US Captive 2018 15
Medical stop loss is one of those things that is relatively easy to do,”
In Marsh’s Captive Landscape Report 2018, there was a 14.3
percent increase in medical stop loss being written in Marshmanaged
captives from 2016 to 2017. Marsh has around 1,200
captives under management.
In the same report, there was a 550 percent increase in multinational
employee benefit coverages in captives over the last four to five years.
For US parent companies, single parent captives continue to be
the most prevalent captive vehicle, the reports shows, making up
79 percent of the captives with US parent companies, followed by
7.4 percent for special purpose vehicles, 4.4 percent for group
captives, 4.2 percent for cell captives, and 5.1 percent for risk
Serricchio considers medical stop loss to be one of the fastest
growing areas in captives, along with cyber.
“It’s very relevant, it’s topical. And there are some real cost savings
to doing medical stop loss in a captive,” he says.
Medical stop loss
“The healthcare industry, with all the mergers and consolidation, is
constantly looking for efficiencies with their risk programmes, and also
cost savings under any stone that they can find it. If they can increase
their medical malpractice retention and fund that in a captive and save
on the commercial premium, they’re going to do that.”
Healthcare organisations tend to have a lot of staff, and Serricchio
notes that medical insurance will probably be one of their largest spends.
“If they can shave off 5 or 10 percent in savings, that’s a very
meaningful amount of money to these organisations, which are
mostly non-profit,” he adds.
This year, Marsh also took a sample of 300 clients and asked
them what some of the value drivers were for their decision to own a
captive, with 42 percent saying that access to reinsurance is one of
the main incentives.
In the same survey, another 42 percent said they were considering
employee benefits or that they were already doing employee benefits.
“There’s a decent amount of the population either doing it, or thinking
about doing it,” says Serricchio. “That’s going to pave the way for what
will happen over the next five years, which is more non-traditional lines
of business in captives, for example medical stop loss, group life, longterm
disability, and even voluntary employee benefits.
“We are seeing a huge increase in the number of enquiries for
voluntary employee benefits, things such as critical illness, accident
insurance, hospital indemnity.”
The overall growth in the medical stop loss captive market is hard to
measure, especially in the group captives space, according to Phillip
Giles, vice president–sales & marketing, accident & health, QBE
Individual brokers can provide statistics on their own captives, but it
does not give the full picture of this industry. When domiciles publish
their latest statistics on captives formations, their figures may show
fairly flat growth, but a group captive gaining new members would
While the market is hard to measure, Giles believes it has been quite
substantial based on QBE’s increased level of activity in this space.
“QBE North America has experienced significant growth in the
number of both group and single parent captives over the past
five years,” says Giles. “The number of enquiries and requests for
proposals (RFPs) that we respond to has especially increased at an
exponentially high rate over the past several years.”