| 1 | | - | Senate File 549 - Enrolled Senate File 549 AN ACT RELATING TO CAPTIVE INSURANCE COMPANIES, AND INCLUDING APPLICABILITY PROVISIONS. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: Section 1. Section 432.1, subsections 2 and 4, Code 2023, are amended to read as follows: 2. The applicable percent for purposes of subsection 1 of this section and section 432.2 is the following: a. For calendar years beginning before the 2003 calendar year, two percent. b. For the 2003 calendar year, one and three-fourths percent. c. For the 2004 calendar year, one and one-half percent. d. For the 2005 calendar year, one and one-fourth percent. e. For the 2006 and subsequent calendar years year through the 2023 calendar year , one percent. f. For the 2024 calendar year, nine hundred seventy-five thousandths of one percent. g. For the 2025 calendar year, ninety-five hundredths of one percent. h. For the 2026 calendar year, nine hundred twenty-five thousandths of one percent. i. For the 2027 and subsequent calendar years, nine-tenths of one percent. 4. The applicable percent for purposes of subsection 3 is the following: |
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| 1 | + | Senate File 549 - Reprinted SENATE FILE 549 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 509) (SUCCESSOR TO SF 424) (As Amended and Passed by the Senate March 14, 2023 ) A BILL FOR An Act relating to captive insurance companies, and including 1 applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 SF 549 (2) 90 ko/rn/mb |
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| 3 | | - | Senate File 549, p. 2 a. For calendar years beginning before the 2004 calendar year, two percent. b. For the 2004 calendar year, one and three-fourths percent. c. For the 2005 calendar year, one and one-half percent. d. For the 2006 calendar year, one and one-fourth percent. e. For the 2007 and subsequent calendar years year through the 2023 calendar year , one percent. f. For the 2024 calendar year, nine hundred seventy-five thousandths of one percent. g. For the 2025 calendar year, ninety-five hundredths of one percent. h. For the 2026 calendar year, nine hundred twenty-five thousandths of one percent. i. For the 2027 and subsequent calendar years, nine-tenths of one percent. Sec. 2. NEW SECTION . 432.1A Tax on premiums captive insurance companies. 1. a. Each captive company under chapter 521J shall pay on or before March 1 of each year a tax on the direct premiums collected or contracted for on policies or contracts of insurance written by the captive company during the immediately preceding calendar year, after deducting from the direct premiums the amounts paid to policyholders as return premiums, including dividends on unabsorbed premiums or premium deposits returned or credited to policyholders. b. The tax due under paragraph a on direct premiums collected or contracted for by a captive company shall be calculated as follows: (1) Seven-twentieths of one percent on the first twenty million dollars of direct premiums. (2) One-quarter of one percent on each dollar of direct premiums after the first twenty million dollars collected under subparagraph (1). 2. a. Each captive company under chapter 521J shall pay on or before March 1 of each year a tax on assumed reinsurance premiums. A reinsurance tax shall not apply to premiums for risks or portions of risks that are subject to taxation on a direct basis pursuant to subsection 1. |
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| 3 | + | S.F. 549 Section 1. NEW SECTION . 432.1A Tax on premiums captive 1 insurance companies. 2 1. a. Each captive company under chapter 521J shall pay 3 on or before March 1 of each year a tax on the direct premiums 4 collected or contracted for on policies or contracts of 5 insurance written by the captive company during the immediately 6 preceding calendar year, after deducting from the direct 7 premiums the amounts paid to policyholders as return premiums, 8 including dividends on unabsorbed premiums or premium deposits 9 returned or credited to policyholders. 10 b. The tax due under paragraph a on direct premiums 11 collected or contracted for by a captive company shall be 12 calculated as follows: 13 (1) Seven-twentieths of one percent on the first twenty 14 million dollars of direct premiums. 15 (2) One-quarter of one percent on each dollar of direct 16 premiums after the first twenty million dollars collected under 17 subparagraph (1). 18 2. a. Each captive company under chapter 521J shall pay 19 on or before March 1 of each year a tax on assumed reinsurance 20 premiums. A reinsurance tax shall not apply to premiums for 21 risks or portions of risks that are subject to taxation on a 22 direct basis pursuant to subsection 1. 23 b. A reinsurance premium tax shall not be payable by a 24 captive company in connection with the receipt by the captive 25 company of assets in exchange for the assumption of loss 26 reserves and other liabilities of another insurer under common 27 ownership and control if the transaction is part of a plan 28 to discontinue the operations of the other insurer, and if 29 the intent of the parties to the transaction is to renew or 30 maintain the other insurers business with the captive company. 31 c. The amount of reinsurance tax due from a captive company 32 under paragraph a shall be calculated as follows: 33 (1) Two-tenths of one percent on the first twenty million 34 dollars of assumed reinsurance premiums. 35 -1- SF 549 (2) 90 ko/rn/mb 1/ 31 |
