Despite a large number of tax court cases, the term risk distribution is still remarkably ill -defined and vague, with the court offering only vague generalities as to the term's exact contours. But central to many cases is a statement that the law of large numbers is somehow involved and required.
But insurance long ago understood that the law of large numbers didn't strictly apply to a pool of risk. The law of large numbers only works when the sampled population complies with i.d.d. - the risks are independent and identically distributed. The latter is most assuredly not a feature of risks in a risk pool. Ultimately, this means the tax court is requiring a captive to comply with something that it can't.
This panel will look at the following:
- Why Helvering v. Legierse, the case that first mentioned the term risk distribution, is a
terrible case on which to base most captive insurance law in the Tax Court. - Why the Tax Court's understanding of the risk distribution is mathematically and conceptually flawed.
- How the insurance world understands risk distribution, how it differs from the Tax Court's
current understanding, and why it's superior to current Tax Court precedent.
Speakers:
- Melissa L. Wiley, Partner, Lowenstein Sandler LLP
- Hale Stewart, Captive Development Officer, Higgenbotham Insurance
- Gordon Thompson, Consultant, AmeRisk
Time: 8-9 a.m. ET
Location: Embassy Suites by Hilton, 708 Demonbreun Street, Nashville, Tennessee, 37203
