Large corporations will increasingly turn to captive insurance companies over the next year. That's the claim of Fitch Ratings in its latest market report.

With the potential for rising premium rates in 2003, captives may be used as an alternative risk solution.

A spokesman said: "The prolonged soft market of the late 1990s provided ample insurance capacity at attractive rates. But the events of September 11 and the subsequent increases in premium rates mean many organisations are reassesssing their risk strategies."

The hard market of the current year has led to reduced capacity, which is forcing corporations to turn to captives, the agency said.

The spokesman added: "Fitch believes there are a number of benefits associated with the use of captives, including direct access to reinsurance and cashflow benefits."

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