Senate Bill No. 173
(By Senators Minard and Jenkins)
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[Introduced February 14, 2005; referred to the Committee
on Banking and Insurance; and then to the Committee on Finance.]
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A BILL to amend and reenact §33-31-1, §33-31-2, §33-31-4, §33-31-6
and §33-31-8 of the Code of West Virginia, 1931, as amended;
and to amend said code by adding thereto three new sections,
designated §33-31-26, §33-31-27 and §33-31-28, all relating
to captive insurance companies; providing for sponsored
captive insurance companies; requiring qualifications of
sponsors; and providing who may participate in sponsored
captive insurance companies.
Be it enacted by the Legislature of West Virginia:
That §33-31-1, §33-31-2, §33-31-4, §33-31-6 and §33-31-8 of
the Code of West Virginia, 1931, as amended, be amended and
reenacted; and that said code be amended by adding thereto three
new sections, designated §33-31-26, §33-31-27 and §33-31-28, all
to read as follows:
ARTICLE 31. CAPTIVE INSURANCE.
§33-31-1. Definitions.
As used in this chapter, unless the context requires
otherwise:
(1) "Affiliated company" means any company in the same
corporate system as a parent, an industrial insured or a member
organization by virtue of common ownership, control, operation or
management.
(2) "Alien captive insurance company" means any insurance
company formed to write insurance business for its parents and
affiliates and licensed pursuant to the laws of a country other
than the United States which imposes statutory or regulatory
standards in a form acceptable to the Commissioner on companies
transacting the business of insurance in such jurisdiction.
(3) "Association" means any legal association of individuals,
corporations, limited liability companies, partnerships,
associations or other entities that has been in continuous
existence for at least one year, the member organizations of which,
or which does itself, whether or not in conjunction with some or
all of the member organizations:
(A) Own, control or hold with power to vote all of the
outstanding voting securities of an association captive insurance
company incorporated as a stock insurer;
(B) Have complete voting control over an association captive insurance company incorporated as a mutual insurer; or
(C) Constitute all of the subscribers of an association
captive insurance company formed as a reciprocal insurer.
(4) "Association captive insurance company" means any company
that insures risks of the member organizations of the association,
and their affiliated companies.
(5) "Branch business" means any insurance business transacted
by a branch captive insurance company in this State.
(6) "Branch captive insurance company" means any alien captive
insurance company licensed by the Commissioner to transact the
business of insurance in this State through a business unit with a
principal place of business in this State.
(7) "Branch operations" means any business operations of a
branch captive insurance company in this state.
(8) "Captive insurance company" means any pure captive
insurance company, association captive insurance company, sponsored
captive insurance company, industrial insured captive insurance
company or risk retention group formed or licensed under the
provisions of this chapter. For purposes of this chapter, a branch
captive insurance company shall be a pure captive insurance company
with respect to operations in this State, unless otherwise
permitted by the Commissioner.
(9) "Commissioner" means the Insurance Commissioner of West
Virginia.
(10) "Controlled unaffiliated business" means any company:
(A) That is not in the corporate system of a parent and
affiliated companies;
(B) That has an existing contractual relationship with a
parent or affiliated company; and
(C) Whose risks are managed by a pure captive insurance
company in accordance with section nineteen of this article.
(11 ) "Industrial insured" means an insured:
(A) Who procures the insurance of any risk or risks by use of
the services of a full-time employee acting as an insurance manager
or buyer;
(B) Whose aggregate annual premiums for insurance on all risks
total at least twenty-five thousand dollars; and
(C) Who has at least twenty-five full-time employees.
(12) "Industrial insured captive insurance company" means any
company that insures risks of the industrial insureds that comprise
the industrial insured group and their affiliated companies.
(13) "Industrial insured group" means any group of industrial
insureds that collectively:
(A) Own, control or hold with power to vote all of the
outstanding voting securities of an industrial insured captive
insurance company incorporated as a stock insurer;
(B) Have complete voting control over an industrial insured
captive insurance company incorporated as a mutual insurer;
or
(C) Constitute all of the subscribers of an industrial insured
captive insurance company formed as a reciprocal insurer;
or
(D) Any group which is created under the Product Liability
Risk Retention Act of 1986, 15 U.S.C. §3901 et seq., as amended, as
a corporation or other limited liability association taxable as a
stock insurance company or a mutual insurer under the law of the
State of West Virginia.
