Companies establish captive insurance vehicles for at least one of the Six Cs of Captive Value — cost, compliance, control, cover, capacity, and commercial — that provide strategic value to the parent organization. The path to a captive insurance vehicle starts with a feasibility study to access the business case, including the financial, strategic, and operational benefits and limitations of alternative risk financing methodologies. A corporation’s decision on the amount of risk to assume is independent and a priority over determining how to finance the risk, whether retained on the books of the parent or within a wholly owned captive insurance company.
There are several steps that go into evaluating a captive program. The feasibility process includes:
To perform the study, information requested will typically include:
Determining the optimal path for your captive can be a challenge. Our captive model can support the comparison of after-tax total cost of risk for multiple program options. If it is determined that a captive vehicle would benefit your organization, Marsh Captive Solutions, with your tax and accounting teams, can help you to determine the setup that meets the unique needs of your organization.
* All such matters should be reviewed with the client’s own qualified tax, accounting, and legal advisors.