There are many wonderful advantages of forming a captive insurance company. They range from exiting the hard and soft market cycles of the traditional market, control, and the many advantages from a tax perspective. But there is another side of the captive story that needs to be understood as a part of the due diligence discussion on captives: the risks of forming and operating a captive.
Writing Only Uninsured Risk
Unsound design and questionable marketing practices
Failing to meet relevant IRS safe harbor provisions
Potential Pitfalls
ReplyDeleteThere are many wonderful advantages of forming a captive insurance company. They range from exiting the hard and soft market cycles of the traditional market, control, and the many advantages from a tax perspective. But there is another side of the captive story that needs to be understood as a part of the due diligence discussion on captives: the risks of forming and operating a captive.
Writing Only Uninsured Risk
Unsound design and questionable marketing practices
Failing to meet relevant IRS safe harbor provisions