Insurance Fundamentals That Strengthen Captive Insurance Companies

Internal Revenue Service (IRS) scrutiny of captive insurance companies has increased in recent years, but what are regulators and courts actually evaluating? In this episode of The Edge of Risk Podcast by IRMI, Joel Appelbaum is joined by George Belokas, president of GPW and Associates, chair of the Self-Insurance Institute of America Captive Committee, and president of the Arizona Captive Insurance Association, to discuss the insurance fundamentals that support well-managed captive insurance companies. Drawing on his actuarial and industry leadership experience, Mr. Belokas explains why the focus extends beyond tax elections to whether a captive is genuinely operating as an insurance company. The conversation explores the importance of actuarially sound pricing and reserving, risk transfer and risk distribution, and the lessons emerging from recent IRS regulations and court decisions. Mr. Belokas also discusses governance, documentation, and emerging risks such as cyber liability, employee health care, and supply chain disruption, and he explains why captive owners should regularly evaluate whether their captive continues to align with changing organizational risks. He concludes with practical guidance on maintaining strong underwriting, governance, and long-term operational discipline while navigating an evolving regulatory environment.