Accounting For Captive Insurance Premiums

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When Are Premiums Paid to a Captive Insurance …

(9 days ago) Generally, premiums paid for insurance are deductible for federal income tax purposes in the year paid if the policy is an annual policy and are amortized over the policy period for a multiyear policy. In addressing the question of when premiums paid to a captive insurance company are deductible for federal income tax purposes, the key determination is whether the …

https://www.captive.com/articles/when-are-premiums-paid-to-a-captive-insurance-company-deductible-for-federal-income-tax-purposes

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TAX / MANAGEMENT ACCOUNTING Captive …

(7 days ago) A captive insurance company formed by a business or business owner can provide flexibility in covering property, casualty, and liability risks and the potential to retain underwriting profits. Premiums paid to a captive may be tax-deductible as a business expense, and premium income to the captive may be

http://riveroakrisk.com/wp-content/uploads/AICPA-Article-112016.pdf

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Captive Insurance Companies - The CPA Journal

(6 days ago) In 1978, Revenue Ruling 78-338 defined the number of participants in a “group” captive that were needed to create deductible insurance premiums: “A ‘group’ Captive is an insurance company formed by multiple corporations seeking to insure similar risk, i.e. … workers compensation, health insurance, employee benefits, etc.”

https://www.cpajournal.com/2018/12/19/captive-insurance-companies/

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Captives 101: What Are They, and Why Do I Want One

(6 days ago) One of the many reasons to choose the "captive option" is because of accounting and tax rules, which allow for the deduction of insurance premiums by insurance companies. Again, as a captive is an insurance company, reserve funds held for the payment of future losses are deductible. If a company simply increases its retention, the funds held in

https://www.irmi.com/articles/expert-commentary/captives-101-what-are-they-and-why-do-i-want-one

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5.2 Captive insurance arrangements - PwC

(5 days ago) 5.2 Captive insurance arrangements. Publication date: 21 Nov 2019. us Loans & investments guide 5.2. Traditional risk management includes commercial insurance (under occurrence-based, claims-made, or retrospectively-rated policies) and self-insurance. Another alternative involves the use of a captive insurance company.

https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/loans_and_investment/loans_and_investment_US/chapter_5_other_rece_US/5_2-Captive-insurance-arrangements.html

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Captive Premium Finance - Input 1

(5 days ago) Past experience shows that at a minimum, a captive commercial premium finance operation with average size premiums of $3,000.00 could realize anywhere from $20,000.00 — $30,000.00 in income per year for every $1 million dollars of financing. This number will vary depending on a variety of factors including the difference between the rate

https://www.input1.com/resources/articles/captive-premium-finance

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GAAP and Statutory Reporting Issues Faced by Captive

(7 days ago) In any case, GAAP generally requires that the risk of loss must have been substantially transferred to the captive for “normal” insurance company accounting to be applicable. If this is not the case, then the premiums and losses are accounted for under deposit accounting and the captive’s operations would be included in the financial

https://www.marcumllp.com/insights/gaap-and-statutory-reporting-issues-faced-by-captive-insurance-companies

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How do you record a payment for insurance? …

(4 days ago) The one-year period for the insurance rarely coincides with the company's accounting year. Therefore, the insurance payments will likely involve more than one annual financial statement and many interim financial statements. Prepaid Insurance vs. Insurance Expense. When the insurance premiums are paid in advance, they are referred to as prepaid.

https://www.accountingcoach.com/blog/insurance-payment

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Basic Insurance Accounting—Selected Topics

(4 days ago) in the IASA’s text of Property-Casualty Insurance Accounting. This study note also assumes a basic understanding of bookkeeping terminology, such as” ledger”, “account” and “closing the books”, ) I. Loss and loss adjustment expense accounting (learning objective B.2 for losses. Premiums already covered by other study note.)

https://www.casact.org/sites/default/files/old/studynotes_7us_blanchard_july2008.pdf

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Captive Insurance Arrangements and Taxes CPA Practice

(4 days ago) Under section 831(b) of the tax code, captive insurers that qualify as small insurance companies can elect to exclude limited amounts of annual net premiums from income, so that the captive pays

https://www.cpapracticeadvisor.com/tax-compliance/news/12434402/captive-insurance-arrangements-and-taxes

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Captive insurance - Deloitte

(1 days ago) effect of covered losses. They can stabilise premiums paid by group members within the multinational group, and they can help the group obtain lower premiums in third party insurance/reinsurance markets as a result of pooling of risks in the captive and “bulk discounts”. Captive insurance: Section F of the OECD’s new guidance on financial

https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/tax/deloitte-uk-captive-insurance-companies-of-non-insurance-groups.pdf

