The captive insurance market continues to dominate the insurance market of the Federated States of Micronesia (FSM) in terms of the number of domestically licensed insurers, volume of insurance business and contribution to FSM's local and national economies.

FSM-domiciled captive insurance companies are currently owned exclusively by large, profitable Japanese companies, approximately 60% of which are listed on major stock exchanges in Japan, the United States and other established markets.

Since the enactment of FSM's captive insurance law in 2006, 27 captive insurance licenses have been issued through 2018, and 2 licenses were voluntarily terminated in 2018, bringing the total number of actively licensed captives at the end of 2018 to 25. These terminations resulted from changes in the risk financing strategies of the captives’ parent companies. The decline in net licenses issued in 2018 is consistent with
trends in other captive insurance jurisdictions and is generally attributable to intensified competition among a growing number of captive domiciles, as well as changes in captive owners' tax and/or operating environments that reduce the efficiency of using a captive insurance program.

The table below presents the number of captive licenses in FSM from 2009 to 2018.

Owners of FSM-licensed captive insurance companies operate across a diverse range of domestic and international markets and industries, including but not limited to the following:

• Trade and Commerce
  

• Financial Services
  

• Real Estate and Construction
  

• Manufacturing
  

• Transportation
  

• Information Technology and Communications

FSM is a country in the western Pacific Ocean composed of more than 600 islands. The total ocean area within the perimeter of the islands is 7,400,000 km².

The top 3 industries in FSM are agriculture and fisheries, finance and tourism. Subsistence farming engages half of the adult population. Of the adults working in the cash economy, more than half are employed in the public sector, earning 58% of total national wages.

Although the FSM captive industry was only permitted by law from 2006, with the first captive established in 2009, its captive market has grown rapidly in the Asia-Pacific region. Since then, new captives have been established every year, making FSM one of the top 3 captive domiciles in the Asia-Pacific region.

By the end of 2017, premiums of Micronesian captives reached USD 152 million, registered capital stood at USD 253 million and total assets amounted to USD 370 million.