Proposed Texas legislation could allow captives to reinsure credit life insurance
Giovanni Capriglione, a Republican member of the Texas House of Representatives, has filed a new captive bill, HB No 1187, with proposed amendments to Section 964.052(a) of the Insurance Code, pertaining to the role of captive insurance as a provider of reinsurance with relation to credit life insurance and credit disability insurance.
Section 964.052(a) currently states that "a captive insurance company may provide reinsurance to an insurer covering the operational risks of the captive insurance company's affiliates, or risks of a controlled unaffiliated business, that the captive insurance company may insure directly under Section 964.051," and proceeds to list of operational risks a captive may insure.
At present, the list of operations risks that a captive insurance company may reinsure includes “(1) employee benefit plans offered by affiliates; (2) liability insurance an affiliate must maintain as a prerequisite for obtaining a license or permit if the law requires maintenance of the liability insurance; and finally (3) workers' compensation insurance and employer liability policies issued to affiliates if the insurer that directly issues workers' compensation insurance and employer's liability policies or its licensed, if required by law, administrator or adjuster.”
The proposed change by Capriglione would also allow captives to reinsure credit life insurance and credit disability insurance offered as a part of, or directly relating to, the operational risks of a captive insurance company's affiliate.
The proposed legislation will be inspected by a committee and if approved would take effect on September 1, 2017.
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