Gregory V. Serio, New York’s Superintendent of Insurance and Empire State Development Chairman Charles A. Gargano issued a joint announcement concerning legislative proposals which would allow “a wider range of businesses the opportunity to utilize captive insurance companies to retain, fund, and better manage some of their risk.”
The proposed bill provides a new risk transfer vehicle, known as a “sponsored captive insurance company,” which permits various participants to use the same vehicle to self-fund their risks. It would also create “additional flexibility by lowering the threshold for businesses to form single parent captives and to participate in a group captive,” and would also permit qualifying public entities to form captives.
Serio explained that in the face of a contracting and increasingly expensive commercial insurance market, the “new legislation gives even more of New York’s businesses a valuable option by offering the use of captives as an alternative form of insurance.”
“The bill creates greater flexibility and allows businesses and public entities new opportunities to avail themselves to greater choices for more efficiency in managing and financing risk,” Serio continued.”New York businesses are being forced to look outside of the State to implement their risk management strategies if they involve the formation of captives, the new legislation will curtail that trend.”
Captives were first authorized in NY in 1997, and the new laws are designed to encourage more companies to avail themselves of the advantages a captive can give, both in assessing risks and lowering costs as well as access to the reinsurance market.
Topics New York Legislation
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