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Closely Held Insurance Companies

Course Objective

            This course was created to teach advisors (CPAs, EAs, accountants, attorneys, financial planners, and insurance advisors) about a not well known business tool to help clients reduce their insurance premiums and grow wealth in a tax favorable manner through the use of a Captive Insurance Company.    

            Most advisors see hear client (especially business clients) complain about how their property and casualty insurance premiums have nearly doubled in the last few years (due to the 911 bombing and large class actions lawsuits on topics like Asbestos and Mold litigation).  The typical response to business owner clients that complain about the problem is to offer sympathy and indicate that the advisor also has the same problem.  With knowledge on how a Captive Insurance Company can be used to help your clients reduce their insurance premiums while at the same time paying those premiums into their own insurance company, advisors can truly show a benefit to clients who can use captives.

Captive Insurance Companies

1. Types of Captives

            a) Single-Parent Captives (Wholly-Owned)

b) Group Captives

c) Entrepreneurial Captives


2. Why are Captives formed?

a) The Biggest Concern of Small Business Owners


3. What are the benefits of a CAPTIVE?

            a) Three ways to reduce your Cost of Risk:


4. What Are They, and Why Would a Client Want One?

a) The Purpose of a Captive

b) Captives versus Traditional Insurance

            c) Structuring a Captive


5. Determining the Feasibility and Goals of a Captive

            a) Domicile Selection

b) Partner Selection


6. Operating a Captive


7. Captive Advantages


8. Captive Structures

            a) Common Characteristics

            b) Single Parent Captive

c) Group or Association Captive

d) Rental Captives

            e) Segregated Protected Cells


9. Choosing the Right Captive Domicile

            a) Political Stability

b) Enlightened Regulation

c) Access

d) Support Services

            e) Capitalization and costs


10. Actuarial Projections and the Captive

a) Understanding Claims

            b) The Actuary's Role

c) Working with the Actuary

d) IBNR Losses

e) Establishing Premiums

f) Profit Projections


12. Reduce Taxes?

a) Large Insurance Companies

b) Small Insurance Companies  (Internal Revenue Code section 831(b))

c) Very Small Insurance (Internal Revenue Code section 501(c)(15))


13. Physicians and captives


14. Estate Planning


15. Revision to “Small” Insurance Company Tax Law

a) Prior Law Requirements For Tax-exempt Status

            b) New Law Changes Related to Tax-exempt Status

c) New Law Related to Taxation of Investment Income Only


16. Asset protection



© 2017 The Wealth Preservation Institute • St. Joseph , MI • (269) 216-9978