Only a small proportion of the world’s National Oil Companies (NOCs) own and operate their own insurance vehicles despite their widespread use by International Oil Companies according to the new research revealed by Marsh, a unit of Marsh & McLennan Companies.
According to the research, these vehicles are used by majority of world’s corporates, known as captive insurance companies, to manage their enterprise-wide insurance needs. Captives enhance ability of firms to identify and value business-critical assets and also to make loss management effective. They can also enhance risk management capabilities for businesses with global operations, and make management of insurance relationships with joint venture partners more efficient.
The research also reported that only 12% of world’s 113 NOCs currently utilize captive insurance. Among the large NOCs, the use of captive was high at 33%.
In addition, the research 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, terrorism risks, and control of well.
Jonathan Groves, the report’s author and leader of Marsh’s captive consulting practice in Europe, the Middle East and Africa, said: With a growing list of countries implementing captive legislation, more NOCs will be able to establish a captive within their own, or nearby, jurisdiction. 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.