Micro-Captive Proposals Threaten Some Insurers, Industry Says

The micro-captive insurance industry Wednesday pressed the IRS and Treasury on the consequences of recent proposed rules.

IRS and Treasury Department on April 10 issued proposed rules on which micro-captive transactions are required to be disclosed to the IRS. The rules apply to small insurance companies that elect to be taxed on net income investment.

There will be fewer captive insurers, and many current captive insurers will dissolve as a result of the proposed rules, said Steven Kinion, the captive director at the Oklahoma Insurance Department. The proposals discourage the use of captive insurers for terrorism coverage, he ...