Allstate Corp. said it incurred an estimated $343 million in pretax catastrophe losses from activity in March, raising the total for the first quarter to $731 million from $1.69 billion in the prior-year period. March catastrophe losses included six events. About 80% of the losses related to one hail system, Allstate said in a statement. Losses were partially offset by favorable reserve reestimates on prior events, lowering the monthly pretax loss to $328 million. In mid-March a string of destructive severe convective storms impacted a wide stretch on the middle of the country.

Allstate in 2023 reported estimated pretax catastrophe losses of $1.17 billion in March after waves of powerful and destructive storms rolled across widespread swaths of the country. That accounted for the majority of $1.69 billion in first-quarter 2023 pretax catastrophe losses.

Allstate also continues to raise rates. Allstate brand automobile insurance hikes increased premiums 2.4% in the quarter. Implemented rate increases and inflation in insured home replacement costs increased average brand homeowners gross written premium 11.9% from the prior year, the company said. Allstate plans to hold a first-quarter earnings conference call on May 2.

Marsh McLennan reported consolidated revenue of $6.5 billion in the first quarter of 2024, up 9% from $5.9 billion in the prior-year quarter. On an underlying basis, its revenue also increased 9%. The firm’s operating income also rose 12% from $1.7 billion to $1.9 billion, while its net income reached $1.4 billion. “We had a terrific start to the year, reflecting continued momentum across our business. For the quarter, we generated 9% underlying revenue growth, 14% adjusted EPS growth, and 80 basis points of margin expansion. With this strong start, we are well positioned for another good year in 2024,” said John Doyle, president and CEO. The firm’s risk and insurance services segment, which includes broking arms Marsh and Guy Carpenter, saw revenue grow 9% to $4.3 billion in Q1 2024, while its operating income was up 12%, reaching $1.6 billion. Marsh McLennan’s consulting services, Mercer and Oliver Wyman, reported $2.2 billion in revenue, reflecting a 9% increase in the first three months of the year. The company also highlighted Oliver Wyman’s acquisition of SeaTec Consulting, which was completed in February. In March, Marsh McLennan Agency closed on the previously announced agreement to acquire two leading middle-market agencies in Louisiana – Querbes & Nelson and Louisiana Companies. Within this month, Mercer also completed the acquisition of Vanguard's U.S. Outsourced Chief Investment Officer (OCIO) business. The firm’s operating income also rose 12% from $1.7 billion to $1.9 billion, while its net income reached $1.4 billion. “We had a terrific start to the year, reflecting continued momentum across our business. For the quarter, we generated 9% underlying revenue growth, 14% adjusted EPS growth, and 80 basis points of margin expansion. With this strong start, we are well positioned for another good year in 2024,” said John Doyle, president and CEO. The firm’s risk and insurance services segment, which includes broking arms Marsh and Guy Carpenter, saw revenue grow 9% to $4.3 billion in Q1 2024, while its operating income was up 12%, reaching $1.6 billion. Marsh McLennan’s consulting services, Mercer and Oliver Wyman, reported $2.2 billion in revenue, reflecting a 9% increase in the first three months of the year. The company also highlighted Oliver Wyman’s acquisition of SeaTec Consulting, which was completed in February. In March, Marsh McLennan Agency closed on the previously announced agreement to acquire two leading middle-market agencies in Louisiana – Querbes & Nelson and Louisiana Companies. Within this month, Mercer also completed the acquisition of Vanguard's U.S. Outsourced Chief Investment Officer (OCIO) business.  

 