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| 5 | | - | Senate File 549, p. 3 b. A reinsurance premium tax shall not be payable by a captive company in connection with the receipt by the captive company of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if the transaction is part of a plan to discontinue the operations of the other insurer, and if the intent of the parties to the transaction is to renew or maintain the other insurers business with the captive company. c. The amount of reinsurance tax due from a captive company under paragraph a shall be calculated as follows: (1) Two-tenths of one percent on the first twenty million dollars of assumed reinsurance premiums. (2) One-eighth of one percent on the twenty million dollars of assumed reinsurance premiums collected after the first twenty million dollars of assumed reinsurance premiums collected under subparagraph (1). (3) Five percent on each dollar of assumed reinsurance premiums collected after the twenty million dollars collected under subparagraph (1) and the twenty million dollars collected under subparagraph (2). 3. a. (1) Except as provided in subparagraphs (2) and (3), if the aggregate taxes as calculated under subsections 1 and 2 that are payable by a captive company are less than five thousand dollars for any one tax year, the captive company shall pay five thousand dollars in tax for that tax year. (2) If a captive company is subject to the minimum tax under subparagraph (1) in the calendar year in which the company is first granted a certificate of authority under section 521J.2, the tax shall be prorated as follows: (a) If a certificate of authority is first granted in the first quarter of the calendar year, the tax shall be five thousand dollars. (b) If a certificate of authority is first granted in the second quarter of the calendar year, the tax shall be three thousand seven hundred fifty dollars. (c) If a certificate of authority is first granted in the third quarter of the calendar year, the tax shall be two thousand five hundred dollars. (d) If a certificate of authority is first granted in the |
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| 5 | + | S.F. 549 (2) One-eighth of one percent on the twenty million 1 dollars of assumed reinsurance premiums collected after the 2 first twenty million dollars of assumed reinsurance premiums 3 collected under subparagraph (1). 4 (3) Five percent on each dollar of assumed reinsurance 5 premiums collected after the twenty millions dollars collected 6 under subparagraph (1) and the twenty million dollars collected 7 under subparagraph (2). 8 3. a. (1) Except as provided in subparagraphs (2) and 9 (3), if the aggregate taxes as calculated under subsections 10 1 and 2 that are payable by a captive company are less than 11 five thousand dollars for any one tax year, the captive company 12 shall pay five thousand dollars in tax for that tax year. 13 (2) If a captive company is subject to the minimum tax under 14 subparagraph (1) in the calendar year in which the company is 15 first granted a certificate of authority under section 521J.2, 16 the tax shall be prorated as follows: 17 (a) If a certificate of authority is first granted in the 18 first quarter of the calendar year, the tax shall be five 19 thousand dollars. 20 (b) If a certificate of authority is first granted in the 21 second quarter of the calendar year, the tax shall be three 22 thousand seven hundred fifty dollars. 23 (c) If a certificate of authority is first granted in 24 the third quarter of the calendar year, the tax shall be two 25 thousand five hundred dollars. 26 (d) If a certificate of authority is first granted in the 27 fourth quarter of the calendar year, the tax shall be one 28 thousand five hundred dollars. 29 (3) If a captive company that is subject to the minimum tax 30 under subparagraph (1) surrenders the companys certificate of 31 authority in the year that the captive company is subject to 32 the minimum tax, the tax shall be prorated on a quarterly basis 33 as follows: 34 (a) If the certificate of authority is surrendered in 35 -2- SF 549 (2) 90 ko/rn/mb 2/ 31 |
