Property has consistently been the most commonly written line of business amongst Aon managed entities and 2013 was no different.
Despite one of the longest and most pronounced soft markets in recent times, our 2013 Captive Benchmarking Survey saw an increase in property premium spend of over $1bn from $5.6bn in 2012 to $6.7bn in 2013.
The survey tells us that the key motivations for having a captive include a captive as a strategic risk management tool, control on insurance programmes and access to the reinsurance market. What may surprise some is that a reduction in insurance premium ranks some way down that list.
It would seem that the increased use of a captive as a strategic risk management tool helps to insulate the industry from the soft market. In terms of control, the ability to tailor policy terms and conditions remains a unique selling point for the captive model.
A captive provides further value through access to the reinsurance market. Of the $6.7bn gross written property premium, $3.4bn is reinsured. This makes it a significant constituency of the global reinsurance market and further demonstrates a recognition of a captive’s ability to add value within insurance programmes on a global basis.
Of the parent country of origin the US represents the largest with $3.5bn of the $6.7bn total in 2013. The US is Aon’s most mature client base with over 64% of US Parented entities being in operation for ten years or more. US placed risk accounts for 55% of the property spend with most of this forming part of a global programme. The remainder of the risk is placed across Europe, South America, Middle East and Asia with smaller pockets in Australasia and Canada.