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.
Original article can be found in Insurance Journal.