Washington State fines captive insurer for unregistered business operations
The office of the insurance commissioner (OIC) of Washington State has fined a captive insurance company for unregistered business dealings in the state.
Maple Shade Assurance, which is registered in Nashville Tennessee, was fined $5,000 for transacting insurance business as a captive insurer in the state of Washington without being registered with the Insurance Commissioner.
According to the OIC the company violated RCW 48.05.030(1) and RCW 48.15.020(1), justifying the imposition of a fine under RCW 48.15.023.
On March 10, 2023, the company submitted an application to the Insurance Commissioner to register as a captive insurer in Washington. The OIC reviewed the company's application and found the company did not qualify as an eligible captive insurer under Chapter 48.201 RCW. Specifically, the company did not demonstrate that it had assets exceeding its liabilities by at least $1,000,000, as required to register as a captive insurer in Washington. The OIC closed the application on November 29, 2023.
The company submitted another application on August 30, 2024, and it became registered as a captive insurer in Washington State on October 9, 2024. The company disclosed to the OIC that it had acted as a captive insurer for three policies in 2023 prior to becoming registered in Washington. The company reported these policies provide reimbursement costs associated with residential real estate development projects in Washington state.
The company reported receiving premiums in the amount of $4,754,243 in 2023. To date, the company has paid premium taxes of $45,912 for Year 2024 and $39,481 for Year 2023.
RCW 48.05.030(1) states no person shall act as an insurer and no insurer shall transact insurance in this state other than as authorized by a certificate of authority issued to it by the commissioner and then in force; except, as to such transactions as are expressly otherwise provided for in this code.
RCW 48.15.020(1) provides an insurer that is not authorised by the Insurance Commissioner may not solicit insurance business in this state or transact insurance business in this state, except as provided in this chapter.
RCW 48.15.023(5)(a) states if the Insurance Commissioner has cause to believe that any person has violated the provisions of RCW 48.15.020(1), the Insurance Commissioner may assess a civil penalty of not more than twenty-five thousand dollars for each violation, after providing notice and an opportunity for a hearing.
By transacting insurance business as a captive insurer in the state of Washington without being registered with the Insurance Commissioner, the OIC said that the company violated RCW 48.05.030(1) and RCW 48.15.020(1), justifying the imposition of a fine under RCW 48.15.023.
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