33-28-102. Certificates of authority -- lines of business -- definition. (1) A captive insurance company, when permitted by its organizational document, may apply to the commissioner for a certificate of authority to provide property insurance, casualty insurance, life insurance, disability income insurance, surety insurance, marine insurance, and health insurance coverage or a group health plan 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 and controlled unaffiliated business entities;
(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 members or affiliated companies of members;
(d) a special purpose captive insurance company may not provide insurance or reinsurance for risks unless approved by the commissioner;
(e) a captive insurance company or a branch 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;
(iii) provide health insurance coverage or a group health plan unless the captive insurance company or branch captive insurance company is only providing health insurance coverage or a group health plan for the parent company and its affiliated companies; or
(iv) write workers' compensation insurance on a direct basis; and
(f) a protected cell captive insurance company may not insure any risks other than those of its participants.
(2) A captive insurance company may not write any insurance business unless:
(a) it first obtains from the commissioner a certificate of authority under this section;
(b) its board of directors, board of managing members, or a reciprocal insurer's subscribers' advisory committee holds at least one meeting each year in this state;
(c) it maintains its principal place of business in this state; and
(d) it designates a registered agent to accept service of process, files the name and contact information and any subsequent changes regarding the registered agent with the commissioner, and agrees that whenever the registered agent cannot be found with reasonable diligence, the commissioner's office may act as an agent of the captive insurance company with respect to any action or proceeding and may be served in accordance with 33-1-605 and 33-1-606.
(3) (a) Before receiving a certificate of authority and with respect to a captive insurance company formed as a business entity, a captive insurance company shall:
(i) file with the commissioner a certified copy of its organizational documents, a statement under oath of an officer of the business entity showing its financial condition, and any other statements or documents required by the commissioner; and
(ii) 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; and
(iii) provide a statement to the commissioner that addresses the following:
(A) the character, reputation, financial standing, and purposes of the organizers;
(B) the character, reputation, financial responsibility, insurance experience, and business qualifications of any officers, directors, or managing members; and
(C) any other factors that the commissioner considers appropriate.
(b) If there is a 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 the commissioner approves a revision of the description. 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, members, 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 protected cell 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 protected cell 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 protected cell 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) In addition to the requirements of subsection (3)(a), a captive insurance company formed as a reciprocal insurer must 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;
(f) 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, individual series of members as defined in 35-8-102 of a limited liability company, and protected cell shall pay to the commissioner a nonrefundable fee of $200 for the examining, investigating, and processing of its application, 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, individual series of members as defined in 35-8-102 of a limited liability company, and protected cell shall pay a 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 certificate authorizing the company to do insurance business in this state. The certificate 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; amd. Sec. 4, Ch. 518, L. 2007; amd. Sec. 2, Ch. 28, L. 2009; amd. Sec. 2, Ch. 75, L. 2011; amd. Sec. 20, Ch. 227, L. 2011; amd. Sec. 2, Ch. 335, L. 2015; amd. Sec. 11, Ch. 60, L. 2019; amd. Sec. 2, Ch. 223, L. 2019.