Texas issues first captive insurance licences
AUSTIN, Texas (Best’s News Service) — The Texas Department of Insurance has issued its first three licences to captive insurers — one that formed in the state and two that redomesticated from outside Texas — since the state became a captive domicile in 2013.
The department approved a licence application submitted by Commerce Way Insurance Co to form a new captive operation in Texas. The department also approved redomestication applications for Cart Assurance Co Inc and Prize Indemnity.
Cart Assurance was the first company to receive a certificate to operate as a captive in Texas, having re-domiciled from Arizona, according to the Texas Captive Insurance Association.
Cart Assurance was among the association’s founding members. Company president Irving Pozmantier said his company’s goals include promoting Texas as a captive domicile and encouraging other captives to locate in Texas.
“We have a high degree of confidence in the ability of the Texas captive regulators to provide an appropriate balance of regulation with assistance in establishing captive insurance companies with solid business purposes and sensible business plans,” he said in a statement.
“From our first meeting with the department’s captive team, they have extended full cooperation, thoughtful suggestions and flexible regulation.”
Pozmantier, a 57-year insurance industry veteran, told Best’s News Service his company moved its captive from Arizona to Texas partly for convenience, because the business his company writes is entirely in Texas and the owners are all in-state residents. “Beyond that, it was an opportunity to show that we have a legitimate captive with a strong business purpose and a good business plan that was willing to domicile in Texas and willing to work with others in developing a strong captive market,” he said. “My hope is that others will be attracted to do the same.”
He said Texas is trying to build a presence in the captive industry. “There’s no reason for Texas businesses to be outside the state or offshore,” he said.
The redomestication rules result from the passage of SB 734, which made Texas a captive domicile. The bill was backed by large Texas-based companies that had captives domiciled outside the state, but were looking to transfer them to Texas, according to the Property Casualty Insurers Association of America.
SB 734 requires that affiliated insurance companies have significant operations in Texas before they can form or move a captive there. Captives in Texas can insure only the operational risks of affiliated companies and controlled unaffiliated business. Also, captives cannot accept insurance policy risks of an affiliate.
Also, SB 734 provided a two-year waiver of any insurance fees or taxes on any captive that relocates to Texas from another jurisdiction. Texas captives can provide reinsurance to any insurer covering a captive’s affiliates, including liability insurance and workers’ compensation.
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