SOUTHAMPTON, Bermuda — Growth in the captive insurance market and new uses for captive insurers will be driven more by the risk financing needs and risk management sophistication of captive parents than the promotional efforts of domicile officials.

Among the risks likely to play a bigger part in captive programs in the years ahead are cyber risks, supply chain exposures and employee wage-and-hour claims, while growing risk management sophistication in areas such as Latin America and the Far East may be the source of new captives for domiciles such as Bermuda, captive experts said.

“The impetus for the new ideas, the new markets has got to come from the private sector,” said Everard T. Richards, Bermuda's minister of finance.

Among those speaking at the annual Bermuda Captive Conference last week in Southampton, Bermuda, Mr. Richards said companies from the Far East are an area of potential growth for the domicile.

“Our penetration of that market is in its infancy,” he said.

Shelby Weldon, director of insurance licensing and authorization for the Bermuda Monetary Authority, said many of Bermuda's new captive formations are coming from Latin America, including 30% of the domicile's 24 new captives in 2013. “I see that momentum continuing throughout 2014,” he said.

William Montanez, president of the Bermuda Captive Owners Association, said he had expected captive growth to come from those areas of the world where risk management is increasing in sophistication.

As companies come to better understand their cyber exposures, that risk is likely to find its way into more captive programs, according to several speakers at the Bermuda conference. While few captives are now covering cyber risks, that should change in the years ahead, some speakers said.

“I think we will see more writing it (cyber risk coverage) going forward,” said Robert Geraghty, vice president and head of business development at Marsh IAS Management Services Bermuda Ltd. in Hamilton, Bermuda. “But I think we have to understand it more. I think you have to understand the risk and how it's going to affect your company.”

“We've got about a dozen companies writing cyber right now,” said Peter Mullen, CEO of captive and insurance management at Aon Global Risk Consulting in Pembroke, Bermuda. “Lots of people are talking about it. But we still haven't really seen captives step up and do something innovative and different.”

Cyber risk remains difficult to quantify, Mr. Mullen said. “Those that are writing cyber in captives are following what the market is doing” thus far, rather than using their captives to fill gaps in the cyber coverages available in the traditional market.

Mr. Geraghty said he expects to see companies initially using their captives to fund the deductibles in their traditional market cyber policies, then eventually place more cyber risk in the captive as they better understand the exposure.

“Cyber liability is big. That's something you have to think about in your captive,” said Jeffrey Driver, chief risk officer of Stanford University Medical Center and executive vice president of Stanford University Medical Indemnity & Trust Insurance Co. in Palo Alto, California.

That said, “We intentionally keep cyber out of our captive,” Mr. Driver said, adding that Stanford avoids placing any exposure considered “too wild and uncertain” in its captive program. But, he said, “There will come a time when it makes sense to put this in your captive and we will probably go there.”

Carolyn Snow, president of the Risk & Insurance Management Society Inc. and director of risk management for Louisville, Kentucky-based Humana Inc., also wondered whether there would be more organizations placing cyber risks in captives.

“If I were going to do cyber (in a captive), I would personally take it very slowly,” she said.

Mr. Geraghty said supply chain exposures are another area in which captives are becoming involved.

“I think supply chain is a risk that has evolved over time,” he said. “What we see is the evolution of nondamage business interruption. What we're seeing with captives is, slowly, they're starting to look at that market.”

Another growing area is coverage for employee wage-and-hour claims, he said. Those claims are growing in number but generally are excluded from traditional market employment-practices liability policies, he said, though stand-alone coverage is available.

“They can use the captive to prefund and insure themselves, or they can look to the market, or they can do a mixture of both,” Mr. Geraghty said. “It's all about making sure you're covered for the risk.”

With the debate continuing over renewal of the U.S. Terrorism Risk Insurance Act, “formation of new captives to access TRIA has probably stalled,” Mr. Mullen said. “We expect to see an uptick” if TRIA is renewed, he said, although the industry doesn't see “many captives formed outside of the United States just to write terrorism.”

This year's Bermuda Captive Conference drew more than 800 attendees June 2-4 to Bermuda's Fairmont Southampton Resort. Next year's Bermuda Captive Conference will be held June 8-10, 2015, at the Fairmont Southampton Resort. For information on the 2015 conference, go to www.bermudacaptive.bm.