Thought leadership

In the intricate world of corporate risk management, Employee Benefits Captives (EBCs) have risen to prominence as essential tools for organisations seeking innovative ways to address the biometric risks of their employees and their families. Within this framework, disability risks play a central role in providing financial security to employees facing disabilities.

The captive reinsurance market has long been on the lookout for the introduction of a dedicated French regulatory framework, with the legitimate fears it could raise for the reinsurance captive market in Luxembourg.

Reinsurance international employee benefits into a captive provides many advantages for employers and employees. It is important, however, to get execution right. Bill Fitzpatrick explains why some EB captives can struggle to succeed.

When a firm buys insurance via a centralized risk management function, it hopes to enjoy the economies of scale of the unified consolidated organisation. Using the captive allows the organisation to harness the economic strength, size, and risk-taking ability of the larger combined group, while recognising the smaller risk appetites of the component business units.

Unprecedented disruption, a hardening (re)insurance market, and the onset of new major risks have increased interest in captive use by corporate risk managers. The captive market – once seen as an alternative to traditional commercial insurance – is establishing itself as a valuable risk management tool and a market in its own right. 

Captive-backed international employee benefits programmes have come a long way since the mid-1990s. Bill Fitzpatrick outlines that journey and what comes next.

You’re not new to the captive world. You’ve had your captive for several years and generally feel good about its performance. However, you’re now in one of the most difficult markets we’ve seen in a while.

As we’ve seen a rise in gross cession structures and requests for pure fronting, the issue of credit risk is becoming more of a critical one, and there are some additional considerations for captives looking to benefit from using gross structures to access reinsurance markets.