The captive insurance industry is embracing AI and digital tools to enhance efficiency and decision-making, but their adoption must be strategic and deliberate, said panellists at the 2025 World Captive Forum in Florida. In the session titled ‘Navigating Change: The Impact of AI and Digital Innovation on Captive Strategies’, Gabriel Weiss, CEO and co-founder of XN Captive, noted that AI is transforming the captive insurance sector, but it is not a replacement for deep industry expertise. “AI is not the answer. It is an opportunity,” he stated. “Its value lies in improving productivity, efficiency, and decision-making while maintaining the fundamental principles of captive risk management.” Weiss described a three-tiered approach to AI adoption: basic tools for daily tasks, customised applications for specialised functions, and cutting-edge innovations that push the boundaries of what is possible. However, he emphasised that moving beyond surface-level implementations requires thoughtful regulatory consideration and a cautious approach. Tiffany Austin, assistant director at the Bermuda Monetary Authority (Authority or BMA), explained how regulators are actively incorporating AI into supervisory frameworks. “We established our Data Science and Artificial Intelligence Team to develop advanced analytics tools that enhance regulatory oversight,” she said. “Our focus is on aligning AI applications with our regulatory objectives to ensure responsible innovation.” Austin provided an example of a captive insurer using AI-powered chatbots to streamline claims processing, enabling companies to analyse historical data and improve decision-making. However, she stressed the need for rigorous testing and early engagement with regulators to ensure compliance. “It is important that businesses collaborate with regulators early to clarify expectations and navigate potential regulatory challenges,” she advised. Beyond compliance, AI is driving operational efficiency in captive management. Queena Cheung, chief strategy and digital officer at Marsh Captive Solutions, highlighted how digital solutions are revolutionising risk management. “We launched ReadyCell, allowing customers to set up a cell captive within minutes,” she said. “Instead of being limited to one set way of structuring programmes, we are now providing new options and opportunities for how risk programmes can be designed and managed.” Cheung emphasised that AI makes institutional knowledge more accessible by embedding industry expertise into digital systems. “Captive management is complex, but AI enables knowledge-sharing on a broader scale,” she explained. “Instead of being limited to a few experts, AI allows critical insights to be integrated into processes and made available across teams.” Despite AI’s benefits, Cheung underscored the importance of ethical considerations. “We must ensure that AI models are transparent, explainable, and aligned with ethical standards,” she said. AI adoption also introduces legal and regulatory risks, particularly in data privacy and compliance. Jonathan Meer, partner at Wilson Elser, stressed the need to understand AI regulations and ensure data integrity. “The most critical aspect of AI is data. The quality of data used to train AI models directly impacts their effectiveness,” he explained. “In a highly regulated industry, accuracy and compliance must be prioritised.” Meer pointed out that while AI-specific regulations are evolving, existing privacy laws, such as the Health Insurance Portability and Accountability Act (HIPAA) in the US and the European Union’s AI Act, already have significant implications for captive insurers. “Regulators globally are working to ensure AI is implemented responsibly. Businesses should stay ahead of regulatory changes and proactively address compliance risks,” he advised. As AI and digital innovation continue to shape captive insurance, experts agree that technology should enhance rather than replace human expertise. A measured and strategic approach will be key to maximising AI’s benefits while ensuring compliance with regulatory and ethical standards. Weiss summed up the industry’s perspective: “Patience is key. No one has won the race yet, and in reality, no one is that far from the starting line.”
