Agers and Igrea publish risk retention guide to support Spanish firms

Top risk managers in Spain have joined forces to launch a handbook to help companies use risk retention and self-insurance mechanisms to navigate a difficult business environment. The authors support the adoption of new rules in Spain, similar to those recently introduced in France, to reduce red tape and enable more efficient financial management of captive companies in the country. The handbook was drafted by members of Spanish risk management associations Agers and Igrea. Its goal is to present in detail the different risk retention tools available for companies and where they can be deployed more efficiently. “Although this document was written in a specific environment, proper management of risk retention can always add value to the company, and we trust that this handbook will be equally useful in any other business environment,” said the presidents of Agera, Juan Carlos López Porcel, and Igrea, Daniel San Millán, in a joint statement to Commercial Risk. The two associations have been working together for a couple of years to discuss self-insurance and retention strategies in the hard insurance market. López and San Millán note that risk retention gained new relevance as insurance capacity tightened, prices rose and conditions became more restricted in recent years. But not all companies are familiar with the captive concept or the best ways to retain risks. The handbook is written to work as an introduction to the subject, helping risk managers find the best solutions for their companies. It then digs deeper into those tools that can help optimise risk transfer policies. The guide explains that factors that can influence the choice of risk retention tools include the size of the company, its activity, loss history and geographical presence. It is hard for SMEs, for example, to set up their own captive companies due to the costs and complexity involved. A less expensive option would be to use Incorporated Cell Companies or Protected Cell Companies, cheaper and simpler structures that have individual cell captives supported by a central core. The handbook also explains how other tools work, such as self-insurance funds and structured insurance products. The authors of the study examine the legal implications of different self-insurance vehicles, comparing the Spanish legal situation with those in Switzerland and France. France has recently adopted new rules, pushed by French risk management association AMRAE, to boost risk retention in the country as part of a wider government-backed effort to improve national resilience. Agers and Igrea say in the guide that they would like to see a similar approach adopted in Spain. The handbook also explains the rules applied by jurisdictions used by European companies to set up captives and other risk retention tools, such as Ireland, Luxembourg and Malta. Its authors argue that interest in risk retention strategies should remain strong due to factors such as the fast pace of technological change, political and social instability, supply chain uncertainty and climate change. The 44-page Guía sobre Herramientas y Fórmulas de Retención de Riesgos guide is published in Spanish. Print and digital versions and can be downloaded for free from Agers’s website at tinyurl.com/4ppye2tm

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