The Captive Insurance Timeline: The Rise of Risk Distribution

7 Pages Posted: 12 Jun 2021

See all articles by Beckett Cantley

Beckett Cantley

Northeastern University

F. Hale Stewart

The Law Office of Hale Stewart

Date Written: October 19, 2015

Abstract

This is the third article in a series briefly explaining the history of U.S. captive insurance law. In the first article, we noted that businesses can be forced to form their own insurance companies if they cannot obtain insurance or if the only available policies are prohibitively expensive. The IRS successfully argued that early captive insurance companies were not valid insurers because they did not cover risks of non-parent companies. In our second article, we explained how adding non-parent risk to captive insurance companies allowed courts to find that captives were viable insurance companies for tax purposes. The cases presented in this article continue on this theme: The addition of a small percentage of third-party risk provides courts with sufficient grounds to respect these structures as insurance companies for tax purposes.

Suggested Citation

Cantley, Beckett and Stewart, Hale, The Captive Insurance Timeline: The Rise of Risk Distribution (October 19, 2015). Tax Notes, 2015, Available at SSRN: https://ssrn.com/abstract=3226657 or http://dx.doi.org/10.2139/ssrn.3226657

Beckett Cantley (Contact Author)

Northeastern University ( email )

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HOME PAGE: http://www.cantleydietrich.com

Hale Stewart

The Law Office of Hale Stewart ( email )

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