With careful planning, policyholders can reduce the taxes they pay on insurance recoveries while maximizing the tax deductions they claim for damage payments.
Taxes also play an important role in designing novel, alternative insurance arrangements.
We have helped a number of policyholders structure insurance settlements to minimize the risk of insurer insolvency while simultaneously minimizing the taxes imposed on recoveries they receive. Similarly, we have helped companies maximize deductions for damages they pay. Frequently, these alternatives combine elements of self-insurance and risk shifting, while permitting tax deductions for premiums paid. Examples of these alternative arrangements include the use of captive insurance companies, retrospectively rated insurance, loss portfolio transfers, and finite risk insurance.