When is a captive conversation worth having?

Start with the business objective

A captive may support control, coverage flexibility, claims management, cost stability or long-term financing. If the objective is only immediate premium reduction, management may overlook volatility, expenses and commitment.

Test data and scale

Reliable exposure and loss information are central to actuarial work. The potential retained premium also needs enough scale to justify fixed costs, capital and administration.

Model the difficult year

The feasibility case should show expected loss and adverse scenarios, collateral demands, cash-flow timing and how severe claims reach excess or reinsurance layers.

Map the operating responsibilities

Captive managers, actuaries, legal and tax advisers, claims administrators, fronting carriers and reinsurers may all have roles. Management needs clear governance and accountability.

• Capital and collateral
• Claims authority and reporting
• Loss control
• Fronting and reinsurance
• Domicile and regulation
• Tax and accounting
• Exit and transaction planning

Our view

A captive conversation is worth having when the organization has credible data, sufficient scale, financial capacity, controllable losses and leadership willing to manage the structure over time. A readiness review can be valuable even when the answer is to remain conventionally insured.