TRENDS
Alternative Risk Financing
Solutions to current challenges with traditional insurance
By Kevin Cunningham
Alternative risk financing( also known as captive insurance) is a mature part of the global insurance and reinsurance marketplace. According to industry experts at the industry recognized International Risk Management Institute, the captive industry is evolving rapidly, poised to reach a projected $ 250 billion global market value by 2028.
This surge among businesses seeking alternative coverage methods and cost reduction, underscores the need for a comprehensive understanding of trends, challenges and opportunities for our CR / ST marketplace to consider alternative risk financing means and methods.
This three-part article series by Lift & Access is being provided to accomplish that objective.
Editor’ s Note: This is the first edition in a three-part series for Lift & Access readers to identify the merits of alternative risk financing, as compared with the volatility in traditional property-casualty insurance for today’ s business owners in our crane, rigging and specialized transport( CR / ST) marketplace.
Captives are being utilized by businesses all across the U. S. and worldwide for a variety of risk management reasons including strategic, financial, operational as well as a result of traditional insurance market condition instabilities.
Captive structures that a company forms commonly involve the company becoming the shareholder of its own insurance company, either directly or indirectly. This alternative risk financing structure provides succinct advantages for participating captive customers working in conjunction with their trusted agent / brokers in developing critical risk mitigation resources via the“ unbundled risk service” nature allowable in captive structures including:
As we look ahead in 2025 and beyond, it will be helpful for CR / ST businesses and related industry stakeholders to examine the trends and future trajectory of the captive insurance market to assess the advantages and disadvantages of captive arrangements to determine how our industry members may be able to use them to navigate today’ s ever-changing financial landscape of traditional insurance markets.
Business organizations worldwide have been using captives since the 1950s, and it is fair to say that the captive insurance sector has weathered many storms providing direct risk benefits to their owners and participants over the past 75 years.
The primary purpose of a captive insurer is to provide coverage for the risks of its owners, ensuring that the insured parties benefit from the underwriting profits generated by the captive.
• Direct customer / broker maintaining control over the actual total cost of risk.
• Direct customer / broker having
Global growth in usage of catives
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
1985 Source: Captive Review
1990 1995 2000 2005 2010 2015 2020 2025
16 l May-June 2025