August 2015

We received very exciting news from the Tennessee Captive Insurance Association (TCIA) this week.  As you are aware, CIC Services, LLC is a member of the TCIA and manages many captive insurance companies domiciled in Tennessee.  In the past, I have noted that Tennessee is pro—business and pro small business, making it a great home for captives.  CLICK HERE to read “Tennessee Full Speed Ahead On Captive Insurance.”

BREAKING NEWS FROM THE TCIA

The Tennessee Captive Insurance Association, Inc. (TCIA) would like to congratulate Michael Corbett, Director of Captive Insurance for the State of Tennessee, on winning Captive Insurance Professional of the Year as given by

By: Sean King, JD, CPA, MAcc

Principal & In-House Counsel, CIC Services, LLC

As I have noted in prior articles, “rules of thumb” offered up offhand by the IRS and certain others for distinguishing a “sham” captive transaction from a legitimate one are often too broad to be helpful.  With that in mind, I have compiled a list of 13 easily identifiable signs of a sham captive insurance arrangement.  This list may not be exhaustive, but it should be sufficient to sound alarm bells in appropriate cases.

Evidence of a Sham Captive Arrangement

1- Prearranged written or verbal understandings that no or very few claims (even legitimate ones) will be filed

2-Prearranged understandings that insulate

By: Sean King, JD, CPA, MAcc

Principal & In-House Counsel, CIC Services, LLC

Question: If a business owner lacks “sophistication” regarding insurance and relies on a captive manager to operate a captive insurance company, is this evidence of a sham?

Welcome to part 6 of my series, addressing naïve and misguided criticisms of small captive insurance companies and the small and mid-market companies that rely on them as part of their risk management program.  As a refresher, I have noted that there is growing concern among regulators, the IRS, and captive insurance professionals that too many