Captives are still playing a minor role in Polish corporate insurance, but this may change soon, according to Radoslaw Ziomko, Risk Management Director at Aon Global Risk Consulting Polska.
"In the past ten years there was no need for Polish companies to think about alternative risk transfer, as we had a soft local insurance market, premiums were low and it was easy for risk managers and insurance buyer to find capacity", Ziomko said during a panel discussion held at this year's meeting of the Polish risk managers' association 'Polrisk' this week. "Now we are observing a hardening market, companies increasingly will have to think about an alternative to conventional insurance", he added.
Another reason why captives are not widespread in Poland is that for a long time risk management itself has been a very exotic part of business, predominantly used by financial institutions. Now, in the increasingly international environment, companies are forced to focus on risk management and the tools that can be used to implement this.
In Eastern Europe, companies mainly work with local brokers. "In this situation our local companies do not have the means to suggest the implementation of a captive", said Mr Ziomko. "It is our job to find a balance between getting more flexible when it comes to risk transfer and keeping the long-fostered good relationship with local brokers and insurance companies."
Risk professionals who are forced to develop alternatives for their risk transfer can consider a segregated portfolio company - or so called cell captive - instead of implementing a full captive in their company, Andrew Carter, Assistant Vice President of the United Insurance Co in the Cayman Islands told delegates. "The difference between a captive and a cell is a captive is something you own and have to look after, costs are greater. A cell is something you effectively rent from an existing structure like an apartment and is cheaper to set up and maintain."
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