States Lure Insurance Companies Through Looser Regulations

Insurance companies have traditionally set up subsidiaries in off-shore tax havens like Bermuda and the Cayman Islands in part to get around strict state regulations regarding their investment strategies. But according to a report by our partner, The New York Times, a number of states have begun luring insurance giants back by allowing them to establish “captive” subsidiaries –  risk management systems that allow companies to invest and reinsure without as much capital backing. Now some state insurance commissioners are warning that captives could put insurance policy holders at risk in the same way that the housing market was endangered by mortgage-backed securities. Louise Story, Wall Street and finance reporter for The New York Times co-authored the story.