A new study by A.M. Best affirms what captive domicile regulators are saying, that the alternative risk-transfer market continues to flourish, despite the current soft insurance market--especially in the captive-heavy medical malpractice sector.
In its special report, released in late July--"Medical Malpractice Leads Captives' Premium"--Best found that falling med mal prices led to a 15 percent drop in net premiums written between 2006 and 2007 for a composite of captive insurers, but that captives overall benefited from favorable underwriting trends.
Best analysts told National Underwriter that risk managers have become much more sophisticated in their use of captives. They are holding onto their facilities--even during a market when insurance rates are down--almost across the board.
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