“We wanted to bring transparency to these transactions,” he said.

So, before you blame Iowa for playing fast and loose with the legacy of Elizur Wright, remember: Most states now allow captive reinsurance. So do the traditional offshore insurance havens like Bermuda. And most keep it secret. But Iowa has decided to stick its neck out and let people look at the deals, knowing full well that they might not like what they see.

The Tax Bill

Those of you who have never bought life insurance or an annuity may, at this point, be thinking: All these perplexing transactions, these assets that may or may not be real — aren’t they all somebody else’s problem?

Not entirely. You could still be liable if the N.A.I.C.’s old-fashioned formulas turn out to be right and insurers come up short at some point because they bestowed so much money on their shareholders. Mr. Lawsky keeps saying that captive structures remind him of the deals that proliferated in the run-up to the financial crisis of 2008. That ended in a giant taxpayer bailout.

“I really think what’s going on now is bigger than anything I know of in the past,” Mr. Belth said. He should know. As the author of the article “More Than a Century of Efforts to Weaken Life Insurance Reserves,” he can compare today’s captive-reinsurance phenomenon with other skirt-the-rules tactics dating all the way back to 1863.

American taxpayers are paying for captive reinsurance already, even without another cataclysmic bailout. Life insurance reserves are a business expense for the companies; as such, they are deductible from the insurers’ federal income taxes. And the boom in captive reinsurance deals has led to billions of dollars of unpaid federal taxes.

The Internal Revenue Code says companies must use the National Association of Insurance Commissioners formulas to calculate their reserves, and deduct that amount. Then companies do a second calculation of their reserves, which is smaller than the N.A.I.C. method. Accordia, for example, sent $3.3 billion of obligations to its family of subsidiaries, but secured only $1.7 billion worth with admissible assets. The tax code tells Accordia to deduct the entire $3.3 billion, even though the backstop it built cost just $1.7 billion. So its tax deduction was inflated by $1.6 billion.

At the top federal tax rate of 35 percent, this suggests about $560 million of taxes avoided.

Remember, Accordia is far from the only company using these techniques. Indirectly, invisibly, the taxpayers are shouldering the cost of these activities, through their taxes.

If the insurance commissioners association ever finds consensus, it may reduce some of the gamesmanship in the future. But it’s unlikely to require life insurers to unwind their existing reinsurance captives. Some analysts say that if the N.A.I.C. really does rein in captive reinsurance, the industry will just invent some new transaction, and the show will go on.