Category: Captives & ART · Reviewed by Matt Bartlett, Director · Founder · Last reviewed 2026-06-05
A captive feasibility study is the structured analytical exercise undertaken to determine whether the establishment of a captive insurance company is economically, operationally and tax-efficient for a particular corporate group. The study is the foundational document on which captive establishment decisions are made and is typically commissioned by the corporate group from a captive consulting practice or major broking firm.
Category: Captives and alternative risk transfer Also known as: Captive study, Captive feasibility analysis Related concepts: Captive insurance company, Captive domicile selection, Captive reinsurance
A captive feasibility study addresses, in structured form, the questions necessary to determine whether and how to proceed with captive establishment. Standard sections include: (1) review of the parent group’s existing insurance programme, retentions, and historic loss experience; (2) quantification of premiums and expected losses if held within a captive; (3) capital and solvency analysis for the captive in candidate domiciles; (4) tax analysis (both corporate income tax and premium tax/insurance premium tax considerations); (5) regulatory analysis in candidate domiciles; (6) operational and governance considerations; (7) cost-benefit comparison; (8) implementation roadmap.
There is no specific regulatory requirement to undertake a captive feasibility study, but feasibility analysis is a de facto prerequisite for board approval of captive establishment and for subsequent regulatory licensing in the chosen domicile. Most domicile regulators will expect to see the feasibility study and supporting actuarial analysis as part of the licensing application package. For UK-based corporate groups, board duties under the Companies Act 2006 sections 171-177 require that material risk financing decisions be supported by adequate analysis.
A typical captive feasibility study runs to 50-150 pages and takes 8-16 weeks to prepare. The principal authors are a captive consulting firm (often a major broker’s captive practice — Marsh Captive, Aon Captive & Insurance Management, WTW Captive Insurance Consulting, Artex Risk Solutions), with input from actuarial advisers (typically WTW, Lane Clark & Peacock, Deloitte Actuarial, or similar), tax advisers (Deloitte, EY, KPMG, PwC), and legal advisers in the candidate domiciles. The study culminates in a board paper recommending a specific course of action.
A “high-level feasibility” is a preliminary 2-4 week exercise to identify whether deeper analysis is justified. A “full feasibility study” is the comprehensive analysis described above. A “captive expansion feasibility” assesses whether an existing captive should be extended to additional lines of business or to additional group entities.
A FTSE 250 manufacturing group commissions a captive feasibility study from its broker’s captive consulting practice. The study analyses the group’s existing £45m UK and international insurance programme; models a captive retaining the working layers (~£15m of premium); compares Guernsey, Isle of Man, Luxembourg and Malta as candidate domiciles; recommends Guernsey on grounds of regulatory quality, proximity, English language and existing service infrastructure; identifies expected first-year underwriting profit of £2-3m and recommends a phased implementation over 18 months.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
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