Legal Developments
What the Drake Plastics Ruling Actually Means for Micro-Captive Owners
The 831(b) Institute discusses the implications of the Drake Plastics ruling on Internal Revenue Service (IRS) oversight of 831(b) captive insurance arrangements. The discussion addresses "transactions of interest," "listed transactions," legitimate risk management structures, and how the ruling could influence future IRS guidance, enforcement activity, and compliance considerations for captive insurance participants. Learn More
Texas Court Partially Strikes IRS Micro-Captive Rule
A Texas federal court issued a split ruling on Internal Revenue Service (IRS) micro-captive regulations, striking down the listed transaction designation while upholding transaction-of-interest reporting rules. The decision maintains disclosure requirements for Section 831(b) captives, but it could limit enforcement and penalties tied to the stricter listed transaction classification. Learn More
Tennessee Court Backs IRS Micro-Captive Reporting Regulations
A Tennessee federal court upheld the Internal Revenue Service (IRS) final micro-captive reporting regulations, rejecting CIC Services' Administrative Procedure Act challenge. The ruling allows disclosure rules for certain Section 831(b) captive insurance transactions to remain in place, concluding the IRS acted within its authority to require reporting of arrangements that may present tax-avoidance risk. Read More
NC Court Allows Bad Faith Claims Against Captive Insurer to Proceed
The North Carolina Business Court allowed bad faith and unfair trade practices claims to proceed against a captive insurer in a dispute over approximately $116 million in coverage tied to a litigation finance investment. The court dismissed the breach of contract claim without prejudice after finding the insured failed to meet policy conditions during the claims process. Read More
Vermont Captive Insurer Seeks Reinsurance Recoveries in Dispute with Lexington, Swiss Re Unit
A Vermont-domiciled captive insurer has filed suit seeking reinsurance recoveries tied to abuse-related claims involving a former boarding school. The dispute centers on coverage treatment, batching of claims, and allocation of losses across policy years to trigger excess general liability and facultative reinsurance coverage. Read More
SRA 831(b) Admin and Affiliates Sue IRS over Final Micro-Captive Regulations
SRA 831(b) Admin and affiliates are suing the Internal Revenue Service (IRS) over its 2025 final rule on captive insurance, arguing it exceeds regulatory authority and burdens small businesses. The lawsuit highlights prior audits, compliance efforts, and industry pushback on proposed rules that foreshadowed the expanded reporting requirements now in force. Read More
Arkansas Governor Signs Bill to Form State Property Insurance Captive
Arkansas Governor Sarah Huckabee Sanders has signed a measure creating a state-owned captive insurance company aimed at stabilizing property insurance for public schools, higher education institutions, and state-owned buildings. The measure provides that the Arkansas Department of Transformation and Shared Services will oversee the state captive insurance program's operations. Read More