Captive insurance bill filed in Texas
Texas Senator Kevin Eltife has filed legislation to expand the provisions of SB 734 that passed in 2013 authorising captive insurance in Texas for the first time.
Eltife, who is chair of the Senate committee on business and commerce, filed the legislation on February 20, 2015 at the request of the Texas Captive Insurance Association (TxCIA). It was read for the first time on February 24, 2015 and referred to the business and commerce committee.
Firstly, it will add reinsurance pooling as an option for risk sharing to allow captives to introduce third party risk to insure deductibility of premium.
Secondly, it will provide discretion to insurance regulators in determining when credit for reinsurance will be granted.
Thirdly, the bill will require notice be given to the Texas Department of Insurance (TDI) when a captive declares stockholder dividends.
The TxCIA said that “currently the law allows for policyholder dividends and while in many cases the policyholders and shareholders are the same entity, amending the law to recognise shareholder dividends recognises the ownership rights and expectations of shareholder’s return on investment.”