(14) "Member organization" means any individual, corporation,
limited liability company, partnership, association or other entity
that belongs to an association.
(15) "Mutual corporation" means a corporation organized
without stockholders and includes a nonprofit corporation with
members.
(16) "Parent" means a corporation, limited liability company,
partnership, other entity, or individual that directly or
indirectly owns, controls or holds with power to vote more than
fifty percent of the outstanding voting:
(A) Securities of a pure captive insurance company organized
as a stock corporation; or
(B) Membership interests of a pure captive insurance company
organized as a nonprofit corporation.
(17) "Participant" means an entity as defined in section
twenty-three of this article, and any affiliates thereof, that are
insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to
the participant's pro rata share of the assets of one or more
protected cells identified in the participant contract.
(18) "Participant contract" means a contract by which a
sponsored captive insurance company insures the risks of a
participant and limits the losses of each participant to its pro
rata share of the assets of one or more protected cells identified
in the participant contract.
(19) "Protected cell" means a separate account established by
a sponsored captive insurance company formed or licensed under the
provisions of this chapter, in which assets are maintained for one
or more participants in accordance with the terms of one or more
participant contracts to fund the liability of the sponsored
captive insurance company to such participants as set forth in such
participant contracts.
(17) (20) "Pure captive insurance company" means any company
that insures risks of its parent and affiliated companies or
controlled unaffiliated business.
(18) (21) "Risk retention group" means a captive insurance
company organized under the laws of this State pursuant to the
Liability Risk Retention Act of 1986, 15 U.S.C. §3901,
et seq., as
amended, as a stock or mutual corporation, a reciprocal or other
limited liability entity.
(22) "Sponsor" means any entity that meets the requirement of section twenty-two of this article and is approved by the
Commissioner to provide all or part of the capital and surplus
required by applicable law and to organize and operate a sponsored
captive insurance company.
(23) "Sponsored captive insurance company" means any captive
insurance company:
(A) In which the minimum capital and surplus required by
applicable law is provided by one or more sponsors;
(B) That is formed or licensed under the provisions of this
chapter;
(C) That insures the risks of separate participants through
participant contracts; and
(D) That funds its liability to each participant through one
or more protected cells and segregates the assets of each protected
cell from the assets of other protected cells and from the assets
of the sponsored captive insurance company's general account.
§33-31-2. Licensing; authority.
(a) Any captive insurance company, when permitted by its
articles of association, charter or other organizational document,
may apply to the commissioner for a license to do any and all
insurance comprised in section ten, article one of this chapter
except as indicated in subdivision (4), subsection (a) of this
section:
Provided, That all captive insurance companies, except
pure captive insurance companies, shall maintain their principal office and principal place of business in this State:
Provided,
however, That:
(1) No pure captive insurance company may insure any risks
other than those of its parent and affiliated companies or
controlled unaffiliated business;
(2) No association captive insurance company may insure any
risks other than those of the member organizations of its
association, and their affiliated companies;
(3) No industrial insured captive insurance company may insure
any risks other than those of the industrial insureds that comprise
the industrial insured group, and their affiliated companies;
(4) No risk retention group may insure any risks other than
those of its members and owners;
(5) No captive insurance company may provide personal motor
vehicle or homeowner's insurance coverage or any component thereof;
(6) No captive insurance company may accept or cede
reinsurance except as provided in section eleven of this article;
(7) Any captive insurance company may provide excess workers'
compensation insurance to its parent and affiliated companies,
unless prohibited by the federal law or laws of the State having
jurisdiction over the transaction. Any captive insurance company,
unless prohibited by federal law, may reinsure workers'
compensation of a qualified self-insured plan of its parent and
affiliated companies;
and
(8) No branch captive insurance company may write any business
in this state except insurance or reinsurance of the employee
benefit business which is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended;
(9) No sponsored captive insurance company may insure any
risks other than those of its participants; and
(8) (10) Any captive insurance company which insures risks
described in subsections (a) and (b) of section ten, article one of
this chapter shall comply with all applicable State and federal
laws.
