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US Supreme Court 831(b) Micro-captives – Surprising Unanimous Decision

US Supreme Court 831(b) – Captive Advisor Win Expands Beyond Workers Comp  A recent US Supreme Court 831(b) micro-captive decision (unanimous) set a precedent that may go well beyond just Workers Compensation or insurance.  The case was CIC v. IRS.  The link will provide a 23-page PDF file of the

IRS Opens Promoter Investigations Office for 831(b) Micro Captives

IRS Opens Promoter Investigations Office For 831(b) Micro Captives The 831(b) micro captives industry received more news this week from the US Treasury Department.  The IRS opens promoter investigations office to: coordinate efforts across multiple business divisions to address abusive syndicated conservation easements and ‘abusive micro captive insurance arrangements as

How Microcaptive 831(b) Arrangements Were Disrupted This Month

One of the long-awaited captive decisions by the US Tax Court was issued this month.  The microcaptive 831(b) arrangements industry may need to look in the mirror very soon.  This makes four major US Tax Cases that could not have been worse for captives, specifically microcaptives. Ever since I attended

Captive Tax Advantages Recently Take Huge Hit In US Tax Court

Captive Tax Advantages – Tax Court Ruling –  One To Read NOW Some Captive tax advantages may have been eroded with a recent US Tax Court decision.  The case is   Reserve Mech. Corp. v. Commissioner, 2018 Tax Ct. Memo LEXIS 87. The three articles that started quite a buzz in the

Micro-Captives (Offshore) Still on IRS Dirty Dozen List – At Bottom

Offshore Financial Arrangements Including Micro-captives Still On Watch List Most micro-captives are a legitimate way to offshore the self-insurance of Workers Compensation benefits.  The IRS released its list of the Dirty Dozen for 2018 a few months ago.   Offshore financial arrangements filled the #12 of 12 spots. Micro-captives, better known

Oklahoma Captive Program Grows 572% In Two Years

Oklahoma Captive Program Grows The Oklahoma Captive program added 63 captives in the last two years.   In 2013, Oklahoma had 11 captives.  The explosive growth of captives may be another way that the larger employers looked to reduce costs without going through the opt-out process. The Oklahoma Insurance Department

Captive RRG Legal and Regulatory Environment – CICA Conference

Captive RRG Legal and Regulatory Environment Captive RRG Legal and Regulatory Environment – I actually attended five different sessions on Day Two of the conference.   There was a common theme to two of the sessions.  This article will be a combo article of that  theme. Captives and RRG’s  have always

CICA Your Actuarial Report – Understanding/Getting Most Out of It

CICA Your Actuarial Report – Maximizing The Findings The CICA Your Actuarial Report covered much ground very quickly for captives.  The exact title of the presentation was How to Understand and Get the Most Out of Your Actuarial Report. The very adept presenters were Michael J. Bemi, CPCU, ARM, ARe –

Using Reinsurance to Make Captive Structure – CICA Conference

CICA Conference – Using Reinsurance to Make Strategic Decisions Presenters – David Sullivan (AON Benfield), Paul McKeon (TransRe) and Brian Alvers (AON Benfield) (Re)Insurance Market Overview The worldwide total supply of insurance services has grown to $4.2 trillion in 2014.   There has been a steady growth in supply since a sharp

Are Micro Captives For Workers Comp New Frontier?

 Micro Captives For Workers Comp – Viable Alternative  Micro captives to cover Workers Comp losses is an interesting yet caveat-generating twist on an old subject. Captives for Workers Comp is one of the most “what was simple is now complex” areas in insurance.   However, and that is a big,

Top 10 Challenge Areas – Expanded Part I

Top 10 Challenge Areas – The First Five The article on the Top 10 Challenges for Workers Compensation received a large amount of inter-buzz. Two readers suggested an expansion (better explanation) of my list.   I will split the Top 10 into two articles. The first five of  My Top

Offshore Captives Are Examined Again By IRS – Audit Guide

IRS Takes Another Look at Offshore Captives A few years ago, I warned that the IRS was beginning to examine captive more closely – mainly offshore captives.  At approximately, the same time, the IRS decided that offshore captive arrangements were just fine.  There was no need to make any new

NY Says Captives Are Shadow Insurance; NAIC Moodys Others Disagree

NY Says Captives Are Shadow Insurance Captives for Workers Compensation and other types of Shadow Insurance have long drawn scrutiny – sometimes undeservedly.  This week, the Superintendent of the New York State Department of Financial Services.said that captives were nothing more than shell games and all state insurance departments should

Do The Great Premium Deals Really Save Money?

