New Jersey Insurance Commissioner Tom Considine praised new, bipartisan legislation that would grow the reinsurance market and create a captive insurance market in the Garden State.
The captive insurance bill was put forward in the Assembly by Democrat Gary Schaer, chairman of the Financial Institutions and Insurance Committee, and Assemblywoman Denise Coyle, a Republican. The legislation would allow captive insurers to do business in the lines of life insurance, health insurance, annuities, indemnity, property and casualty, fidelity, guaranty and title insurance and reinsurance. The legislation is intended to encourage the growth of an industry that in some states has brought in billions of investment and new high paying jobs, Considine said.
Captive insurance companies are insurance companies established with the specific objective of financing risks emanating from their parent group or groups. For example, a corporation could form a captive insurer company to insure its own worker’s compensation program. Currently, the law does not allow captive insurance companies in New Jersey.
This captive bill is based on Vermont’s law.
Considine announced plans to introduce legislation to promote growth in the reinsurance market through a bill being introduced by Senate Minority Leader Tom Kean, a Republican, as well as Schaer and Coyle. The legislation would promote job creation by providing incentives to the most financially sound reinsurers to do business in New Jersey. The proposed bill would afford reinsurers more flexibility in how they deploy their capital, which should also put downward pressure on the rates charged by reinsurers to New Jersey domestic insurers.
“These two bills represent a smart, bi-partisan effort that would make some common sense changes to regulation and allow captive insurers, and carriers of reinsurance and surplus lines to operate more expansively in New Jersey,” Considine said.
This legislation should attract surplus lines companies to re-domesticate in New Jersey as New Jersey would be only the second state in the U.S. to allow its surplus domestic companies to write in the New Jersey surplus lines market, according to the Department of Banking and Insurance.
“The legislation will pave the way for certain types of insurance lines to operate more freely and effectively in New Jersey and not diminish the state’s protection of consumers one iota,” Schaer said. “This is a common-sense approach to expanding the state’s insurance market. It is win-win.”
Coyle added that the legislation “will send the signal that insurance companies of all types should be able to set up in New Jersey, and it will create jobs and allow captive insurers, reinsurers and surplus lines firms to serve as engines of economic growth as they have in other states.”
Source: New Jersey Department of Banking and Insurance
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