The Montana Legislature has passed abill designed to strengthen the state’s position as a captive domicile. The bill, HB 160, is expected to be signed into law by Governor Brian Schweitzer before the end of the month.
Under the new law, Montana-licensed captives will now be able write surety and marine insurance. The maximum premium tax remains at $100,000 per year, with a pro-rated payment schedule now applicable for first year captive insurance companies subject to the minimum tax to help reduce front-end organizational costs.
The bill codifies the commissioner’s authority to waive the costly risk based capital (RBC) report for risk retention groups in existence for less than two years. With regard to the formation of captives, the number of required organizers has been reduced from three to one.
Providing additional flexibility for RRG investments, the law gives the commissioner discretion to approve up to 20 percent of admitted assets in rated credit instruments in any one investment that meets certain statutory requirement for RRGs with total admitted assets of less than $5 million.
The Montana Captive Insurance Association, Inc. (MCIA) praised the state Legislature for passing the legislation.
“Enactment of HB 160 is a big win for the state’s growing captive insurance industry,” said MCIA President Mike Mace. He noted that new captives will enjoy streamlined formations and lower first-year premium taxes. Existing captives have a broader choice of coverages to offer their insureds and risk retention groups will enjoy greater flexibility with their investments, while being relived from filing costly risk-based capital reports.
MCIA Chairwoman Brenda Olson commented further that during the past 12 months, the cooperative efforts and perseverance of association members were key to the Montana Legislature enacting HB 160 into MCA Title 33 Chapter 28. MCIA members helped underwrite the production of the 2007 Domicile Report, which was provided to members of the Legislature.
The full text of the legislation can be accessed on line through the MCIA Web site at www.mtcaptives.org. A briefing on the new law will also be provided at the association’s Spring Seminar, scheduled for April 1-2, 2009 in Helena, Mont.
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