The captive insurance sector in Bermuda could be poised to benefit from a wave of innovation and shifting global risk priorities, according to a new report from Artex.

The Alternative View for spring 2025 on the state of the market reveals that in Europe, new cell captives and cell formations are now outpacing single-parent captive structures, a trend Artex expects to continue globally. Bermuda has long specialised in both models and has infrastructure that supports modular cell captives.

One of the most urgent areas of growth is cyber-risk. “Captives can self-insure against AI-driven fraud, ransomware and data breaches,” the report states, with some firms now viewing cyber-risk as a potential systemic threat. Social engineering, where attackers manipulate people into giving up access or information, is now replacing ransomware as “the topic that keeps the C-suite up at night”.

Bermuda Monetary Authority figures from November 2022 showed a major increase in captive use for cyber insurance and complex exposures such as climate and renewable energy liabilities. In 2020, the captive market wrote over $24  billion in premiums, with 17 per cent of captives in Bermuda using segregated accounts.

In the United States, companies are turning to captives to manage rising healthcare expenses, according to Artex. With medical costs expected to spike again in 2025, medical stop-loss captives are becoming a go-to solution for mid-size and large employers. Both group captives and single-parent structures are being used to contain these costs.

Meanwhile, the global reinsurance market reached a record $655 billion in traditional capital in April, according to Gallagher Re. That growth comes alongside improved underwriting results, with the US property and casualty market posting a combined ratio of 96.6 per cent in 2024 and outperforming the S&P 500 with a 10 per cent return year-to-date.