Captives could be the answer to the shortage of insurance cover for large single risk policies world-wide following the September 11 attacks, according to `Captive Insurance Company Reports'.

This month's issue of the publication states that group captive cover for items or even countries that are currently finding it hard to get cover in the wake of the terrorist attacks are a solution both for those seeking insurance and for existing insurance and reinsurance companies.

And the solution should be hoisted upon those seeking cover by the insurance companies, the article goes on to state in an article headed `September 11 and the Effects on Captives'.

And the magazine, which is used by captive managers around the world, said that opportunities for captive insurance companies coming out of the attacks will probably "escape us yet again".

It also said that the insurance world should listen to the pressure put on it by shareholders to take on the large policies and encourage the use of captives as an alternative way to deal with the risks.

It states: "The insurers and reinsurers of the world, answering to their own stockholders, should soon be forcing the need for action on commercial/industrial insurance buyers, even if they don't see the opportunity.

"And the demands for capacity, protection and insurance, if met by group captive solutions, will lead ultimately to better management of the financial risks of doing the businesses the participants are in."

Following the attacks on the US, the cost of insuring many large items such as buildings, large corporations, airlines and even countries either increased in price so much it is too expensive to be viable or is simply not available.

The issue of terrorism cover is proving particularly sticky, as businesses strive to get cover that insurance companies think is too risky to provide.

But now the editor emeritus of the magazine, Hugh Rosenbaum, believes the answer to these problems is for groups of businesses to form together and set up group captives to cover their own risk.

And he says this will free up the insurance companies to insure individual's homes, cars, lives and small businesses.

He states in his article that "the drying up of primary and reinsurance capacity and the restrictions of conditions would be taken by many captive prognosticators as reasons for fast growth in numbers of new captives in the immediate future. However, the real opportunity for captive insurance will probably escape us yet again".

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