The clamour to set up captives as an alternative risk management vehicle is driven by a considered long-term strategy, not market volatility and hard markets, according to research from Aon. The conclusion is one of many that were drawn from Aon's report, entitled "Global 500: The Captive Picture". The report analysed the use of captives among the top 500 global companies.
Many commentators have argued that events such as 9/11, which usually give rise to hard markets, triggered companies to establish captives. They were thought to have managed risks in this way to avoid paying the post-event premium hikes that insurers were charging and also to ensure that they could gain cover for risks where coverage was simply not available. Experts from Aon's captives division told journalists yesterday that the findings from the report also revealed that there were significant untapped opportunities.
Stephen Cross, chief executive at Aon Captives Services Group, said that the examination of
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