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| 7 | | - | Senate File 549, p. 4 fourth quarter of the calendar year, the tax shall be one thousand five hundred dollars. (3) If a captive company that is subject to the minimum tax under subparagraph (1) surrenders the companys certificate of authority in the year that the captive company is subject to the minimum tax, the tax shall be prorated on a quarterly basis as follows: (a) If the certificate of authority is surrendered in the first quarter of the calendar year, the tax shall be one thousand dollars. (b) If the certificate of authority is surrendered in the second quarter of the calendar year, the tax shall be two thousand five hundred dollars. (c) If the certificate of authority is surrendered in the third quarter of the calendar year, the tax shall be three thousand seven hundred fifty dollars. (d) If the certificate of authority is surrendered in the fourth quarter of the calendar year, the tax shall be five thousand dollars. b. Each protected cell in a protected cell captive company shall be considered separately in determining the aggregate tax to be paid by the protected cell captive company. If the protected cell captive company insures any risks in addition to the protected cells, the determination of the aggregate tax shall, in addition to the protected cells, also include the premium on all insured risks. c. Each series of members of a limited liability company formed as a special purpose captive company shall be considered separately under this section, except that the minimum tax as described in paragraph a shall be considered in the aggregate. 4. A captive company, other than a protected cell captive company, shall not be required to pay aggregate taxes under this section that exceed one hundred thousand dollars in any one tax year. 5. Two or more captive companies under common ownership and control shall be taxed as a single captive company. For the purposes of this subsection, common ownership and control means either of the following: a. In the case of a stock corporation, the direct or |
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| 7 | + | S.F. 549 the first quarter of the calendar year, the tax shall be one 1 thousand dollars. 2 (b) If the certificate of authority is surrendered in the 3 second quarter of the calendar year, the tax shall be two 4 thousand five hundred dollars. 5 (c) If the certificate of authority is surrendered in the 6 third quarter of the calendar year, the tax shall be three 7 thousand seven hundred fifty dollars. 8 (d) If the certificate of authority is surrendered in the 9 fourth quarter of the calendar year, the tax shall be five 10 thousand dollars. 11 b. Each protected cell in a protected cell captive company 12 shall be considered separately in determining the aggregate 13 tax to be paid by the protected cell captive company. If the 14 protected cell captive company insures any risks in addition 15 to the protected cells, the determination of the aggregate tax 16 shall, in addition to the protected cells, also include the 17 premium on all insured risks. 18 c. Each series of members of a limited liability company 19 formed as a special purpose captive company shall be considered 20 separately under this section, except that the minimum tax as 21 described in paragraph a shall be considered in the aggregate. 22 4. Under this section, a captive company, other than a 23 protected cell captive company, shall not be required to pay 24 aggregate taxes that exceed one hundred thousand dollars in any 25 one tax year. 26 5. Two or more captive companies under common ownership 27 and control shall be taxed as a single captive company. For 28 the purposes of this subsection, common ownership and control 29 means either of the following: 30 a. In the case of a stock corporation, the direct or 31 indirect ownership of eighty percent or more of the outstanding 32 voting stock of two or more corporations by the same 33 shareholder or shareholders. 34 b. In the case of a mutual insurer, the direct or indirect 35 -3- SF 549 (2) 90 ko/rn/mb 3/ 31 |
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| 9 | | - | Senate File 549, p. 5 indirect ownership of eighty percent or more of the outstanding voting stock of two or more corporations by the same shareholder or shareholders. b. In the case of a mutual insurer, the direct or indirect ownership of eighty percent or more of the surplus, and the voting power of two or more insurers, by the same member or members. 6. Only the branch business of a branch captive company shall be subject to taxation under this section. 7. The tax provided for in this section shall be calculated on an annual basis notwithstanding a policy or a contract of insurance, or a contract of reinsurance, that is issued on a multiyear basis. In the case of a multiyear policy or a multiyear contract, the premium shall be prorated for the purpose of calculating the appropriate tax. Sec. 3. Section 507C.3, Code 2023, is amended by adding the following new subsection: NEW SUBSECTION . 8. Captive companies under chapter 521J. Sec. 4. NEW SECTION . 521J.1 Definitions. As used in this chapter, unless the context otherwise requires: 1. Affiliated company means a company that is in the same corporate system as a parent, an industrial insured, or a member based on common ownership, control, operation, or management. 2. Alien captive company means a captive company formed under the laws of an alien jurisdiction that imposes statutory or regulatory standards in a form acceptable to the commissioner on companies transacting the business of insurance in such jurisdiction. 3. Branch business means any insurance business transacted by a branch captive company in this state. 4. Branch captive company means an alien captive company authorized by the commissioner by rule to transact the business of insurance in this state through a business entity with its principal place of business in this state. 5. Branch operations means any business operations of a branch captive company. 6. Business entity means a corporation, a limited |