(b) No captive insurance company may do any insurance business
in this State unless:
(1) It first obtains from the Commissioner a license
authorizing it to do insurance business in this State;
(2) Its board of directors, or, in the case of a reciprocal
insurer, its subscribers' advisory committee, holds at least one
meeting each year in this State;
and
(3) It maintains its principal place of business in this
State, or in the case of a branch captive insurance company,
maintains the principal place of business for its branch operations
in this state; and
(3) (4) It appoints a registered agent to accept service of
process and to otherwise act on its behalf in this State:
Provided, That whenever such registered agent cannot with reasonable diligence be found at the registered office of the
captive insurance company, the Secretary of State shall be an agent
of such captive insurance company upon whom any process, notice, or
demand may be served.
(c) (1) Before receiving a license, a captive insurance
company shall:
(A) File with the Commissioner a certified copy of its
organizational documents, 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 such additional information as the Commissioner may reasonably
require. In the event of any subsequent material change in any
item in such description, the captive insurance company shall
submit to the Commissioner for approval an appropriate revision and
shall not offer any additional kinds of insurance until a revision
of such description is approved by the Commissioner. The captive
insurance company shall inform the Commissioner of any material
change in rates within thirty days of the adoption of such change.
(2) Each applicant captive insurance company shall also file
with the Commissioner evidence of the following:
(A) The amount and liquidity of its assets relative to the
risks to be assumed;
(B) The adequacy of the expertise, experience and character of
the person or persons who will manage it;
(C) The overall soundness of its plan of operation;
(D) The adequacy of the loss prevention programs of its
insureds; and
(E) Such other factors deemed relevant by the Commissioner in
ascertaining whether the proposed captive insurance company will be
able to meet its policy obligations.
(F) In addition to the information required by this section,
each applicant 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 such 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, shall 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 shall be allocated to each
protected cell in a fair and equitable manner.
(3) Information submitted pursuant to this subsection shall be
and 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:
(A) Such information may be discoverable by a party in a civil
action or contested case to which the captive insurance company
that submitted such information is a party, upon a showing by the
party seeking to discover such information that:
(i) The information sought is relevant to and necessary for
the furtherance of such action or case;
(ii) The information sought is unavailable from other
nonconfidential sources; and
(iii) A subpoena issued by a judicial or administrative
officer of competent jurisdiction has been submitted to the
Commissioner:
Provided, That the provisions of subdivision (3) of
this subsection shall not apply to any
industrial insured captive
insurance company insuring the risks of an industrial insured group
or risk retention group; and
(B) The Commissioner may, in the Commissioner's discretion,
disclose such information to a public officer having jurisdiction
over the regulation of insurance in another state, if:
(i) The public official shall agree in writing to maintain the
confidentiality of such information; and
(ii) The laws of the state in which such public official serves require such information to be and to remain confidential.
(d) Each captive insurance company shall pay to the
Commissioner a nonrefundable fee of two hundred dollars for
examining, investigating and processing 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 against the applicant. The
provisions of subsection (r), section nine, article two of this
chapter shall 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 year thereafter of three
hundred dollars.
(e) If the Commissioner is satisfied that the documents and
statements that such captive insurance company has filed comply
with the provisions of this chapter, the Commissioner may grant a
license authorizing it to do insurance business in this State until
April first, thereafter, which license may be renewed.
§33-31-4. Minimum capital and surplus; letter of credit.
(a) No captive insurance company shall be issued a license
unless it shall possess and thereafter maintain unimpaired paid-in
capital of:
(1) In the case of a pure captive insurance company, not less
than one hundred thousand dollars
capital and one hundred fifty thousand dollars surplus;
(2) In the case of an association captive insurance company,
incorporated as a stock insurer, not less than three hundred fifty
thousand dollars;
(3) In the case of an industrial insured captive insurance
company, not less than two hundred fifty thousand dollars;
(4) In the case of a risk retention group, not less than five
hundred thousand dollars; and
(5) In the case of a sponsored captive insurance company, not
less than two hundred fifty thousand dollars.
(b) No captive insurance company,
organized as a reciprocal
insurer under this chapter may shall be issued a license unless it
possesses and thereafter maintains unimpaired paid-in surplus of:
(1) In the case of a pure captive insurance company, not less
than one hundred fifty thousand dollars;
(2) In the case of an association captive insurance company,
not less than three hundred fifty thousand dollars;
(3) In the case of an industrial insured captive insurance
company, not less than two hundred fifty thousand dollars;
(4) In the case of a risk retention group, not less than five
hundred thousand dollars; and
(5) In the case of a sponsored captive insurance company, not
less than two hundred fifty thousand dollars.
