8 April 2014

JLT: domicile choices are growing more complex

The proliferation of captives and captive domiciles is making the domestication decision an increasingly tough one. Parents need to weigh their decision increasingly carefully.

That is the word from Len Crouse a partner at JLT Towner and former captive regulator for Vermont, who says that “despite a soft commercial market, the captive industry continues to grow”.

He warns that parents need to consider each domicile carefully. “The number of dedicated regulators and the experience of captive insurance professionals differ from one domicile to the next.”

Increased competition has been good for captives he says, but has complicated domicile decision-making. He cautions that companies need to do their due diligence with an experienced partner when picking their home domicile.

Proliferation has generated considerable competition within the space, and JLT Towner says that it is “crucial captive principals understand the pros and cons of prospective domiciles”.

“Some have sprung up to keep tax dollars from captives sponsored by home state corporations. Others specialize in particular captive structures, such as IRC section 831(b),” says Crouse.

Captive parents need to consider why they are opting for a particular jurisdiction and how it is a fit for their particular needs.

For a primer on what to look for in a captive domicile, check out the JLT Towner white paper on the subject, which you can find  here.