In September 2026, WTW published an analysis by Julie Nye arguing that employee benefits captives can help close coverage gaps created by war and terrorism exclusions.

The subject is becoming more pressing for multinational employers. Group life, accident, disability and medical arrangements are normally built through local insured contracts, each shaped by local law, market practice and carrier appetite. War and terrorism provisions can therefore differ materially between countries, benefit lines and insurers. A multinational promise to employees may look consistent at headquarters level while the underlying protection is fragmented.

WTW’s central contribution is to reframe the gap as a captive question. Instead of accepting every local exclusion as the final boundary of the programme, an employer can consider whether selected exposures should be retained and financed centrally, subject to clear limits, data and governance.

A coverage gap is also a confidence gap

For employees and their families, an exclusion becomes visible at the worst possible moment. For the employer, the issue is not limited to claim cost. It also concerns duty of care, consistency of treatment, reputational risk and the credibility of global benefits commitments.

The first step is therefore diagnostic. The multinational needs an inventory of relevant clauses by country and benefit, an understanding of which employees travel or work in exposed locations, and an estimate of plausible loss scenarios. Particular attention should be paid to differences between declared and undeclared war, terrorism, civil unrest and related events, since contract wording and legal interpretation may not align.

This work can reveal several responses. Some gaps may be removed through local negotiation. Others may be covered through specialist markets. A captive may be appropriate where commercial coverage is unavailable, inconsistent or disproportionately expensive — but only if the parent is genuinely prepared to retain the risk.

What a captive structure must solve

A captive does not make geopolitical risk disappear. It converts an external exclusion into a deliberate financing decision. The structure must define eligible populations, covered events, limits, deductibles, aggregation rules and claims governance. It must also determine how benefits will be delivered locally where direct captive participation is not practical or permitted.

Data quality is critical. Employee location, travel patterns, benefit amounts, dependants and existing policy wording all affect exposure. Scenario analysis should test both a severe event in one location and correlated incidents across several countries. The result must be compared with captive capital, liquidity, reinsurance protection and the parent’s risk tolerance.

Governance is equally important. The captive board should receive a clear rationale for accepting the exposure, independent actuarial analysis where appropriate, and regular reporting on accumulations. Claims protocols need to reconcile speed and compassion with consistent interpretation. Communications must avoid suggesting unlimited protection when the captive operates within defined terms.

A practical agenda for multinational employers

A sensible feasibility exercise can begin with five questions:

1. Where do material exclusions exist?
2. Which employees and benefits are affected?
3. What loss scenarios are credible?
4. Which gaps can be negotiated or transferred?
5. Which residual exposures could the captive retain without weakening its wider programme?

The answer may be a layered solution rather than a single captive placement. Local insurance can remain the primary vehicle, specialist capacity can absorb defined peaks, and the captive can fund carefully selected gaps or deductibles. Reinsurance may then protect the captive against accumulation or severe events.

For global benefits leaders, the broader lesson is that exclusions of any kind should not remain buried in policy schedules. They are strategic programme data. Mapping them creates the basis for better decisions about financing, employee protection and governance. WTW’s proposal is valuable precisely because it brings an uncomfortable coverage boundary into the open — where it can be measured, debated and, where justified, financed.