From: Captive International

The current hardening insurance market is driving greater interest in self-insurance via a captive and leading to a cooling of relations between companies and their insurers. AMRAE president Oliver Wild told Captive International sister publication Intelligent Insurer why insurers need to have a rethink—and talk to risk managers.

Oliver Wild, president of French risk management association AMRAE, arguably speaks for all risk managers when he highlights the sharp rise in rates, reduction in capacity and increased risk adversity from insurers as a spectre looming over 2021. It’s a problem that persists in multiple lines, regardless of efforts to minimise risks: risk managers who have, for example, worked closely with cybersecurity officers to mitigate cyber risk are still seeing price hikes and restrictions in terms of the coverage they are being offered.

A mechanism such as a captive is great because you can mutualise different types of risks in the vehicle.”

Oliver Wild, AMRAE

As discontent grows, self-insurance is becoming a more attractive solution.

“What that means is that the government needs to make it easier for companies to create things such as captives or other financial mechanisms,” says Wild, who is group chief risk and insurance officer for French multinational Veolia.

“It’s vital to help companies invest in risk management and to allow them to self-insure, because the market is not responding—and the government should be pushing the insurance market to respond and make sure that we have the capacity to build a bit more resilience into the economic tissue.”

With this in mind, AMRAE is working hard to get the French government to make it easier and more attractive to domicile captives in France. It’s an issue AMRAE had been pursing pre-COVID-19, but its efforts have intensified as a result of the pandemic.

“French companies do have captives, but not located in France, and that’s purely because in other markets—such as Luxemburg, Malta and Ireland—the legislation and conditions are more attractive to companies,” says Wild.