Structuring Captive Insurance Programs: Key Provisions, Regulatory Requirements, Risk-Pooling Arrangements

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Wednesday, September 21, 2022

Recorded event now available

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Course Materials

This CLE course will offer guidance on structuring captive insurance programs across several scenarios. The panel will discuss the different types and uses of captive structures, best practices in regulatory compliance, and how to best leverage captive formation to maximize financial risk transfer and capital deployment strategies.

Description

Captive insurance programs have been in use for more than 50 years. From Fortune 500 companies to sophisticated family-owned ventures, captive insurance offers the flexibility to manage an organization's unique risks while also providing value to the company's bottom line. The structure can take the form of a single parent, group/association, or segregated protected cells, among many others.

When structured as a subsidiary, ownership of the captive is held by the operating company. Structuring as an affiliate, on the other hand, places ownership with the person(s) who own the parent organization. In either case, the captive is a separate entity and its form should be led by the business' strategic needs and goals of ownership.

At its fundamental level, a captive insurance program uses funds set aside from a general treasury to provide coverage of uninsured losses as incurred. Unlike typical self-insurance schemes, however, captive programs are "smarter" in that they can afford their owners a number of tax and non-tax benefits like the availability of tailored coverage and capturing underwriting income. Practitioners seeking to leverage the potential tax benefits, however, must carefully structure the program to achieve the requisite risk-shifting and risk distribution attributes shared by traditional insurance companies.

Listen as our distinguished panel discusses the most effective uses for captive insurance programs, best practices for leveraging their benefits for businesses of all sizes, and key provisions to include when structuring the entity.

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Outline

  1. Overview of captive insurance
    1. Common structure
    2. Common uses
  2. Benefits of captive insurance programs
    1. Non-tax
    2. Tax
  3. Regulatory considerations
    1. State-by-state
    2. Federal
    3. Off-shore
  4. Structuring key provisions
  5. Avoiding pitfalls

Benefits

The panel will review these and other relevant issues:

  • What types of risks can a captive insure?
  • How can counsel best incorporate captive programs into a client's overall risk-mitigation/management scheme?
  • What are some common pitfalls in structuring captive insurance programs?

Faculty

Domanski, Michael
Michael W. Domanski

Partner
Honigman

Mr. Domanski is a seasoned attorney with a practice dedicated to international tax matters and alternative risk...  |  Read More

Nowakowski, Gregory
Gregory M. Nowakowski

Partner
Honigman

Mr. Nowakowski advises businesses on risk management strategy, alternative risk financing, regulatory compliance, and...  |  Read More

Peruski, Ryan
Ryan Peruski

Partner
Honigman

Mr. Peruski focuses his practice on captive insurance arrangements, cross-border transactions, tax controversies, and...  |  Read More

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