Montana State Auditor John Morrison has announced the formation of two new Montana companies approved to provide insurance in the captive insurance market. The State Insurance Department has licensed MHA Worker’s Compensation Reciprocal Insurance Co. and Eadonton Insurance Co. as captive insurance companies in Montana. The new captives will insure the risks of a number of Montana hospitals and a California construction company.
“Captive insurance programs are truly ‘win-win’ situations in the states that have them,” Morrison said. “In addition to the many benefits provided to participating companies, there can be a huge economic benefit to the state. The captive insurance industry requires a highly paid infrastructure to support it and brings national and international companies to the state that otherwise might never have any contact with the region.”
According to the Auditor’s office, Montana is one of a number of states in the nation aggressively pursuing captive insurance business. A captive may be used to provide for some or all of its parent company’s insurance. Benefits of forming a captive include stabilizing insurance costs, providing greater access to reinsurance and tailoring coverage for special insurance needs.
The 2001 Legislature passed a law at Morrison’s request allowing captive insurance companies to operate in Montana. Currently, there are 12 captive insurance companies formed in the state to insure rural hospitals, nursing homes, fuel stations, commercial trucking firms, investment firms, medical professional firms, construction companies and attorneys. In addition, three captive management companies and the Rocky Mountain Captive Insurance Association have formed in Montana. Presently in Vermont, the first state to allow captives, it is a $1 billion-a-year industry. Morrison’s goal is to make Montana the leading captive domicile in the West. Morrison requested additional legislation in the 2005 session further streamlining the captive insurance process in the state.
“The captive insurance industry is the type of business I have been working to encourage in Montana to help diversify our economic base,” Morrison said. “I am confident Montana’s infrastructure and laws will attract other businesses wishing to take advantage of this opportunity.”
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