Captive solutions are increasingly becoming a strategic cornerstone for organisations aiming to manage casualty risks with greater precision and control. By establishing a captive, companies can take ownership of their core liability exposures – ranging from general liability to workers’ compensation and auto liability – while designing coverage that reflects their unique risk profile.

Around the world, leading businesses have adopted this approach, with casualty consistently emerging as one of the most prominent lines within captive portfolios.

The latest Marsh Captive Landscape Report showed that while gross written premium across its portfolio had increased 10% for property from 2023 to 2024, the increase was 11% for workers’ compensation, 80% for auto liability and 24% for excess liability.

Beyond cost efficiencies and improved claims handling, captives enable organisations to strengthen risk governance, enhance transparency, and build a deeper understanding of their own loss patterns. In a rapidly shifting liability environment, captives stand out as a flexible, forward-thinking mechanism for safeguarding an organisation’s long-term future.

The casualty-centric world

Today, we are operating in what can only be described as a casualty-centric world. The escalating frequency and severity of liability lawsuits – combined with the growing influence of mass tort litigation – are challenging traditional assumptions and raising legitimate concerns about reserve adequacy.

Adverse claims arising from latent exposures, such as asbestos or environmental contaminants, continue to have the potential to disrupt even the most disciplined captives.

These exposures often remain hidden for years before emerging, complicating efforts to anticipate both frequency and severity. Claims tied to long-term product use – spanning ‘forever chemicals’ such as Perfluoroalkyl or Polyfluoroalkyl (PFAS) and asbestos, automotive defects such as airbags, food and beverage contaminants with long-term health effects, and real estate & construction materials with latent flaws – illustrate the complexity and duration of these challenges.

Much of the attention is focused on chemical producers and water systems, but this exposure touches now a broad range of industries – and often in ways companies have not yet accounted for.

Even organisations that did not directly manufacture or handle PFAS may inherit liability through merger or acquisition or past property use. This is especially true for long-standing industrial sites that have changed ownership over the years.

As a result, (re)insurers are facing heightened financial pressures, multifaceted legal liabilities, and the urgent need for stronger, more resilient risk management frameworks.

The captive position

For captives, these dynamics reinforce the importance of partnership with fronting carriers, disciplined underwriting, prudent reserving, and continuous evaluation of coverage strategies to maintain stability in an evolving casualty landscape.

This is precisely why accelerating the development and application of casualty catastrophe models is no longer optional – it is essential for any organisation seeking to lead with confidence.

These are not wait and see risks. It is to everyone’s benefit that businesses, brokers and insurers are pro-active in identifying, assessing, quantifying and mitigating the exposures.

Risk audits, reviewing policy language, revisiting historical data, risk engineering and environmental site assessments are all important steps for a risk manager to take, in partnership with their broker and insurance partners.

Brokers should educate customers on how PFAS may impact coverage, enter into early pre-renewal conversations with insurers and help risk managers compile the correct information through risk disclosures and risk mitigations plans to better understand, manage, prevent and mitigate these risks.

The captive can play an important role in supporting the risk manager in these tasks, and operate as a central resource

In conclusion, as we monitor these trends and consider the full spectrum of evolving casualty pressures and emerging opportunities, one message becomes clear: organisations that embrace a proactive approach – grounded in robust risk management and forward-looking modelling – position themselves not only to withstand uncertainty but to lead through it.