The Internal Revenue Service provides guidelines for how insurance companies known as “captives” should be taxed. The Cornell University Law School’s Legal Information Institute provides specific language about the code along with notes and updates that have been made to it.
The father of captives
The International Insurance Society’s Insurance Hall of Fame is a place where industry leaders are honored for their work. One of the hall of fame’s laureates is Frederic Reiss, an insurance broker and Harvard alum who invented the captive in the 1960s, and promoted captive insurance for the remainder of his career. Reiss mainly promoted the offshore captive, and is often referred to as “the father of the captive” – he is just as often credited with putting Bermuda on the investor’s map.
Reiss brought into vogue a new way of looking at insurance that would help businesses gain access to insurance they needed but couldn’t buy – or afford — on the market.
Intuitive Captive Solutions (Intuitive) works with the type of domestic enterprise captives as outlined by the IRS, mainly U.S.-based small property and casualty captives that help mainly medium-sized businesses take advantage of the benefits offered by captives.
Putting captives to work for you
As Reiss recognized in the 1960s, companies sometimes need additional options for insuring risks – and a pool where that risk can be shared. He was focused on big companies, but since then, the benefits of captives have been delivered to mid-sized businesses who want the same types of advantages. Domestic captives offer an opportunity for your business to get additional coverage, lower tax rates and lesson the burden of deductibles while creating an opportunity for investment growth and smarter wealth management.
Reiss’s company, International Risk Management Limited, was the first company to sell captives. His place as an innovator in the insurance industry is secured, and his idea continues to help companies big and small. See how his innovation can work for your company – consider launching a captive to help your business grow, and contact us if we can provide you with answers to some of the more complicated questions that arise while you’re reading the IRS code.