Iowa pushes forward new captive bill
Iowa’s Senate Bill SF 549, which covers captive insurance in the state, is continuing to make progress in the state legislature.
The bill allows for the formation of captive insurance companies and establishes tax rates for captive insurance premiums.
It also decreases the applicable percent tax rate for insurance companies’ tax in Iowa Code chapter 432, establishes requirements for the operation of captive insurance companies, including reporting and examination requirements.
The bill permits the Commissioner of Insurance to suspend or revoke certificates to conduct business and also creates a Captive Insurance Regulatory and Supervision Fund, into which all revenue sources under new Iowa Code chapter 521J will be deposited.
It also permits the formation of protected cell captive companies and provides guidelines for their operation and requires the Iowa Insurance Division (IID) of the Department of Commerce to create rules to administer the provisions of the Bill.
Currently, captive insurance companies are not allowed to operate or sell insurance in the State. There are captive insurance companies headquartered in Iowa that must do business outside of the State.
All insurance companies and associations of any kind, not including fraternal beneficiary associations or nonprofit hospital and medical service corporations, must, as required by law, pay an applicable percent of the gross amount of premiums received during the preceding calendar year on contracts of insurance covering risks resident in Iowa during the preceding year, including contracts for group insurance and annuities and without including or deducting any amounts received or paid for reinsurance. The applicable percent is currently 1.0%.
The regulation of a newly introduced insurance market to the State will require the IID to hire three people to carry out the provisions of the Bill. The IID will hire a captive insurance bureau chief, an examiner specialist and an examiner. Each of these positions will begin at the start of 2024.
