1696- Contributors for Insuring Houses, Chambers or Rooms from Loss by Fire by Amicable Contributionship - London, England – Perhaps the first mutual insurance company. More commonly known as the Amicable Contributionship (for obvious reasons).
1735 - The Friendly Society - Charleston, SC – Perhaps the first effort to form a mutual in the New World. Unfortunately, the Friendly Society failed in 1740 due to the conflagration which consumed over three hundred houses.
1752 - The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire - Philadelphia, PA – Benjamin Franklin was one of the founders of this mutual which is still in operation today.
1784 - The Mutual Assurance Company for Insuring Houses from Loss by Fire - Philadelphia, PA – Formed by former members of the Philadelphia Contributionship, which, in 1781, decided to no longer insure any building that had trees near it. The Philadelphia Contributionship felt that trees were a fire hazard and interfered with the fire fighters efforts.
1835 - Manufacturers Mutual Fire Insurance Company – Providence, RI - After making considerable loss prevention improvements to his textile mill, Zachariah Allen requested a reduction in his insurance premium, but was denied. He called upon other local textile mill owners who shared his loss prevention philosophy to create a mutual insurance company that would insure only "good risk" factories, presumably leaving only the bad risks with the standard insurance companies. I wonder if their rates increased?
1850 - Boston Manufacturers Mutual Fire Insurance Company – MA - Allen convinced Boston mill owners to establish the Boston Mutual Fire Insurance Company along the same lines as his Rhode Island companies. This was the first, but not the last expansion of what would become to be known as theAssociated Factory Mutual Insurance Companies, aka “Factory Mutuals.”
1957 - Steel Insurance Company of America – Cleveland, Ohio – Fred Reiss creates the first “pure” captive for one of his clients, Youngstown Sheet and Tube Company. In the face of rising premiums Reissoffered to have his client take a large deducible in exchange for lower premiums. This was rejected. Reiss found the coverage he wanted at Lloyds, but Lloyds would only offer the coverage on a reinsurancebasis. Reiss needed a front to issue the policy. Youngstown controlled their supply of iron and coal by owning their own mines which were capped, “captive mines.” It was natural for Youngstown to apply the term “captive” to their newly-formed, wholly-owned insurance company.
1962– Tax Reform Act of 1962 – Eliminated the tax advantages of US-domiciled captives. The result was the establishment of Bermuda as a preferred domicile.
1976 – Controlled Risk Insurance Company, Ltd (CRICO) – Cayman - Harvard University forms a med-mal captive. Bermuda rejected Harvard’s application in 1974. The program went to Cayman which became Bermuda’s only meaningful offshore competitor.
1981 - Products Liability Risk Retention Act of 1981 – The bill was originally introduced in the late 1970’s to address the unavailability of Product Liability insurance. By 1981 the crisis had passed. Only 3 RRGs and 4 RPGs were formed under the 1981 act.
1986 - Liability Risk Retention Act of 1986 – Expanded the 1981 act to all forms of liability insurance. By 1988, 54 risk retention groups were created with more than 43,000 insured and a total premium amount of $250 million.
1989 - Humana v IRS – Tax court reverses IRS’ “Economic Family” position. Allowed tax deductibility of premiums paid by brother-sister corporations.
2001 – IRS issues Revenue Ruling 2001-31 - IRS officially abandoned its 24-year old "economic family theory" basis for denying "insurance" status for single parent captives which provide insurance to brother-sister subsidiary corporations.
2010 – IRS Issues Proposed Regulations Regarding Cell Captives – The proposed regulations would make each cell within a Segregated Account Company a separate entity for tax purposes.