The Washington Office of the Insurance Commissioner is offering captives that have unlawfully insured any risk in the state in the past 15 years a self-reporting period of 18 months to pay significantly reduced fines.
Starting from January 1, 2019 to June 30, 2020, all captives that self-report their insurance policies that cover assets in Washington will pay signifcantly reduced fine and premium tax penalties.
This development follows Microsoft's Arizona-domiciled captive Cypress Insurance Company settling with the OIC to pay $573,905 in unpaid premium taxes and $302,915 in interest and penalties after insurance commissioner Kreidler ordered them in May to stop transacting insurance without a license and to pay tax on its written premiums.
Between 2008 and 2018, Cypress collected more than $91 million in written premium from Microsoft and its companies. Washington State law requires insurance companies to pay a 2 percent tax based on their written premiums.
From July 1, 2019 until June 30, 2020, the fine amount and tax penalty captive insurers unlawfully insuring risk in the state will have to pay will increase for every six months that they don't self-report.
Kreidler said he will pursue maximum fines and tax penalties against captive insurers that have unlawfully insured risk in Washington state after the 18-month grace period ends.
The OIC has also encouraged captives that insured risk in Washington more than 15 years ago to self-report those policies from Jan. 1, 2019 through June 30, 2020 - are they will not face fines and premium taxes. However, if they do not self report in this time, they will also face maximum fines and tax penalties.
Washington OIC, Microsoft, Cypress, Arizona, Washington, North America