Developers, suppliers, and users of artificial intelligence must comply with existing state consumer protection, anti-discrimination, and data privacy laws, the Massachusetts attorney general cautioned Tuesday. In an advisory, Attorney General Andrea Campbell pointed to what she described as the widespread increase in the use of AI and algorithmic decision-making systems by businesses, including technology focused on consumers. The advisory is meant in part to emphasize that existing state consumer protection, anti-discrimination, and data security laws still apply to emerging technologies, including AI systems — despite the complexity of those systems — just as they would in any other context. “There is no doubt that AI holds tremendous and exciting potential to benefit society and our commonwealth in many ways, including fostering innovation and boosting efficiencies and cost-savings in the marketplace,” Cambell said in a statement. “Yet, those benefits do not outweigh the real risk of harm that, for example, any bias and lack of transparency within AI systems, can cause our residents,” she added. Falsely advertising the usability of AI systems, supplying an AI system that is defective, and misrepresenting the reliability or safety of an AI system are just some of the actions that could be considered unfair and deceptive under the state’s consumer protection laws, Campbell said. Misrepresenting audio or video content of a person for the purpose of deceiving another to engage in a business transaction or supply personal information as if to a trusted business partner — as in the case of deepfakes, voice cloning, or chatbots used to engage in fraud — could also violate state law, she added. The goal, in part, is to help encourage companies to ensure that their AI products and services are free from bias before they enter the commerce stream — rather than face consequences afterward. Regulators also say that companies should be disclosing to consumers when they are interacting with algorithms. A lack of transparency could run afoul of consumer protection laws. Elizabeth Mahoney of the Massachusetts High Technology Council, which advocates for the state’s technology economy, said that because there might be some confusion about how state and federal rules apply to the use of AI, it’s critical to spell out state law clearly. “We think having ground rules is important and protecting consumers and protecting data is a key component of that,” she said. Campbell acknowledges in her advisory that AI holds the potential to help accomplish great benefits for society even as it has also been shown to pose serious risks to consumers, including bias and the lack of transparency. Developers and suppliers promise that their AI systems and technology are accurate, fair, and effective even as they also claim that AI is a “black box”, meaning that they do not know exactly how AI performs or generates results, she said in her advisory. The advisory also notes that the state’s anti-discrimination laws prohibit AI developers, suppliers, and users from using technology that discriminates against individuals based on a legally protected characteristic — such as technology that relies on discriminatory inputs or produces discriminatory results that would violate the state’s civil rights laws, Campbell said. AI developers, suppliers, and users also must take steps to safeguard personal data used by AI systems and comply with the state’s data breach notification requirements, she added.

The American Property Casualty Insurance Association is urging California lawmakers to slow down on legislation that would require insurers to factor state and private fire mitigation efforts into decisions on coverage and rates. The bill, S.B. 1060, would require insurers to account for fire mitigation efforts including hazardous fuel reduction, home hardening, defensible space and fire prevention activities, according to the measure's text. It would also authorize the Department of Insurance to examine models used for underwriting purposes to ensure compliance with a risk model requirement and issue orders to ensure compliance. Lawmakers in the state's Senate Insurance Committee are scheduled to take up the bill on April 24, according to the Legislature's website. It's sponsored by Sen. Josh Becker, a Democrat of Menlo Park. "The California Department of Insurance already requires insurers that use risk models to take into consideration specific mitigations and provide consumers discounts," said Mark Sektnan, APCIA's vice president for state government relations. "The department is also in the process of developing regulations to authorize new types of catastrophe models that factor in the risk of wildfires and mitigation efforts taken by individuals and communities.  We believe the department should be allowed time to adopt these regulations." Carriers support wildfire mitigation efforts like home and community hardening projects to protect both public safety and property, Sektnan said in an emailed statement. Insurers will be allowed to base projected wildfire, terrorism and flood losses on catastrophe models under proposed regulatory changes in California, a move Insurance Commissioner Ricardo Lara is calling another step in efforts to safeguard the integrity of the state’s insurance market. The market is “essentially at a crossroad” with residents finding fewer options on climate-related threats from wildfires to atmospheric rivers and floods, he said. Seven of the state’s 12 largest property/casualty insurance groups have instituted some kind of limit on underwriting, his department said, sharply increasing enrollment at the state’s insurer of last resort. The five largest homeowners multiperil writers in California in 2022, based on direct premiums written, were: State Farm Group, with a 20.58% market share; Farmers Insurance Group, 14.46%; CSAA Insurance Group, 6.66%; Liberty Mutual Insurance Cos., 6.43%; and Allstate Insurance Group, 6.36%; according to BestLink.    

