What is the purpose of a feasibility study, what information does it contain, and who performs it? What does a feasibility study cost?
As its name implies, a feasibility study determines the practicality of the formation and operation of a captive insurance company for a particular business entity. It also explores alternative risk financing mechanisms available to the insured Although studies are not required by all domiciles, the feasibility study is a key component to establishing the appropriateness of alternative risk planning and are a component of good planning. Additionally, a feasibility study helps establish the bona fide business reasons for a captive’s formation. Where required, some domiciles also specify the format in which the final report must be presented. Some require that a formal actuarial study be carried out as well. As a practical matter, a feasibility study should be conducted whether it is required by the domicile or not; the foremost reason for doing such a study is that it provides management with a formal and contemporaneous compilation of the key factors that went into evaluating the pract
As its name implies, a feasibility study determines the practicality of the formation and operation of a captive insurance company for a particular business entity. It also explores alternative risk financing mechanisms available to the insured Although studies are not required by all domiciles, the feasibility study is a key component to establishing the appropriateness of alternative risk planning and are a component of good planning. Additionally, a feasibility study helps establish the bona fide business reasons for a captive’s formation. Where required, some domiciles also specify the format in which the final report must be presented. Some require that a formal actuarial study be carried out as well. As a practical matter, a feasibility study should be conducted whether it is required by the domicile or not. The foremost reason for doing such a study is that it provides management with a formal and contemporaneous compilation of the key factors that went into evaluating the pract
