Bahrain’s Bapco Energies has entered an agreement with ACE Gallagher to set up and manage a captive insurance company.
The move is aimed at enhancing the energy company’s insurance and risk management strategies.
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It is part of Bapco Energies’ efforts to centralise its insurance portfolio and adopt a unified risk management strategy that supports long-term sustainability.
The energy company evaluated proposals from five leading captive managers worldwide.
Following a stringent selection process by the Bahrain Tender Board, ACE Gallagher emerged as the top choice, achieving the highest combined technical and commercial score, and was subsequently appointed as the lead captive manager.
An ‘insurance captive’ is essentially a subsidiary insurer established by a parent company to handle risk mitigation for itself or its affiliates.
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By GlobalDataThis strategic partnership is expected to bolster Bapco Energies’ resilience, stability, and adaptability in response to the dynamic needs related to insurance.
The significance of the insurance captive is said to be underscored by current challenges in the insurance market.
By establishing this captive, Bapco Energies aims to exert more control over its insurance portfolio, enhance its bargaining power with commercial insurers, and ultimately optimise insurance costs for the entire group.
Bapco Energies group CEO Mark Thomas said: “We have seen a global surge in the use of captive insurers as a critical risk management tool amidst the challenges of an increasingly hardening insurance market exacerbated by higher rates. We expect this upward trajectory to persist throughout this decade.
“As such, we are delighted to have secured this strategic partnership with ACE Gallagher. Their expertise will be instrumental in strengthening our risk management framework and enhancing our overarching initiatives in centralisation and operational efficiency.”
ACE Gallagher CEO Yolla El Khoury said: “This strategic initiative not only demonstrates Bapco Energies’ unwavering confidence in their risk management practices but also paves the way for an enhanced risk profile.
“With utmost certainty, we anticipate achieving Bapco Energies’ goals of consolidating insurance policies, leveraging economies of scale, and generating revenue by retaining a portion of their risk.”
