Potential Pitfalls

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There are many wonderful advantages of forming a captive insurance company. They range from exiting the hard and soft market cycles of the traditional market, control, and the many advantages from a tax perspective. But there is another side of the captive story that needs to be understood as a part of the due diligence discussion on captives: the risks of forming and operating a captive.

Writing Only Uninsured Risk

Unsound design and questionable marketing practices

Failing to meet relevant IRS safe harbor provisions