Texas Opening Doors to Captive Insurers
The Texas Department of Insurance has begun accepting applications from captive insurance companies located in other jurisdictions that would like to relocate to Texas. TDI will license the companies under a law change approved by the 83rd Texas Legislature and signed by Gov. Rick Perry on June 5, 2013.
Senate Bill 734, sponsored by Senator John Carona (R-Dallas), provides TDI with the ability to license captives to insure the risks of parent companies and affiliates, as well as controlled unaffiliated businesses.
A captive is defined as an insurance company formed by another company to cover its own risks. In the past, Texas-based companies wanting to self-insure through a captive were forced to form the operations outside of the Lone Star State.
The Texas statute requires that parent companies have significant operations in Texas in order to form a captive here. Texas-based captives can only insure operational risks of affiliated companies and controlled unaffiliated business; SB 734 prohibits captives from accepting insurance policy risks of an insurance affiliate.
TDI is currently accepting re-domestication applications for captive insurers with existing track records as well as accepting registrations for captive managers. Applications for new captive operations will be accepted at a later date after final adoption of the captive rules.
TDI has posted its formal captive rule proposal to the agency website at: http://www.tdi.texas.gov/rules/2013/parules.html. The proposal will be published in the Texas Register on November 22, 2013. Public comments will be accepted until Dec.23, 2013.
Source: TDI