New Oklahoma Law Caps Premium Tax on Captive Insurance Companies

A proposed new law that places a cap on premium taxes paid by captive insurers is expected to increase the number of companies conducting business in Oklahoma, state regulators say.

Senate Bill 1617, requested by Oklahoma Insurance Commissioner John Doak, caps the premium tax on captive insurance companies at $100,000. It has gained legislative approval and is awaiting the signature of Gov. Mary Fallin.

Captive insurance refers to a subsidiary corporation that provides insurance to the parent company and its affiliates. It allows corporations and groups to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third-party insurers.

Oklahoma has allowed captive insurance companies to operate in the state since 2004, but the law didn’t attract any new business to the market.

The Oklahoma Insurance Department (OID) discovered that captive insurance companies were instead choosing to operate in states with a cap in premium tax. In fact, several Oklahoma-based companies are domesticated in Vermont.

The OID asked for a change in the law in order to attract new businesses to the state.

Once signed by the governor, the bill takes effect immediately.

Source: Oklahoma Insurance Department

Topics Carriers Oklahoma