According to the survey, Guernsey accounts for around 50% of the UK captive market, followed by Isle of Man (21%), Bermuda (15%) and Ireland (8%).

“This report illustrates that Guernsey is very much the UK’s captive domicile of choice,” commented Peter Niven, Chief Executive of Island promotional agency, GuernseyFinance.

He added:

“In doing so it provides further evidence that businesses seeking captive insurance solutions highly value Guernsey’s excellent offering, including substantial expertise and ongoing tradition for innovation.”

According to similar research conducted by Marsh in 1995, 42% of captives with UK parents were domiciled in Guernsey. At that time the market was dominated by Guernsey, Bermuda and the Isle of Man.

In the interim period, while Gibraltar has remained relatively consistent in terms of its market share, Dublin has experienced notable growth and Guernsey has experienced growth of 20%. While Bermuda’s attraction has remained for its existing client base, new captive owners have opted not to establish there primarily because the same captive benefits are available much closer to home, according to Marsh.

Mr Niven went on to observe that:

“UK companies really appreciate that Guernsey’s convenient location – it is in the same time zone, has regular air links from a number of different cities and is less than an hour away from London by plane, coupled with its broad-based finance industry and sophisticated range of support services all within a close proximity - make it an ideal ‘one stop shop’.”

The Marsh report shows that the number of captives forming to serve the UK market has broadly followed the dynamics of the insurance market. At the height of hard market cycles the number of captives formed naturally accelerates, as was previously seen in both 1994 and 2002. Overall growth has remained steady with around 12 to 18 captives formed each year. It shows that the primary reason for captive utilization is to reduce the total cost of risk.