(c) The Commissioner may prescribe additional capital and surplus based upon the type, volume, and nature of insurance
business transacted.
(d) Capital and surplus may be in the form of cash or an
irrevocable letter of credit issued by a bank chartered by the
State of West Virginia or a member bank of the Federal Reserve
System and approved by the Commissioner.
(e) In the case of a branch captive insurance company, as
security for the payment of liabilities attributable to the branch
operations, the Commissioner shall require that a trust fund,
funded by an irrevocable letter of credit or other acceptable
asset, be established and maintained in the United States for the
benefit of United States policyholders and United States ceding
insurers under insurance policies issued or reinsurance contracts
issued or assumed, by the branch captive insurance company through
its branch operations. The amount of such security may be no less
than the capital and surplus required hereunder and the reserves on
such insurance policies or such reinsurance contracts, including
reserves for losses, allocated loss adjustment expenses, incurred
but not reported losses and unearned premiums with regard to
business written through the branch operations; however, the
Commissioner may permit a branch captive insurance company that is
required to post security for loss reserves on branch business by
its reinsurer to reduce the funds in the trust account required by
this section by the same amount so long as the security remains posted with the reinsurer. If the form of security selected is a
letter of credit, the letter of credit must be established by, or
issued or confirmed by, a bank chartered in this State or a member
bank of the federal reserve system and approved by the
Commissioner.
§33-31-6. Formation of captive insurance companies in this State.
(a) A pure captive insurance company may be incorporated as a
stock insurer with its capital divided into shares and held by the
stockholders, or as a nonprofit corporation with one or more
members.
(b) An association captive insurance company or an industrial
insured captive insurance company may be:
(1) Incorporated as a stock insurer with its capital divided
into shares and held by the stockholders;
(2) Incorporated as a mutual insurer without capital stock,
the governing body of which is elected by its insureds; or
(3) Organized as a reciprocal insurer in accordance with
article twenty-one of this chapter.
(c) A captive insurance company incorporated or organized in
this State shall have not less than three incorporators or three
organizers of whom not less than one shall be a resident of this
State.
(d) In the case of a captive insurance company:
(1) (A) Formed as a corporation the incorporators shall petition the Commissioner to issue a certificate setting forth the
Commissioner's finding that the establishment and maintenance of
the proposed corporation will promote the general good of the
State. In arriving at such a finding the Commissioner shall
consider:
(i) The character, reputation, financial standing and purposes
of the incorporators;
(ii) The character, reputation, financial responsibility,
insurance experience and business qualifications of the officers
and directors; and
(iii) Such other aspects as the Commissioner shall deem
advisable.
(B) The articles of incorporation, such certificate, and the
organization fee shall be transmitted to the Secretary of State,
who shall thereupon record both the articles of incorporation and
the certificate.
(2) Formed as a reciprocal insurer, the organizers shall
petition the Commissioner to issue a certificate setting forth the
Commissioner's finding that the establishment and maintenance of
the proposed association will promote the general good of the
State. In arriving at such a finding the Commissioner shall
consider:
(A) the items set forth in subparagraphs (i), (ii) and
(iii), paragraph (A), subdivision (1) of this subsection:
(A) The character, reputation, financial standing and purposes of the organizers;
(B) The character, reputation, financial responsibility,
insurance experience, and business qualifications of the
attorney-in-fact; and
(C) Any other aspects as the Commissioner considers advisable.
(3) Licensed as a branch captive insurance company, the alien
captive insurance company shall petition the Commissioner to issue
a certificate setting forth the Commissioner's finding that, after
considering the character, reputation, financial responsibility,
insurance experience, and business qualifications of the officers
and directors of the alien captive insurance company, the licensing
and maintenance of the branch operations will promote the general
good of the State. The alien captive insurance company may
register to do business in this State after the Commissioner's
certificate is issued.
(e) The capital stock of a captive insurance company
incorporated as a stock insurer may be authorized with no par
value.
(f) In the case of a captive insurance company:
(1) Formed as a corporation, at least one of the members of
the board of directors shall be a resident of this State; and
(2) Formed as a reciprocal insurer, at least one of the
members of the subscribers' advisory committee shall be a resident
of this state.
