Are captives here to stay?
Growing through a soft market, which is the unusual part
Queen thinks captives are permanent, and his evidence is the timing rather than the volume. Captive formation has continued to grow through a soft market, when cheaper conventional cover would normally slow it down. That, to him, says institutional and mid market buyers now treat a captive as part of the risk financing stack rather than as something reached for when pricing turns.
The soft market point is the one worth sitting with. Captive formation has historically been counter cyclical: when conventional insurance is cheap and available, fewer people build their own. Growth through a soft cycle suggests the reason for forming has changed.
His picture of a mature user is a business that keeps the structure in place across cycles and uses it where it fits, which is a different thing from a business that forms one because this year's renewal was painful.
Key takeaways
Queen's evidence is counter cyclical growth: captive formation has continued through a soft market, when it would normally slow.
He reads that as captives becoming a standing part of the risk financing stack rather than a response to hard pricing.
For advisers the argument is retention, since a business with a captive in place tends not to re shop the account.
He points out how far up the scale this reaches, noting that even a company launching rockets holds a captive, and tells a story against the usual assumption about what such a company worries about: their general counsel told him the regulator on his mind was the aviation authority, not the tax authority.
From the conversation
Matt Queen
Captive Insurance Attorney, author of Modern Captive Insurance
“And another funny thing about the SpaceX thing is I met the General Counsel once.”
This answer begins at 52:43 of the full conversation. Watch or listen to the whole thing.
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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