A.M. Best has released a report saying the effect of the captive market on the insurance and corporate sectors has been "greatly understated". It said the captive market's premium growth rate in 2000 outstripped the commercial insurance sector in all the major markets.
In the US alone, the captive sector increased net premiums written at four times the commercial market's robust 7.2% rate.
It estimates that the entire alternative market will comprise nearly half the US commercial market by 2003.
The rating agency said growth is expected to continue as risk managers make better use of their existing captives.
Multiowner captives are also expected to see steady growth in membership, as well as segregated-cell companies.
The company said the growth of the alternative market was aided in the first half of 2001 by "self-insurance, captives and capital-market solutions, as commercial insurance rates continued to increase and capacity continued to shrink".
It also said that uncertainty in the wake of the World Trade Centre disaster had "accelerated the migration as risk managers and their advisers react to a situation forced upon them".
The rating agency said it believes that despite rising leverage "the captive industry will remain well capitalized and well positioned for the influx of new business during 2002-2003".
