Welcome to another week in the captive world, and our new week in review newsletter. Here we will bring you all the biggest news from the last week so you’re prepared for your Monday morning and week ahead.
Hong Kong passed a new bill focused on captives and insurance-linked securities (ILS). The bill hopes to encourage more captives to Hong Kong where there are currently only four captives, all owned by Chinese parent companies. Read the story here.
Last week saw the Vermont Captive Insurance Association (VCIA) hold their annual conference, for the first time in a virtual format. In one of the more controversial keynotes Dr Robert Hartwig, a economist and professor at the University of Southern California, declared that pandemic risk is uninsurable. Read the story here.
In another VCIA keynote Michael Chang, CEO of Sompos Global Risk Solutions, analysed the current insurance market and said that he believe premium rate hikes will continue through 2020 and into 2021. Chang said that external factors such as natural disasters as well as caution from underwriters were the main cause of the rate hikes. Read the story here.
There was a big focus on social issues and captive insurance at the conference, with Commissioner Michael Pieciak declaring he would be asking captives in Vermont “hard questions” about diversity, keynote Michael Chang saying there was a “long way to go” for diversity in the industry and multiple sessions discussing the impact of “social inflation”.
There was more movement in the US market around the Internal Revenue Service’s (IRS) focus on microcaptives. The IRS sent another wave of “soft enforcement” letters to microcaptives after an initial wave in March. Then in a court case the law firm Moore Ingram Johnson and Steele formally objected to a Judge recommending that the firm hand over confidential documents regarding microcaptive clients to the IRS.
A court in Maryland ruled that Macy’s captive insurance company did not have to pay $24 million in state taxes. Leadville Insurance Company, which is domiciled in Vermont, had appealed an assessment by the Maryland Department of Treasury that it owed millions in taxes for the years 1996-2003.