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Preparing captive owners for new accounting legislation

(2 days ago) Preparing captive owners for new accounting legislation. IFRS 17 is the first international accounting standard for insurers. It represents a huge change for captive insurance companies, which will need to be well prepared to comply with the new rules, says Alex Gedge of Marsh. In May 2017, the International Accounting Standards Board issued

https://www.captiveinternational.com/contributed-article/preparing-captive-owners-for-new-accounting-legislation

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Chapter 34 – Insurance Costs

(Just Now) 34-1 Methods of Cost Accounting for Insurance Programs in proportion to the participation in gross premium costs. Insurance provided by captive insurers (owned by or under the control of the contractor) is considered self-insurance and …

https://www.dcaa.mil/Portals/88/Documents/Guidance/Selected%20Area%20of%20Cost%20Guidebook/Chapter34.pdf?ver=2019-03-06-135648-533

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Captive insurer premium reporting and tax requirements

(3 days ago) The passage of 2SSB 5315 (leg.wa.gov) requires captive insurers operating in Washington state to register with the Office of the Insurance Commissioner (OIC). Taxes on premiums for Washington risks are due for any period after Jan. 1, 2011, if not previously remitted.

https://www.insurance.wa.gov/captive-insurer-premium-reporting-and-tax-requirements

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How Does a Captive Insurance Company Work?

(4 days ago) A captive insurance company operates in a similar way to a traditional property and casualty insurance company. A captive issues policies, processes claims, follows all applicable regulations, files a property and casualty insurance company income tax return, and has profits, if profitable, available to the insurance company owners.

https://www.captive.com/articles/how-does-a-captive-insurance-company-work

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Financial Reporting for Non-Traditional Insurance WALZ

(4 days ago) Each member company typically makes an initial investment to buy into the captive and then makes monthly premium payments to the captive. Captives can hold all types of insurance, including health, workers’ compensation and general liability. In addition to potentially lower premiums, there are added benefits to a captive.

https://www.walzgroupcpa.com/non-traditionalinsurance/

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Captive insurance and risk management: PwC

(9 days ago) Why captive insurance? A “captive” is a licensed insurance company utilized to insure a wide range of risks depending on business needs. Many businesses begin with coverages such as the deductible or self-insured portions of general liability, auto, casualty, property and workers compensation losses, but often expand coverages to include unique risks such as …

https://www.pwc.com/us/en/industries/insurance/captive-insurance-and-risk-management.html

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The Beginner’s Guide to Captive Insurance Launchways

(1 days ago) Captive insurance programs have been popular among business’ largest corporations since they were first created in the 1950s. As we enter 2020, however, captives are enjoying a resurgence as a growing solution for businesses of all sizes trying to think outside the box. Captives allow businesses to maintain direct control of their insurance programs, …

https://www.launchways.com/captive-insurance-guide/

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The Ultimate Guide To Captive Insurance Companies

(Just Now) A few years ago Congress passed legislation regarding the requirements a captive insurance company must meet to be verified as underwriting legitimate insurance for tax and accounting purposes. The Protecting Americans from Tax Hikes Act of 2015 (‘PATH Act’) passed December 18, 2015 and took effect January 1, 2017. The Basics of the PATH Act

https://captiveinsurance101.com/captive-insurance-companies/

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The Basics of Captives - Risk & Insurance

(4 days ago) The number of captive insurance companies continues to rise. In 2014, there are roughly 6,300 captives globally, up from 5,525 in 2009. About 90% of the Fortune 500 companies1 own one or more captive insurance companies and many captives house more than one company with the development of cell captives. Cell companies are a captive program

https://riskandinsurance.com/wp-content/uploads/2016/05/The-Basics-of-Captives-Book-FINAL-March-2016.pdf

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The benefits of captive insurance companies

(6 days ago) For the premium payment to the captive to be deductible as an insurance expense, the captive must be able to prove that it is a valid insurance company (payments for self-insurance generally are not deductible (L.A. Thompson Scenic Railway Co., 9 B.T.A. 1203 (1928)). Besides obtaining an insurance license from a state or a foreign jurisdiction

https://www.journalofaccountancy.com/issues/2013/mar/20126102.html

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Insurance Accounting and Financial Reporting Update

(Just Now) entities in the insurance sector. The annual accounting and financial reporting updates for the banking and securities, investment management, and real estate sectors are available on US GAAP Plus, Deloitte’s Web site for accounting and financial reporting news.

