James Larkin, global head of captive insurance for Barclays, explains how combining the benefits of global banking scale and dedicated captive teams is helping to support clients in the sector
Captive Review (CR): How has Barclays supported the captive industry?
James Larkin (JL): We have worked closely with the captive industry for over 25 years. Our team is supporting clients in the UK, the Channel Islands and the Isle of Man, as well as in our offshore locations such as the Cayman Islands and Bermuda. We have also established branches with on-theground teams in the US, in locations such as Vermont, Hawaii, Delaware, Washington DC and Arizona. My colleagues in Europe are busy expanding our offering in that market as well.
CR: How are you tailoring your support for clients in different regions?
JL: As a global group, we recognise client demands differ based on geography and that different clients will need different approaches. We take the time to understand each client to be able to support their needs. We are able to be agile and leverage our global presence and resources to tailor what we offer to each market. Leaning on our existing, strong broker network and leveraging these relationships in various geographies will play a key part in this.
CR: You say you are able to be agile – how do you achieve this as part of such a large global banking group?
JL: Our structured support for the sector helps us stay agile and keep abreast of the changing environment for our clients. We recognise that the captive industry has its own unique challenges and opportunities and we have a dedicated team with in-depth knowledge of the industry. Our team is very well equipped to understand a captive’s needs, including where it is in its lifecycle, the risks it’s covering as well as the motivations of the parent. This gives us greater insight and strengthens our services, whereas specific captive considerations could be overlooked. Our ability to tailor our proposition to captive clients has helped us stand apart. Fundamentally, our approach is built on understanding who we need to speak to and then making time to listen to them. We recognise that the risk managers who run captives play a crucial role. It really helps them when we listen to what they have to say and understand their challenges and concerns. Other factors, such as our global resources, are of course really important too, but the relationship is truly fundamental. If our approach was different, we might not be recognised as a strong partner for our clients.
CR: How do banks and captive clients engage on ESG considerations?
JL: Everybody has their own journey with environmental, social and corporate governance (ESG) – learning and adapting. We are working together with captive clients to consider where they fi t into this equation. For example, an insurance group may have surplus cash in its captive and want to make that work for it. Therefore, one strategy it may wish to consider would be putting that cash into an ESG investment to contribute to the parent’s Hi year-end reporting or wider ESG goals. Right now, there is a lot to figure out with regard to ESG and the role that captives can play.
CR: What’s front and centre in captive clients’ minds?
JL: Captives continue to operate in a hardening market with very few lines softening. This naturally presents challenges for risk managers as they face off to treasury teams that are seeing steadily increasing premiums. Captives need to show their value to parent companies in this challenging environment. One positive to this market is the opportunity for more lines of insurance, which could help risk managers to balance risk in portfolio. There are also challenges in certain lines of insurance where there is less capacity in the market to absorb their lines. Some of the areas where we’ve seen capacity issues include directors’ and officers’ liability insurance, cyber insurance and property insurance.
CR: What challenges is the captive industry considering as we head into 2024 and beyond?
JL: On the challenge side, we can’t overlook the current interest rate environment. Clients are more attuned to this and the impact it can have on returns. That is not likely to change any time soon. The industry is also becoming more conscious of fraud risks and completing extra due diligence. One area that may offer opportunities for captives over the next few years is working with insurtech. We’re beginning to see more companies offering technology services to captive clients. Working with tech companies may offer opportunities to implement innovative, cost-saving processes. It’s early days but it will be interesting to see how insurtech could be embedded within the industry – perhaps with claims handling if there is enough scale in the tech business. At Barclays, we’re committed to keep building on our offering to captives and supporting our clients through this challenging market across the globe.