Captives are the grass roots of Bermuda risk

During the same period, the Bermuda property and casualty market has demonstrated its importance and resilience to many catastrophe impacted areas of the globe, but substantively to wildfire-hit California this year where island-based reinsurers deployed nearly $10 billion in gross claims.

Appleby counts many of the major life re, ILS and P&C platforms in Bermuda as clients, and these provide substantive and interesting work.

However, there is another important sector of our healthy insurance and reinsurance market that keeps us busy: Bermuda captives.

Captives are intragroup risk management tools that underwrite risks related to their group — as opposed to third-party risks.

Some of Bermuda’s earliest market entrants were captives, serving the needs of their onshore parent and/or group. In this context, Bermuda captives can be seen to represent the grass roots of our risk marketplace while remaining a formidable sector from a gross written premium standpoint.

While early to arrive to our shores, new captives consistently register in Bermuda and existing captives constantly adapt to best suit the risk needs of their parent/group.

By way of example, some captives have been used to address diversity, equity and inclusion initiatives for bespoke employee benefits, and more recently captives have provided coverage related to the increase in costs owing to supply-chain disruption — borne of the imposition of tariffs.

Cyber-risks are being increasingly looked at and underwritten in captive structures.

Of course, the more traditional coverages are regularly featured in captive risk selection as well.

I was fortunate to speak at the recent and very well-attended Bermuda Captive Conference. One of the questions that my panel addressed was why captive owners continue to choose Bermuda.

The response to this is manifold and includes plenty of attributes for the island to be proud of, including:

Regulatory pedigree: the Bermuda Monetary Authority has actively refined and adapted the island’s insurance and reinsurance regulatory regime over the past decades in such a way that it is now in a distinguished class.

The National Association of Insurance Commissioners in the US has designated Bermuda as an equivalent and qualifying jurisdiction facing US markets. The European Commission has granted Bermuda Solvency II equivalence facing EU markets.

These two important accreditations offer ease of conducting business, in a sense passporting our registrants into major markets. They also set us apart from other jurisdictions from a regulatory standards standpoint. The BMA has carefully bifurcated the regulatory regime in Bermuda such that captives are subject to less rigorous requirements relative to commercial insurers and reinsurers.

Ratings: Bermuda has more rated captives than any other jurisdiction, and as such, ratings bodies are very familiar with the regulatory regime, standards of capitalisation and governance requirements of Bermuda. This may help to expedite the ratings process for Bermuda captives relative to lesser-known jurisdictions.

Proximity to reinsurers: Bermuda captives have the advantage of being proximate to one of the largest reinsurance markets in the world. Bermuda reinsurers benefit from the regulatory excellence, are deeply capitalised and resilient. This proximity may help captives obtain coverage quickly, address a unique risk type and/or offer other benefits.

Speed to market: Bermuda captives can be licensed quickly. Once know-your-customer information is collected for the ultimate ownership of the captive, the process of compiling and submitting application materials to the BMA can, in many instances, happen in weeks, not months. The BMA will respond to an application the same week it is submitted. Our captive clients value this prompt turnaround and the speed to market that it brings about.

Novelty in risk type: the BMA has welcomed innovative insurance platforms and risk types, whether it be insurtech in deploying coverage, or addressing emerging risks. Captives can take comfort that, provided they are adequately capitalised and have access to the requisite expertise, the BMA will generally be open to novel aspects of a given captive business plan.

Service providers: a diverse and experienced array of captive service providers on-island provide round-the-calendar support for captives. The entire life cycle of a captive benefits from having experienced folks on hand to provide guidance and support when needed.

Geography: Bermuda is conveniently located in terms of connecting flights to major cities in Europe and North America. Our new national carrier expands the offerings.

Whether a captive owner values one or more of the above attributes or another or others, there is no denying that Bermuda presents an attractive cocktail of qualities that will ensure success and solvency for captive registrants for years to come.

First Published in The Royal Gazette, Legally Speaking column, July 2025