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-insurance-accounting-and-financial-reporting-update-02122016.pdf

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CAPTIVE INSURANCE: TAX CONSIDERATIONS FOR TAX- …

(7 days ago) Premiums paid generally not subject to a federal excise tax (4% of the premium for direct insurance and 1% for reinsurance or life insurance) Except for premiums from unrelated voluntary physicians or entities Can avoid attribution of any “unrelated business taxable income” to captive’s tax-exempt parent

https://caymanintinsurance.ky/wp-content/uploads/2019/04/2018-11-27-Track-A2-Captive-Insurance-Kusaila-Raybshteyn.pdf

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Captive Insurance Taxation

(8 days ago) Tax law expertise underlies alternative risk finance structures of which captives are one. This is because the business logic behind most alternative risk structures involving a captive have as a foundation a company's expectation that it can deduct against income premiums paid for insurance, and the involved captive will qualify for special accounting and tax treatment …

https://captiveexperts.com/Captive_Taxation.html

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How Does a Captive Insurance Program Work? - Captive Resources

(2 days ago) Captive Manager: A full-service management firm providing captive insurance services like license application, captive formation, accounting, and more. Insurance Carrier: A carrier is still involved in the captive model to issue the policies, provide aggregate excess and statutory coverage, and back the full financial risk of the program.

https://www.captiveresources.com/insight/group-captives-101-how-does-a-captive-insurance-program-work/

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Self-Insured Group Medical Plans and - Accounting Today

(4 days ago) Captive Alternative One strategy that can be implemented is to establish a captive insurance company. In a properly structured captive arrangement, premiums paid to the captive would be tax deductible and the captive would be able to establish loss reserves to defer taxation on a majority of the plan savings.

https://www.accountingtoday.com/news/self-insured-group-medical-plans-and-their-effect-on-the-corporate-tax-return

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Accounting Entry to Record Finance of Insurance Premiums

(1 days ago) Knowing the basic journal entries in the Generally Accepted Accounting Principles system will make anyone's life easier, but especially managers. There are a number of journal entries that are important and one of those accounting journal entries is recording the financing of insurance premiums. Insurance is a

https://bizfluent.com/info-12011197-accounting-entry-record-finance-insurance-premiums.html

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Understanding Captive Insurance Expert Commentary IRMI.com

(9 days ago) Understanding Captive Insurance. Although captive insurance has been an accepted risk management tool for over 70 years, it remains criminally underutilized for a number of reasons. The fact that insurance is one of the most dreaded business purchases doesn't help, nor does the industry's negative image.

https://www.irmi.com/articles/expert-commentary/understanding-captive-insurance

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Insurance Accounting: Statutory Accounting Principles

(3 days ago) Insurers assume risk on return for a premium. Statutory accounting principles apply to the insurance industry. Insurance category impacts accounting practices. How liabilities, revenues, expenses, etc. are classified and accounted for. The purpose of financial statements to evaluate the business.

https://www.financepal.com/blog/insurance-accounting/

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How Captives Can Cut Supply-Chain, Cyber Insurance Costs - CFO

(5 days ago) 1. Increase the company’s deductible on commercial coverage for those risks — boosting them, for example, from $50,000 to $250,000 on a policy with an overall coverage limit of $2 million. 2. Self-insure the $250,000 deductible, as well as the excess risk from $2 million to $5 million, through a captive. 3.

https://www.cfo.com/accounting-tax/2014/06/captives-can-cut-supply-chain-cyber-insurance-costs/

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An Introduction to Captives - AIG Business Insurance Home

(9 days ago) entities pay premium to the captive. Any profits made by a captive are retained within the parent company’s group rather than being ‘lost’ to the insurance market. Typically, a captive has none or very few employees requiring some or all of the usual ’insurance company’ functions to be outsourced to third parties.

https://www.aig.co.uk/content/dam/aig/emea/united-kingdom/documents/Alternative-Risk-Solutions/White-Papers/an-introduction-to-captives.pdf

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A Guide to Captive Insurance - Artex Risk

(9 days ago) Source – Business Insurance captive survey Vermont 596 Utah 450 Delaware 323 Nevada 202 Hawaii 197 Montana 196 District of Columbia 193 South Carolina 167 Tennessee 127 Arizona 110 1 According to the Business Insurance captive survey, captive numbers at the end of 2015 had reached 6,939, up from 6,839 at the end of 2014.

https://www.artexrisk.com/media/9243/artexcaptive-guide.pdf

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Captive Insurance: Liability, Programs, Costs & More

(4 days ago) The initial interest was to lower insurance premiums. Also, stimulating growth was realizing a new source of significant revenue, and equity for captive owners was a welcome byproduct of creating a captive insurance company. The progress of captive insurance programs continued with the help of favorable congressional action.

https://www.programbusiness.com/blog/captive-insurance-liability-programs-costs-more

