Captive numbers swell, with market topping $50bn
More companies than ever before are turning away from traditional insurance methods in favour of setting up a captive insurer, Aon Captive Services Group (ACSG) claimed.
According to Aon's latest captive domiciles map, the boom in the captive market has failed to level off. In the past five years more domiciles have enacted captive legislation than ever before.
Globally captive numbers have swollen from 4,125 in 2002 to 4,735 in 2004. Premium growth has also been "significant", with the global market estimated to be worth more than $50bn (£27.7bn).
According to Aon, captive numbers and premium volumes have reached their highest point in history.
Aon Captive Services chief executive Stephen Cross said the market growth had been driven by the soft market. "In a soft market captive numbers increase," he said.
There are, however, several factors contributing to the rise in captives highlighting significant changes in the market place, according to Aon.
Cross said companies looking for cover in conventional London market lines, such as marine or aviation, tended to show a preference for a captive after a catastrophic event.
"These companies will use a captive more if there is less capital available," Cross said.
In addition, companies are taking a more active approach to risk management.
"Focus on risk management has definitely strengthened," Cross said. "Captives are attractive because they mitigate the opportunity for the risk to occur."
Captive growth areas
According to Aon, the US has seen the largest growth in the captive market.
Aon Captive Services chief executive Stephen Cross said Arizona, Vermont and South Carolina were particularly active in 2005.
Gibraltar has also shown "significant" growth, he added.
Aon named Liechtenstein as the area to watch over the next 12 months in terms of growth.
