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Captive owners adapt to market changes - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Captive owners adapt to market changes by Claire Wilkinson & Gavin Souter Alternative Risk Transfer/Captives , Property , Reinsurance Axa , Marsh & McLennan Apr 24, 2026 Captive insurers are being deployed more broadly as strategic risk tools as organizations seek to build resilience and adapt to shifting conditions in the commercial insurance market. Premium growth extended into 2025 with many existing captive owners expanding their use of the vehicles and companies of various sizes establishing new captives. Despite rate declines in the property insurance market, several other areas of the market remain difficult for buyers, experts say. There were 6,549 captives in 80 domiciles tracked by Business Insurance , a 3.8% increase over 2024 (see chart here ). The United States remains a “heavy user” of captives, but large companies in parts of Europe, Asia and the Middle East are showing increased interest, said Will Thomas-Ferrand, London-based global head of captive solutions at Marsh Risk. Marsh’s captive solutions business recorded more than 100 new captive formations in 2025, he said. Gross written premium in Marsh-managed captives rose 3.3% in 2025 to $79.14 billion (see chart here ). Traditional property/casualty lines continue to dominate, but non-traditional risks such as cyber liability, directors and officers liability, environmental liability and trade credit are increasing, Mr. Thomas-Ferrand said. “Captives are way beyond a fix” for market cycles and have become core risk management tools, said Steve Bauman, global programs and captives director, Americas, at Axa XL. In softer markets, companies “explore different areas,” expanding lines and refining strategy, while in harder markets they lean more heavily on captives to assume risk, increase retentions and address capacity constraints, he said. Emerging risks are driving captive use, with artificial intelligence seen as “the ultimate emerging risk that is going to touch every company,” Mr. Bauman said. “We are still continuing to see growth in captives. Customers and clients are not only looking to start a captive, but are continuing to look to grow what they may have existing,” said Dawn Hiestand, chief underwriting officer and head of captives at Artex North America. Softer conditions can allow companies to purchase capacity through their captives that may previously have been unavailable while maintaining flexibility in how much risk they retain, she said. “Now is actually a perfect time to be able to purchase capacity that you may not have otherwise had access to,” Ms. Hiestand said. Growth drivers have shifted over time. Earlier in the hard market, property insurance challenges, particularly around catastrophe-exposed risks, were a primary catalyst for captive formations. More recently, liability lines have taken on a greater role, reflecting ongoing pricing pressures and capacity constraints, said Nancy Gray, regional managing director, Americas, at Aon in Burlington, Vermont. “What we’ve seen in 2025 is auto liability, excess liability, especially, has been driving a lot of the growth, because there are certain lines that continue to be difficult from a pricing perspective or capacity standpoint,” she said. Captives should be viewed as long-term strategic tools, said Kristen Peed, chief risk officer at Sequoia Benefits and Insurance Services, in San Mateo, California. “If you’re looking at this as a short-term solution or a knee-jerk reaction to a market turn, that’s where you’ll find the resistance from your leadership team or management,” she said. Risk professionals “need to stop and think what am I trying to fix, rather than just say ‘oh a captive sounds like a good idea,’” said Ms. Peed, who is immediate-past president of the Risk & Insurance Management Society. Sequoia’s leadership team is looking to expand its captive use, she said. Mariposa, the company’s Arizona-domiciled captive, is being broadened from a “deductible buy down” workers compensation structure into a more strategic vehicle, she said. The company is exploring adding a second professional employer organization and potentially a protected cell facility, she said. Some smaller companies, such as family offices, are also looking to use captive risk structures that are not traditionally used in captives, such as a combination of commercial and personal lines coverage, said Ms. Hiestand. “This may be considered newer in the captive environment and I think the various domiciles will be deciding how comfortable they are with the inclusion of both lines,” she said. Property softens Property remains a core captive line, even as commercial insurance pricing continues to stabilize. “Property is by far the largest line of business being written for captive programs,” Ms. Gray said. Captives continue to fill gaps in property programs and provide access to reinsurance when market capacity is constrained, particularly for difficult-to-insure perils such as wildfire, she said. In catastrophe-exposed regions such as Florida, companies are retaining larger portions of their property exposure through captives and using reinsurance above those layers as a cost-effective alternative to traditional insurance, said Nick Frost, president of captive management at Davies Group. “They’re taking first $10 million, $20 million or $30 million and reinsuring excess of that, and they find that a cheaper way of doing it,” he said. Captives are increasingly used alongside parametric covers to address specific climate-related risks, sources said. Captives can take a portion of parametric risk and increase their share over time, Mr. Bauman said. “It’s a great area for captive utilization,” he said. Parametric coverages are used for a “specific reason or specific issue or problem you’re trying to address,” and tend to be “more of a one-off,” Ms. Gray said. Casualty pressures While property conditions have improved in many areas, liability lines continue to present significant challenges. “The casualty business is out of control with social inflation right now and outsized awards,” Ms. Peed said. Companies are using captives to fund specific layers, she said. Captives are well-suited to high-frequency, low-severity risks and typically handle retentions and primary layers of a casualty program rather than the full tower, Ms. Gray said. They also help address gaps in excess liability programs, where pricing and capacity remain challenging, driven by so-called nuclear verdicts, she said. “These new nuclear verdicts … have made pricing within the excess liability lines of business very difficult,” she said. Challenges in the health care sector are also contributing to new captive formations. Long-term care exposures, particularly in jurisdictions such as New York, New Jersey and Florida, are proving difficult to insure in the traditional market, Mr. Frost said. “Long-term care exposures are particularly tough … we’re seeing new formations in there,” he said. Tough conditions in the construction insurance market are also driving growth, Mr. Frost said. Davies has formed a risk retention group in Montana for New York contractors facing a difficult liability market and limited fronting capacity, he said. The structure avoids the need for a fronting insurer while still allowing access to reinsurance. Health and benefits Rising health care costs have driven an increase in health care and other employee benefits being placed in captives. Medical stop loss captives are seeing continued growth due to rising health care costs, Mr. Frost said. “If you put $2 million premium into a captive, you can save $1 million,” he said. Interest in employee benefits is expanding, particularly internationally, Ms. Gray said. Companies are using captives to manage costs and harmonize programs across jurisdictions. This includes “looking at … how their employee benefits program can be adjusted on a global basis across countries in a more cost-effective way,” she said. Companies are looking to bring benefits in-house, where “we know what the loss ratio is … could we do it ourselves? Could we pull it in-house, make it profitable, offer additional value by charging less,” Ms. Peed said. Expansion Companies are showing growing interest in new domiciles and onshore frameworks such as the United Kingdom, Mr. Thomas-Ferrand said. Broader domicile options are driving new captive formations, particularly among middle-market companies, he said. Plans for a U.K. captive insurance regime are advancing. Regulators aim to publish a framework in June or July and begin accepting applications in 2027, said Caroline Wagstaff, CEO of the London Market Group. The initiative is “not tactical … not a price play anymore. This is a strategic imperative on how you manage risk,” she said. The regime is expected to focus initially on direct writing and reinsurance, and will include protected cell structures to broaden access, particularly for smaller companies, Ms. Wagstaff said. Demand is expected to come primarily from new formations rather than redomiciliations, given the cost and complexity of relocating existing captives, she said. Interest could extend beyond U.K. companies, with some firms potentially choosing London for its location and legal framework, she said. 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