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A Casualty Centric World
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.
Captives exploring pure fronting for difficult to insure risks
Captives are seeking pure fronting arrangements for risks that lack capacity in the commercial market, according to Joshua Nyaberi, head of captive fronting at Zurich Insurance Company.
When a captive enters into a pure fronting agreement with a carrier, they are essentially paying a fee to use a carrier’s licences and rated paper without transferring any risk to the commercial insurer.
“Captives seek pure fronts for such difficult to insure risks and often serve as incubators for the risks until such a time as traditional markets start to actively participate in them,” said Nyaberi, speaking on a recent episode of the Global Captive Podcast.
Nyaberi said while Zurich was seeing pure fronting requests, in his view there is no discernible trend in terms of an increase or decrease in interest in this type of structure.
“However, in a world of new and even so-called ‘uninsurable’ risks, captive owners want to have programmes that enable them to formally set aside risk funds to respond to loss instances when they arise.”
Among the key motivations for pure fronts is the need for the captive to control the reinsurance placement for the excess risk that it does not wish to retain.
“This also presents arbitrage opportunities for the captive,” Nyaberi said. “Here we are talking about pricing arbitrage, capacity arbitrage, or wording arbitrage.”
Secondly, Nyaberi said captives want pure fronting when there is a necessity to retain a risk for which the fronting carrier has no appetite to participate in.
“And thirdly, there’s sometimes the desire to actually retain the entirety of a certain risk, often due to its favourable profile for the captive owner.”
Also speaking on the GCP Short, Dr. Carin Gantenbein, global head of network management at Zurich Multinational, said there are key areas Zurich is focusing its attention when it comes to pure fronting for captives and traditional programmes.
“One is clearly on quality and speed, so delivering accurate instructions, issuing policies quickly, managing premium payments very efficiently – this is really essential for captives,” she said.
“Then streamlined cash flow processes help also ensure everything runs smoothly.”
Gantenbein added that it is important to have strong network collaboration.
“Excellent service relies really on a close knit and collaborative network, having strong expertise locally, and building also strong relationships across all involved partners is really crucial,” she said.
“And last but not least is digitalisation, which is driving not only seamless operations from a system point of view but also going down the route of deep insights into data and analytics, which is very crucial for captives.”
GCP Short: GreenieRE and providing capacity for renewables
This GCP Short, produced in partnership with the State of Vermont, shares a recent case study of a sponsored captive formed to provide additional capacity for renewable energy projects in the United States.
Richard is joined by Amy Antczak, Chief Operating Officer andCo-Founder of GreenieRE, who tells us about the GreenieRE Coalition, the insurance challenge it faced and how it is using public and private funds, through the utilisation of a Vermont cell company, to support MGAs and renewable infrastructure projects and startups.
We also hear from Christine Brown, Director of Captive Insurance at the Vermont Department of Financial Regulation, who explains why the State saw the project as a good fit for a sponsored captive structure and the process involved in getting it licensed.
For the latest news, data-driven analysis and thought leadership on the global captive market, visit Captive Intelligence and sign up to our twice-weekly newsletter.
From Exposure to Resilience: Captives, Parametrics, and the Future of Flood Insurance
Captive Intelligence, in partnership with Previsico and Descartes, has launched its first technical report, focused on the challenges faced by businesses and organisations from flood risk and the insurance solutions some are turning to.
Executive Summary
Extreme weather patterns are changing, and areas once considered low risk are now vulnerable to severe flooding.
Losses from flooding worldwide amounted to $325bn over the last five years, of which only $70bn was insured. In the United Kingdom alone, it is estimated that the total number of properties in areas at risk of flooding from surface water could increase from 4.6 million to 6.1 million – a rise of 30% between 2040 and 2060.
READ AND DOWNLOAD THE REPORT HERE
Despite the growing threat, many organisations choose to go uninsured, either assuming they will not be impacted because they have not previously suffered an event, or because the commercial market is viewed as inefficient and prohibitively expensive.
As insurance markets have grown increasingly cautious, often raising deductibles or excluding flood coverage altogether, large protection gaps for flood have been left.
Understanding flood risk means recognising that no business is immune – proactive planning and mitigation are key to avoiding costly disruption and loss.
In this report, From Exposure to Resilience: Captives, Parametrics, and the Future of Flood Insurance, Captive Intelligence explores how shifting weather patterns are causing an unprecedented increase in global flood risk, and how organisations can mitigate and finance the impact through innovative risk solutions.
Case studies, such as Balfour Beatty Vinci’s HS2 project, show how predictive tools can prevent asset losses and improve resilience.
Technologies such as flood forecasting and IoT sensors are giving organisations the solutions to enhance their resilience by providing early warnings and real-time data, while parametric policies are emerging as an alternative to the traditional market; offering quick, transparent payouts initiated by pre-defined triggers such as rainfall intensity, river height, or water depth.
When combined with captives, parametric solutions can become more effective – allowing insureds to formally retain a portion of flood risk, fund prevention measures, and smooth out “basis risk”.
This partnership allows companies to design tailored coverage that aligns with their risk profiles and changing local flood environment.
Read and download the full report here.
GCP Short: Combining Multinational with Captive Fronting
This GCP Short, produced in partnership with Zurich Commercial Insurance, is all about combining the insurer’s multinational network with captive fronting.
In a 20-minute discussion, recorded at the European Captive Forum in Luxembourg in November, Richard is joined by Dr. Carin Gantenbein, Global Head of Network Management at Zurich Multinational, and Joshua Nyaberi, Head of Captive Fronting.
Carin and Josh discuss how a multinational network is leveraged to support and implement multinational programmes, trends in captive fronting and the nuances concerning Financial Interest Clauses (FINC) and pure, 100% fronting.
For the latest news, data-driven analysis and thought leadership on the global captive market, visit Captive Intelligence and sign up to our twice-weekly newsletter.
Luxembourg working ahead of Solvency II reform deadline
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Captive Intelligence provides high-value information, industry analysis, exclusive interviews and business intelligence tools to professionals in the captive insurance market.