Captive Insurance Issues and Trends 2017
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Internal Revenue Service ruling specifies types of coverage that do not qualify as insurance risk for determining tax-deductibility of premiums paid to a captive insurer.
The use of swing-rated reinsurance contracts by captive insurance companies, including actuarial, accounting, and regulatory implications, was the focus of a March 3, 2016, webinar hosted by the South Carolina Captive Insurance Association (SCCIA).
The year may have changed, but the Internal Revenue Service (IRS) preoccupation with captives as potential abusive tax shelters remains the same.
On August 14, 2015, the Internal Revenue Service (IRS) released Chief Counsel Advice (CCA) 201533011, in which the IRS determined that the excess loss insurance contracts at issue do not qualify as insurance for US federal income tax purposes. The CCA is the latest indication of the IRS's position on the ongoing issue of what is insurance and continues the IRS's reliance on the common sense insurance prong of the test for insurance to bolster its conclusions on the other prongs of the test.
Validus holding that federal excise tax (FET) does not apply to foreign reinsurance transactions is affirmed by the U.S. Court of Appeals for the District of Columbia Circuit.
Captive insurance involving single-member limited liability companies may now qualify as insurance for tax purposes due to a recent decision in the Healthmark case.
In IR-2015-19, the IRS explained that 831(b) micro-captives may be considered abusive tax structures and outlined determining criteria.
Placing medical stop loss coverage in a captive insurance company can provide substantial savings to employers.
Over the last month Captive Wire and Captive.com have highlighted a series of headlines suggesting that the fundamentals underlying the global reinsurance market are changing. John Foehl, coeditor of Captive.com and Captive Wire, suggests generative thinking is one means of considering what these changes mean for captives.
Last week a 7-0 Missouri Supreme Court decision invalidated the state cap on some punitive damages. The supreme court restored the judgment of a lower court because the plaintiff had filed a claim as a common law fraud, which existed in Missouri since the first state constitution was written.