Following are selected bills in the captive insurance area, plus one relating to catastrophe risk, that have now been adopted in the state legislatures:
- South Carolina has amended its captive insurance company law by enacting S. 323, which we previously reported, to make changes relating to incorporation, licensing, capitalization and other requirements. The bill was ratified on May 27, 2009, and it took effect when it was approved by the Governor on June 2, 2009.
- Missouri enacted House Bill No. 577 (mentioned in our May 8, 2009 post), which modifies various provisions of the state’s captive insurance company law and permits an association captive insurance company or an industrial insured captive insurance company to be organized as a reciprocal insurer. On May 29, 2009, the bill was delivered to the Governor for his signature.
- The Governor of Vermont, on May 27, 2009, signed S. 42 into law, which makes amendments to the captive provisions of the Vermont Code including, among other things, providing new captive formations a $7,500 tax credit and increasing state funding for captive regulation and examination.
- On June 1, 2009, the Texas legislature passed House Bill No. 4409, which includes provisions dealing with the reform and funding of the Texas Windstorm Insurance Association (TWIA), the state’s insurer of last resort for wind and hail coverage for certain coastal parts of the state. Among other things, the legislation provides for various layers of funding, including the imposition of certain insurance carrier assessments. Reinsurance to cover an assessment may be purchased at the insurer’s election subject to certain conditions. The bill has been delivered and is awaiting the Governor’s signature.
Congress has also recently introduced three bills relevant to reinsurance or catastrophe funds. These bills are as follows:
- H.R. 2555, proposes to establish a program to provide Federal support for State-sponsored insurance programs to help homeowners prepare for and recover from the damages caused by natural catastrophes, to encourage mitigation and prevention for such catastrophes, to promote the use of private market capital as a means to insure against such catastrophes, to expedite the payment of claims and better assist in the financial recovery from such catastrophes. The bill has been referred to the Committee on Financial Services.
- H.R. 2571, proposes to streamline the regulation of nonadmitted insurance and reinsurance, and for other purposes. The principal provisions of the Act: (1) regulate premium taxes for nonadmitted insurance; (2) provide that the placement of nonadmitted insurance shall be subject to regulation solely by the insured’s home state; (3) limit the ability of a state to establish eligibility requirements for US domiciled nonadmitted insurers that vary from the Non-Admitted Insurance Model Act; (4) require a GAO study of the nonadmitted insurance market; (5) regulate the extent to which a state may not recognize credit for reinsurance for an insurer’s ceded risk; (6) partially pre-empt the extraterritorial application of the law of a state to a ceding insurer not domiciled in that state; and (7) provide that in most circumstances a state that is the domicile of a reinsurer shall be solely responsible for regulating its financial solvency. This bill has been referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary.
- H.R. 2589, proposes to establish the Office of Public Finance in the Department of the Treasury to make available Federal reinsurance for insurers of tax-exempt municipal bonds. This bill has been referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means.