Superior wealth protection and risk management services including captive design and end of life tax free reorganization services

Captive Insurance Feasibility Study

A solid risk assessment or feasibility study is essential in determining whether or not to create a captive.

The feasibility study step determines your captive design, discuss the types of insurance coverages your captive should offer, estimate the costs to form and operate, include financial proformas prepared after the underwriting assessment is completed and the domicile recommendation made, and discuss the pros and cons of creating the captive.

Click here for the steps and costs involved with a typical small captive application program.

Similar to our strategic captive review service for owners or manager of existing captives, we offer
 independent captive feasibility studies for less than you might expect if you are serious about getting a truly objective view as to whether you should form a captive and what its design should look like. An independent feasibility study can also then be used to get competitive price quotes that are truly comparable from firms you are considering hiring to form and operate your captive. We also offer other a la carte services. 

Contact us for a solid factual foundation and design including clear presentation of the pros and cons of forming a captive specifically for your business. Selecting the best domicile is also within our expertise. 

A feasibility study is valuable for:

  • improving corporate governance practices;
  • identifying the economic and business benefits of the captive program;
  • objectively assessing the most valuable areas of risk coverage;
  • objective domicile assessment and selection guidance;
  • providing conflict of interest free analysis and financial projections .
Contact us if you want to expedite a substantive discussion about whether a captive makes sense for you. Consider preparing and emailing our basic  questionnaire by clicking here, or at least be able to discuss this type of information on our call. Everything you share will of course be kept in the strictest confidence. 
What are feasibility studies?

Feasibility studies are an invaluable tool for making a decision to move forward or not with a captive. They determine the business and economic purposes of forming a captive. An independent study carries the most and provides the most objective design and domicile assessments.

The core components of a comprehensive feasibility study include:
  • Identifying your organization's risk management goals and concerns
  • Assessing current insurance coverage, gaps and retention
  • Review historical loss data 
  • Assess the types of insurance coverages suitable for a captive
  • Estimate costs of new captive coverages
  • Estimate captive coverage losses
  • Assess suitable domiciles for your captive
  • Estimate cost of forming a captive
  • Estimate annual operating expenses of the captive
  • Determine the capital and surplus requirements for the captive
  • Summarize the cost-benefit analysis
  • Prepare and explain the financial performance projections for both expected and adverse loss scenarios
  • Explain the tax implications, uncertainties, assumptions and elections
  • Explain proposed coverage lines, limits, rates and policy type in some detail
  • Address reinsurance and pooling aspects and requirements if applicable
  • Document the business purposes and expected economic benefits 
  • Captive legal and management structure evaluated including the pros and cons of joining existing cell, series or group programs, not merely the  business case for creating your own pure captive 
  • Captive ownership structure alternatives and asset protection and estate planning impact
  • How claims will be made and handled
  • Responsibility allocation between owners and service providers
  • The investment objectives and options impacting captive operations
  • Next steps and process control considerations 
  • Implications if the captive program is terminated
  • ... formal feasibility studies are well wort the investment of time and money
Quality captive insurance feasibility studies form a solid foundation for the captive insurance company business plan; it validates the benefits of foregoing some traditional risk transfer to the conventional commercial insurance marketplace by funding reserves for these risks within your captive insurance company with you retaining control over risk reserve investment portfolio assets verses these being owned by unrelated third party insurance companies.

A high quality feasibility study acts as the project blueprint. 

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