World Domicile Update reveals surge in captive insurance cell formations

An annual report by Captive Review has revealed that global captive numbers fell slightly in 2020, but that there was a surge in captive cell formations.

Each year Captive Review’s World Domicile Update charts captive formations and licence surrenders for the previous year, giving the most accurate and up-to-date data of global captive figures.

The update revealed that at the end of 2020 there were 6,304 captives licenced in 71 different captive insurance domiciles, a net loss of 93 compared to 2019.

There was however an increase in cell captives, which are counted separately. There were at least 336 new cells formed in 2020, bringing total cell number to 3,039. Some large captive domiciles do not count individual cells, so this figure is a minimum global number.

Regulators also told Captive Review that they have seen huge increases in captive applications in late 2020 and early 2021, with Vermont reporting the highest number of applications in a decade.

“The global captive industry has reacted quickly to the changing market, supporting the transition to the new normal by creating long-lasting and innovative solutions. I’m excited to highlight and recognise the hard work of the captive community over the past year with our World Domicile Update,” publishing director Nick Morgan said.

Captive Review editor and author of the World Domicile Update, Lauren Ingram, said that the trends that emerged in the report with captive cells were particularly interesting.

“The surge in captive cells in particular has been driven by both the Covid-19 pandemic and what was an already hardening insurance market,” Ingram said.

“Companies looking for a quick solution for a specific line have chosen to implement a cell structure, where the lead time to form the captive is much quicker and the capitalisation requirements lower than a pure captive.”

The World Domicile Update has also revealed that more than 50% of captives are now domiciled in North America, with the region growing slightly in 2020 while the Bermuda and the Caribbean region shrunk.

The Captive Review World Domicile Update is available to read in the reports section.

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