A bill has been presented in Alabama that will update the Alabama Captive Insurers Act to provide greater economic growth and development for the state’s captive insurance industry.
The Act was originally presented during the 2020 session and passed unanimously in the House Insurance Committee prior to legislative sessions ending due to the pandemic.
The new bill, called HB 31, includes an expansion of branch captives to expand the definition and promote utilisation. This includes a “wholesale rethinking of branch captives by greatly revamping branch captive requirements to more closely match those of pure captives,” according to the Alabama Captives Insurance Association (ACIA).
It will allow multi-state and multi-national organisations to better manage their Alabama risks by making capital standards more reasonable, expanding the use of branch captives to all lines of business, the ACIA explained.
Changes will also allow branch captives to pool risks written in a foreign or alien jurisdiction into an Alabama captive, subject to the commissioner’s approval. Branch captives will be required to maintain “a place of business”, rather than “the principle place of business” in Alabama.
The bill also updates coastal captive requirements, removing a requirement for coastal homeowners captives to be fronted and making a series of technical corrections to promote consistent language within the Act.
It also codifies a formal dormancy statute, following existing practice, to allow captives that may cease writing business for up to five years to remain in existence.
“For the state’s captives, this bill will mean increased flexibility and innovation, thus creating a more attractive captive domicile atmosphere in Alabama,” the ACIA said.
Alabama Captive Insurers Act, HB 31, Alabama Captives Insurance Association, ACIA