Top companies not using captives to full potential

Contrary to popular belief, the captive market remains underdeveloped and more than half of the world’s top 1,500 companies (G1500) do not currently own a captive, according to research by Aon Global Risk Consulting.
This means that insurance buyers within the worlds largest companies are failing to achieve a better quality of cover as well as cost savings of typically 10-15%, through economies of scale, efficient use of capital, leverage and more efficient use of senior management time, Aon reported in its report, Global 1500 : A Captive Insight 2007.
The report notes markets such as Asia have traditionally not been extensive captive users (only 14% of Japanese G1500 companies have a captive), but even in more mature markets such as the United States, captive ownership by G1500 is running at only 42%
Certain industry sectors could also make greater use of captives, Aon notes in its report. Forty-five percent of manufacturing companies and 38% of companies in the communications sector still do not own a captive.
Andrew Tunnicliffe of Aon Global Risk Consulting says the report indicates growth in the captive market is not slowing down. There is still a long way to go before companies are truly managing risk effectively, he says. 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 program.