Parima joins Labuan captive meeting as Asia-Pacific growth continues

Steve Tunstall, general secretary of Parima, will represent the association at a conference on captives, organised by Labuan International and Business Financial Centre and Swiss Re Corporate Solutions, as evidence mounts of the increased interest in the self-insurance tools among Asian risk and insurance managers. Mr Tunstall, a founding member of the Parima leadership team, is set to take part in a panel discussion entitled ‘How captives have been successfully deployed as a cost-efficient risk management tool’, in the Malaysian capital on 7 August. He will be joined by Juerg Stoll, principal officer, Swiss Re Corporate Solutions (Labuan branch); George McGhie, managing director, Asia-Pacific captive practice, Willis Towers Watson; and Roshan Perera, partner, Asia consulting, NMG Consulting. The organisers of the event pointed out that self-insurance through captives is an established and cost-effective way of protecting a company’s assets. But, it also has to be recognised that that captives increasingly carry a considerable amount of risk that they assume on behalf of their parent entity, and can pose the risk of potential insolvency under certain circumstances. “It is essential that corporations understand captives and how they can be utilised to manage volatility arising from the changing risk landscape and the changing needs of their parent entity,” stated the organiser. The point of the event is to understand how captives can be specifically tailored to various business models, and learn about the tools that will help captive owners transform insurance from a business cost to a risk management initiative, they added. The meeting comes as interest among Asian risk and insurance managers is at a high point, according to global broker Marsh. It recently published a report – Securing Your Future With a Captive – which found that, based on an analysis of its 1,100 captive clients across the world, Asia-Pacific is the fastest-growing region in the world for captives. Marsh reveals in the report that, among regions where captive parents are based, growth during the past five years has been robust overall, with Asia-Pacific up 24%, the Middle East up 33%, the Caribbean up 18%, and Latin America up 17%. The broker points out that, although the growth in the Middle East appears to be quite significant, this is somewhat skewed by the small number of captives in the region. Captives in the Asia-Pacific region saw a 116% increase in gross premium during the past five years. The Asia-Pacific region also leads the five-year growth in number of captives. Between 2014 and 2018, 11 captives were added in Asia-Pacific, nine in the Caribbean, three in the Middle East, and just one in Latin America. The 116% growth in Asia-Pacific means that the region’s captives now generate some $1.1bn in gross premiums. This compares with $5.7bn in gross premiums generated in the Europe and Middle East region, which includes an 8% decrease in number of captives in the last five years but a 4% increase in gross premiums during the same period. Interest in captives in the Asia-Pacific region will inevitably rise as the regional market finally appears to be hardening. According to Marsh’s first-quarter global pricing analysis, overall insurance pricing in the Asia-Pacific region increased by 16%, continuing the region’s steady pricing increases of the last two years. The broker says that property insurance pricing in the region increased by more than 14%, the fifth consecutive quarter of double-digit increases. At the same time, major carriers have reduced capacity and adjusted risk appetites. Casualty lines composite pricing increased by 5.7%. Financial and professional liability pricing increased by more than 20%, continuing a string of double-digit increases during the last seven quarters. Marsh adds that the financial and professional liability market continued to be “difficult” for listed company D&O risks. The number of class action claims increased again in 2018, and this continued to affect pricing. The broker’s Asia Composite Pricing Index also shows increases for a second consecutive quarter. Marsh says that insurance pricing in the first quarter of 2019 increased by 0.4%, marking the seventh consecutive quarter of “relatively minor” pricing movements. Property pricing increased by 0.6%, only the third quarterly increase in four years. Casualty pricing fell by 0.4%, which continued a trend toward stable pricing following several years of moderate decreases. Financial and professional liability pricing generally increased, with the composite up 0.2%. “This marked the first back-to-back quarterly increases in more than six years. Financial and professional liability pricing was influenced by the deteriorating global market and carriers’ efforts to achieve pricing adequacy while reducing capacity,” concludes Marsh.

Parima joins Labuan captive meeting as Asia-Pacific growth continues

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