Captives offer flexible insurance and risk financing solutions for large industrial companies. A possible underwriting profit is equivalent to a return on the investments made in risk management and the improvement of risk quality.
As part of Solvency 2, the regulatory requirements for captive models were substantially expanded, particularly with regard to the availability and granularity of risk management information. This poses new challenges for today's captive owners and their fronting service providers. The required data can often only be made available with great manual effort.
Global fronting providers are therefore investing into the digitization of their global fronting network. New approaches such as "point-to-point connectivity" or "connected ecosystems" are aimed at automating the data flows across the fronting network and providing the captive owner with the necessary information consistently and in the desired granularity.
In addition to fulfilling regulatory requirements, the improved database offers the captive owner further decisive advantages. The operational effort in insurance management and internal and external reporting is substantially reduced. Moreover, there are strategic advantages in risk management, such as the exploitation of better conditions when placing in the reinsurance market.
Find out more about this topic in our recent publication with Paul Wöhrmann and Armin Schäfer from Zurich Insurance in the HSG Insurance Industry Trend Monitor.
Click here to read more (in German).