Use of captive surging, reports Aon
Captives remain an important risk management tool for businesses, despite an easing of market conditions, according to Aon, in its Q2 2021 Global Market Insights report.
In Latin America the market is starting to plateau for some lines of business, Aon noted, even if the environment remains challenging overall. “Rate increases and policy restrictions continue to be imposed, but with less intensity,” it said.
However, Aon highlighted a number of areas where the market remains very challenging in Latin America, where alternative risk transfer methods, including captives, remain important tools for managing risk. These include energy, power, directors’ and officers’ (D&O) and cyber, as well as loss active and poorly managed risks.
In Europe, the Middle East and Africa (EMEA), Aon also pointed to an overall deceleration of premium increases, though here too D&O liability, professional indemnity, cyber and large, CAT-driven property placements, remain challenging. Aon also highlighted contingent business interruption exposures and risks in the food, energy and waste processing industries as exceptions to the deceleration trend.
In North America, however, Aon emphasised the broader deceleration of rate increases, highlighting signs of equilibrium, with the D&O index nearly back to its 2003 state. In North America, Aon said, traditional broking has become more innovative and symbiotic, which is leading to increased captive insurance activity.
“Experts are collaborating across risk, consulting, actuarial, reinsurance, health, retirement, investments, etc,” Aon said. This is supporting “risk assessment and quantification, risk financing decisions, captive feasibility evaluation, exploration of alternative capital, and other out-of-the-box options and solutions,” it added.