Captives Could Go Native in the U.S.

The first fully independent Native American captive domicile could be just six months away, according to G Thomas Roberts, president of Intercontinental Captive Management Company. Roberts has been in talks with a Native American tribe which has approved plans to set up captive business in its reservation, and is waiting for Federal sign-off to draft laws and regulations. Once finalised, the tribe plans to set up a self-insurance captive with capitalisation of US$250m, and then begin marketing itself as a commercial captive domicile. Each Native American reservation is a sovereign nation, exempt of US taxes and subject to its own laws. As a result, casinos and tax-free shopping malls have sprung up on several reservations. Intercontinental proposes to assist in the implementation of insurance law, insurance regulatory departments and captive formation and management facilities in several Native American communities. If one reservation is established successfully as a captive domicile, any number of the 500 others located on the US mainland could follow suit, revolutionising the industry. A swathe of new onshore domiciles could have serious implications for smaller offshore jurisdictions and would undoubtedly cause unrest among onshore states. "The tribes would be competitive in their cost structure, would set their own fees and taxes, and travel would not be a consideration. I expect them to meet the low-end captive market, similar to the British Virgin Islands," said Roberts. "I think there would be US interest in doing business with the tribes due to the country's Patriot Act [which makes it more difficult to move funds outside the US], and the current feeling here that there is something underhand about taking your money outside the country. "The US government would not be opposed to these activities, but the states may be less magnanimous. That is where the battle line will be drawn if there is one, but I don't think the states will be successful. "As far as I know, no-one has taken it as far as our group. It's an interesting business," Roberts added.