Chinese government-linked hackers have burrowed into U.S. critical infrastructure and are waiting "for just the right moment to deal a devastating blow," FBI Director Christopher Wray said on Thursday. An ongoing Chinese hacking campaign known as Volt Typhoon has successfully gained access to numerous American companies in telecommunications, energy, water and other critical sectors, with 23 pipeline operators targeted, Wray said in a speech at Vanderbilt University. China is developing the "ability to physically wreak havoc on our critical infrastructure at a time of its choosing," Wray said at the 2024 Vanderbilt Summit on Modern Conflict and Emerging Threats. "Its plan is to land low blows against civilian infrastructure to try to induce panic." Wray said it was difficult to determine the intent of this cyber pre-positioning which was aligned with China's broader intent to deter the U.S. from defending Taiwan. China claims democratically governed Taiwan as its own territory and has never renounced the use of force to bring the island under its control. Taiwan strongly objects to China's sovereignty claims and says only the island's people can decide their future. Earlier this week, a Chinese Ministry of Foreign Affairs spokesperson said Volt Typhoon was in fact unrelated to China's government, but is part of a criminal ransomware group. In a statement, China's Embassy in Washington referred back to the MFA spokesperson's comment. "Some in the US have been using origin-tracing of cyberattacks as a tool to hit and frame China, claiming the US to be the victim while it's the other way round, and politicizing cybersecurity issues." Wray said China's hackers operated a series of botnets - constellations of compromised personal computers and servers around the globe - to conceal their malicious cyber activities. Private sector American technology and cybersecurity companies previously attributed Volt Typhoon to China, including reports by security researchers with Microsoft and Google.  

Marsh McLennan sees strong growth opportunities amid a year of economic and geopolitical uncertainty that is raising the price of risk, according to its chief executive officer. The geopolitical environment remains unsettled, with multiple major wars and rising tensions politically, said President and CEO John Q. Doyle in a conference call. As more than half the world goes to the polls in elections this year, he said the economic outlook is uncertain. Marsh McLennan's growth prospects are strong with economic growth in most of its major markets as inflation and interest rates remain elevated, the cost of risk and health care costs continue to rise and labor markets remain tight, he said. Property rates overall increased 3%, compared with a 6% rise in the fourth quarter, and casualty rates also rose 3%, in line with the fourth quarter, Doyle said.  Financial and professional liability rates fell 7% and cyber liability rates decreased 6% and workers' compensation rates fell in the mid-single digit range. Conditions were stable in the reinsurance market as client demand increased and capacity remained adequate, Doyle said. U.S. property catastrophe reinsurance rates in April renewals were flat with some decreases for loss-free accounts, he said. Rates rose in the 10% to 20% range for accounts hit by losses. For Florida catastrophe risk renewals at June 1, early signs show improved conditions for cedants. Increased reinsurance appetite for growth should be adequate to meet higher demand, Doyle said.

First-quarter net income attributable to the company rose to $1.40 billion from $1.24 billion a year ago. Revenue rose to $6.47 billion from $5.92 billion.

All of the group's segments reported revenue growth in the quarter, with Marsh, Mercer and Oliver Wyman's growth accelerating, Doyle said. He noted revenue rose 9% each in both risk and insurance services and consulting. Marsh McLennan continued to add to its assets through acquisitions in the first quarter, Doyle said.

The group used about $1 billion in cash in the first quarter, including $347 million for acquisitions, said Chief Financial Officer Mark McGivney in the call. The group expects to deploy about $4.5 billion in 2024 for dividends, M&A and share repurchases.

The amount to be used for share repurchases depends on how the M&A pipeline develops, McGivney said. Oliver Wyman closed on the acquisition of SeaTec Consulting, expanding it capabilities in the aviation, transportation and defense industries, he said. Marsh McLennan Agency acquired two agencies in Louisiana and Mercer completed its acquisition of Vanguard's OCIO business, which expanded its reach in endowments and foundations. The group's Marsh, Oliver Wyman and reinsurance broker Guy Carpenter affiliates developed the Unity facility, a public-private insurance solution enabling grain shipments from ports in Ukraine, Doyle noted. Marsh McLennan earlier said it is expanding the Unity war risk insurance facility in conjunction with the Ukrainian government and Lloyd’s to provide affordable war risk insurance for ships carrying all non-military cargo. Doyle said Unity expanded in the first quarter to allow all ships to carry non-military cargo with the help of Lloyd's and Ukrainian banks, supporting Ukraine's wartime economic resilience.

Led by Ascot and underwritten by insurers based at Lloyd’s and other London-based insurers, Unity provides up to $50 million in hull and protection and indemnity war risk insurance. It is available to clients of all Lloyd’s registered brokers, the broker said earlier.

