Contents of a Typical Feasibility Study

1. Review of
• Current objectives
• Adequacy of insurance programme
• Risk exposures
• Claims profile – such will dictate changes in levels of underlying deductibles, captive retention & type & cost of reinsurance programme
2. Background of Operator
3. Operational Issues
• Reinsurance basis
• Implementation proposals
• Management services that will be provided by ARK
• Development potential
4. Examining financial elements including financial projections under a number of scenarios
• Premium Volume – Study will need to analyse relationship between premium volume available, the overall exposure at both individual & aggregate levels & the spread of risk within the portfolio, in order to ensure it is sufficient to meet both the costs of reinsurance & retained losses.
• Investment policy has to be determined bearing in mind need to maintain sufficient liquidity, to provide inflation protection, to make settlements in foreign currencies, & to optimise return from fund.
• Financial Projections for 3 Years
o Includes Realistic and Pessimistic scenarios showing potential variability of results
o Shows advantages of compounding of investment income and earnings
o Shows how Reinsurance programme limits the operation from large losses / events / accumulation of losses