Dodd Frank may still apply to captives

Vicky Beckett 19/10/2011

The VCIA’s whitepaper may not persuade congress that the Dodd Frank Act does not include captives, say industry insiders.

Jim McIntyre of the Vermont Captive Insurance Association (VCIA) has published a whitepaper stating that the broadness of definitions by Dodd Frank’s Non-admitted and Reinsurance Reform Act (NRRA) raises questions about the Act’s impact on captive insurance.

Richard Smith, president of the VCIA, plans to discuss the need for legislative clarification with members of the congress.

Jay Adkisson, US commercial litigator, said: “The whitepaper is hardly an independent analysis since it was commissioned by CICA and VCIA, not that anybody had foul motives, but merely that the paper seems more to justify a sought conclusion than to give an independent analysis (and keeping in mind that Vermont would suffer the most were the conclusion to be otherwise).”

Steven Beeghly, partner at Kreger Beeghly, said there are challenges with the ‘broad-brush arguments’ made in the whitepaper as to self-procurement and/or direct-procurement.

He said: “I think a prudent captive owner, and its service providers, could be helped by taking a look as to the regional ramifications in states, such as Washington, that have no self-procurement/direct procurement rights (other than in adoption of the one exception of the NRRA), and have not yet accepted constitutional arguments of recipients of cease and desist orders.”

Michael Mead, president at Constitution Insurance Company, said: “The white paper does a good job in bringing this issue to the forefront. The state tax issues are insanely complex and contradictory and very few captive owners and service providers pay any attention to them.”

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Dodd Frank may still apply to captives

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