(g) Other than captive insurance companies formed as nonprofit
corporations under chapter thirty-one-e of this code, captive
insurance companies formed as corporations under the provisions of
this article shall have the privileges and be subject to the
provisions of the general corporation law as well as the applicable
provisions contained in this chapter. In the event of conflict
between the provisions of said general corporation law and the
provisions of this chapter, the latter shall control.
(h) Captive insurance companies formed as nonprofit
corporations under the provisions of this article shall have the
privileges and be subject to the provisions of chapter thirty-one-e
of this code as well as the applicable provisions contained in this
chapter. In the event of conflict between the provisions of
chapter thirty-one-e of this code and the provisions of this
chapter, the latter shall control.
(i) The provisions of sections twenty-five, twenty-seven and
twenty-eight, article five of this chapter and section three,
article twenty-seven of this chapter, pertaining to mergers,
consolidations, conversions, mutualizations, redomestications and
mutual holding companies, shall apply in determining the procedures
to be followed by captive insurance companies in carrying out any
of the transactions described therein, except that:
(1) The Commissioner may waive or modify the requirements for
public notice and hearing in accordance with rules which the Commissioner may adopt addressing categories of transactions. If
a notice of public hearing is required, but no one requests a
hearing, then the Commissioner may cancel the hearing; and
(2) An alien insurer may be a party to a merger authorized
under this subsection:
Provided, That the requirements for a
merger between a captive insurance company and a foreign insurer
under section twenty-five, article five of this chapter shall apply
to a merger between a captive insurance company and an alien
insurer under this subsection. Such alien insurer shall be treated
as a foreign insurer under section twenty-five, article five of
this chapter and such other jurisdictions shall be the equivalent
of a state for purposes of section twenty-five, article five of
this chapter.
(j) Captive insurance companies formed as reciprocal insurers
under the provisions of this chapter shall have the privileges and
be subject to the provisions of article twenty-one of this chapter
in addition to the applicable provisions of this chapter. In the
event of a conflict between the provisions of article twenty-one of
this chapter and the provisions of this chapter, the latter shall
control. To the extent a reciprocal insurer is made subject to
other provisions of this chapter pursuant to article twenty-one of
this chapter, such provisions shall not be applicable to a
reciprocal insurer formed under this chapter unless such provisions
are expressly made applicable to captive insurance companies under this chapter.
(k) The articles of incorporation or bylaws of a captive
insurance company formed as a corporation may authorize a quorum of
its board of directors to consist of no fewer than one third of the
fixed or prescribed number of directors determined under section
eight hundred twenty-four, article eight, chapter thirty-one-e of
this code.
(l) The subscribers' agreement or other organizing document of
a captive insurance company formed as a reciprocal insurer may
authorize a quorum of its subscribers' advisory committee to
consist of no fewer than one third of the number of its members.
§33-31-8. Examinations and investigations.
(a) At least once in five years, and whenever the Commissioner
determines it to be prudent, the Commissioner shall personally, or
by some competent person appointed by the Commissioner, visit each
captive insurance company and thoroughly inspect and examine its
affairs to ascertain its financial condition, its ability to
fulfill its obligations and whether it has complied with the
provisions of this chapter. The captive insurance company shall be
subject to the provisions of section nine, article two of this
chapter in regard to the expense and conduct of the examination.
(b) All examination reports, preliminary examination reports
or results, working papers, recorded information, documents and
copies thereof produced by, obtained by or disclosed to the Commissioner or any other person in the course of an examination
made under this section are confidential and are not subject to
subpoena 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 to the extent provided in this subsection.
Nothing in this subsection shall prevent the Commissioner from
using such information in furtherance of the Commissioner's
regulatory authority under this title. The Commissioner may, in
the Commissioner's discretion, grant access to such information to
public officers having jurisdiction over the regulation of
insurance in any other state or country, or to law-enforcement
officers of this State or any other state or agency of the federal
government at any time, so long as such officers receiving the
information agree in writing to hold it in a manner consistent with
this section.
(c) (1) The provisions of this section shall apply to all
business written by a captive insurance company: Provided, That
the examination for a branch captive insurance company shall be of
branch business and branch operations only, as long as the branch
captive insurance company provides annually to the Commissioner a
certificate of compliance, or its equivalent, issued by or filed
with the licensing authority of the jurisdiction in which the
branch captive insurance company is formed, and demonstrates to the
Commissioner's satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of
such jurisdiction.
