By Rebecca Delaney

March 4 - (The Insurer) - Airmic has described the UK government's captive consultation as a "logical development" for the London market, with the association's latest survey showing that captive interest is now more than just a "passing response" to market conditions.

The survey was conducted in partnership with HDI Global. It found that Guernsey continues to be the most common choice of domicile for Airmic members (40%) because of its long history as a jurisdiction for UK-headquartered companies' captives and its physical proximity to the London market.

Guernsey was followed by Vermont and the Isle of Man (16%), then Dublin and Malta (9%), and Luxembourg and Bermuda (7%).

Combining Ireland, Malta and Luxembourg, one-quarter of Airmic respondents own a captive inside the European Union.

The survey also highlighted that captives are increasingly integrated as a mainstream element of an "agile, intelligent and resilient risk financing strategy", regardless of commercial insurance market conditions.

"The importance of captive strategies is not a passing response to fluctuations in market cover and pricing conditions, but an established part of a future-looking risk management and risk financing strategy and programme," said Julia Graham, CEO of Airmic.

"As captives move more into the mainstream, we believe it is a logical development for this to be reflected within the UK as a leading financial services centre. Airmic members do, and will, continue to make use of a wide range of captive domiciles around the world, and presenting them and future captive owners with an additional UK option will further strengthen their hand and choices as they implement increasingly agile, intelligent, and resilient risk financing strategies."

Graham spoke to The Insurer TV last month alongside London Market Group CEO Caroline Wagstaff and Stuart Herbert, managing director and captive consulting practice leader at Marsh Services, on the next steps of the UK captive regime.

Among Airmic members that don't currently own a captive, 72% said their organisation is currently exploring the possibility of forming a captive now or in the future.

INSERT GRAPH - Gross annual premium spend

The survey made a "conservative estimate" that Airmic members spend more than 5.1 billion pounds ($6.55 billion) in annual premium through their captives, holding more than 22.6 billion pounds in assets under management in captives domiciles globally.

More than one-quarer of respondents write between 2 million and 5 million pounds in annual premium through their captives, with 17% writing more than 50 million pounds.

INSERT GRAPH - Total assets under management

As new captive insurance companies are formed and move more into the mainstream, smaller captives make up a significant portion of those being utilised.

Captives were historically used for high-frequency, low-severity risks in order to underwrite more stable and predictable lines of business. However, in response to the hard market cycle over the past five years, insureds have begun to include their captives in a greater range of programmes, with property now a common risk.

In addition, 44% of respondents said they write some form of third-party risk through their captive.

Around half of respondents (49%) reported a "captive-first" strategy, centralising and concentrating the group's risk financing strategy, while 51% believe they currently make good use of their captive but plan to use it for further covers or services, such as incubating emerging risks and gathering data.