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The GCC captive insurance industryEdmund O’Sullivan, Chairman, MEED EventsMEED Insight/QFCA seminar, Riyadh, 26 February, 2012 2Captives have e monMajority of world’s largest panies have captive subsidiaries. Altogether, there are more than 5,600 captive insurance firms globally. More than 65 per cent of all panies have captive subsidiaries,while recent estimates have calculated that the captive insurance market has more than $30bn in annual premiums and more than $130bn in assets are used by all types panyAnd cover all types of riskEligibility There are no restrictions on the type of business that can use a captive – public, private, family-owned, and even mutual associations all employ panies should have a minimum annual premium threshold of more than $1m. Firms with premiums lower than that would not necessarily benefitfinancially from a captive as its operating costs would outweigh the financial advantages that it would panies should also operate a robust balance sheet, be profitable, operate from a stable base and have a high level of understanding of their risk importantly pany needs or wants to have a risk management so far Middle East take-up has been slowTo date, only 10 panies have established captive insurance subsidiaries. Of those, just seven are domiciled in the GCC number of reasons for this? General lack of insurance awareness, education and sophistication in the region;? Low litigation pared to elsewhere;? Lower catastrophe risk than other regions;? Competitive local insurance market, that keeps premiums down;? A lack of corporate taxation in the region, that negates some of the tax advantages that captives can bring;?Prevalence of absorbing risk in-house panies’ own insurance subsidiaries;? Religious/cultural hesitancy toward insurance is not really a factorBut in short, there is no inherent reason why captive insurance cannot really take off in the regionDomiciles are doing their b