Captive insurance industry fears new IRS rules

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Officials with Vermont’s captive insurance industry say tax-rule changes proposed by the Internal Revenue Service could hurt an industry that supports 1,400 high-paying Vermont jobs.

The IRS rules would end the deductible status of the money captive insurance companies set aside to pay claims.

They argue that regular insurance companies are allowed to deduct their reserves and that the captives — set up to serve just one parent company — should be able to as well, but the IRS rules would change that.

Molly Lambert of the Vermont Captive Insurance Association says the changes could alter what is now a level playing field between Vermont and other locations where captive insurance companies often go, like Bermuda and the Cayman Islands.

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