Questions

	So you are thinking about joining a captive. Important questions to ask ...

Will the captive manager/administrator or broker maintain any ownership or voting power within the captive?
Will any other third party have ownership in the captive?
Will any other third party share in the captive profits or dividends?
Who is responsible for the growth of the captive? Growth is vital for spreading risk and leveraging competitive operational cost.
What goals have the broker(s) set on growth?
What types of risks will the captive accept (Light Manufacturing vs. Construction) and will the members have a right to veto prospective members?
What is the captive's risk retention?
What lines of insurance coverage does the captive intend to include?
Are there maximum premium limits (aggregates) for individual members and the captive as a whole? Who has guaranteed those limits?
Does the captive have a policy issuing carrier admitted in all 50 states?
What Re-Insurance company will the company be using?
How will the captive intend to return unused loss funds or premium dollars?
What time line has been set for returning unused loss fund dollars?
Does the captive have a calculated collateral requirement?
Are the collateral requirements significant enough to pay for potential bad debt in the captive and capitalize the captive to more than minimum levels?
Are services unbundled and controlled by the captive members? Who will handle loss control and claims management (Broker, Carrier, TPA)?
Are all the cost to the captive members transparent?
Do the captive members have the ability to ask members to leave for financial or bad loss performance?
Where will the captive be domiciled (Vermont, Bermuda, Cayman)?
What are your total operating costs vs. loss funding?
Will the captive have assessment possibilities for under performing members?
How is the risk sharing allocated?
How will the captive invest the premium dollars generated by the company?
Will the captive produce semi-annual financial statements and a year end audited statement?
Are there any hand-cuff clauses or minimum membership requirements?
Does the captive have a complete exit strategy if a member leaves?
Does the captive have a plan to close underwriting years?
Does the captive provide a prospective member pre-approval process that includes an independent financial analysis and a risk control assessment?
Is there any cost to evaluating the captive?

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