Relating to captive insurance companies and life captive reinsurance companies, and including civil penalties

This bill relates to captive insurance companies (captive companies) and life captive reinsurance companies (LCRCs). Under the bill, a tax return on gross premiums filed by an insurance company or a captive company shall not be subject to inspection under Code chapter 22, and it shall be unlawful for any present or former officer or employee of the state to willfully or recklessly publish such tax return. A person who violates the bill shall be guilty of a serious misdemeanor and, in addition to any other penalty, shall be dismissed from state office or discharged from state employment. The bill does not prohibit the department of revenue (DOR) from turning over information and tax returns in the DOR’s possession to duly authorized officers of the United States, or tax officials of other states, pursuant to an agreement between the commissioner of insurance (commissioner) and either the secretary of the treasury of the United States or the secretary’s delegate, or the commissioner of another state.905 (foreign insurance companies becoming domestic) applies to life insurance companies, and to insurance companies doing business under Code chapter 515.905 also applies to captive companies. The bill amends the definitions of “alien captive company”, “business entity”, “captive company”, “captive reinsurance company”, “captive risk retention group”, and “special purpose captive company” under Code chapter 521J (captive companies). The term “foreign captive company” is defined in the bill. Under current law, if permitted by its organizational document, a captive company may apply to the commissioner for a certificate of authority to provide property insurance, casualty insurance, life insurance, disability income insurance, surety insurance, marine insurance, health insurance, or a group health plan. Under the bill, a captive company may also apply for a certificate of authority to have the ability to accept or transfer risks by means of a parametric contract. A captive company shall not write any insurance business unless the captive company’s organizational documents, and any subsequent amendments, have been filed and approved by the commissioner prior to being filed with the secretary of state. Prior to receiving a certificate of authority, current law requires a captive company to file with the commissioner a certified copy of the business entity’s organizational document. The bill eliminates the requirement that the copy be certified.13(1)(b) that requirements of the commissioner be established by rule. Under current law, all documents and information submitted by a captive company prior to receiving a certificate of authority shall be confidential and shall not be made public without the advance written consent of the submitting company. The bill includes reports as confidential information. Current law requires that each captive company, individual series of members of a limited liability company, and protected cell pay an initial registration fee, and an annual renewal registration fee, of $300. The bill requires each captive company, individual series of members of a limited liability company, and protected cell pay an annual renewal registration fee of $300. Under current law, the commissioner shall not issue a certificate of authority to a captive company unless the captive company possesses and maintains unimpaired paid-in capital and surplus of no less than $500,000 for a protected cell captive company. If, however, the protected cell captive company does not assume any risks, the risks insured by the protected cells are homogenous, and there are not more than cells, the commissioner may reduce the amount to an amount not less than $250. Under the bill, the commissioner shall not issue a certificate of authority to a captive company unless the captive company possesses and maintains unimpaired paid-in capital and surplus of no less than $100,000 for a protected cell captive company. Under current law, the minimum capital and surplus requirements for a captive company shall be in the form of cash, cash equivalent, or an irrevocable letter of credit. Under the bill, the minimum capital and surplus requirements may also be in the form of marketable securities approved by the commissioner. If the captive company elects to satisfy the minimum requirements with marketable securities, the commissioner may require the captive company to file financial statements or other reports on a more frequent basis than otherwise required. The increased reporting frequency may be imposed to ensure the commissioner can adequately monitor the liquidity, valuation, and market risk associated with the marketable securities. Current law requires a captive company be formed or organized as a business entity under Code chapter 521J. Under the bill, subject to the commissioner’s approval, a captive company may also be formed as a reciprocal insurer under Code chapter 520. The bill eliminates the requirement under current law that a captive risk retention group formed as a reciprocal insurer have a minimum of five members of the subscribers’ advisory committee who are residents of this state. Under the bill, a captive company formed as a reciprocal insurer shall be subject to Code chapter 520 (reciprocal or interinsurance contracts), unless exempt by approval of the commissioner in the captive company’s plan of operation. The bill eliminates the requirement under current law that applicable provisions of Code chapter 508B (conversion from mutual company to stock company) apply to a merger, consolidation, conversion, mutualization, or voluntary dissolution by a captive company. Under current law, a captive company shall file an annual report with the commissioner that meets the requirements of current law. Under the bill, a captive company does not have to file the annual report if directed by the commissioner in the first year of a captive company’s licensure.7 (reports) be considered confidential and not a public record. Under the bill, applicable provisions of Code chapter 508B apply to a merger, consolidation, conversion, mutualization, or voluntary dissolution by a captive company unless provided otherwise. Under current law, if a captive company’s admitted assets total less than $5 million, the commissioner may approve an investment of up to percent of the captive company’s admitted assets in rated credit instruments in any investment. Instead of admitted assets, the bill relies on the total assets disclosed in a captive company’s annual report. Total assets under the bill shall be based on the accounting basis approved by the commissioner, provided that all assets included must be reasonably liquid, realizable, and available to support the obligations of the captive company. Current law requires that each protected cell captive company formed or authorized by Code chapter 521J be incorporated, and an incorporated protected cell may be organized and operated in any form of business organization as authorized by the commissioner by rule. The bill requires that each protected cell captive company be formed as a business entity, provided the business entity is separate from the protected cell captive company of which the business entity is a part. Under current law, the commissioner shall adopt