Volatility and uncertainty in any environment can create challenges but they can also create opportunities. Those who are willing to adapt and are motivated to succeed can flourish in the most demanding of times. The insurance marketplace is currently experiencing varying degrees of volatility and uncertainty caused by hardened markets in property, unpredictability in liability lines, catastrophic natural disasters and other contributing factors. Fortunately, one of the routes to sustainability has been captive solutions, for which both supply and demand have grown exponentially.
By design, the captive marketplace is not a ‘one size fits all’ solution. A captive is not just a vehicle to provide customized insurance. It is a business, and therefore requires another layer of diligence. When considering the coverage, costs and claims of a risk management program, including the newly formed captive business, it is important to examine each underlying component to understand how to employ them in the most efficient and effective manner.