BONITA SPRINGS, Fla.—The extent of outside services required to support a captive insurance company vary with the nature of the captive, though current and prospective captive owners should know what services they need and what they should expect from service providers, according to a group of captive experts.

Speaking as part of a panel discussion called “Making Your Captive More Effective” at the 19th annual World Captive Forum last week in Bonita Springs, Fla., D. Hugh Rosenbaum, retired principal at Towers Perrin in London, said, “You have to have the basics, because this keeps the captive running. You might need some enhanced services, but they get more expensive.”

Mr. Rosenbaum advised current and potential captive owners to know “what you have to have” vs. “what you might like to have.”

For companies looking to form a captive, Nicholas Dove, president of Quest Management Services Ltd. in Hamilton, Bermuda, said, “There's going to be different structures, depending on your needs.”

Depending on the type of captive, the timeline of a formation “could be a matter of weeks or it could be a matter of years,” Mr. Dove said, with a single-parent captive going from concept to incorporation in a matter of weeks, while a group captive could take years to form.

Regardless of the type of captive, “what you're looking for is a transaction that's treated as insurance for tax purposes,” said F. Roy Sedore, partner at Baker & McKenzie L.L.P. in New York. “We always talk about deductibility of premiums. The real tax benefit is the deductibility of loss reserves.”

“That's why—at least from a tax perspective—it's more attractive to have long-tail business in a captive,” Mr. Sedore said.

In dealing with consultants studying captive feasibility, prospective captive parents should know that when it gets to the feasibility study, “Within 30 minutes, we'll have a pretty good idea whether this thing has a chance,” said Joel S. Chansky, consultant with Milliman Inc. in Wakefield, Mass.

“It normally becomes very apparent very quickly what the captive can insure and what layers of insurance” it can offer, Mr. Chansky said.

Prospective captive parents should be wary of consultants' claims that their programs present unique challenges.

“There are no new things in the insurance business. Just variations on the same theme,” said Michael Maglaras, president of Michael Maglaras & Co. in Stamford, Conn. If “someone (is) telling you (that) you have a unique program, man, show that guy the door.” Insurance programs may have “unique facets,” but there are no truly unique programs, he said.

Mr. Maglaras said hot topics in the captive arena are management liability and employer practices liability coverage.

“The next big captive opportunity—you heard it here first—are cyber risk and cyber liability.” Using a captive for $1 million of a $2 million working cyber liability retention with excess insurance or reinsurance above that layer “is the next big opportunity for captives, in my opinion,” Mr. Maglaras said.

Mr. Maglaras advised potential captive parents that “a captive is a little bit of extra work. Make sure you budget the time and investment.” But, he said, much can be gained from understanding an organization's exposures that comes from forming a captive. “One of the best reasons to form a captive is to get your arms around the data,” he said.