MINNEAPOLIS, Aug. 25, 2015 ─ In an Information Statement released today the Captive Insurance Companies Association (CICA) emphasized the importance of using best practices and qualified experts when designing and operating a micro-captive, including those that use the Internal Revenue Code 831(b) election for small insurance companies.
The “Information Statement Regarding Micro-Captives” serves as a supplement to CICA’s Best Practice Guidelines and builds on last year’s CICA statement “Do 831(b)s Right or Don’t Do Them at All”.
“Well run captive insurance companies play an essential role in risk management and must be designed and operated to achieve risk transfer and risk distribution,” said Dennis Harwick, CICA president.
The key to successful use of captive insurance, as outlined in the Information Statement, is to follow all best practices, starting with having a valid non-tax business purpose and using the guidance of experts with primary, rather than secondary knowledge of coverages, premiums, risk management, governance, investments, and claims.
CICA issued the Information Statement to help its members and the public better operate and understand micro-captive insurers. “Our mission to be the best source of unbiased information, knowledge and leadership for captive insurance decision makers,” Harwick explained.
A copy of CICA’s Information Statement Regarding Micro-Captives is available online.