On November 1, 2016, the IRS released Notice 2016-66, designating certain captive insurance companies that have made the 831(b) election as a "Transaction of Interest."
In terms of total premium, the Notice affects only a relatively small part of the captive insurance market, because the Notice is limited to 831(b) captives. Such captives, by definition, have net premiums of less than $1.2 million per year (rising to $2.2 million in 2017 and adjusted for inflation thereafter). These are small so-called "mini-captives", often incorrectly - as the IRS does in the Notice - referred to as "micro-captives" (a real "micro-captive" is a captive formed under IRC 501(c)(15) which has premiums of less than $350,000 per year). The Notice does not affect non-831(b) captives, many of which have net premiums of the tens of millions or more.