Katoen Natie survived the pandemic by securing NDBI cover through its captive – something thought to be a near-impossible task. Chief risk officer Carl Leeman explains how he did it, and why he won’t stop pushing to test his captive’s potential.

We were able to weather the storm through COVID-19 because the business losses linked to the global pandemic – including non-physical damage business interruption (NDBI) and financial loss – were insured entirely by our captive.

This was a huge relief at the time and remains so today, particularly in light of the continuing global impact: the number of dissolved businesses; the crippling financial loss and lengthy recovery period; and the numerous lawsuits brought on by policyholders against their insurers over NDBI losses.

business opportunity, covid

Our long-term safeguards against the pandemic were made possible because we were successful in adding NDBI coverage to our captive insurance programme, but also because a pandemic as such was not excluded from our CBI policies.

This was no easy task.

In insurance terms, NDBI is challenging to quantify compared to traditional business interruption. The latter is usually triggered by some form of physical damage - fire or flooding to a building - where losses are tangible and possible to calculate.

“Our long-term safeguards against the pandemic were made possible because we were successful in adding NDBI coverage to our captive insurance programme”

But measuring losses owing to forced closure of physical premises because of a global pandemic is, perhaps, near impossible. A global pandemic - with its chain reaction on international business – is rare and there will be limited data on which to make loss severity and business impact calculations.

And if you can find cover, the capacities available on the traditional market will likely be inadequate.

So how did we make pandemic-related NDBI coverage possible through our captive?


First, we needed to find a fronting insurer. For all the reasons listed above, this was the most complicated step - even though the risk(s) would be 100% reinsured by our captive. That is, the fronting insurer will retain none of the risk.

Nonetheless, we had to build a business case and convince a fronting insurer - a battle that took me more than a year. We focused our business case on insurers with whom we have current policies and a long-term relationship. And we leveraged our legacy partnership as a selling point.

Our business case also honed in on the following benefits:

  • NDBI would be part of a global package of risks under our captive portfolio - business that we currently have with our preferred fronting insurer and of which part of the risk does stay with the fronting insurer.
  • Demonstrable history that we are reliable ‘risk takers’ in that we will participate in retaining some of the risks ourselves - and this is backed by a robust legacy risk management framework and process, which puts insurers at ease.
  • There is the potential of combining coverages on the traditional market with coverages in the captive - an attractive proposition for insurers.
  • NDBI risks will be shared with other policies under our captive portfolio, such as financial loss - enabling us to diversify the share of risk.

The last point is an important one to emphasise because it was a vital step in achieving as full a coverage as possible against non-damage pandemic-related risks, without placing 100% of the financial pressure on one line of coverage.

And, crucially, from our exposure of more localised pandemics in the past, like the SARS outbreak across south-east Asia in 2002-2004, we made sure there were no pandemic-related clauses in relevant insurance contacts.


Capacity was another consideration. We had to set our sights on realistic goals.

Our first aim was to obtain NDBI coverage in our captive albeit with limited capacity. Once we achieved this, we then enacted a strategy for year-on-year growth - a plan that I devised some 12 years ago when we first set up our captive.

The basic principle s are to grow the amount insured as the captive matures. In other words, we worked on increasing our reserves so we could take on more risks with certain policies.This helped strengthen our NDBI capacity over the years.

Today we have 12 lines of business in our captive insurance portfolio, which is above the average two to four lines that most captives carry. This is testament to the strength of our captives - we have a solid risk transfer mechanism that reliably pays out claims.


This puts me in the advantageous position to look for new and opportunities for our captive - to stretch its potential.

For the most part, we’ve been using our captive as an alternative risk transfer vehicle to provide our business with insurance where the traditional market can’t or lacks the capacity.

“I hold insurers to the same standards that I would hold for myself. And that is to push the envelope on risk innovation as far as we possibly can.”

In this way, I’m working towards adding ESG risks to our captive portfolio, which is currently tricky for the traditional market to offer. We are also looking at involving our captive in our expat medical expense coverage.

This is the most interesting part of running a captive - or managing any risks for that matter - is creating new opportunities. And I expect the same from insurers.

For example, I sit on a working group to find insurers that could create coverage for more complex risks such as NDBI. I hold insurers to the same standards that I would hold for myself. And that is to push the envelope on risk innovation as far as we possibly can.