(2) As a condition of licensure, the alien captive insurance
company must grant authority to the Commissioner for examination of
the affairs of the alien captive insurance company in the
jurisdiction in which alien captive insurance company is formed.
§33-31-26. Sponsored captive insurance companies.
(a) One or more sponsors may form a sponsored captive
insurance company under this chapter.
(b) A sponsored captive insurance company formed or licensed
under the provisions of this chapter may establish and maintain one
or more protected cells to insure risks of one or more
participants, subject to the following conditions:
(1) The shareholders of a sponsored captive insurance company
shall be limited to its participants and sponsors;
(2) Each protected cell shall be accounted for separately on
the books and records of the sponsored captive insurance company to
reflect the financial condition and results of operations of the
protected cell, net income or loss, dividends or other
distributions to participants, and any other factors as may be
provided in the participant contract or required by the
Commissioner;
(3) The assets of a protected cell shall not be chargeable
with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;
(4) No sale, exchange or other transfer of assets may be made
by such sponsored captive insurance company between or among any of
its protected cells without the consent of such protected cells;
(5) No sale, exchange, transfer of assets, dividend or
distribution may be made from a protected cell to a sponsor or
participant without the Commissioner's approval and in no event may
such approval be given if the sale, exchange, transfer, dividend or
distribution would result in insolvency or impairment with respect
to a protected cell;
(6) Each sponsored captive insurance company shall annually
file with the Commissioner any financial reports that the
Commissioner shall require, which shall include, without
limitation, accounting statements detailing the financial
experience of each protected cell;
(7) Each sponsored captive insurance company shall notify the
Commissioner in writing within ten business days of any protected
cell that is insolvent or otherwise unable to meet its claim or
expense obligations;
(8) No participant contract shall take effect without the
Commissioner's prior written approval, and the addition of each new
protected cell and withdrawal of any participant of any existing
protected cell shall constitute a change in the business plan
requiring the Commissioner's prior written approval; and
(9) The business written by a sponsored captive, with respect
to each cell, shall be:
(A) Fronted by an insurance company licensed under the laws of
any state;
(B) Reinsured by a reinsurer authorized or approved by the
State of West Virginia; or
(C) Secured by a trust fund in the United States for the
benefit of policyholders and claimants funded by an irrevocable
letter of credit or other asset that is acceptable to the
Commissioner. The amount of security provided by a trust fund
shall be no less than the reserves associated with those
liabilities which are neither fronted nor reinsured, including
reserves for losses, allocated loss adjustment expenses, incurred
but not reported losses and unearned premiums for business written
through the participant's protected cell. The Commissioner may
require the sponsored captive to increase the funding of any trust
as established under this subdivision. If the form of security in
the trust is a letter of credit, the letter of credit must be
established, issued or confirmed by a bank chartered in this State,
a member of the federal reserve system, or a bank chartered by
another state if such state chartered bank is acceptable to the
Commissioner. A trust and trust instrument maintained pursuant to
this subdivision shall be established in a form and upon such terms
approved by the Commissioner.
§33-31-27. Qualification of sponsors.
A sponsor of a sponsored captive insurance company must be an
insurer licensed under the laws of any state, a reinsurer
authorized or approved under the laws of any state or a captive
insurance company formed or licensed under this chapter. A risk
retention group shall not be either a sponsor or a participant of
a sponsored captive insurance company.
§33-31-28. Participants in sponsored captive insurance companies.
(a) Associations, corporations, limited liability companies,
partnerships, trusts and other business entities may be a
participant in any sponsored captive insurance company formed or
licensed under this chapter.
(b) A sponsor may be a participant in a sponsored captive
insurance company.
(c) A participant need not be a shareholder of the sponsored
captive insurance company or any affiliate thereof.
(d) A participant may insure only its own risks through a
sponsored captive insurance company.
NOTE: The purpose of this bill is to define and include
provisions concerning sponsored captive insurance companies. The
bill further requires sponsors to have qualifications while
providing who may participate in sponsored captive insurance
companies.
Strike-through indicates language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§§33-31-26 through 28 are new; therefore, strike-throughs and
underscoring have been omitted.
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