During the 1700s and 1800s, the earlier forms of captives were mutual insurers, formed together by firms from a particular industry that shared similar exposures. Today, mutual models are still very much alive. Their contributions to global premiums have risen in recent years after years of decline, and they include captives set up as mutuals. The takaful industry is also thriving and poised to continue growing, in large part driven by growth in Asia. The overlapping markets of the mutual, captive and takaful industries, is likely to provide an important impetus for the wider use of group captives among mid-sized and smaller companies. This region is especially well-placed to harness this potential, given the vibrance of SMEs and fast growing takaful market. Southeast Asia alone contributes almost 30% to global takaful contributions, and this offers an opportunity, as Malaysia has long sought to develop a facilitative regulatory environment to drive an innovative, competitive and sustainable growth of Islamic finance. Second, technology will be a key driver and opportunity for new captive models. Technological advancements are already driving the growth of captive insurance business due to the new risks that businesses face. As an industry founded in response to an inflexible insurance market, the history of captives is very much intertwined with innovation. The first captive can itself be seen as a disruption to the market! Captives can be expected to leverage on new technologies to modernise legacy processes and systems, strengthen risk management capabilities and capture efficiency gains.

The 2017 Allianz Risk Barometer, which covers mainly large corporates, as well as a 2016 Zurich study on SMEs revealed that cyber risk is topmost on businesses’ minds. The same study showed that, in Asia Pacific, there are now twice as many SMEs that worry about cybercrime, fire, technological vulnerabilities, health and safety of customers or employees, and corruption compared to four years ago. Yet, in terms of preparedness for dealing with risk events, there is a marked disparity between 1/4  BIS central bankers' speeches  large corporates, and mid-sized and smaller companies. Predictably, larger companies are the ones that tend to have a structured risk mechanism in place, as well as the resources and expertise to deploy risk management tools. Larger companies also tend to have better access to specialist insurance products and the resources to establish a captive. Indeed, 90% of Fortune 1000 companies have a captive insurance company. Smaller and mid-sized companies are a different story. Most do not consider captives as a feasible risk management option. However, this is changing with innovations in captive models, such as group and rental captives and protected cell companies. It is not only possible for smaller companies to engage captives. A more compelling business case is emerging for the use of captives as small and mid-sized businesses evolve. Some of the most significant small business trends in the 21st century include disaggregated business networks, shorter cycles of proprietary knowledge, and rising entrepreneurship powered by a younger digital generation. Take for example, high-growth tech startups.