Marsh McLennan's outlook for 2024 includes an expectation of mid-single digit revenue growth, margin expansion and strong earnings per share growth, Doyle said. Lloyd's and underwriting entities of Ascot parent Canada Pension Plan Investment Board have current Best's Financial Strength Ratings of A (Excellent).

Thousands more Californians will lose their home insurance this summer as two more insurers withdraw from the state.

In filings with the California Department of Insurance, Tokio Marine America Insurance Company and Trans Pacific Insurance Company said they would both withdraw from the homeowners and personal umbrella insurance markets in California. Both are subsidiaries of Tokio Marine Holdings Inc., a Japanese company.

The two companies together insured 12,556 homeowner policies in California with $11.3 million in premiums, according to their filings. Tokio Marine also insured 2,732 personal umbrella policies for liability worth $400,000.

Tokio Marine America and Trans Pacific join a roster of insurers big and small that have limited and stopped doing business in California, often citing the risk of wildfires in the state. Some, such as AllState and State Farm, have stopped writing new policies in the state though they continue to renew policies — though last month, State Farm also announced it would not renew 30,000 homeowner policies, a small fraction of its total business in California. Farmers Direct Insurance has chosen to leave the state.

In response, California Insurance Commissioner Ricardo Lara has proposed a slate of reforms known as the Sustainable Insurance Strategy, designed to attract insurers back to the state. They include ideas such as changing the process for requesting rate hikes to allowing insurers to use forward-looking risk models when raising their rates. All of the strategy’s reforms are set to take effect at the end of the year.

Tokio Marine did not immediately respond to a request for comment. Neither company disclosed in state filings the reasons behind the withdrawal or where their policies are located in the state.

The companies will begin sending non-renewal notices to customers starting July 1, according to state filings.

   

Home sales in March posted their biggest decline in more than a year, reversing course after a positive start this year as rising mortgage rates frightened off buyers.

Sales of previously owned homes decreased 4.3% from the prior month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. It was the biggest percentage decline on a monthly basis since November 2022, NAR said.

After sales tumbled to their lowest level in nearly 30 years in 2023, activity picked up to start this year. Home sales rose during the first two months as buyers took advantage of a decline in rates and active listings that ticked higher early in the year.

But mortgage rates rose again in February. That sent buyers to the sidelines and it now threatens to squash momentum during the crucial spring home-buying season, which is typically the busiest time of year in the housing market.

The average rate on a 30-year fixed mortgage has moved back toward 7%, according to Freddie Mac. While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. That could also keep mortgage rates from declining.

Home buyers are also confused about coming changes to rules about how real-estate agents get paid, and whether those changes could increase or decrease their costs. That is causing some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.

“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. “I think they’re just sitting it out.”

While higher mortgage rates make home purchases more expensive for many buyers, a persistently low supply of homes for sale is also pushing prices higher.

The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said.

“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”

On an annual basis, existing home sales fell 3.7% in March. These sales make up most of the housing market.

Economists surveyed by The Wall Street Journal estimated sales of previously owned homes fell a seasonally adjusted 4.8% in March from February.

Homes typically go under contract a month or two before the contracts close, so the March data largely reflect purchase decisions made in February and January.

For some who bought in March, they found less competition. David Bramlett and Alexandra Hodson started house hunting last fall but decided to wait. When they re-entered the market this year, interest rates had declined, Bramlett said. The couple bought a four-bedroom home with a yard in Cumming, Ga., in March for $480,000.

“There was no bidding war,” Bramlett said. “It was good to get in when we did, where we did, with a motivated seller.”

But affordability has worsened in recent weeks. The median monthly payment for a home purchase rose to $2,747 in the four weeks ended April 7, up 11% from a year earlier, according to real-estate brokerage Redfin.

“March and April slowed down tremendously,” said Clint Jordan, a real-estate agent in Colorado Springs, Colo. “Rates are a little bit higher, so a lot of our buyers are sitting back.”

The share of first-time buyers in the market was 32% in March, up from 28% a year earlier. About 28% of March existing-home sales were purchased in cash, up from 27% in the same month a year ago, NAR said.

The typical home sold in March was on the market for 33 days, up from 29 days a year earlier, NAR said.

