Captivating Thinking

Tax avoidance is perfectly legal and encouraged by the IRS,

but tax evasion is against the law.

–         Internal Revenue Service Website

To what lengths should business owners and professionals go to reduce their taxes and keep more of their hard earned money?  Provided they are conducting legitimate business transactions, the answer is “to the full extent the law allows.”  The phrase “tax avoidance” may cause some to feel uncomfortable.  But, even the IRS acknowledges that tax avoidance is perfectly legal and encouraged. 

We routinely talk with prospective business owners who tell us their business would benefit greatly by owning its own insurance company, but they are concerned that legal and regulatory changes will negate their captive in the future.  This is unfortunate because owning your own insurance company – specifically, a captive insurance company, is one of the most powerful financial moves a business owner can make.  Captive insurance companies are particularly effective because they provide businesses and owners with:

1. Remarkable Asset Protection
2. Better Control Over Risk Management
3. Heightened Risk Protection
4. Advantageous Tax Treatment
5. Wealth Accumulation

CIC Services, LLC recently attended the Captive Insurance Companies Association (CICA) Conference in Palm Springs, California as part of our on-going efforts to stay abreast of shifting trends, strategies and regulations in the captive insurance industry.  The conference was thematically focused on the future of the captive insurance industry.  We attended multiple presentations and workshops covering a wide range of topics, including demographic trends, risk management, medical malpractice, preparing witnesses in a lawsuit, reinsurance, captive investments, regulatory trends, and the creative employment of captive insurance companies.  Stepping back from all of the detailed and educational presentations, three large themes emerged.

CICA Conference Themes

1.   Insurance costs will increase in the very near future.

The term “game changer” has often been used to describe people or entities that break from the established or expected norms.  A “game changer” often defies existing paradigms or creates new paradigms.  In sports, a “game changer” is often an athlete that is far superior to his or her contemporaries, is very versatile or seems to always deliver in high impact situations.

The same can be said of “game changers” in business.  However, in business, “game changing” behavior is often a matter of discovery, unlike sports where “game changing” behavior is almost always the result of raw talent and hard work.