According to analysts at international insurance law firm, DAC Beachcroft, proposals to develop a UK captive market are expected to progress further in 2025.
Analysts noted that the new UK Labour government has signalled that it could be receptive to establishing a UK-domiciled captive regime.
“The London Market Group (LMG), with the backing of brokers, captive managers, insurers and AIRMIC, is calling for a consultation over the coming months to advance a framework to establish London as a leading captive centre, attracting international business and promoting growth,” analysts explained.
They went on to state that London’s expertise in insurance also creates a “trusted and stable environment” for new captive formations by UK companies and non-UK multinationals, as well as a skilled workforce, provided that the fiscal and regulatory conditions are favourable and competitive.
Analysts also highlighted how France has witnessed substantial growth in its captive market in recent years, meaning that the UK needs to act swiftly if it wants to avoid being left behind.
Switching attention over to COVID-19, DAC Beachcroft expects claims to progress to reinsurance markets in 2025.
“As the litigated claims for COVID-19 related business interruption losses complete their journeys through the Commercial Court and the appellate courts during 2025, insurers’ attention will naturally switch to their own outwards reinsurance recoveries.”
However, analysts noted, that as losses clear up, an increasing flow of claims into the reinsurance and retrocessional markets will see a spotlight fall on claims presentations to excess of loss catastrophe contracts.
Moving forward, analysts are also anticipating for reinsurers’ focus on Russia and Ukraine related aircraft leasing losses to intensify heading into 2025.
According to the firm, reinsurers and retrocessionaires will spend 2025 with an intensified focus on monitoring and engaging with the issues emerging from the litigated claims regarding Russia & Ukraine related aircraft leasing losses which have considerably dominated the aviation/specialty insurance market since the conflict began in February 2022.
“The long awaited ‘mega trial’ in the Lessor Policy claims, listed for 11.5 weeks in the Commercial Court from 2 October 2024, and the operator policy claims following some time thereafter are proving to be increasingly absorbing for reinsurers and retrocessionaires,” analysts added.
Concluding: “The gradual resolution of the underlying claims, whether through settlement or judgment, should provide increased clarity as to potential ultimate exposures and the many and labyrinthine routes through the retro market by which those exposures will reach reinsurers/retrocessionaires.”
