Producer-owned reinsurance companies (PORCs) have the potential to drive growth in the captive insurance market as intermediaries and brokers establish vehicles to aggregate the risks of their individual customers, heard attendees of the Guernsey Insurance Forum.
Oliver Schofield, executive director at RKH Reinsurance Broking, and a panellist at the recent Guernsey Insurance Forum held in London, said PORCs represent a means for entities to access the benefits of the captive and reinsurance markets that would otherwise be too small to go down the captive or protected cell company route in their own right.
“It allows smaller organisations to access those underwriting profits, rather than seeing those profits perhaps just disappearing into the insurance and reinsurance world,” Schofield explained.
“It also allows those producers, those brokers, to drive alternative solutions into their client base, rather than perhaps some of the more esoteric alternative solutions being the domain of the larger buyer. They suddenly become much more available to the small and very small organisations that are buying their insurance now. It also allows those brokers to drive risk management into the core of each of those individual customers.”
Small- and medium-sized entities (SMEs) are most likely to drive innovation in the PORC sector, Schofield said. Corporate entities, affinity groups, associations and trade bodies that traditionally utilise captives will continue to do so.
Mark Helyar of Bedell Cristin, a Guernsey-based lawyer specialising in insurance, reinsurance and insurance-linked securities, agreed.
He said: “PORCs are the major area of growth in the captive sector at the moment.”
“All of the Coca Colas of this world, the BPs and the Shells and everybody, have got their captives already, so if you want to get into another sector, then it needs to be in SMEs.”
