US captive coalition opposes rule change

The Captive Insurance Companies Association (CICA) and the Vermont Captive Insurance Association (VCIA) have formed the Coalition for Fairness to Captive Insurers (CFCI) to develop a coordinated response to the proposed changes to captive regulation in the US.

They have hired the firms of McDermott Will & Emery LLP, Dewey & LeBoeuf LLP, and McIntyre Law Firm, PLLC to develop their response to the proposed regulation of the Internal Revenue Service (IRS) issued on September 28, 2007.

VCIA said the proposal, related to captive insurance and the rules of consolidated reporting, would significantly alter the landscape for captive insurers should it become final. Adding that should the proposed regulation be implemented the favourable captive environment in the US would be changed dramatically.

According to CICA president, Dennis Harwick: “Captive insurance companies pay taxes just like commercial insurance companies, but this proposed regulation would suddenly penalize legitimate, fully regulated captive insurance companies.” Molly Lambert, President of VCIA added, “A change in the IRS rules of this magnitude creates uncertainty in the federal regulatory environment. Businesses may continue to use the captive insurance tool, but the US industry would be significantly affected if this proposed regulation were implemented.”

Both Associations have determined that achieving the withdrawal of this proposal by the IRS is critical to their missions of promoting the strength of the captive insurance industry and the members that they serve.