oThe global recession--Re-evaluation of capital utilization, management oversight costs, and softening market cycles may tempt insurance buyers to consider insurance programs with lower retentions, or alternative deductibles and retentions, or non-captive fronting alternatives and risk transfer alternatives.

oFinancial crisis fallout and subsequent reforms--Regulatory reforms in the U.S. and abroad will impact insurance company and captive capitalization requirements. Captives must keep pace with organizational, statutory, or other externally-imposed regulations, the paper said

oResources--Risk managers are doing more with less, so the amount of resources required for captive management and controls may be overshadowed by the long-term strategic captive value proposition.

Ms. Frey told NU Online News Service that acquisitions have also prompted risk managers to question costs and whether they need to maintain multiple captives that sometimes duplicate coverages.

Risk managers facing such a scenario may need to do a "re-feasibility study," she said, noting that they need to determine whether to keep multiple captives open, consolidate captives, choose the captive that can be the most effective over the long term, or transfer risks back to an insurer.

Changes in organizations, such as a new chief financial officer with no knowledge of captives, also can presents challenges. Here, education is required. New management can also trigger a demand for detailed information on costs associated with the captive, such as management and actuarial fees, Ms. Frey said.

"From the carrier perspective, we're trying to be sensitive to what the clients are trying to achieve," she said. "We're trying to put options out there for them."

Once an analysis is complete, Ms. Frey said, risk managers may ultimately decide not to make any changes, but the process helps them become more aware of options available to them.

While the solutions for the current challenges will be unique for each risk manager and the organization's enterprise approach, the study found that captives are clearly able to survive and thrive when they are supported at the highest levels of an organization--and when the captive is used in a way that provides the maximum financial and risk management benefits.