Subscribe now & get informed!
Browse by Categories
News Details
* Report shows growth potential for captive insuranceThe Global 1500 Captives Report, published by Aon Global Risk Consulting, revealed that a perceived slow-down in captive insurance company formations globally is unfounded. The study looked at captive insurance operations of the top 1,500 global companies.
According to Mark Salmon, general manager of Aon Insurance Managers in Malta, the report indicates that even in well developed locations such as the United Kingdom or Sweden, the take-up rate is still below 80 per cent and there is a great deal of scope for new formations from other locations such as Italy, China and Japan. Overall, only 53 per cent of companies surveyed currently utilise captive insurance facilities as part of an overall group risk financing strategy.
Whilst growth in captive set-ups is not at the level experienced in the late 1990's, the report revealed that is far from "slow".
"The growth figures for recent years are potentially somewhat suppressed given the high level of global acquisitions and mergers and use of other risk financing structures such as third party owned Protected Cell facilities" Mr Salmon explained.
"The report shows that growth in the captive market is not slowing down - there is still a long way to go before companies are truly managing risk effectively. The message to some specific sectors, such as financial services, communications and retail trade is clear: You are missing out on significant cost savings by not using captives as part of your risk management programme. The captive market is set to grow further. Global 1500 companies currently have 1,061 captives. As benefits of captives become clear, I believe that this figure will rise to at least 1,200 by the year 2010." Since joining the EU in 2004, Malta has attracted 15 international insurance operations broadly split into one-third pure captives (writing group-related risks only) and two thirds writing varying degrees of third-party business.
"Key aspects that make Malta an attractive domicile include the robust and well respected regulatory framework, the comprehensive network of double taxation agreements and the ability to write business across Europe under the EU Freedom of Services rights" Mr Salmon said.
The report states that: "Out of 140 captives domiciled in the established direct writing locations in Europe, such as Malta, 50 are owned by companies outside the single market, highlighting that many may be taking advantage of EU passporting opportunities". Mr Salmon feels that these findings are significant: "In this world of globalisation and increasing fronting costs we are seeing non-EU parented multinational firms reconsider their insurance structuring for the European part of their operations as writing the risks directly via an EU based subsidiary can be an attractive and cost effective proposition".