Industry experts gather to examine the rise of captives in Latin America, where their number has doubled over the past decade amid a hardened insurance market and growing emerging risks
Once seen as a solution reserved for multinational giants in North America and Europe, captive insurance is now reshaping how Latin American companies manage risk. Faced with rising insurance premiums, economic uncertainty, and increasingly complex exposures, businesses across the region are embracing self-insurance vehicles with unprecedented urgency and enthusiasm.
As commercial insurance becomes more costly and restrictive, captives offer a compelling alternative. They give companies more control over their risk, the ability to customise coverage to fit their specific needs, and a long-term framework for financial resilience.
Eduardo Fox, a consultant for private clients, trusts, and Latin America at Appleby Bermuda, pointed out during a panel at the 2025 World Captive Forum in Florida that Latin America is currently the fastest-growing region in the world when it comes to captive insurance.
He noted that the number of captives in the region has doubled — from around 80 to 100 in 2015 to more than 200 today. Of these, roughly a third are domiciled in Bermuda. Fox also clarified that this count refers specifically to pure captives, and does not include secondary structures such as segregated accounts.
More importantly, there is a greater awareness of what captives can offer. “It seems to me that the key factors that have contributed to the growth and expansion of captive insurance in Latin America are that more information about the world of captive insurance exists and is available,” says Mariame Vásquez, head of marketing at Mandarin Re.
“There are also statistics, and there are even captives with risk rating at origin, which was not the case before. This can be seen in the increase of captives in all jurisdictions in the region.”
From necessity to strategy
Historically, many Latin American firms viewed captive insurance with skepticism or confusion. For some, it was dismissed as a tax avoidance tool; for others, the regulatory burdens and structural complexity seemed prohibitive. That perception is rapidly changing.
Today, an increasing number of companies see captives not just as a cost-saving vehicle, but as a critical component of modern risk management.
“We are seeing heightened interest from industries with complex risk profiles and high insurance costs, such as energy, construction, financial services, and agriculture,” says Ruben A. Gely-Ortiz, president of International Insurer’s Consulting Group.
“Large multinational companies and regional conglomerates in these sectors are looking to captives as a way to manage unpredictable exposures while gaining cost efficiencies.”
That interest extends to emerging sectors as well. The rise of technology startups and fintech platforms in markets like Brazil, Chile, and Colombia has introduced new risks — cybersecurity breaches, intellectual property exposure, and data loss — that traditional insurers have been slow or reluctant to cover comprehensively.
“The rise of technology and fintech companies in Latin America is creating demand for captives to address emerging risks, such as cyber threats,” Gely-Ortiz notes.
Vásquez echoes this, adding that captive usage has diversified well beyond the traditional sectors.
“There are all kinds of industries and sectors in Latin America that already have their captive — banks and other financial institutions, the gambling industry, money transfer operators, insurance companies, reinsurance brokers, duty free shops, hospitals, hotels, the food industry, among others.”
The flexibility of captives in terms of the lines of business they can manage has made them especially attractive. “Commonly these companies reinsure their noble lines of business and the ones with no risks or the lowest risks,” she says, “but it will depend on each specific industry.”
If education and diversification were laying the foundation for captives in the region, Covid-19 was the accelerant. Vásquez observes that the pandemic marked a turning point in interest and uptake.
“Of course the use of captive insurance has evolved after the Covid-19 pandemic,” she says. “I witnessed that growth, and even the pandemic accelerated the decision of many clients to establish their captive company.
“There are tendencies to seek licensing in order to have the opportunity to reinsure all types of lines of business, even if they only use the most noble lines and noble risks.”
Gely-Ortiz agrees that external disruptions have played a role in catalysing growth. “Economic uncertainty, supply chain disruptions, and regulatory developments are driving companies to seek greater control over their insurance programmes.”
Fronting, regulation and reputational challenges
Despite this momentum, challenges remain — particularly around regulatory environments and fronting arrangements. While some Latin American jurisdictions are making progress, many still impose capital restrictions, foreign exchange controls, and tight reporting requirements that make domestic captive formation difficult.
“Some Latin American jurisdictions impose capital restrictions and reporting requirements that make it difficult to establish captives locally,” Gely-Ortiz notes, explaining why many firms seek out more accommodating domiciles such as Bermuda, Cayman, or Puerto Rico.
Vásquez adds that fronting requirements — especially when reinsuring third-party business — are not uniform and can pose specific challenges depending on the risk profile. “The availability of fronting services for a captive depends on the risk it reinsures,” she says. “The fronting partner may be asking them for different tools that protect the partners' capital and that in turn they comply with what the regulators require from the fronting partner.”
Still, both experts agree that these hurdles can be overcome with proper planning and strong compliance. Vásquez advises companies to mitigate reputational and regulatory risk by sticking to well-regulated jurisdictions.
“The strategies I recommend to companies to mitigate these reputational and compliance risks while benefiting from captive arrangements is to keep your captives in offshore jurisdictions that implement the Organization for Economic Cooperation and Development (OECD) regulations and recommendations.”
“Have your corporate office keep you updated on regulatory news and laws in that jurisdiction and prepare your captive with all compliance issues,” she adds.
Moreover, Vásquez sees regulatory changes in a positive light, rather than as impediments. “From my perspective, these regulatory changes are for the benefit of the establishment and operation of captives in the Latin American region, because they have strengthened due diligence processes, corporate governance, and improved operational efficiency.”
