Will Cheaper Insurance Undermine Captive Growth? Soft market should not be only consideration for buyers
The hard property-casualty market of the last three years brought triple-digit rate increases in some lines of coverage and capacity shortages in others, sparking the formation of many new captives. A return to a softening market, however, might soon make captive formation less appealing.
Although captives take market share away from traditional insurers, the reinsurance market benefits as the captive market expands. In addition, the growth of the captive market opens opportunities for traditional insurers to offer services such as claims and captive management.
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