Risk management in the form of self-insurance or captives in on the rise, with four new captive insurers registered in the Labuan International Business and Financial Centre (IBFC) in Malaysia during the first half of 2019, making it the fastest growing captive domicile in Asia and bringing the total number of captives to 51.
Labuan's captive insurance business has increased 12.8% to $288m in gross written premiums in June 2019, compared with $255m in the same period last year.
Danial Mah, director general of Labuan Financial Services Association (Labuan FSA), said that captives remain a "vital business segment" in Labuan IBFC, being the "leading jurisdiction in Asia for captive formations compared to other jurisdictions in the region such as Singapore and Hong Kong".
Asia in particular has shown tremendous potential for growth in captives over the coming years"
Mah was speaking at the launch of the Labuan International Business and Financial Centre (Labuan IBFC) and Swiss Re Corporate Solutions's conference held on August 07 in Kuala Lumpur.
"Asia in particular has shown tremendous potential for growth in captives over the coming years. The July 2019 AM Best's Captive Market Report stated that the rating agency expects to see significant growth in the Asia-Pacific domiciles for captives, including Labuan IBFC."
Mah added that having four new captives join in the first half of 2019 is significant, as it is already two-thirds of the way to matching 2018, when six new captives registered in Labuan IBFC.
He attributes the steady growth momentum of Labuan captives to the growing awareness around the benefits of captives in Asia. Other reasons include changes in the international tax landscape, which have prompted companies looking for alternative jurisdictions to re-domicile their captives to ensure tax compliance, which requires amongst others for captives to have substantive presence in domiciles from which they operate.
Andre Martin, Head of Innovative Risk Solutions APAC, Swiss Re Corporate Solutions added it was great to share more on the benefits captives can bring to organisations as a comprehensive risk financing strategy.
"Today we see a rise in demand for captive insurance across the region including Malaysia and expect this to increase as the risk management function advances and the corporate landscape evolves," he said.
"We look forward to continue working with customers to provide solutions in the captive space and are encouraged by the interest in alternative risk transfer solutions from this event."
As a whole Labuan IBFC's insurance sector registered strong growth in 2018 with total gross written premiums posting a significant increase to $1.7bn, rising 19.1% from the previous year, of which foreign insurance business accounted for 64.7% of the total premiums underwritten.