THE REINSURANCE MARKET
A GROWTH STORY
If you don’t have an alternative risk transfer program in place, you may soon be in the minority. Insurance industry trends indicate that most middle market businesses will implement an alternative risk transfer strategy over the next few years. In fact, 92% of Fortune 500s use some form of reinsurance.
Self insurance dates back to the 1600s and became a strategic business strategy in the 1900s surrounding the Industrial Revolution. Significant reinsurance platforms were formed in Bermuda in the early 1960’s, and then formalized in the late 1970’s with a medical malpractice insurance structure for Harvard University. In 1986, President Ronald Reagan/Congress passed formal legislation into law.
In recent years, the growth of reinsurance and related risk transfer mechanism has boomed driven by businesses seeking to better manage insurance dynamics including risk mitigation, premium cost, cash flow, claims, asset protection, service and capacity.
According to data from S&P, the 2023 US reinsurance market was valued at $198.23 billion. It's expected to grow to $630.10 billion by 2034, with a compound annual growth rate (CAGR) of 11.09% from 2024 to 2034.
EXPANSION TO
MIDDLE MARKET
Today, this popular risk mitigation platform is used by Fortune 500 companies to capture insurance premiums and underwriting profits. With reinsurance, large organizations can insured general liability, worker's compensation, auto and property insurance. These structures soon become a profit center for the entire organization.
Until 2001, IRS regulations largely restricted middle market businesses from using reinsurance. However, in 2001, 2002 and 2005, the IRS issued guidelines that provided “safe harbors” for middle market companies. These new rulings have opened the door to many third-party insurance companies being operated in all 50 states.
In alignment with President Ronald Reagan's vision to serve small to mid cap American businesses, reinsurance has become a strategic and practical risk management tool surrounding risk mitigation, asset protection and cash flow management.
“My reinsurance company gives me better control of mitigating company risks while building premium in my PORC structure. This has been an excellent business decision” — Tara K.
“I want to thank you for the gift of communicating the benefits of a reinsurance company...it has allowed me to react to the Coronavirus crisis from a place of compassion and not out of self preservation”— Andy M., DDS
What Business Leaders Say...
