August 05, 2014
Response by Ken Carlton, Milliman USA


For an association type captive, a premium of $1 million is often mentioned as a minimum threshold (although, in some domiciles or jurisdictions, it is possible to form a captive with a lower amount of premium). The type of coverages you mentioned may be perfect for forming a special type of captive, known as a risk retention group.

After completing a captive feasibilty study, if the proposed captive's experience is good, one of key steps to undertake in moving forward on the captive's formation is to then find excess insurance or reinsurance.

[Editor's note: For more information on this topic, see Hugh's Views on D&O insurance in Captives]