Nationally, there were 1.11 million homes for sale or under contract at the end of March, up 4.7% from February and up 14.4% from March 2023, NAR said. At the current sales pace, there was a 3.2-month supply of homes on the market at the end of March.

Despite the increase in inventory, the supply of homes for sale in March was still 37.9% below typical prepandemic levels, according to Realtor.com.

But some markets are more amply supplied. In San Antonio, inventory in March was 27% above prepandemic levels.

“It is a buyer’s market now,” said Maricela Mares Castillo, a real-estate agent in San Antonio. “They don’t have to settle as much as they may have last year.”

   

Florida’s homeowners market may look better than it has in the past, but Travelers Cos. is still steering clear, according to Travelers Personal Insurance President Michael Klein. It’s still a highly catastrophe-exposed geography and carriers are vulnerable to an assigned risk obligation if a significant catastrophe strikes, he explained during a first-quarter earnings conference call. “While we do see signs of improvement ... it’s going to take more. We haven’t seen enough change to cause us to change our perspective on wanting to reopen to business," said Klein. “It is still a place where we think the risk reward is not in balance." Chairman and Chief Executive Officer Alan Schnitzer said enacted tort reforms were an “excellent start” in Florida. “We would love other states to follow suit,” he said, but agreed other “structural” elements are an impediment. The company routinely evaluates conditions, both men said.

Travelers Cos. Inc.’s first-quarter net income increased 15% to $1.12 billion despite higher catastrophe losses, largely on elevated activity in Central and Eastern states, Schnitzer said.

Renewal premium change was 16.6% in personal automobile and 13.4% in homeowners and other business, he said. That was basically flat, compared with the fourth quarter for auto, but down from 21.2% in homeowners in the prior quarter. Because Travelers writes mostly 12-month auto policies, Klein pointed out a rate hike enacted in May 2023 is still taking effect on policies renewing this month. Personal auto renewal premiums change should moderate as the year progresses, he said. However, in homeowners the carrier plans to keep raising rates “in response to increased loss costs.” Renewals declined because Travelers took “dramatic increases in property Coverage A limits” in 2022 and 2023 and has caught up with higher values and construction costs. “What you’re looking at now is mostly our outlook for rate” increases for homeowners, said Klein. In terms of non-rate actions, he said the carrier, like others in the industry, is executing broad changes. First, it determines eligibility after evaluating exposure and roof age, he said, and may place underwriting restrictions based on roof conditions or tree overhang. "Our primary approach on risk sharing is really to focus on all other perils and wind-hail-tornado deductibles," said Klein. Travelers has implemented higher tornado and wind-hail deductibles in 21 states, "virtually every severe convective storm-exposed state across the country." "We've increased deductibles to help deal with the exposure, and then managing distribution" and appetite to address aggregated exposure locally and at the state level, Klein said.

Travelers completed its $435 million acquisition of cyber insurance managing general underwriter Corvus Insurance Holdings Inc. at the start of the year (BestWire, Jan 3, 2024).

Bond and Specialty President Jeff Klenk said the company feels "really good about bringing in and leveraging the capabilities of both organizations. We feel really good about the quality, the profitability of the Corvus book of business. It's consistent and we're taking some of those capabilities." Travelers has scanned its business using proprietary technology acquired with Corvus. "We're really comfortable with what we're seeing," said Klenk. Most operating entities of Travelers Cos. Inc. currently have a Best’s Financial Strength Rating of A++ (Superior).      

Climate change will reduce future global income by about 19% in the next 25 years compared to a fictional world that’s not warming, with the poorest areas and those least responsible for heating the atmosphere taking the biggest monetary hit, a new study said. Climate change’s economic bite in how much people make is already locked in at about $38 trillion a year by 2049, according to Wednesday’s study in the journal Nature by researchers at Germany’s Potsdam Institute for Climate Impact Research. By 2100 the financial cost could hit twice what previous studies estimate. “Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany and the U.S., with a projected median income reduction of 11% each and France with 13%,” said study co-author Leonie Wenz, a climate scientist and economist. These damages are compared to a baseline of no climate change and are then applied against overall expected global growth in gross domestic product, said study lead author Max Kotz, a climate scientist. So while it’s 19% globally less than it could have been with no climate change, in most places, income will still grow, just not as much because of warmer temperatures. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979.

