10 January 2013Law & regulation

Texas DI recommends law to allow pure captive


In its latest Biennial Report to the 83rd Legislature, submitted at the end of 2012, the Texas Department of Insurance (TDI) took issue with Texas law, which does not permit the establishment of captives. The TDI recommended that the legislature “add new provisions to the Texas Insurance Code to provide for the formation of pure captives.”

The organisation noted that any new legislation could be modelled on existing laws in other states and engineered to include a limited number of favourable financial incentives and a reduced premium tax rate. Allowing Texan companies to establish pure captives in their home state as opposed to overseas or in other states, the TDI argued, would cut company administrative costs and bring in additional tax revenue for the state.

“An opportunity exists to further enhance Texas’ pro-business climate,” the report reads, “allowing the formation of Texas domestic captive insurance companies could help attract new businesses and retain existing Texas companies.”