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| 9 | + | S.F. 549 ownership of eighty percent or more of the surplus, and the 1 voting power of two or more insurers, by the same member or 2 members. 3 6. Only the branch business of a branch captive company 4 shall be subject to taxation under this section. 5 7. The tax provided for in this section shall be calculated 6 on an annual basis notwithstanding a policy or a contract 7 of insurance, or a contract of reinsurance, that is issued 8 on a multiyear basis. In the case of a multiyear policy or 9 a multiyear contract, the premium shall be prorated for the 10 purpose of calculating the appropriate tax. 11 Sec. 2. Section 507C.3, Code 2023, is amended by adding the 12 following new subsection: 13 NEW SUBSECTION . 8. Captive companies under chapter 521J. 14 Sec. 3. NEW SECTION . 521J.1 Definitions. 15 As used in this chapter, unless the context otherwise 16 requires: 17 1. Affiliated company means a company that is in the 18 same corporate system as a parent, an industrial insured, or 19 a member based on common ownership, control, operation, or 20 management. 21 2. Association means a legal entity comprised of sole 22 proprietorships or of business entities that has been in 23 continuous existence for a minimum of one consecutive year, 24 unless the one-year requirement is waived by the commissioner, 25 and all of the members collectively, or the legal entity 26 itself, meets either of the following requirements: 27 a. Owns, controls, or holds with power to vote all of 28 the outstanding voting securities of an association captive 29 company incorporated as a stock insurer; or has complete voting 30 control over an association captive company incorporated as a 31 mutual insurer; or constitutes all of the subscribers of an 32 association captive company formed as a reciprocal insurer. 33 b. Owns, controls, or holds with power to vote all of the 34 outstanding ownership interests of an association captive 35 -4- SF 549 (2) 90 ko/rn/mb 4/ 31 |
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| 11 | | - | Senate File 549, p. 6 liability company, or other legal entity formed by an organizational document. Business entity does not include a sole proprietorship. 7. Captive company means any pure captive company, protected cell captive company, special purpose captive company, or industrial insured captive company formed or authorized under this chapter. 8. Captive reinsurance company means a captive insurance company in this state, as authorized by the commissioner by rule, that reinsures the risk ceded by any other insurer. 9. Captive risk retention group means a captive insurance risk retention group formed under this chapter and that is subject to chapter 515E. 10. Cash equivalent means any short-term, highly liquid investment with an original maturity of three months or less that is readily convertible to known amounts of cash. 11. Commissioner means the commissioner of insurance. 12. Controlled unaffiliated business entity means a business entity or sole proprietorship that meets all of the following requirements: a. The business entity or sole proprietorship is not in a parents corporate system that consists of the parent and any affiliated companies. b. The business entity or sole proprietorship has an existing, controlling contractual relationship with the parent or an affiliated company. c. The business entitys or sole proprietorships risks are managed by a pure captive company or an industrial insured captive company, as applicable. 13. Excess workers compensation insurance means, for an employer that has insured or self-insured the employers workers compensation risks in accordance with applicable state or federal law, insurance in excess of a specified per-incident or aggregate limit as established by the commissioner by rule. 14. Industrial insured means an insured that meets all of the following requirements: a. The insured procures the insurance of any risk by use of the services of a full-time employee acting as an insurance manager or buyer. |
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| 11 | + | S.F. 549 company organized as a limited liability company. 1 3. Association captive company means an insurance company 2 that insures risks of the associations members and the risks 3 of the associations affiliated companies of members. 4 4. Branch business means any insurance business transacted 5 by a branch captive company in this state. 6 5. Branch captive company means a foreign captive company 7 authorized by the commissioner by rule to transact the business 8 of insurance in this state through a business entity with a 9 principal place of business in this state. 10 6. Branch operations means any business operations of a 11 branch captive company. 12 7. Business entity means a corporation, a limited 13 liability company, or other legal entity formed by an 14 organizational document. Business entity does not include a 15 sole proprietor. 