Gain a practical understanding of risk-based capital. What it is, how it is measured, how does ORSA fit in, and how does it impact your captive?
Many captive owners are being asked to consider writing cyber-liability coverage in their captives. The idea has been discussed at numerous captive conferences over the last several years. Additionally, there are dozens of articles available on captive vendor websites that explore the possibility. Reading these articles can lead many owners and board members to conclude that cyber-liability coverage is worthy of pursuing.
Here is a message that needs to be delivered to all those involved in advising, regulating, or legislating tax policy: captive insurance companies are genuine risk management organizations that add value to their owners.
The Arent Fox law firm’s Government Relations group hosted a seminar on “What to Expect from Our New President & Congress” last week. Captive.com Editor Dan Labrie attended the panel discussions focused on three topics: Infrastructure, the Economy and the Likelihood and Nature of Comprehensive Tax Reform, and the Future of Obama Care and Health Care.
Tax reform is on the agenda not only in the United States but elsewhere in the world, as well. A report of Oxfam, a global antipoverty agency, has joined those calling for corporate tax reform, and the Bermuda Business Development Agency responded quickly.
Rental captives are but one form of a captive insurance company. A captive insurer is an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits.
The National Association of Insurance Commissioners (NAIC) adopted the Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act (#505), which was effective January 1, 2015, for certain large insurers and is required for state insurance department accreditation by January 1, 2018.
Technology and Insurance: Are You Prepared for the Coming Disruptions? This was the name for the Pinnacle Actuarial Resources, Inc., APEX webinar on December 1, 2016. The hour-long presentation by Christopher M. Holt, ACAS, MAAA, and Legaré W. Gresham, FCAS, MAAA, focused on six new technologies and their ability to disrupt the liability insurance landscape.
Here are some recent and upcoming events in the captive insurance industry that may be of interest to our readers.
The president and CEO of SOBC Corp. explains the acquisition process for distressed insurance companies and risk retention groups.
Founders Indemnity Group, Inc., was licensed by the New Jersey Department of Banking and Insurance on November 2, 2016.
There is a lot to do in the next 90 days for captives and their material advisers who have made elections under 26 US Code § 831(b) of the Internal Revenue Code. The reporting requirements will be applicable to “[v]irtually all of the captives that have selected the 831(b) tax option,” according to John Colvin, an attorney at Colvin + Hallett and a panelist on the American Bar Association’s (ABA) Captive Insurance Committee’s webinar that was held November 9, 2016.
One of the sections in recent Internal Revenue Service (IRS) Notice 2016-66 that may be of concern to all captives, as well as commercial insurers, is the implication that an 831(b) captive with a loss and loss adjustment expense (LAE) ratio of less than 70 percent may not be an “insurance arrangement.”
On May 23, 2016, the Office of the Montana State Auditor, Commissioner of Securities and Insurance (CSI), suspended the license of CareConcepts Insurance, Inc., a risk retention group (RRG), allowing the Insurance Department to take control and supervise CareConcepts. On August 8, 2016, the Montana CSI issued a court order, signed by a Montana District Court Judge, to commence liquidation of CareConcepts. On August 10, 2016, CareConcepts was placed into liquidation. Michael J. FitzGibbons, president of FitzGibbons and Company, Inc., was appointed as special deputy liquidator on August 22. Claims against CareConcepts have a deadline of March 31, 2017.
At the National Risk Retention Association's (NRRA) 2016 Annual Conference in Chicago, Mitch Cantor, executive director of the International Center for Captive Insurance Education (ICCIE), announced a new program initiative. Recently approved by the ICCIE board of directors, this new program would allow ICCIE to share its curriculum with students in colleges and universities that have risk management programs. According to Mr. Cantor, “in most insurance and risk management programs, the topic of captives are explored but not directly taught. Only ICCIE offers this expertise.”
Many captives are probably aware of the work being done at the National Association of Insurance Commissioners (NAIC) concerning cyber-security risks. This process began in late 2014 when the NAIC’s Executive (EX) Committee appointed a "Cybersecurity (EX) Task Force" to serve as the point group on all regulatory matters related to cyber-security. In April 2015, the Cybersecurity Task Force adopted the “Principles for Effective Cybersecurity: Insurance Regulatory Guidance.”
According to the National Conference of State Legislatures, “a total of 25 states, the District of Columbia, Guam and Puerto Rico now allow for comprehensive public medical marijuana and cannabis programs. Another 17 states allow the use of low tetrahydrocannabinol (THC), high cannabidol (CBD), products for medical reasons in limited situations or as a legal defense.” An additional four states have 2016 ballot measures to permit medical use for certain conditions, such as cancer and chronic pain.
The Connecticut Captive Insurance Association (CCIA) had its fifth annual Symposium October 12–13 at the Sheraton Stamford Hotel in Stamford, Connecticut. The theme for this year’s event was “Managing Risk in the New Economy.” Some of the distinguished guests attending the conference included Katharine Wade, the insurance commissioner for the state of Connecticut, and Jonathan A. Harris, commissioner of the Connecticut Department of Consumer Protection.
The Delaware insurance commissioner has approved two "limited and streamlined" application procedures to make it easier for captive insurers to comply with the Protecting Americans from Tax Hikes (PATH) Act.
The launching of online commercial lines services that enable businesses to manage, buy, analyze, compare, and store all of the insurance information in one place have become a reality. Visit the new Embroker website to see an example of this type of insurance tech initiative.