Captive insurers; certificate of dormancy
The proposed changes by HB2193 would affect several existing regulations for captive insurers, particularly sections of the Arizona Revised Statutes related to licensing and financial requirements. By allowing for certificates of dormancy, the bill acknowledges the varied activity levels of captive insurers and provides a framework for those who might not be actively transacting insurance. This move is seen as a way to maintain the integrity of the captive insurance market in Arizona while providing flexibility for policyholders and companies operating captive insurers.
House Bill 2193 aims to amend existing statutes governing captive insurers in Arizona. The bill introduces provisions for the certification of dormant captive insurers, allowing them to maintain a lower minimum capital and surplus while suspending active insurance operations. Specifically, a dormant captive insurer must maintain unimpaired paid-in capital and surplus of at least $125,000 and submit an annual financial report. This change is intended to provide regulatory relief to captives that are not currently active but wish to preserve their structure for future use, mitigating the operational burden during dormant periods.
The general sentiment surrounding HB2193 has been cautiously optimistic among captive insurers and industry stakeholders. Proponents argue that enabling dormant status for captive insurers fosters a more accommodating regulatory atmosphere, aiding in financial planning and stability. However, concerns have been raised regarding the potential for misuse by companies setting up captive insurers without intending to engage in genuine insurance activities, which could undermine the market's overall health if not adequately monitored.
Some members of the legislative body have expressed concerns regarding the implications of creating a dormant captive insurer category. They argue it could pose risks if not structured with strict oversight, particularly with regards to maintaining adequate financial conditions among dormant insurers. Critics assert that without a rigorous regulatory framework, the potential for financial instability and lack of accountability could emerge as dormant insurers might not adhere to the same standards as active insurers, ultimately posing risks to consumer protection.