GILC Captives Report - Corporate demand drives global surge in captive insurance formation

Captive insurance formations are accelerating globally as corporates seek greater control, stability and resilience in response to prolonged hard market conditions, according to a new report from Global Insurance Law Connect.

Drawing on insights from member firms across 20 jurisdictions, including Australia, the 2026 GILC Captives Report identifies sustained premium increases, constrained underwriting capacity and emerging risk complexity as primary drivers behind a marked expansion in captive utilisation.

Once predominantly used by large multinationals, captives are now increasingly being established by mid-market corporates, public sector entities and organisations in developing economies.

Hard market conditions accelerate growth

The report finds that the hardening commercial insurance market since 2018 has been the single most significant catalyst for captive growth.

Across Europe – including Germany, Spain, Italy and the UK – member firms report sustained increases in formation activity. Spain alone estimates approximately 50% growth in captive demand over the past five years as businesses respond to rising premiums and reduced coverage availability.

Similar trends are evident in Australia, New Zealand, the United States and Latin America. In particular, corporates are utilising captives to secure capacity in lines such as cyber, environmental liability and catastrophe-exposed property, where pricing volatility and underwriting restrictions remain acute.

As noted by Matt Ellis, Partner at Sparke Helmore, 'There has been increased interest in businesses seeking alternatives to traditional insurance to deal with emerging risks like cyber threats, natural disasters, supply chain issues, and rising reinsurance costs.' Captives are therefore increasingly viewed as essential tools for securing coverage for 'risks that are expensive or difficult to obtain in the commercial market.'

Gillian Davidson, Chair of GILC, commented: 'We are witnessing a structural shift in corporate risk financing. Captives are no longer viewed as niche vehicles for only the largest multinationals; they are increasingly central to enterprise risk strategy. The pace of adoption among mid-market and public sector organisations reflects sustained pressure in the commercial market and a clear desire for greater financial certainty.'

Regulatory reform intensifies domicile competition

Alongside demand-side pressure, the report highlights a wave of regulatory reform reshaping domicile competitiveness.

Established captive centres including Luxembourg, Switzerland, Malta and key US states continue to refine their regimes, while jurisdictions such as France, the UK, Italy and Greece have introduced or are developing reforms designed to attract new formations and encourage re-domiciliation.

France’s 2023 reforms have already produced measurable results, with domestic captive numbers increasing from fewer than 10 to 23 within two years.

In the UK, a government-backed captive insurance regime expected by summer 2027 is anticipated to introduce proportionate capital requirements, streamlined authorisation processes and Protected Cell Company structures. Market participants view the framework as a significant development in the UK’s risk financing architecture.

Caroline Wagstaff, Chief Executive of the London Market Group and an advocate for a UK captives regime, said: 'This report makes clear that captives are no longer peripheral tools for only the largest multinationals, they are rapidly becoming central to modern risk-financing strategy. The UK’s forthcoming captive regime represents a major step forward, ensuring we retain and attract corporate capital that might otherwise move offshore. By introducing a proportionate, competitive and internationally aligned framework, the UK is positioning itself as a leading domicile for the next generation of captive growth.'

Australia has a mature market for captive insurance, supported by major international brokers, but most Australian organisations choose to establish their captives offshore. This is mainly influenced by more favourable tax and regulatory conditions in jurisdictions such as Bermuda, Singapore, Vermont, and Guernsey, with only a small number of captives authorised locally. Those that operate from abroad typically rely on the ‘unauthorised foreign insurer’ exemptions to participate in the Australian market. Over time, Singapore has become increasingly preferred over traditional European domiciles, particularly as specialised industries, such as mining, energy, and infrastructure, turn to captives in response to the growing impact of weather-related risks.

Marianne Robinson, Special Counsel at Sparke Helmore in Australia, comments, 'Although Australia is a stable and highly regulated insurance environment, the financial and administrative burden of establishing a captive domestically remains a major deterrent. Higher capital requirements, lengthy authorisation processes and the need to engage multiple financial and legal experts contribute to substantial upfront costs. While there has been some effort to reduce regulatory complexity, barriers persist. However, regulators such as the APRA are becoming more open to alternative capital structures, including insurance-linked securities and the Federal Government is exploring climate-related risk pools and captive-style mechanisms similar to the existing Terrorism Insurance Pool.'

In jurisdictions without domestic captive legislation – including Brazil, Chile, India, Argentina and Mexico – corporates continue to rely on established offshore domiciles such as Bermuda, the Cayman Islands, Luxembourg and certain US states.

Broadening strategic role of captives

Beyond formation growth, the report identifies a widening strategic application of captives across all markets.

Mid-sized corporates in both Europe and the United States are increasingly using captives to stabilise long-term insurance costs and strengthen balance sheet resilience. Public sector adoption is also expanding, with Norway utilising captive structures to manage municipal and national infrastructure exposures, including property portfolios and energy networks.

Organisations are also extending captive programmes beyond traditional property and casualty lines. Captives are being deployed to test emerging risks, manage climate-related exposures, support ESG-aligned strategies and enhance long-term capital planning.

While regulatory frameworks vary by jurisdiction, the report concludes that proportional oversight, competitive positioning among domiciles and expanding corporate engagement point to sustained global momentum in the captive sector.

The full 2026 GILC Captives Report is available here.