The survey—consisting of 67 percent single-parent captives, 15 percent risk retention groups, 9 percent segregated-cell captives and 9 percent association captives—found that 20 percent of respondents listed policyholder retention as their top concern. Fifteen percent said expanded utilization, and 12 percent said collateral.

Michael Mead, president of M.R. Mead Company, Inc., pointed out that in previous surveys fronting was a big concern.

“The industry is evolving,” he told NU Online News Service. “The soft market has a lot to do with it, also an evolution that many carriers are accepting captives as a real business.”

He pointed out that Tillinghast has said captives comprise more than half of the insurance market.

Patricia Villarreal, director-risk management, Starwood Hotels & Resorts Worldwide, Inc., a member of a panel discussion, agreed the soft commercial market plays a role, “Every year [captive members] are weighing the benefits of a captive versus risk transfer,” she said.

The survey looked at captives’ use of fronting carriers. Eighty-four percent of respondents listed admitted paper as one of their primary reasons for using a fronting carrier. The next highest reason was regulatory compliance at 49 percent.

A captive often must secure a licensed primary insurance company to serve as its "front" in a certain state, which issues a policy and then reinsures the vast majority of that exposure with the captive.

Respondents reported using the following fronting carriers for property and casualty coverage:

• Chartis/Lexington (27 percent)
• ACE (18 percent).
• Zurich (16 percent).
• Liberty Mutual and Old Republic (10 percent)

Other findings:

• 63 percent said the price of fronting is “reasonable,” with 20 percent characterizing the price as “expensive.”
• 55 percent said the value of their fronting relationship is “excellent,” while the other 45 percent listed it as “moderate.” Zero-percent rated the relationship as low.
• 63 percent of respondents reported no change in the cost of fronting from the prior year, while 25 percent reported an increase in costs of less than 5 percent and 6 percent reported a decrease in costs.
• 84 percent of respondents reported that collateral was required, compared to 93 percent the previous year

When asked what kind of collateral was required, letters of credit were named by 63 percent of respondents, trust accounts by 42 percent of respondents, cash by 27 percent of respondents, and parental guarantee by 5 percent.