In a recent article published by Captive International, Sol Feinberg and Enoch Starnes discuss how the captive insurance space serves as an enticing option for entities faced with emerging or complex risks which often have limited amounts of historical data points. While this presents obstacles for actuarial analytics using traditional methods, it doesn’t mean actuarial techniques are impossible to use. Creative approaches with regard to research and analytics may offer solutions for covering risks in the absence of an extensive history of unique losses or even industry losses. This article addresses how such a challenge may be approached from an actuarial perspective and contrasts the approach with more common actuarial methods.

Captives have historically been sought as a solution to address risks that have never been addressed (or potentially not been seen) before. While this may present the types of obstacles or complexities outlined in this article, it also offers an opportunity to broaden the capabilities presented in the captive insurance landscape. Complex risks may require new approaches, and new approaches almost always lead to a stronger industry.

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