For more than a decade, the small captive insurance industry has faced persistent scrutiny and, at times, an unfavorable public narrative. While a small number of bad actors misused micro-captives for improper purposes, the resulting regulatory response has often swept far broader than intended. Compounding the issue has been a fundamental misunderstanding in some policy circles about how insurance operates and how properly structured 831(b) captives function as legitimate risk management tools. 

At SRA 831(b) Admin, we believe education, transparency, and collaboration are essential to strengthening the future of the micro-captive industry. That’s why the work of the 831(b) Institute matters so much.  

Why the 831(b) Institute Was Founded 

The 831(b) Institute was established in March 2023 with a clear mission: to educate business owners, regulators, policymakers, and congressional staff about the legitimate and important role micro-captives play in managing fortuitous business risks. 

For many small and mid-sized businesses, 831(b) captives are not tax strategies; they are strategic risk management tools. They help companies address gaps in commercial insurance markets, improve resilience, and take a more proactive approach to managing emerging or difficult-to-insure risks. 

The Institute focuses on ensuring policymakers understand this distinction. 

Advocating for Common-Sense Policy 

One of the Institute’s primary objectives is to promote practical, balanced policy reforms that reduce regulatory uncertainty while maintaining appropriate oversight. 

Through collaboration with industry professionals, advisors, and advocacy partners, the Institute: 

  • Publishes commentary on regulatory and legislative developments 
  • Analyzes relevant court decisions and IRS actions 
  • Engages with policymakers to explain how micro-captives operate in practice 
  • Works alongside other advocacy groups to present unified industry perspectives 

This work helps ensure that small business owners who rely on captive insurance have a voice in policy discussions, especially those who may not otherwise have the time or resources to engage directly with lawmakers. 

Signs of Progress 

Policy shifts in Washington move gradually, but there are signs of meaningful progress. 

One example is the IRS’s delay in implementing final micro-captive regulations, a development that reflects growing awareness of the complexity and significance of these rules. 

Additionally, the confirmation of Ken Kies as Assistant Secretary for Tax Policy at the Treasury Department is viewed by many as a constructive development. In November 2017, Mr. Kies authored a letter raising concerns about IRS Notice 2016-66, particularly noting that it had been issued without a proper notice-and-comment process. 

Those concerns proved prescient. In March 2022, the U.S. District Court for the Eastern District of Tennessee vacated Notice 2016-66, finding that the IRS failed to comply with Administrative Procedure Act requirements and acted arbitrarily in issuing the notice. 

Notice 2016-66 was subsequently replaced by proposed micro-captive regulations in April 2023, which ultimately led to final rules issued in January 2025. 

These developments underscore an important point: thoughtful policy engagement matters. 

The Importance of Industry Unity 

The long-term health of the 831(b) space depends on maintaining high standards, supporting legitimate structures, and fostering clear communication between industry participants and policymakers. 

Building a coalition of informed professionals and engaged stakeholders remains the most effective way to ensure that small captives are understood correctly and regulated appropriately. 

At SRA 831(b) Admin, we support efforts that: 

  • Elevate professional standards 
  • Encourage responsible captive design and administration 
  • Advocate for clarity in regulatory guidance 
  • Protect access to micro-captives for legitimate small businesses 

The 831(b) Institute represents an important step in that direction. 

Learn More 

If you believe in the 831(b) micro captive space, as an advisor, business owner, regulator, or service provider, we encourage you to learn more about the Institute’s mission and initiatives. 

You can explore their work and connect directly at: https://www.831binstitute.org/