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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Minnesota Includes Captives in Direct Procurement Tax Form Changes

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September 08, 2020

The Minnesota Department of Revenue is taking comment on proposed changes that, among other things, would specify that the state's nonadmitted premium tax for direct procured insurance applies to captive insurance.

Minnesota levies a 2 percent premium tax to payments for insurance that Minnesota-based companies purchase from nonadmitted insurers that isn't placed by a licensed broker.

A proposed revision to Form IG255, the state's nonadmitted insurance premium tax return form, modifies the form's definition of nonadmitted insurers to include surplus lines insurers and captives.

"Therefore, whenever you purchase insurance directly from a surplus lines insurer and whenever your company pays premiums to a captive insurer and Minnesota is the home state of the insured ... you must complete and file Form IG255," the proposed revision states.

A statement from the department says the proposed updates to the form "define more clearly what 'nonadmitted insurance' means and further clarify the types of direct procured insurance policies that must be reported to the department for insurance premium tax."

"In addition to surplus lines policies purchased directly from nonadmitted insurance companies (purchased without the assistance of a surplus lines broker), premiums paid to a captive insurance company must also be reported on Form IG255," the statement said.

The Minnesota department requested any questions or comments about the proposed changes be submitted by September 30 to [email protected]

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