NU Online News Service, April 12, 4:09 p.m.EDT

Aon Global Insurance Managers, thecaptive management division of Aon Corporation, announced thelaunch of its group captive solutions practice, which will providerisk financing alternatives to Aon's middle-market clients.

"From Aon Corp.'s perspective, the middle-market segment is hugein terms of the number of clients we have within the brokeragenetwork," Nancy Gray, regional managing director of Aon GlobalInsurance Managers, told NU Online News Service.

She pointed out that in viewing the different marketcycles--hard and soft market conditions over time--"currently we'rein a soft market environment. What is sometimes forgotten is thatwe're still having some pretty large deductibles for some of theseprograms." For the middle market, she said, "it's a lot moredifficult for them to be absorbed."

She noted that 10 or 15 years ago, a deductible of $50,000 to$100,000 limit wasn't unusual. Now, however, those deductibles are$250,000 to $500,000, she said.

"So now you have more companies within the middle-market segmentlooking for options to the commercial market and how to use acaptive to lower their total cost of risk. For us, the groupcaptive is a very important part of the evolution for themiddle-market clients," she explained.

Ms. Gray pointed out that captives, traditionally available toFortune 500 companies, are now accessible to middle-marketorganizations. The threshold for companies looking at captives hascome down every year over the past 10 years.

"Now, even companies with $700,000 in premium spend can belooking at a captive option," Ms. Gray noted.

To streamline the process for its middle-market clients, Aon'sgroup captive solutions practice has collaborated with Zurich inNorth America, which will issue policies, adjudicate claims and buy reinsurance from a virtual captive that isexpected to exist within United SPC, asegregated portfolio company. Through this approach, capitalcontributions frequently associated with group captives will beeliminated and start-up expenses minimized, the company said.

"Group captives have proven themselves as efficient and stablerisk financing mechanisms for decades," Ms. Gray said in astatement. "We view our innovative approach as Group Captives 2.0,building on the past to create the most effective solutions forcompanies that share our commitment to reducing the total cost of risk."

Aon also announced that Steve Bankes has been tapped to leadAon's Global Insurance Managers group captive solutions practice asits managing director.

Prior to his appointment, Mr. Bankes was a group captiveconsultant and held senior positions at two major insurancecompanies within their alternative market practices.