16 8. Captive company means any pure insurance company, 17 association captive company, protected cell captive company, 18 special purpose captive company, or industrial insured captive 19 company formed or authorized under this chapter. 20 9. Captive reinsurance company means a captive insurance 21 company in this state, as authorized by the commissioner by 22 rule, that reinsures the risk ceded by any other insurer. 23 10. Captive risk retention group means a captive insurance 24 risk retention group formed under this chapter and that is 25 subject to chapter 515E. 26 11. Cash equivalent means any short-term, highly liquid 27 investment with an original maturity of three months or less 28 that is all of the following: 29 a. Readily convertible to known amounts of cash. 30 b. Close enough to maturity that the investment presents 31 insignificant risk of change in value if interest rates 32 fluctuate. 33 12. Commissioner means the commissioner of insurance. 34 13. Controlled unaffiliated business entity means a 35 -5- SF 549 (2) 90 ko/rn/mb 5/ 31 |
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| 13 | | - | Senate File 549, p. 7 b. The insureds aggregate annual premiums for insurance on all risks are at least twenty-five thousand dollars. c. The insured employs a minimum of twenty-five full-time employees. 15. Industrial insured captive company means an insurance company that insures the risks of industrial insureds, comprised of the industrial insured group and the industrial insured groups affiliated companies and the risks of the controlled unaffiliated business of an industrial insured or its affiliates. 16. Industrial insured group means a group of industrial insureds that meets either of the following requirements: a. The group collectively owns, controls, or holds with the power to vote all of the outstanding voting securities of an industrial insured captive company incorporated as a stock insurer, or has complete voting control over any of the following: (1) An industrial insured captive company incorporated as a mutual insurer. (2) An industrial insured captive company formed as a reciprocal insurer. (3) An industrial insured captive company formed as a limited liability company. b. The group is a captive risk retention group. 17. Mutual insurer means a business entity that does not have capital stock, and that has a governing body elected by the insurers policyholders. Mutual insurer includes a nonprofit corporation with members. 18. Organizational document means articles of incorporation, articles of organization, a subscribers agreement, a charter, or any other document that can legally establish a business entity in this state. 19. Parent means a sole proprietorship, a business entity, or an individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent of the outstanding voting securities or membership interests of a captive company. 20. Participant means a sole proprietorship or a business entity and any affiliates that are insured by a protected cell |
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| 13 | + | S.F. 549 business entity or sole proprietorship that meets all of the 1 following requirements: 2 a. The business entity or sole proprietorship is not in a 3 parents corporate system that consists of the parent and any 4 affiliated companies. 5 b. The business entity or sole proprietorship has an 6 existing, controlling contractual relationship with the parent 7 or an affiliated company. 8 c. The business entitys or sole proprietorships risks are 9 managed by a pure captive insurance company. 10 14. Excess workers compensation insurance means, for 11 an employer that has insured or self-insured the employers 12 workers compensation risks in accordance with applicable state 13 or federal law, insurance in excess of a specified per-incident 14 or aggregate limit as established by the commissioner by rule. 15 15. Foreign captive company means a captive insurance 16 company formed under the laws of a jurisdiction other than this 17 state. 18 16. Industrial insured means an insured that meets all of 19 the following requirements: 20 a. The insured procures the insurance of any risk by use 21 of the services of a full-time employee acting as an insurance 22 manager or buyer. 23 b. The insureds aggregate annual premiums for insurance on 24 all risks are at least twenty-five thousand dollars. 25 c. The insured employs a minimum of twenty-five full-time 26 employees. 27 17. Industrial insured captive company means an insurance 28 company that insures the risks of the industrial insureds that 29 is comprised of the industrial insured group and the industrial 30 insured groups affiliated companies. 31 18. Industrial insured group means a group that meets 32 either of the following requirements: 33 a. The group collectively owns, controls, or holds with 34 the power to vote all of the outstanding voting securities of 35 -6- SF 549 (2) 90 ko/rn/mb 6/ 31 |
