Commercial insurance rate increases are expected to drive an uptick in new captive formations and greater utilisation of existing captives in Europe, according to a new AM Best report.

The Best’s Market Segment Report, “Europe’s Captive Segment Poised for Growth Amid Hardening Insurance Conditions,” notes that tougher renewal discussions with commercial insurers and challenging economic conditions provide the ideal environment for corporates to look at how they might optimise their risk transfer programmes. This is expected to contribute to an expansion of business volumes for the captive industry, according to AM Best.

The report also notes that the strong capital buffers of the European captives AM Best rates have been tested by the pandemic and have proven resilient. In addition, the report looks at regulatory developments and assesses the growing importance of environmental, social and governance (ESG) considerations for captive owners.

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