TAX REFORM ACT OF 1984 – One section of this act redefined income related to the insurance of US-based risks as US-source income instead of foreign-source income. Another section made income from the insurance of related risks in foreign countries taxable in the current year. The net effect of these two changes was to eliminate most tax advantages for an offshore single parent captive.
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TAX REFORM ACT OF 1988 – The major change imposed by this act affected offshore group captives in that the definition of a U.S. shareholder was changed from an ownership interest of 10 percent or more to any shareholding interest.
THIRD-PARTY ADMINISTRATOR (TPA) – A TPA is an independent company which provides services to the insurance company (captive) for a fee. Typical services provided include claims reporting, administration, and management; and/or underwriting and policy issuance. Typical TPA firms include claims adjusting firms and managing general underwriters and managing general agents.
TREATY – A general reinsurance agreement which is obligatory between the ceding company and the reinsurer containing the contractual terms applying to the reinsurance of some class or classes of business, in contrast to a reinsurance agreement covering an individual risk. The treaty contains provisions defining the terms of the agreement including specific risk definition, data on limits and retention, and provisions for premium payment and duration.