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| 15 | | - | Senate File 549, p. 8 captive company and whose losses are limited by a participant contract to such participants pro rata share of the assets of one or more protected cells identified in the participant contract. 21. Participant contract means a contract by which a protected cell captive company insures the risks of a participant and limits the losses of each participant in the contract to the participants pro rata share of the assets of one or more protected cells as identified in the contract. 22. Protected cell means a separate account established by a protected cell captive company formed or authorized under this chapter in which an identified pool of assets and liabilities are segregated and insulated, as provided in section 521J.17, from the remainder of the protected cell captive companys assets and liabilities in accordance with the terms of one or more participant contracts to fund the liability of the protected cell captive company with respect to the participants. 23. Protected cell assets means all assets, contract rights, and general intangibles identified and attributable to a specific protected cell of a protected cell captive company. 24. Protected cell captive company means a captive company that meets all of the following requirements: a. The minimum legally required capital and surplus of the company is provided by one or more sponsors. b. The company is formed or authorized under this chapter. c. The company insures the risks of separate participants through participant contracts. d. The company funds the companys liability to each participant through one or more protected cells, and segregates the assets of each protected cell from the assets of other protected cells, and from the assets of the protected cell captive companys general account. e. The company is incorporated or formed as a limited liability company. 25. Protected cell liabilities means all liabilities and other obligations identified with and attributable to a specific protected cell of a protected cell captive company. 26. Public records means the same as defined in section |
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| 15 | + | S.F. 549 an industrial insured captive company incorporated as a stock 1 insurer; or has complete voting control over an industrial 2 insured captive company incorporated as a mutual insurer. 3 b. The group is a captive risk retention group. 4 19. Member means a sole proprietorship or a business 5 entity that belongs to an association. 6 20. Mutual insurer means a business entity that does not 7 have capital stock, and that has a governing body elected by 8 the insurers policyholders. 9 21. Organizational document means articles of 10 incorporation, articles of organization, a subscribers 11 agreement, a charter, or any other document that can legally 12 establish a business entity in this state. 13 22. Parent means a sole proprietorship, a business entity, 14 or an individual that directly or indirectly owns, controls, 15 or holds with power to vote more than fifty percent of the 16 outstanding voting securities of a captive company. 17 23. Participant means a sole proprietorship or a business 18 entity and any affiliates that are insured by a protected cell 19 captive company and whose losses are limited by a participant 20 contract. 21 24. Participant contract means a contract by which 22 a protected cell captive company insures the risks of a 23 participant and limits the losses of each participant in the 24 contract to the participants share of the assets of one or 25 more protected cells as identified in the participant contract. 26 25. Protected cell means a separate account established 27 by a protected cell captive company formed or authorized 28 under this chapter, in which an identified pool of assets 29 and liabilities are segregated and insulated, as provided in 30 section 521J.17, from the remainder of the protected cell 31 captive companys assets and liabilities in accordance with 32 the terms of one or more participant contracts to fund the 33 liability of the protected cell captive company with respect to 34 the participants. 35 -7- SF 549 (2) 90 ko/rn/mb 7/ 31 |
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| 17 | | - | Senate File 549, p. 9 22.1. 27. Pure captive company means an insurance company that insures the risks of the companys parent and the parents affiliated companies, and the risks of controlled unaffiliated business entities. 28. Qualified actuary means an individual who meets all of the following requirements: a. The individual is a member of the American academy of actuaries. b. The individual is qualified to provide the certifications as described in the United States qualifications standards promulgated by the American academy of actuaries pursuant to the code of professional conduct adopted by the American academy of actuaries, the society of actuaries, the American society of pension professionals and actuaries, the casualty actuarial society, and the conference of consulting actuaries. 29. Series of members means a group or collection of members of a limited liability company who share interests and who have separate rights, powers, or duties with respect to property, obligations, or profits and losses associated with property or obligations, and who are specified in the organizational document or operating agreement of the limited liability company, or that are specified by one or more members or managers of the limited liability company or other persons as provided in the organizational document or operating agreement. 30. Sole proprietorship means an individual who does business in a noncorporate form. 31. Special purpose captive company means a captive company that is formed or authorized under this chapter that does not meet the definition of any other type of captive company as defined in this section, or that is formed by, on behalf of, or for the benefit of a political subdivision of this state. 32. Sponsor means any person that meets the requirements of sections 521J.17 and 521J.18, and that is approved by the commissioner to do all of the following: a. Provide all or part of the capital and surplus required of a protected cell captive company by law. |
