The State of Arkansas has proposed a number of changes to its current captive legislation that could allow greater flexibility in the formation of a captive insurance company.
House Bill 1476 aims to widen the definition of what type of companies may form a captive insurance company to “any form of business organisation authorised under Arkansas law and approved by the Commissioner.”
“This change provides greater flexibility as, under current state law, a pure or sponsored captive company may only form as a stock company, eliminating other business vehicle options such as LLCs,” a spokesperson for the Arkansas Department of Insurance said.
Captive insurance laws were originally adopted by Arkansas in 2001, and the State’s Department of Insurance believes they are in need of an update to address changes in the market and to make the State a more attractive domicile.
Since 2015, the Dept. said it has seen significant growth in the formation of new domestic captive insurers, as businesses seek cost-effective insurance alternatives to manage commercial risk and grow successfully.
Furthermore, it is believed that captive insurance vehicles can provide possible alternatives that can help local businesses accomplish these goals
The spokesperson continued: “HB 1476 would create an environment in our state that could lead to more domestic and foreign business entities choosing to form Arkansas-based captive insurance companies.”
HB 1476 passed the Senate late afternoon on February 27, with a 33-0 vote. The bill is now due to be presented before Governor Asa Hutchinson, who will make the final decision.
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Arkansas, Captives, Legislation, North America