Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda.
Today, all it takes is a trip to Vermont.
Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.
Gosh another giant step forward in the on-going creation of corporate welfare-statism.
Good way to encourage white collar crime and fraud. Off shore transactions are frequently use to shield from scrutiny by the state insurance regulators.
Actually I think its away to eliminate the need for fraud. It allows insurance companies to accomplish legally what was previously fraud. Namely sell more policies than they can financially cover.
I wrote a very long diatribe about this story and decided not to send it. Suffice it to say there are more falsehoods in this story than truths. Before believeing much of what is in this article, consider the source. Believing most of what is in the NYT is like saying “I saw it on the internet, so it must be true.”
Their hope must be that government will buy into the fallacy that these companies are too big to fail but it seems to me that our economy might be better served if some of these companies did fail and leave room for more efficient (and possibly more honest) companies to sell insurance.
3, No. It allows them to cover up that they are selling more polices than they are allowed to. In effect it will allow them to conceal the fact that they are falsifying their financial statements. They can also play games with their reinsurance.
and increase the options and bonuses of execs that are tied to profitability . . .