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| 17 | + | S.F. 549 26. Protected cell assets means all assets, contract 1 rights, and general intangibles identified and attributable to 2 a specific protected cell of a protected cell captive company. 3 27. Protected cell captive company means a captive company 4 that meets all of the following requirements: 5 a. The minimum legally required capital and surplus of the 6 company is provided by one or more sponsors. 7 b. The company is formed or authorized under this chapter. 8 c. The company insures the risks of separate participants 9 through participant contracts. 10 d. The company funds the companys liability to each 11 participant through one or more protected cells, and segregates 12 the assets of each protected cell from the assets of other 13 protected cells, and from the assets of the protected cell 14 captive companys general account. 15 e. The company is incorporated or formed as a limited 16 liability company. 17 28. Protected cell liabilities means all liabilities 18 and other obligations identified with and attributable to a 19 specific protected cell of a protected cell captive company. 20 29. Public records means the same as defined in section 21 22.1. 22 30. Pure captive company means an insurance company that 23 insures the risks of the companys parent and the parents 24 affiliated companies, and the risks of controlled unaffiliated 25 business entities. 26 31. Series of members means a group or collection of 27 members of a limited liability company who share interests 28 and who have separate rights, powers, or duties with respect 29 to property, obligations, or profits and losses associated 30 with property or obligations and who are specified in the 31 articles of organization or operating agreement of the limited 32 liability company, or that are specified by one or more members 33 or managers of the limited liability company or other persons 34 as provided in the articles of organization or operating 35 -8- SF 549 (2) 90 ko/rn/mb 8/ 31 |
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| 19 | | - | Senate File 549, p. 10 b. Organize and operate a protected cell captive company. Sec. 5. NEW SECTION . 521J.2 Certificate of authority. 1. If permitted by its organizational document, a captive company may apply to the commissioner for a certificate of authority to provide property insurance, casualty insurance, life insurance, disability income insurance, surety insurance, marine insurance, health insurance, or a group health plan, with the following exceptions: a. A pure captive company shall only insure risks of the companys parent and affiliated companies, and of the companys controlled unaffiliated business entities. b. An industrial insured captive company shall only insure risks of the industrial insured company, comprised of the industrial insured group and the industrial insured groups affiliated companies, and the controlled unaffiliated business of an industrial insured group or the industrial insured groups affiliated companies. c. A special purpose captive company shall not provide insurance or reinsurance for risks unless approved by the commissioner. d. A captive company or a branch captive company shall not do any of the following: (1) Provide personal lines of insurance, including but not limited to motor vehicle insurance, homeowners insurance, or any component of motor vehicle insurance or homeowners insurance on a direct basis. (2) Accept or cede reinsurance except as permitted by the commissioner by rule. (3) Provide health insurance coverage or a group health plan unless the captive company or the branch captive company provides the health insurance coverage or the group health plan only for the parent company and the parent companys affiliated companies. (4) Write workers compensation insurance on a direct basis. (5) Write life insurance on a direct basis. e. A protected cell captive company shall not insure any risks other than those of the protected cell captive companys participants. |