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Understanding Captive Insurance Arrangements (article)

(7 days ago) In order for captive insurance premiums to be deductible for federal tax purposes, the premiums must be for paid for true insurance, and be ordinary and necessary business expenses. In the captive insurance world, the IRS has sought for years to clarify what it considers to be "insurance" for which premiums would be deductible.

https://www.cbiz.com/insights/articles/article-details/understanding-captive-insurance-arrangements-article

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Insurance - FASB

(Just Now) To address these issues, the amendments in FASB Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts: Improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows

https://www.fasb.org/insurance

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Captive Insurance Companies ValueScope The Valuation Experts

(4 days ago) A Captive Insurance Company (CIC) is an insurance company established by an operating parent company for the purpose of covering the parent company’s specific risks. CICs are effectively a type of “self-insurance.”. The Internal Revenue Code 831 (b) permits businesses to create CICs, whereby the premiums paid by the operating company are

https://www.valuescopeinc.com/resources/white-papers/wp-captive-insurance-companies/

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Captive Insurance: Meaning, How it works (Examples with

(2 days ago) Captive Insurance companies represent a special case of risk retention. How Captive Insurance Works. Instead of paying a premium to an insurance company, the premium is paid to the captive insurance company. Depending on the type of the company, level of claims, the captive could retain any excess of the premium received over claims paid.

https://www.iedunote.com/captive-insurance

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Captive Insurance? The Answer Is Education Accounting Today

(8 days ago) Now, every year the company pays premiums to the captive (up to $1.2 million per year), and the company will get a tax deduction for the premiums paid. Whatever is left at the end of each year in the captive, after expenses and claims have been paid, will now go to the reserves of the captive.

https://www.accountingtoday.com/news/captive-insurance-the-answer-is-education

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U.S. Taxation for Captive Insurance Company

(6 days ago) • Of the ~5,000 captive insurance companies, ~70% are “offshore”. • Significant reinsurance market - Bermuda • Potentially subject to a Federal Excise Tax (“FET”) on premiums paid to a foreign insurer. • Potential self procurement taxes as captive domicile is not the “home state” for Dodd Frank purposes.

https://nebula.wsimg.com/3eb6a760ef6ac12750af6c6df3b0615f?AccessKeyId=C5B9CC34FEB5DA1231B4&disposition=0&alloworigin=1

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The IRS is looking for a few good lawyers Accounting Today

(8 days ago) 1 hour ago · Abusive micro-captive insurance arrangements are generally sold to owners of closely held entities and commonly lack many of the necessary attributes of insurance, have excessive premiums, insure highly improbable risks and have no connection to genuine business and insurance needs.

https://www.accountingtoday.com/news/the-irs-is-looking-for-a-few-good-lawyers

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Captive Reinsurance White Paper - Prudential Financial

(9 days ago) using captive insurance companies to manage a variety of risks for over 50 years. These risks include property, casualty, and workers’ compensation insurance. The first 40 years of captive reinsurance During the 1960s, companies began to set up captive insurance entities to insure the risks that the commercial insurance marketplace

http://web.prudential.com/media/managed/giproducer/IFS-A105178_CaptiveReins.pdf

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Texas Captive Annual Report Instructions

(4 days ago) Funds Held under Reinsurance Ceded: Include reinsurance premiums withheld by the captive insurance company as specified in the reinsurance contract or advances to the captive insurance company by the payment of losses before the …

https://www.tdi.texas.gov/financial/documents/captivearinstr.pdf

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Background on: Insurance Accounting III

(3 days ago) Overview Accounting is a system of recording, analyzing and reporting an organization’s financial status. In the United States, all corporate accounting and reporting is governed by a common set of standards, known as generally accepted accounting principles, or GAAP, established by the independent Financial Accounting Standards Board (FASB).

https://www.iii.org/publications/insurance-handbook/regulatory-and-financial-environment/background-on-insurance-accounting

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Group Captive Insurance FAQs Chernoff Diamond

(1 days ago) Cost efficiencies and reductions in insurance premiums are also dominant drivers for captive use. Member-owners can choose their providers, obtain broader insurance coverage and access the reinsurance market that may offer better rates, coverage, and service.

https://www.chernoffdiamond.com/services/risk-management-consulting/group-captive-insurance/group-captive-insurance-faqs/

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Insurance RH CPAs, PLLC

(8 days ago) Premiums paid by the owner or operating company are 100% tax-deductible. The income is deferred by the captive and taxed at a more favorable capital gains rate when money is distributed to the owners. If the owners of the captive are heirs of the owners of the operating company, wealth is transferred without gift or estate tax implications.

https://www.rh-accounting.com/what-we-do/captive-insurance

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