Louisiana introduces detailed framework for captive insurers
Louisiana’s Department of Insurance has promulgated Regulation 139—Captive Insurance Companies, establishing detailed rules for captive insurance companies and risk retention groups domiciled in the state.
The regulation implements the Creating Holistic Options in Coverage for Enterprise and Self-Insurance (CHOICES) Law enacted by Act No. 313 of the 2025 Regular Session of the Louisiana Legislature.
The regulation applies to entities seeking a Louisiana licence and to those already operating as captive insurers or risk retention groups under the CHOICES Law. Prospective applicants must first arrange a meeting with the Department of Insurance. The meeting is intended to give the Department an understanding of the applicant’s organisation, insurance needs, business plan and ownership structure, while providing an opportunity to explain the application process and regulatory requirements.
Regulation 139 covers several forms of captive business, including pure captive insurance companies, association captives, affiliated reinsurance companies and risk retention groups. A pure captive, for example, insures risks of its parent, affiliated companies or controlled unaffiliated businesses, while an association captive insures specified risks of an association and its member organisations and related entities.
The framework provides flexibility in corporate structure. Subject to the Commissioner’s approval, a captive or risk retention group may be established with fewer than five natural persons and may take the form of a corporation, limited liability company, partnership, statutory trust or another legal entity permitted under Louisiana law. Organisational documents must be submitted to the Commissioner for approval before filing and must address the entity’s purpose, governance and operational structure. Captives must also obtain approval for their proposed name and submit policy forms for regulatory review.
Regulation 139 places particular emphasis on professional oversight. Captive managers must be experienced and competent in captive insurance operations and authorised by the Commissioner. Each captive and risk retention group must appoint an authorised certified public accountant to prepare and certify audited financial statements, as well as a qualified actuary to prepare required actuarial opinions and reports. At least 30 days’ written notice is required before changing an approved manager, accountant or actuary, or before a material change affecting operations, governance, financial condition or the business plan.
Financial requirements form another key element of the regime. Permitted capital may include cash, cash equivalents, bonds, marketable securities, letters of credit, approved trusts and certain government obligations. The Commissioner may prescribe additional capital requirements according to the type, volume and nature of the business. The Commissioner may also require deposits of money or securities to address financial solvency concerns, with deposited securities held for the protection of policyholders or as security against those concerns.
Ongoing reporting requirements are extensive. Captives and risk retention groups must file an annual statement of financial condition by 1 March, an audited financial statement by 30 June and an annual actuarial certification of loss and loss-expense reserves. The Commissioner may also require property and casualty rates to be filed on an actuarially justified basis where appropriate.
The regulation also establishes procedures for redomestication into Louisiana and for dormant captives. A qualifying captive may obtain a certificate of dormancy after ceasing insurance business and addressing outstanding liabilities, but must maintain its legal existence, continue required filings and fees, and obtain approval before resuming insurance operations. Enforcement powers include fines, refusal or revocation of a certificate of authority, suspension and cease-and-desist orders.
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