Changes to Captive Ins. Companies Now in Effect
We have received a few member questions on the updates to the captive insurance law that went into effect May 22. Here are the relevant changes to captive insurance company requirements that passed in Public Chapter 452:
- Grants the Dept of Commerce and Insurance (TDCI) the ability to back date a license of a captive, or a protected cell, to do business as a captive to as early as the date of incorporation of the company.
- Allows capital and surplus requirements to be held in the form of “marketable securities.” Places other requirements on captives that use marketable securities for capital and surplus requirements.
- Insurance provided by a captive is deemed “reinsurance” except as otherwise specifically provided.
- Captives may not make any material changes to their plan of operation until the Department has approved the change. And these changes are subject to a fee of $400.
- Requires that information obtained by TDCI pursuant to disciplinary actions against captives for violations of the law is confidential except under limited exceptions.
- Allows Captives or cells to receive payments of premiums in foreign currency, pay claims in foreign currency, and hold foreign currency as surplus for the payment of future claims, if approved by TDCI within the captive’s plan of operation.
- Clarified that captive cells and individual series of LLCs have the ability to enter into contracts.
- States that biographical affidavits are not required for participants in unincorporated cells but are required for owners of incorporated cells, including series members of LLCs.
- Allows an individual protected cell to merge with another individual protected cell with consent of the participants of the protected cells and TDCI. TDCI may require the surviving protected cell to make changes to its business plans and other governing documents as a result of the merger. The surviving protected cell must acquire all of the assets and liabilities of the emerging protected cell.
For any questions, please contact Jim Layman at firstname.lastname@example.org or call 615.515.2605.