In the first of a two-part series (October and December), we speak to captive insurance stalwart, Callum Beaton about the Asian captive insurance industry.
Many large corporations have long used captives as an alternative to self-insurance to manage their insurance risks - more than 75% of Fortune 500 companies in the world own a captive today.
While the concept has been around for centuries, it has only gained its acceptance in the last two to three decades. Notwithstanding that, there is also growing interest for captives from the developing ASEAN economies rising in tandem with economic growth in the recent years.
There are only a few jurisdictions in the Asia Pacific region that offer captive as a type of risk management tool and Labuan International and Business Financial Centre (Labuan IBFC) is one of them.
In fact, there has been a steady growth for the take-up of captives and protected cell companies in the midshore jurisdiction over the years and this is precipitated by the increasing demand from Asian-based risks owners seeking cost-effective and flexible solutions, especially as their business matures and a cross-border risk profile emerges.
There are currently 41 captives established in Labuan IBFC as of August 2016, mainly from the Asia Pacific region, and as a key reinsurance centre, the jurisdiction is working towards ensuring continuous development in the area of risk management.
Specifically, in 2017 Labuan Financial Services Authority (Labuan FSA) is due to launch a Masterplan for Captives, which aims to further develop the offering of self-insurance vehicles available. In addition, Labuan IBFC along with the Labuan International Insurance Association will be jointly hosting Asia's first Captive Conference in 2017.
An area which is in need of constant enhancement is talent development and as such, Labuan FSA invited Mr Beaton to conduct a three-day workshop entitled, "Modern Insurance and Its Implications in the 21st Century".
It was on the side lines of this workshop that Insight Plus caught up with the industry veteran, and had the opportunity to speak to him about his thoughts and outlook for the future of captives in Asia.
IP: Can you share with us your thoughts on the general outlook and the growth of Captives in Asia? CB: Asia is regarded as the big growth area, most certainly dominated by developments from Hong Kong and China. Multiple (financial services and captive) jurisdictions are focusing their attention...