History of US Employee Benefits in Captives

Employee Benefits In Captives | Debbie Liebeskind | Actuary, Health & Group Benefits | Towers Watson

Debbie Liebeskind of Towers Watson discusses the brief history of US employee benefits and captive insurance. The Employee Retirement Income Security Act (ERISA) prohibits transactions between plans and parties of interest (such as wholly owned captive insurance companies), so companies wishing to manage employee benefits through a captive insurance company must get permission from the US Department of Labor. Requirements for getting this permission include use of a captive domiciled in the United States, all fronting insurers must have an A.M. Best "A" Rating, and the arrangement must create a benefit enhancement for the plan participants (the employees). The DOL's expedited approval process has led to an increase in companies using captives to manage employee benefits.