Two changes to captive insurance laws passed by the Council of the District of Columbia went into effect on March 14, 2007. Supporters see the changes as giving captives more flexibility and making the District a more inviting environment for these alternative self-insurance organizations.
Introduced by Councilmember Jim Graham (Ward 1), the “Captive Insurance Company Amendment Act of 2006” and the “Special Purpose Financial Captive Authorization Amendment Act of 2006” were passed at the end of 2006 and signed into law by outgoing Mayor Anthony A. Williams.
The Captive Insurance Amendment Act updates and expands the Captive Insurance Company Act of 2004 on the formation and structure of protected cell captive insurers, providing greater flexibility to captive owners, managers and regulators regarding the status and actions of protected cell companies.
The Special Purpose Financial Captive Act provides securitization of risk and allows access to capital markets through special purpose captives, which promises tol make the District’s captive laws more compact and easy to use.
The changes were hailed by Commissioner Thomas E. Hampton of the District of Columbia Department of Insurance, Securities and Banking (DISB) and District of Columbia Councilmember Mary M. Cheh (Ward 3).
“The establishment of a regulatory scheme for securitizing insurance risks in a captive and the amendments to our protected cell statute will put the District ahead of other jurisdictions in our captive insurance regulation and attract more captive insurance companies to the District,” said Commissioner Hampton.
He said he was pleased with the “Council’s efforts to make the District of Columbia’s financial regulatory environment more responsive to market changes, and the District more competitive as a captive domicile.”
A captive insurance company is one that insures the risks of the corporation or association that owns the company. It is a form of self-insurance that has been gaining popularity over the past decade both in the United States and in the international financial market. Since 2001, when the District enacted its captive insurance law, DISB’s Risk Finance Bureau has licensed more than 70 companies, including those owned by such organizations as the American Society of Association Executives, General Motors and the Port Authority of New York and New Jersey.
“The District is uniquely positioned to leverage its status as the nation’s political capital into making the city more of an international financial center,” said Councilmember Cheh, chair of the Council’s Committee on Public Services and Consumer Affairs, which has oversight of DISB and captive insurance services. “I believe we as a Council are committed to being at the forefront of the nation’s captive insurance laws and ensuring the District remains a magnet for captive companies.”
The Captive Insurance Council of the District of Columbia (CIC-DC), worked with DISB on the new laws.
“These new laws should make the District an even more attractive location for the formation of new captive insurance companies,” said Larry Smith, chair of CIC-DC. “Now our captive regulations will be the most advanced in the United States in terms of access to capital investment and flexibility in forming protected cell insurance companies. Each captive insurance company that locates in the District has a multiplier economic effect through its business presence, its capital deposits and the use of local professional service providers.”
Was this article valuable?
Here are more articles you may enjoy.