Strategically Insuring Your Farm: The Rise of Micro-Captive Insurance

Over the past twenty-five years producers have operated within the modern crop insurance regime. Through this experience producers have gained valuable insights into understanding the essence of how insurance operates. The insurance market, including crops, property and casualty, has experienced changes, especially in the past couple of years. Crop insurance per acre premiums have risen and contract offerings have expanded, contributing to further complexity. Property and casualty have experienced increased claims costs, leading to higher premiums and/or higher deductibles and sometimes drops in coverage. Increased knowledge of how insurance market’s function, increases in contract complexity, increases in premium, increases in deductibles and the threat of being denied coverage for risks makes the time ripe to discuss an insurance alternative – Section 831(b) of the U.S. tax law, commonly referred to as “micro-captives”.