Simply as a number of different U.S. states are bragging in regards to the rising variety of captive insurers domiciled there – and are making modifications to draw extra captives – Alabama regulators have declared a short lived moratorium on these kinds of insurance coverage corporations.
“Efficient this date, the Alabama Division of Insurance coverage won’t settle for or course of new filings for registration or licensing of captive insurance coverage corporations and threat retention teams,” state Insurance coverage Commissioner Mark Fowler stated in a bulletin posted March 3.
The division is asking captive managers to not submit functions or payment funds in the course of the moratorium, which may final six months or extra – or much less, the bulletin famous.
The bulletin gave no rationalization for the transfer, and a spokeswoman for DOI provided little info.
“We wish to guarantee we’ve the suitable regulatory infrastructure in place to accommodate this development responsibly,” Jennifer Bowen, public info officer for the division, stated in an e-mail to Insurance coverage Journal.
The moratorium caught some within the business and in Alabama abruptly. An official with the Captive Insurance coverage Firms Affiliation had not heard in regards to the bulletin. Others speculated {that a} latest rise in captives and RRGs in Alabama has left ALDOI with out sufficient employees to maintain up with firm filings. One captive supervisor stated there was little indication that the division is struggling to maintain up and had normally been immediate in dealing with filings.
The variety of captives in Alabama is effectively under the totals in a number of different Southeastern states. Alabama now has 54 captive corporations registered and 29 non-captive threat retention teams, Bowen stated. She didn’t present year-over-year knowledge on the variety of corporations and teams.
Subsequent door, Tennessee now has 182 captive corporations and noticed a 15% development within the numbers in 2024, the Tennessee Division of Commerce and Insurance coverage stated in a information launch final month. Premiums rose from $2.4 billion in 2023 to $2.9 billion final yr. The division stated a modernization of the state’s captive statutes in 2011 has helped gas the expansion.
“I commend our implausible group of analysts who made customer support and connecting with potential prospects their focus in 2024 and past,” TDCI Captive Part Director Mark Wiedeman stated within the assertion. “I firmly imagine that sustained year-over-year development, good relationships, and connectivity with our prospects will proceed to incentivize different corporations to make use of establishing a captive in Tennessee for his or her risk-financing wants.”
North Carolina, the third-largest domicile for captives, is dwelling to greater than 311 captive entities, simply behind Utah, with 439 captives, and Vermont, with 659, the NCDOI introduced final yr. To assist be sure that development, North Carolina lawmakers final summer time approved a bill that trimmed premium taxes on captives and threat retention teams that domicile or relocate to the state.
South Carolina reported 311 captives in 2023, and Texas had 79, the Insurance coverage Info Institute famous.
These states and others have usually welcomed extra captives, partly due to the premium tax income they will produce for state and regulatory coffers and due to the choices captives and RRGs can supply to some insureds going through larger prices within the major insurance coverage market.
The Alabama moratorium could also be seen as considerably ironic, given the truth that Alabama was one of many first states to undertake captive-friendly laws. In recent times, the state noticed a major enhance in RRGs and captives, in line with business sources and information reviews.
The Alabama DOI didn’t point out what it might want to carry the moratorium, or if state lawmakers have been requested to supply extra sources for the division.
Subjects
Alabama
A very powerful insurance coverage information,in your inbox each enterprise day.
Get the insurance coverage business’s trusted publication