Puerto Rico on the rise
Amid growing regulatory complexity across Latin America, Puerto Rico has emerged as a standout domicile for captive insurance, particularly for companies seeking both proximity and regulatory alignment with the US. Once overlooked in favour of longer-established hubs like Bermuda or Cayman, the island is now gaining ground thanks to its unique combination of legal compatibility, fiscal incentives, and cultural accessibility.
“Puerto Rico is uniquely positioned as a bridge between Latin America and the US insurance market,” explains Gely-Ortiz. “It offers a well-established legal and regulatory environment, access to US financial markets, and the ability to write policies in both Spanish and English.”
For many Latin American businesses, that bicultural and bilingual capability is more than a convenience; it is a competitive advantage. The island provides a familiar cultural context while also granting access to the sophistication and reach of the US financial system.
As a US territory, Puerto Rico operates under a regulatory framework aligned with US insurance standards and is a member of the National Association of Insurance Commissioners (NAIC), reinforcing its credibility among international reinsurers, brokers, and regulatory bodies.
Puerto Rico’s tax regime also adds to its appeal. Under Act 60, the Puerto Rico Incentives Code, international insurers benefit from a four per cent corporate tax rate on net income over US$1.2 million. They also receive 100 per cent exemptions on dividends, profit distributions, and branch profit taxes.
These fiscal advantages are specifically designed to attract insurance activity and provide companies with a tax-efficient structure that complies with US regulations. This is particularly attractive to Latin American firms looking to expand their international presence.
Puerto Rico has also built out a supportive ecosystem of experienced captive managers, reinsurers, legal advisors, and auditors who are familiar with Latin American regulatory expectations and market dynamics. This local infrastructure helps new captives navigate onboarding, reporting, and ongoing compliance in a way that feels both professional and accessible.
This intentional development has paid off. Today, Puerto Rico is home to more than 400 captive insurance companies, with annual written premiums exceeding US$11 billion. The island now ranks among the top captive domiciles serving the Latin American market and is increasingly preferred by regional companies aiming to avoid the regulatory hurdles and reputational risks often associated with more distant offshore jurisdictions.
But how does Puerto Rico compare to other Latin American jurisdictions where captives are also growing?
Mexico and Brazil, Latin America’s two largest economies, have taken steps in recent years to explore and develop captive insurance frameworks, although their regulatory environments remain relatively complex.
In Mexico, regulatory requirements such as detailed reporting obligations and foreign exchange controls can add layers of administrative consideration for companies utilising foreign captives. Transactions involving jurisdictions with low or preferential tax regimes are subject to close scrutiny by tax authorities, and deductions for premiums paid offshore typically require clear documentation of business purpose and risk transfer.
Similarly, in Brazil, there is growing interest in alternative risk financing, including the use of captives. However, the regulatory environment still presents challenges. Capitalisation standards for insurers are relatively high, and the approval process for using foreign reinsurers, including captives, follows specific procedural requirements.
Compared with these jurisdictions, Puerto Rico offers a more transparent and flexible operating environment. The regulatory requirements are rigorous but clearly defined. Tax incentives are well established. Perhaps most importantly, the local expertise and bilingual environment help reduce friction for Latin American businesses navigating cross-border transactions.
“Puerto Rico offers several advantages, including competitive tax structures for captives,” says Gely-Ortiz. “The domicile allows for tax-efficient structures that can benefit Latin American companies seeking risk financing solutions while maintaining compliance with US financial regulations.”
What’s next for captives?
Education remains a critical piece of the puzzle, especially as the industry expands. Vásquez believes that more structured, Spanish-language training is needed to help local professionals engage with captives effectively.
“Captive insurance education continues to be through oral transmission of knowledge, although there are more and more programmes in English-speaking countries,” she says. “I encourage those experts in the Latin American market to write books about their experiences in this market. That is what I am doing, to give more people the opportunity to specialise in this business.”
Meanwhile, digital transformation continues to reshape the landscape. Gely-Ortiz points out that innovations such as AI, blockchain, and predictive analytics are improving risk modelling, streamlining claims, and opening the door to new forms of insurance. Parametric products for climate and agricultural risks, for example, are now feasible through captives.
Considering the evolving economic and regulatory environment, Vásquez believes the outlook for captives in the region is strong. “I believe that there is a bright future for captive insurance in Latin America,” she says. “This has been the trend in recent years, and we have witnessed this continuous development and growth. For sure, this trend will continue.”
As regulations evolve and companies become more familiar with the structures and benefits, the use of captives is not just expected to increase; it is expected to mature. “There are opportunities to follow the new standards,” Vásquez adds.
“And there are also challenges, such as ensuring that people are willing to study and understand more about the captive business, setting aside myths, and recognising that this industry is very well regulated and increasingly structured, even evaluated much like the traditional reinsurance industry today.”
Ultimately, captive insurance remains what it has always been: a trust-based business. “With the expertise I have in the captive business, that will always be a possibility,” Vásquez says. “It is a 100 percent trust-based business, and the clients are always keeping it on the radar and referring new prospects.”
While Latin America was slower to embrace captive insurance compared to other regions, it has steadily shifted from being a novelty to becoming a strategic part of the region’s approach to managing risk.
According to industry experts, this renewed wave of interest is only just beginning — and it may soon redefine how Latin American businesses navigate risk amid a more volatile global landscape.
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