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By: Allan J. Hayes
According to the National Association of Insurance Commissioners (NAIC) a Captive Insurer is an insurance company established by a parent firm for the purpose of insuring the parent’s exposures. Currently, 75 percent of the world’s Fortune 500 companies are parent owners of captive insurance companies and total captive premium income is exceeding $14 billion with more than 5,000 captives established worldwide. Twenty-four captives are domiciled in Georgia.
Benefits of a captive include greater business opportunities and more risk management options for the parent company which can result in lower premium payments and management costs. Also, a captive can be formed in a jurisdiction where taxes, solvency rules and reporting requirements are more advantageous.
The Georgia Department of Insurance and other state leaders are interested in attracting some of the growing captive insurance market. During the 2017 legislative session they supported passage of SB 173, a bill sponsored by Senate Insurance and Labor Committee Chairman Burt Jones and House Insurance Committee member Jason Shaw that extensively revises provisions relating to captive insurance companies and updates several definitions within the Insurance code. Governor Deal signed the bill on May 9, 2017 and the new provisions contained in it become effective July 1, 2017.
Briefly, the new law will:
For any questions or for more information regarding forming a captive, please contact Allan Hayes at [email protected].