
Talley explained: “Since Missouri has passed a medical marijuana law, I have already fielded some inquiries concerning the development of captives servicing the industry. I see that continuing.”
“I think the growth of technology in the production and distribution of insurance, in general, will have a massive effect on the insurance industry.”
“How that will translate to the captive industry remains to be seen.”
“Regarding blockchain technology, it will influence the captive industry, but I do not have any idea what form it will take.”
