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Oct 2019

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Labuan continues to corner the captives market in Asia

Source: Middle East Insurance Review | Jul 2019

Labuan IBFC remained the leading jurisdiction in Asia for captives formations in 2018, with six new formations over the year, bringing its total number to 48.
 
The jurisdiction’s captive market growth outpaced other Asian hubs such as Singapore and Hong Kong, said Labuan IBFC CEO Farah Jaafar-Crossby. Globally, captive insurance growth has been on an upward trajectory, with more than 6,500 captives formed as of end-2017.
 
However, only 2% of these captives originate from Asia Pacific, meaning the Asian captives’ market still has a significant potential for growth.
 
“With the ever-changing global challenges and changes, the need for risk management tools such as captives and protected cell companies is on the uptick,” said Ms Jaafar-Crossby.
 
“Labuan IBFC recorded continued growth in 2018, with 19.1% growth in insurance premiums, and total gross premiums for its captive insurance business showing an increase of 11% to $400.5m,” she said.
 
Rise in third-party business
The rising popularity of captives was emphasised in a recent report by Marsh. Specifically, the number of captives writing third-party business has been growing at a double-digit pace. Twenty-two percent of Marsh-managed captives wrote some kind of third-party business last year, an annual increase of 12% and a 62% increase over the last five years. Coverage for contractor, vendor and customer risk saw a particularly sharp rise, spiking 138% among Marsh-managed captives in the last five years.
 
“More risk professionals today are embracing captives as a tool to secure their organisations’ future, whether it is generating profits by underwriting third-party risks, accessing reinsurance, or providing cost efficiencies,” said Marsh captive solutions president Ellen Chamley. “No matter the structure or premium volume, captives offer flexibility to access and protect capital, accelerate business objectives, and facilitate the funding of programmes that promote employee health, wellbeing and safety.”
 
The report also found that in the past five years, the Asia-Pacific region saw a 24% growth in the number of captives. The Middle East had a 33% growth, while the Caribbean and Latin America saw a growth of 18% and 17%, respectively. M 
 
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