23 March 2015Services

TxCIA advances captive legislation

Legislation advanced by the Texas Captive Insurance Association (TxCIA) is currently under consideration by the state’s legislature.

The legislation, HB 1700 and SB 667, would authorise pooling, credit for reinsurance, and equity dividends.

The Texas Senate Business and Commerce Committee, chaired by Senator Eltife, took public testimony on SB 667. Josh Magden, president of the association, testified in favour of the bill, and Andrew Marson, a member of the TxCIA legislative committee, registered in support of the bill and was available as an expert witness.

Magden responded to questions relating to the number of captive incorporations or re-domestications since the 2013 legislation, and the potential impact of the proposed changes on increased captive activity in the future. No one testified in opposition to the bill.

The Committee is expected to vote tomorrow (Tuesday March 24) on SB 667. If the vote is unanimous, the Committee will have the option of sending it to the local and uncontested calendar or to the full Senate.

In either case, the expectation is to pass the full Senate by the end of March and then on to the House.  In the House, SB 667 will have a public hearing in the House Insurance Committee. Assuming it passes out of that Committee, it will need approval of the full House before the end of May.

Members of the TxCIA legislative committee continue discussions with the Texas Department of Insurance over several changes to SB 667. Topping the list is a provision that would allow Texas based captive insurers to take ‘credit’ for reinsurance procured from a commercial non admitted reinsurer (subject to approval by the Department of Insurance).

If consensus is developed on this issue and others, those changes would be put into a committee substitute and presented to the House Insurance Committee when it considers SB 667.