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Writing Third-Party Business May Provide Captives Tax Advantage

David Lang, Principal and Consulting Actuary, Milliman
May 04, 2020

A new Captive Thought Leader Video featuring David Lang, principal and consulting actuary with Milliman, titled "Writing Third-Party Business in a Captive," has recently been added to the video library.

The biggest advantage to writing third-party business through a captive insurance company is that it may provide a tax advantage compared to a captive that only writes the risks of a single parent, according to Mr. Lang. Unlike a self-insured entity or a true single-parent captive, an organization may be able to defer taxes on its unpaid claim liabilities, much like an insurance company, he says.

There is also the opportunity to profit from the additional business, Mr. Lang says. However, by participating in the underwriting risk, an organization takes on additional risk that it didn't have before, he explains.

A business should make sure that it is comfortable with the additional risk and that it understands the third-party business written in its captive, according to Mr. Lang. It is important for those who write third-party business through their captive to understand exactly what they are getting into, he says.

There is no cost to view the videos, and you will find them in the Captive Thought Leader Videos section of More videos will be added in the future.

(Mr. Lang is pictured above.)

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