Asia captive market is steadily growing

Aon’s Asia Market Review 2017 has stated that Asia is witnessing an unprecedented level of sophistication within captive owners. The fourth edition of the annual report on Asian insurance and risk trends showed that the majority of captive owners hold gross line captives seeking to manage and control external risk transfer costs as well as group retention costs, taking a ‘total cost of insurance’ risk approach to their risk-related decision making. The report highlighted that the Asian captive market has continued to grow during 2016 with 71 captives active in Singapore, 40 in Labuan, 18 in Micronesia and 3 in Hong Kong. Aon found trends of captive clients writing traditional lines such as property and liability risks, however, the region has also seen an increase in clients seeking to write non-traditional lines such as cyber risk, employee benefits, trade credit and environmental liability. Although there are signs of positive growth, uncertainties around tax strategies and reputational impact are still holding the region back. In an effort to address this issue, the Monetary Authority of Singapore has recently introduced the Organisation for Economic Co-operation and Development’s (OECD) base erosion and profit shifting standards.