Bermuda Still Top Dog In Captive World
While this alternative market report focuses on U.S. captive domiciles, Bermuda still the hands-down leader in terms of the number of such entities operating on its small but busy island incorporated 89 new captives in 2003.
The domicile, which boasts 1,157 captives overall, according to the Captive Insurance Companies Association twice its chief U.S. rival, Vermont is paralleling some U.S. trends and seeing a few others as well.
J. Oliver Heyliger, managing director at Willis Management Ltd. in Hamilton, Bermuda, and president of the Bermuda Insurance Management Association, said lines of business he is seeing in captives include health care and a large increase in professional liability for lawyers.
He also noted a renewed interest in rent-a-captives and an increase in program business, which he described as insurance agencies "looking to partake in the profitable business they share with the insurance market."
Mr. Heyliger predicted 2004 will be "good business as usual."
"It's fairly consistent from a numbers point of view," he said. "My expectation is that we will probably come in at around the 90 mark." He said last year started slowly but ended "extremely well."
Jill Husbands, managing director of business development for Marsh Management Services in Hamilton, said that although the number of new captives is down slightly from 107 incorporated in 2002, 2004 is off to a good start, "even though there are rumblings of a soft market."
Ms. Husbands noted that "we have not seen any reductions in incorporations of new insurance companies in Bermuda yet. Those normally go hand-in-hand with the softer market."
As far as trends, Ms. Husbands said she, too, has seen an increasing number of health care captives in the last 12 months, which she said are "a direct result of the fact that there are markets here that now write malpractice and other insurance for health care companies." She noted that all of those health care captives are coming from U.S. insureds. The trend, which started last year, is continuing, she added.
"We're still seeing the classic type of captive for primary casualty and a little property," she said.
Ms. Husbands also observed that Bermuda is starting to see more innovative uses for captives. "In the hard market, the risk managers focus on getting their property and casualty risks placed because it's so tough [to find affordable insurance]," she noted. "But now you're seeing a lot of clients who have set up captives starting to do something unusual."
The line of coverage, depending on the business the parent company is in, could include warranty, credit card or credit life, she said, noting that even life insurers are setting up captives.
Although it is still early to draw hard conclusions, Ms. Husbands said the number of captives licensed in Bermuda in 2004 most likely "will be in the high 80s."
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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