Editor’s note
Another year of change
“The industry seems united in opposing this action by the IRS.”
“The industry seems united in opposing this action by the IRS.”
As the US captive insurance industry gets ready to attend the Vermont Captive Insurance Association’s (VCIA) annual conference in Burlington, Vermont, it’s interesting to take a look back at what’s happened since the last such event.
What a year it’s been, as the attendees at Burlington will all attest.
First, let’s address the elephant in the room. Many in the market will have been wondering if this year’s VCIA would be affected by the severe storms and subsequent flooding that hit Vermont in July. Fortunately, Burlington seems to have escaped the worst of it, unlike Montpelier, the state capital.
Coming at the same that severe heatwave conditions gripped most of the southern US as well as much of southern Europe, it’s obvious that climate change is having an impact on our weather. Exactly how much of an impact is still a matter of debate, but the science is settled on this and the world needs to meet this challenge.
Insurers seem to be responding. As several articles in this year’s US Focus edition of Captive International make clear, various kinds of captives are being used to cover the risks of many companies—and this is a trend that seems to be accelerating. We’re only part of the way through the year, but the market will be paying attention to the numbers of captives, cells and other captive-related insurance tools.
In this edition we chat to Sandy Bigglestone about her first full year as the deputy commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation, after she took over from David Provost.
We take a dive into the world of risk retention groups (RRGs), which hit the headlines this year when a bill was introduced in the Florida legislature that would have severely impacted RRGs throughout the state if it had been signed into law. RRGs do not normally hit any kind of headline, so a lot of eyebrows were raised over this area of the captive insurance world suddenly being high-profile.
And then there’s another elephant in the room. The Internal Revenue Service (IRS) has, once again, intervened in the captive insurance world to attempt to brand microcaptives as potentially abusive tax transactions. Last time, the IRS was defeated when the case ended up before the Supreme Court and this second attempt appears, at first glance, to have avoided some of the mistakes the IRS made last time in terms of procedure and possibly precedent.
Nevertheless, the industry seems united in opposing this action by the IRS, and we will have to wait and see for further developments on this matter.
Two elephants in the room for a year is a lot of pachyderms for an industry such as captive insurance where things have previously been quite staid. However, times change and interest in captives is up across the board, so if anyone thinks that captives are boring in any way, they have not been paying attention.
Captive International will be at VCIA this year, where we hope to meet many old friends and make new ones, especially as retention of key staff and the recruitment of new talent is always a topic of keen discussion at any captives conference.
I look forward to meeting many of you again in Burlington.
Marc Jones, editor, Captive International
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