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4th of February 2012

Captives under-utilised by national oil sector

Gavin Bradshaw 26/04/2010

Jonathan Groves

A new report by Marsh has indicated that, despite widespread use by international oil companies (IOCs) only a small proportion of national oil companies (NOCs) own a captive.

The report, ‘Is captive utilisation an optimal strategy for National Oil Companies?’ contains research that found only 12% of the world’s 113 NOCs currently utilise a captive insurance vehicle. Among the larger NOCs, captive use was higher at 33%.

“With NOCs looking increasingly at expanding their operations overseas, as well as more joint ventures with IOCs and other partners, the case for captive insurance use is becoming more compelling,” said Jonathan Groves, the report’s author and leader of Marsh’s EMEA Captive Consulting Practice.

In the report Marsh recommends that, where appropriate, NOCs step up their use of captive insurance to manage risks such as property damage and business interruption, liability, marine, aviation, construction, environmental and terrorism risks, as well as Control of Well.

“With a growing list of countries implementing captive legislation, more NOCs will be able to establish a captive within their own, or nearby, jurisdiction,” said Groves.

“Captives insurance will only ever be one part of an NOCs risk management and mitigation strategy, but we predict it will become an increasingly important one.”

Tags: Marsh

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