The US Department of Labour has “tentatively” granted a United States’ Employee Retirement Income Security Act (ERISA) benefits exemption to Fedeli Group, which would allow the company to utilise its captive to write employee benefits cover.
The exemption would permit the Fedeli Group’s to enter into a fronting contract with THP Insurance Company for its EB cover, which would then reinsure the risk back to Fedeli’s captive, Risk Specialists LLC.
The Fedeli Group is a risk management and insurance firm based in Ohio, and its captive is domiciled in Tennessee.
The firm specialises in property and casualty, employee benefits consulting, workers’ compensation, environmental risk management and surety.
The company had evaluated two different approaches to provide the benefits payable under its benefit plan and the effects on the costs from each.
The first contemplated using a third-party, while the second option was to utilise its captive.
Based on actual values from the benefit plan’s 2023 financial statement, the annual premium under the third-party approach would have been $2.3m compared to the $2.1m annual premium from the captive.
There had previously been four and a half years between successful ERISA applications, but there has been a renewed sense of optimism in the process following approvals of the Comcast and Phillips 66 programmes in early 2022.
Clients are told to expect a timeline of 12 months from start to finish of the process.
Fedeli calculated that the total annual cost savings by utilising the captive would equal a $162 monthly contribution reduction per person.
As of 19 September 2023, the benefit plan covered 64 participants.
“Based on Fedeli Group satisfying the conditions described above and the representations made in its exemption allocation and communications with the Department, the Department has tentatively determined that the relief sought by the applicant satisfies the statutory requirements for an exemption under ERISA section 408(a),” The DoL said.
Captive Intelligence understands the DoL is in the process of reviewing its entire exemption programme, providing a new regulation proposal last year to potentially change the rules that govern the process.