The Great Premium Deals May Not Be Deals After All Do the great workers comp premium  deals really save money? With prices rising (at least for the short-term) in California and other states, the “we can save you a ton of dough on premiums” vendors  are now appearing again on

Split Points – Largest Workers Comp Concern Presently

Largest Workers Comp Concern Today Seen As Split Points The Split Points became the Largest Workers Comp concern presently.   I am presenting at the North Carolina Mid State Safety Council conference tomorrow.  A few weeks ago I was contemplating what would be the largest concern for safety, human resource,

Captive Reserve Question From Our Readers – How To Calculate Mod

Captive Reserve Question Concerning LDF’s A good question about Captive reserve from readers. I am responding to a question from Wayne on this post. I will paraphrase the question. How do I calculate the reserves required if I have had a workers comp captive since 2005? This is a very

Workers Compensation Captives – Are They Worth Exploring?

Workers Compensation Captives – A Legitimate Yet Complex Alternative Workers Compensation Captives have come to the forefront as a possibly viable alternative for Workers Compensation coverage.  Last week, I decided to explore Captives further by attending the CICA conference in Tucson, AZ.x After attending many of the sessions, I came

CICA Captive Conference 2011 Interesting Alternative Insurance

CICA 2011 Conference – Tucson AZ was a learning experience I attended the CICA Conference this week in Tucson AZ. The conference provided a large amount of information that I will have to sift through and post some of the important info on this blog next week. One thing I

Who Is CICA?

Term Of The Day – CICA CICA or Captive Insurance Companies Association is an association of risk managers formed to educate, inform, support and provide valuable networking opportunities to members and interested parties about captives, regardless of domicile or structure. CICA has no jurisdictional or commercial ties. Members come from a

Captives for Workers Comp – One Overlooked Area

Captives for Workers Comp – Who Adjusts Your Claims Most Captives for Workers Comp should not overlook the claims administrator which will handle your claims. Over the last four years, captive insurance arrangements have become more prevalent in our business. That is not to say that captives have not existed

Protected Cell Captives for Workers Comp

Protected Cell Captives In my last blog post, I covered Protected Cell Captives under the Rent-A- Captive heading. I used to think this type of arrangement was complicated and expensive to administrate. I have found Protected Cell Captives to be neither complicated nor expensive when compared with paying regular Workers

Rent-A-Captives For Workers Compensation

Rent-A-Captives Types Rent-A-Captives are becoming more popular in Workers Comp as a method of risk transfer. Rent-A-Captives used to be viewed as hybrid arrangements that were too complicated to be considered by most employers. That landscape has changed in the current economy. Individual Accounts Rent-a-captives can benefit individual corporate accounts

Captive Insurance Arrangements For Workers Compensation -Still Viable?

Captive Insurance Arrangements I have not posted on captive insurance arrangements for many months. The last time I posted was when the IRS surprised me by basically leaving captives in place. I had thought the IRS would not let captives keep their tax-free status overall. In this tough economy, companies

Fronting Agreement Can Be Used For Captives and Non-Captives

 Fronting Agreement Popular With Captives A fronting Agreement covers two types of “foreign” companies and insurers. In general terms, and usually for Workers Comp purposes, one insurer produces a policy for a third party, but all of the losses are the responsibility of a second insurer. This is, of course,

Workers Comp Captive Insurance Arrangements Question

Workers Comp Captive Insurance A question from one (and I love to hear from our blog readers) of our readers on Workers Comp Captive Insurance arrangements – We are a smaller employer with less than 100 employees. Our E-Mod/X-Mod sharply increased from .8 to 1.3 over the last two years. Would

Offshore Captives Could Be Last Haven In Hard Market

Most Offshore Captives Look Much Better In Workers Comp Hard Market Most offshore Captives look great in a Workers Comp Hard Market. For many years, I did not catch on to the concept of captives in the Workers Compensation market. As insurance and reinsurance markets start to harden quickly, I

Captive Taxes Decision – IRS Recently Shocks With Recent Ruling

IRS Decided No Captive Taxes For Now IRS shocks with no captive taxes decision. One of the most hotly debated and controversial topics since the bid-rigging accusations have hit the Workers Compensation world. The Internal Revenue Service has performed a complete U-turn on attempting to tax captives upfront, or actually not

Captives Tax Deductions Getting Closer Look From IRS This Month

News Is On Captives and The IRS I was a little slow to understand how captives worked when they first were written a few years ago. I do not want this post to sound like “I told you so.” Check the prior posts on captives. Has the day of atonement

Workers Comp Captives – Viable Alternative Unless IRS Changes

Workers Comp Captives – IRS Mulling Changes The Workers Comp Captives are the IRS news today. The blog post today was supposed to be about Searching for Workers Comp terms in Google and the mistakes that are made in the Work Comp searches. We will get back to that tomorrow

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