12 August 2013Analysis

Home state proliferation down to revenue

Commenting in our most recent issue of US Captive, Richard Smith, president of the Vermont Captive Insurance Association, said that the rise of home state domiciles is down to states pursuit of revenue.

“Domiciles come in because they see captive insurance as a niche market that creates jobs and helps provide general revenues. Overall it’s an excellent business for states”, said Smith.

Gary Osborne, president of USA Risk Group, explained that the NRRA had also proved a major driver of states considering the captive option or paying closer attention to such entities, helping to turn a spotlight on the potential financial benefits of becoming a captive domicile.

“It has drawn attention to state taxes on captives, which has raised the profile of self-procurement taxes. As more and more domiciles are opening for business, states are saying ‘well, we’ve got all of those captives out there. If they don’t come back to us maybe we can collect the taxes on them,’” said Osborne.