Guest Perspective
By Kevin Cunningham Risk Financing, Part 1 of 3
Alternative Risk Financing
Solutions to Current Challenges With Traditional Insurance
Editor’ s Note: This is the first edition in a three-part series for Crane Hot Line 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.
Global growth in usage of catives
10,000
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 Crane Hot Line is being provided to accomplish that objective.
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.
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1985 Source: Captive Review
1990 1995 2000 2005 2010 2015 2020 2025
Captive Insurance Market Growth
• Captive growth continues today, accelerated by increased innovations in risk mitigation solutions including data, software and artificial intelligence.
• There are more than 6,000 active captives today, including more than 2,000 captive cells.
• Between 2019 and 2023 the global captive market increased 24.8 % as an offset to deteriorating traditional insurance market conditions.
• The global market for captive insurance surpassed $ 200 billion in premiums in 2023.
• Demand remains strong for captive solutions with noticeable increases lately due to persistent traditional market condition challenges.
• Increased demand for“ unbundled risk services” allowed in captive insurance structures is also driving growing interest in captives.
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February 2025 • www. cranehotline. com