Talk:Captive insurance

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Advertisements
The Captive Manager section has what look to be a bunch of advertisements for specific companies. They don't belong there. -- Dougher (talk) 02:20, 25 June 2011 (UTC)

There are a lot of companies running around saying they are captive managers. Several have been indicted. They are selling ponzi schemes trying to secure the investments of unsuspecting businessmen. Search for "Brian Raymond Callahan" on google. Other "captive managers" are run by unlicensed lawyers whose principal tried to cleanse himself of judgments relating to selling tax shelters in a no asset Chapter 7 bankruptcy in 2007. Yet Delaware licenses his company and apparently doesn't care. The term "captive managers" is meaningless. The manager is just a mail drop. — Preceding unsigned comment added by 38.104.63.82 (talk) 02:45, 15 December 2012 (UTC)

James P. Landis is no longer with Intuitive Captive Solutions, LLC. — Preceding unsigned comment added by 65.105.28.218 (talk) 14:34, 13 June 2013 (UTC)

Alternative uses
I'm a bit unhappy about the new alternative uses section that came in (even after I cleaned it up a bit). The fact that it has come in from an IP address, and the external links that were included with the edit (now removed), makes me suspect spam. But I have left it for now (tidied up a bit) but put a "source needed" tag on it. If anyone has any more information on this alleged tax loophole, please edit as appropriate. Legis (talk - contributions) 21:50, 12 December 2006 (UTC)
 * Since it is several months later with not attribution, I chopped it.--Nowa 21:07, 29 May 2007 (UTC)

Mostly Used
I would be surprised if the statement that "Captives are mostly used by doctors, dentists and other wealthy business owners for tax benefits." proved to be factually correct. I believe it is the case that, in terms of premium volume and probably raw count, that the majority of captives are owned by commercial business enterprises or associations. Given the number of captives in Bermuda that make the 953(d) election, I am not confident that the 'for tax benefits' part of that statement can be supported either. Is there a source?

--Rcherrick 22:54, 25 January 2007 (UTC)


 * I thought that it sounded dubious myself, but it is not really my practice area, so I left it for others to edit if they thought appropriate. --Legis (talk - contributions) 08:01, 26 January 2007 (UTC)

Search "captive insurance" in Google and you'll find out many things like "A captive insurance company is, in its simplest and purest form, an insurance company that only insures all or part of the risks of its parent. This definition is, however, rather narrow and fails to reflect the way in which captives have developed over the years. A captive may more usefully be described as an insurer that writes risks whose origins are restricted or risks to which it has unique access." from http://www.captive.com/service/kpmg/kpmg_article2.html

It's all one company and the ricks are usually ridiculous like "Loss of key employee or "Loss of computer equipment" basically items which are already covered under the parent companies "real" insurance policies.

The statement "Captives are mostly used by doctors, dentists and other wealthy business owners for tax benefits." is correct. The dentist or doctor just incorporates thus becoming a business. "Other wealthy busness owners" are the commercial business enterprises, whcich usually have one owner, who makes the profit from his commercial business. Captive insurance policies are not for the poor, that's for sure! —Preceding unsigned comment added by User:Oiseau777 (talk • contribs) 00:31, 8 February 2007


 * I hear what you say, but I put the citation-needed tag back on until someone can post either a credible link or cite a credible source for the proposition. Certainly the captives I have seen in practice have mostly been law firms who are seeking to add a layer of cover either at the top or bottom of their existing PI cover, and seeking basically to retain the benefit of the brokers fees for themselves. --Legis (talk - contributions) 12:06, 8 February 2007 (UTC)

Is there a simple layman's explanation of these? An insurance company/etc that insures itself seems redundant. The only thing I can see of value would be if this was a make-believe insurer who took the fall for the parent company in a disater- ie risk. The wee captive goes belly up and the plaintiff gets nothing and the parent gets away nearly scott free. But this sounds too simple and too illegal. Any simple explanation as to why bother with this.159.105.81.31 (talk) 20:32, 21 December 2010 (UTC) I found my own answer - self-insurance is cheaper ( skip the middle guy). Many states, etc refuse or shy away from this endeavor - that is hard to find out why. I presume it may have some shady sides but noone blurts it out. It's a very big business in VT but almost nonone here has heard a word about it. If there is money being made the public apparently doesn't see a dime.159.105.80.220 (talk) 14:48, 23 December 2010 (UTC)