The Supreme Court on Wednesday made it easier for workers who are transferred from one job to another against their will to pursue job discrimination claims under federal civil rights law, even when they are not demoted or docked pay. Workers only have to show that the transfer resulted in some, but not necessarily significant, harm to prove their claims, Justice Elena Kagan wrote for the court. The justices unanimously revived a sex discrimination lawsuit filed by a St. Louis police sergeant after she was forcibly transferred, but retained her rank and pay. Sgt. Jaytonya Muldrow had worked for nine years in a plainclothes position in the department’s intelligence division before a new commander reassigned her to a uniformed position in which she supervised patrol officers. The new commander wanted a male officer in the intelligence job and sometimes called Muldrow “Mrs.” instead of “sergeant,” Kagan wrote. Muldrow sued under Title VII of the Civil Rights Act of 1964, which prohibits workplace discrimination on the basis of race, sex, religion and national origin. Lower courts had dismissed Muldrow’s claim, concluding that she had not suffered a significant job disadvantage. “Today, we disapprove that approach,” Kagan wrote. “Although an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test.” Kagan noted that many cases will come out differently under the lower bar the Supreme Court adopted Wednesday. She pointed to cases in which people lost discrimination suits, including those of an engineer whose new job site was a 14-by-22-foot wind tunnel, a shipping worker reassigned to exclusively nighttime work and a school principal who was forced into a new administrative role that was not based in a school. Although the outcome was unanimous, Justices Samuel Alito, Brett Kavanaugh and Clarence Thomas each wrote separate opinions noting some level of disagreement with the majority’s rationale in ruling for Muldrow. Madeline Meth, a lawyer for Muldrow, said her client will be thrilled with the outcome. Meth, who teaches at Boston University’s law school, said the decision is a big win for workers because the court made “clear that employers can’t decide the who, what, when, where and why of a job based on race and gender.” The decision revives Muldrow’s lawsuit, which now returns to lower courts. Muldrow contends that, because of sex discrimination, she was moved to a less prestigious job, which was primarily administrative and often required weekend work, and she lost her take-home city car. “If those allegations are proved,” Kagan wrote, “she was left worse off several times over.”

The federal Internal Revenue Service listed microcaptive insurance programs on its 2024 "Dirty Dozen" list of 12 tax scams, saying the programs can prove to be bogus tax avoidance strategies. The IRS has prevailed in multiple recent tax court cases involving the arrangements and last year moved to place more regulatory oversight on them. The agency in the past has argued they don't provide insurance and allow entities to make improperly tax deductions. "Abusive microcaptives involve schemes that lack many of the attributes of legitimate insurance," the IRS said. "These structures often include implausible risks, failure to match genuine business needs, and in many cases, unnecessary duplication of the taxpayer’s commercial coverages." Premiums paid under the microcaptive arrangements are often excessive and reflecting pricing that isn't "arm’s length," the IRS said. The agency reaffirmed abusive microcaptive transactions are a high-priority enforcement area for the IRS, and it has won all Tax Court and appellate court cases involving them that have been decided on their merits since 2017. “Taxpayers should be wary of anything that seeks to completely eliminate a legitimate tax responsibility,” said IRS Commissioner Danny Werfel in a statement. “Promoters continue to peddle elaborate schemes to reduce taxes and make a handsome profit. Taxpayers contemplating these arrangements should always seek advice from a trusted tax professional, not an aggressive promoter focused on pushing questionable transactions to make a buck.” The IRS has released the Dirty Dozen list annually since 2022, highlighting scams that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more, the agency said. Along with microcaptives, the final installment on the list included syndicate conservation easements, which allow property owners to report a deduction in exchange for limiting land use. Last month, the IRS won another round of legal wrangling over a dispute with a microcaptive owner's tax payments for a number of years. Sunil Patel's businesses supplemented their commercial insurance coverage by purchasing assorted policies from two microcaptive insurance companies that Patel controlled, Magellan Insurance Co., domiciled in St. Kitts, and Plymouth Insurance Co., domiciled in Tennessee. According to the decision, the premiums paid to the microcaptives were substantially more than the premiums paid to  Patel's commercial insurers, creating substantial tax benefits for the couple.