UK companies are increasingly considering captive formation, driven by a desire to implement sophisticated risk management regimes and address the total cost of risk, according to a major benchmarking report released today by Marsh.
The report provides evidence that many companies are enjoying a range of benefits to their risk and insurance programme from forming a captive.
It also shows that the number of captives owned by a UK parent continues to increase. Traditionally, their formation has been in response to hardening insurance rates. However, captives are increasingly fulfilling broader strategic risk management aims.
Jonathan Groves, head of captive consulting at Marsh, said: “The increasing ability of captives to write specialist risks, as well as traditional casualty and property lines, means that captives now have a closer fit with organisations' unique risk profiles and requirements.
“The report shows that many companies are already benefiting, both strategically and financially, from operating a captive. It is important for companies to review their captive arrangements regularly in order to take a more effective and efficient approach to managing their risks.”
The report also examines the use of captives by industry identifying the financial services, manufacturing and service supply industries as the three sectors owning the most number of captives.
The report also examines where UK companies are choosing to locate their captives. Groves said: “The increased benefits and proximity to the UK of offshore domiciles, such as Guernsey and the Isle of Man, have detracted from formations in Bermuda; we believe this trend will continue. We also expect Malta to increase its number of captive formations as it benefits from its membership of the European Union.”
