Rich Smith, president of the Vermont Captive Insurance Association (VCIA), has hit out at Washington State over its “poorly drafted” captives bill that will impose new costs on captives that insure risks in that state.
The Washington State senate approved legislation on March 9, 2021, that would require captives that are licensed elsewhere but operating in Washington to pay an initial registration fee of $2,500.
Captives would also be liable for an annual two percent premium tax on insurance provided to their parents or affiliates for Washington risks, although captives affiliated with public institutions of higher education would be exempt from the premium tax.
Writing in the VCIA’s blog, Smith said the poorly drafted bill “sets a terrible precedent whereby acquiescing some regulatory oversight by the Washington State insurance commissioner on captives domiciled in other states.”
Washington’s Office of Insurance (OIC) has “turned a blind eye on the benefits of captives” to companies operating in the state, and by extension to the state itself, Smith said. He warned the deal will not help the State of Washington, or companies doing business there, but would instead discourage the use of captives by Washington State businesses and nonprofits.
“All it will do is limit control and add costs,” he said. “Washington could have instituted a self-procurement tax like several other states – instead, the OIC chose pride over prudence.”
Rich Smith, Vermont Captive Insurance Association, VCIA, Washington State