33-28-102. Licensing -- authority. (1) A captive insurance company, when permitted by its articles of incorporation, charter, or other organizational document, may apply to the commissioner for a license to provide property insurance, casualty insurance, life insurance, disability income insurance, and health insurance coverage as defined in 33-22-140, except that:
(a) a pure captive insurance company may not insure any risks other than those of its parent and affiliated companies;
(b) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;
(c) an association captive insurance company may not insure any risks other than those of the member organizations of its association or their affiliated companies;
(d) a captive insurance company may not:
(i) provide personal lines of insurance, including but not limited to motor vehicle or homeowner's insurance coverage or any component of those coverages;
(ii) accept or cede reinsurance except as provided in 33-28-203; or
(iii) provide health insurance coverage, unless the captive insurance company is a pure captive insurance company; and
(e) a sponsored captive insurance company may not insure any risks other than those of its participants.
(2) A captive insurance company may not do any insurance business in this state unless:
(a) it first obtains from the commissioner a license authorizing it to do insurance business in this state;
(b) its board of directors or a reciprocal insurer's subscribers' advisory committee holds at least one meeting each year in this state; and
(c) it maintains its principal place of business in this state.
(3) (a) Before receiving a license, a captive insurance company shall:
(i) with respect to a captive insurance company formed as a corporation:
(A) file with the commissioner a certified copy of its charter and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the commissioner; and
(B) submit to the commissioner for approval a description of the coverages, deductibles, coverage limits, and rates, together with any additional information that the commissioner may reasonably require;
(ii) with respect to a captive insurance company formed as a reciprocal insurer:
(A) file with the commissioner a certified copy of the power of attorney of its attorney-in-fact, a certified copy of its subscribers' agreement, a statement under oath of its attorney-in-fact showing its financial condition, and any other statements or documents required by the commissioner; and
(B) submit to the commissioner for approval a description of the coverages, deductibles, coverage limits, and rates, together with any additional information that the commissioner may reasonably require.
(b) In the event of any subsequent material change in any of the items in the description provided for in subsection (3)(a), the captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. The captive insurance company shall inform the commissioner of any change in rates within 30 days of the adoption of the change.
(c) In addition to the information required by subsections (3)(a) and (3)(b), each applicant captive insurance company shall file with the commissioner evidence of the following:
(i) the amount and liquidity of its assets relative to the risks to be assumed;
(ii) the adequacy of the expertise, experience, and character of the person or persons who will manage it;
(iii) the overall soundness of its plan of operation;
(iv) the adequacy of the loss prevention programs of its parent, member organizations, or industrial insureds as applicable; and
(v) any other factors considered relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
(d) In addition to the information required by this section, each applicant that is a sponsored captive insurance company shall file with the commissioner the following:
(i) a business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the commissioner and how it will report the experience to the commissioner;
(ii) a statement acknowledging that all financial records of the sponsored captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the commissioner or the commissioner's designated agent;
(iii) all contracts or sample contracts between the sponsored captive insurance company and any participants; and
(iv) evidence that expenses will be allocated to each protected cell in a fair and equitable manner.
(e) Information submitted pursuant to this subsection (3) must remain confidential and may not be made public by the commissioner or an employee or agent of the commissioner without the written consent of the company, except that:
(i) the information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that the information sought is relevant to and necessary for the furtherance of the action or case, the information sought is unavailable from other nonconfidential sources, and a subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner;
(ii) the commissioner may, in the commissioner's discretion, disclose the information to a public officer having jurisdiction over the regulation of insurance in another state or to a public official of the federal government, as long as the public official agrees in writing to maintain the confidentiality of the information and the laws of the state in which the public official serves, if applicable, require the information to be and to remain confidential.
(4) (a) Each captive insurance company shall pay to the commissioner a nonrefundable fee of $200 for the examining, investigating, and processing of its application for license, and the commissioner is authorized to retain legal, financial, and examination services from outside the department, the reasonable cost of which may be charged to the applicant.
(b) The provisions of Title 33, chapter 1, part 4, apply to examinations, investigations, and processing conducted under the authority of this section. In addition, each captive insurance company shall pay a license fee for the year of registration and a renewal fee for each subsequent year of $300.
(5) If the commissioner is satisfied that the documents and statements that the applicant captive insurance company has filed comply with the provisions of this chapter and applicable provisions of Title 33, the commissioner may grant a license authorizing the company to do insurance business in this state. The license is effective until March 1 of each year and may be renewed upon proper compliance with this chapter.
History: En. Sec. 2, Ch. 298, L. 2001; amd. Sec. 9, Ch. 383, L. 2003.
