Ariz. Governor Napolitano Signs Captive Insurance Law
|May 1, 2007
Arizona Governor Janet Napolitano has signed HB2294, Captive Insurer Amendments, updating Arizona's captive insurance law. The amendments will be effective 90 days after the legislative session adjourns.
The new amendments implement:
- New provisions allowing the establishment of branch captives to provide employee benefits.
- New provisions defining "deductible reimbursement" business, and clarifying that deductible reimbursement business is permitted on a direct basis.
- Re-defines "industry group captive insurer" to eliminate group member eligibility requirements of a third party insurance consultant and a threshold amount of annual premium expenditure, and substitutes a simple homogenous risk standard.
- Allows group captives (except RRGs) to cover "controlled unaffiliated business".
- Eliminates remaining restrictions against writing commercial motor vehicle business on a direct basis.
- Eliminates an Arizona residency requirement for captive managers, and requires that captive managers do business at location in Arizona.
- Reduces the minimum capital requirement for a protected cell captive from $1MM to $500K.
- Allows any surplus note interest rate approved by the Director.
- Specifically allows a reinsurance captive to securitize its risk portfolio through contracts that allow the purchase of interests on a nonrecourse basis.
- Allows pure captives to be formed as a LLC.
- Allows group captives to have as few as 3 directors, and up to as many directors as it has members (in addition to outside directors).
- Coordinates the effective date of corporate re-domestication to Arizona and the effective date of the new Arizona certificate of authority.
- Clarifies that audit reports are due within 6 months after the end of the captive's fiscal year.
- Clarifies the requirement for prior approval of changes to captive business plans.
- Clarifies the confidential treatment of all information related to captive insurers, except for name, type, date licensed, license status, and business of owners (does not apply to RRGs)
- Specifically authorizes the Director to expend monies in the captive insurance regulatory and supervision fund to pay the costs of administering the captive insurance law and to promote the state's captive insurance industry pursuant to guidelines that she adopts.
Source: Arizona Captive Associaton, Arizona Legislature