Why Captive Insurance is More Critical Than Ever
• Technological Advancements: While innovation has accelerated technology, it introduces new risks. The adoption of artificial intelligence and robotics opens businesses to potential product liability claims and manufacturing defects. Captives can offer coverage for these emerging risks, providing a safety net for technological-related liabilities. • Cybersecurity Threats: Cyber-attacks have been on the rise, with significant increases in recent years. Captives have become a profitable line of coverage for cyber risks, offering businesses a way to manage exposures such as ransomware, phishing, data breaches, or credential theft. • Health Insurance Premiums on the Rise: According to Swiss Re’s 2025 Global Economic and Insurance Market Outlook, health insurance premiums are projected to grow by 4.2% annually, driven by increased claims activity and inflationary pressure. For employers offering employer-based health care, premiums are expected to rise by 7% in 2025, based on an annual report from PricewaterhouseCoopers. This trend highlights the importance of leveraging captives to control rising costs and ensure sustainable coverage. The past few years have been tumultuous for the marketplace, and 2025 is shaping up to be no different. As inflation persists, consumer confidence is expected to fluctuate. With businesses now understanding the potential for unpredictable events that are widespread and severe, risk management is all the more critical. For businesses with captive insurance companies, or those considering it, keeping an eye on industry trends can help define how captives are best utilized—not only to mitigate risk but to control costs and ultimately boost profit.
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