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WHAT IS “INSURANCE”? LESSONS FROM THE CAPTIVE INSURANCE TAX CONTROVERSY
Author(s) -
Porat M. Moshe,
Powers Michael R.
Publication year - 1999
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/j.1540-6296.1999.tb00053.x
Subject(s) - casualty insurance , actuarial science , insurance law , insurance policy , business , key person insurance , auto insurance risk selection , general insurance , property insurance , insurability , liability insurance , economics , public economics
Over the past 30 years, the tax treatment of insurance premiums paid to captive (i.e., subsidiary) insurance companies has generated considerable controversy and litigation. In this article, we propose a new definition of insurance that is motivated by a careful analysis of the issues raised in the captive insurance tax controversy. Emphasizing the fundamental roles played by market forces and the efficiency of risk transfers, this new definition both broadens and refines traditional definitions of insurance.