History incorrect
The whole premise that captives were invented by this chap in the 1960's is completely incorrect. BP, then known as Anglo Persian, had a captive insurer known as Tanker insurance 40 years previously in 1920. I am pretty sure that ICI had one dating back to 1910. — Preceding unsigned comment added by 80.254.147.180 (talk) 15:32, 15 June 2011 (UTC)

I fully agree. Captives have been around for much longer time. — Preceding unsigned comment added by 38.104.63.82 (talk) 02:39, 15 December 2012 (UTC)

I agree too. Captives have been around longer than the 1960's. I think more research is needed to put this to rest. I work in the captive insurance industry and I am going to dig into this further and add the information when I verify them. — Preceding unsigned comment added by Bmedia (talk • contribs) 19:59, 28 April 2014 (UTC)

New Sections
I'm new at this so please forgive me but I've been working with Captives now for 26 + years. It might make some sense to break out domiciles by the following: European, Caribbean, North America (to bring in British Columbia in Canada), Asia, and all other.

Vermont licensed 41 new captives in 2011 bringing total captives to 952 per the press release from the State of Vermont office of Captives: http://www.vermontcaptive.com/press-room/news-releases/2011-very-strong-for-vermont-captive-insurance-licenses.html

Every year I write a state of the market report for my employer. The following chart shows the number of captives by facilities for 2011 as of 2/1/2012 along with the incremental number of new facilities comparing 2011 to 2010 - final numbers are usually available by end of March 2012.

2011 Year End Score Card - I'm still trying to figure out how to embed or add my file

I hope this helps (Theim912 (talk) 19:39, 9 February 2012 (UTC))


 * In addition to breaking out the domiciles, I would also recommend that the types of captives be broken out (sponsored/non-sponsored). This would also allow for the subject of Cells to be expanded upon, which is a subject briefly mentioned in the original post. Finally, I would recommend breaking out advantages and disadvantages/risks associated with captives/cells.Melissa F (talk) 17:17, 16 September 2016 (UTC)

Expanding Sections
What do you think of expanding the "Sheltering income from taxes" section to focus more broadly on IRS Concerns? The IRS has been investigating small captive insurance companies since 2013 and has taken steps to identify the companies who are doing shady things.

In 2013, the IRS launched an investigation of small captive insurance companies, resulting in the IRS issuing notices in 2014 that it would be conducting formal “promoter audits” of the managers of these companies, and serving subpoenas that request a broad swath of information regarding these captives: http://www.forbes.com/sites/jayadkisson/2014/09/19/irs-launches-promoter-audits-of-captive-managers-suspected-of-abusive-practices/

There are also risks associated with failing this IRS audit:

"Risks of failing an IRS captive insurance audit include losing the premium deduction associated with Section 831(b) and incurring a 20 percent penalty, along with interest: http://www.accountingtoday.com/news/tax-practice/captive-insurance-on-the-irs-dirty-dozen-list-what-every-cpa-needs-to-know-74061-1.html"

This has changed a bit more recently and now there's a list of dirty companies who are conducting tax scams: http://www.forbes.com/sites/deanzerbe/2015/03/25/captive-insurance-irs-knocking/

The IRS claims that “unscrupulous promoters persuade closely held entities to participate in this scheme by assisting entities to create captive insurance companies onshore or offshore, drafting organizational documents and preparing initial filings to state insurance authorities and the IRS. The promoters assist with creating and ‘selling’ to the entities often times poorly drafted ‘insurance’ binders and policies to cover ordinary business risks or esoteric, implausible risks for exorbitant ‘premiums,’ while maintaining their economical commercial coverage with traditional insurers.” http://www.irs.gov/uac/Newsroom/Abusive-Tax-Shelters-Again-on-the-IRS-Dirty-Dozen-List-of-Tax-Scams-for-the-2015-Filing-Season

Ariel924 (talk) 20:36, 17 April 2015 (UTC)

New Changes
I would like to add to the page, in particular expanding on the introduction, adding some cases with conflicts and expanding on the advantages/disadvantages already presented in the article. Melissa F (talk) 17:08, 21 October 2016 (UTC)

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