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| 19 | + | S.F. 549 agreement. 1 32. Sole proprietorship means an individual who does 2 business in a noncorporate form. 3 33. Special purpose captive company means a captive 4 company that is formed or authorized under this chapter that 5 does not meet the definition of any other type of captive 6 company as defined in this section, or that is formed by, on 7 behalf of, or for the benefit of a political subdivision of 8 this state. 9 34. Sponsor means an entity that meets the requirements 10 of sections 521J.17 and 521J.18, and that is approved by the 11 commissioner to do all of the following: 12 a. Provide all or part of the capital and surplus required 13 of a protected cell captive company by applicable law. 14 b. Organize and operate a protected cell captive company. 15 Sec. 4. NEW SECTION . 521J.2 Certificate of authority. 16 1. If permitted by its organizational document, a captive 17 company may apply to the commissioner for a certificate of 18 authority to provide property insurance, casualty insurance, 19 life insurance, disability income insurance, surety insurance, 20 marine insurance, health insurance, or a group health plan, 21 with the following exceptions: 22 a. A pure captive company shall not insure any risks other 23 than those of the companys parent and affiliated companies, 24 and of the companys controlled unaffiliated business entities. 25 b. An industrial insured captive company shall only insure 26 risks of the industrial insured company, comprised of the 27 industrial insured group and the industrial insured groups 28 affiliated companies. 29 c. An association captive company shall not insure any risks 30 other than those of the members or affiliated companies of 31 members. 32 d. A special purpose captive company shall not provide 33 insurance or reinsurance for risks unless approved by the 34 commissioner. 35 -9- SF 549 (2) 90 ko/rn/mb 9/ 31 |
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| 21 | | - | Senate File 549, p. 11 2. A captive company shall not write any insurance business unless the captive company complies with all of the following: a. The captive company obtains a certificate of authority from the commissioner prior to writing any insurance business. b. The captive companys board of directors, board of managing members, or a reciprocal insurers subscribers advisory committee, holds at least one annual meeting in the state. c. The captive company maintains its principal place of business in the state. d. The captive company designates a registered agent to accept service of process, files the name and contact information and any subsequent changes regarding the registered agent with the commissioner, and agrees that if the registered agent cannot be found with reasonable diligence, the commissioner may act as an agent of the captive company with respect to any action or proceeding and may be served pursuant to section 505.30. 3. a. Prior to receiving a certificate of authority, a captive company shall do all of the following: (1) File with the commissioner all of the following: (a) A certified copy of the business entitys organizational document. (b) A statement under oath of an officer of the business entity showing the business entitys financial condition. (c) Any other statement or document required by the commissioner as established by rule. (2) Submit a description of coverages, deductibles, coverage limits, rates, and any additional information requested by the commissioner to the commissioner for approval. (3) Provide a statement to the commissioner that describes all of the following: (a) The character, reputation, and financial standing of the organizers of the business entity. (b) The character, reputation, financial responsibility, insurance experience, and business qualifications of all officers, directors, and managing members of the business entity. (4) Provide any other information required by the |
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| 21 | + | S.F. 549 e. A captive company or a branch captive company shall not 1 do any of the following: 2 (1) Provide personal lines of insurance, including but not 3 limited to motor vehicle insurance, homeowners insurance, 4 or any component of motor vehicle insurance or homeowners 5 insurance. 6 (2) Accept or cede reinsurance except as established by the 7 commissioner by rule. 8 (3) Provide health insurance coverage or a group health 9 plan unless the captive company or the branch captive company 10 is providing the health insurance coverage or the group health 11 plan only for the parent company and the parent companys 12 affiliated companies. 13 (4) Write workers compensation insurance on a direct 14 basis. 15 f. A protected cell captive company shall not insure any 16 risks other than those of the protected cell captive companys 17 participants. 18 2. A captive company shall not write any insurance business 19 unless the captive company complies with all of the following: 20 a. The captive company first obtains a certificate of 21 authority from the commissioner. 22 b. The captive companys board of directors, board of 23 managing members, or a reciprocal insurers subscribers 24 advisory committee holds at least one annual meeting in this 25 state. 26 c. The captive company maintains its principal place of 27 business in this state. 28 d. The captive company designates a registered agent 29 to accept service of process, files the name and contact 30 information and any subsequent changes regarding the 31 registered agent with the commissioner, and agrees that if the 32 registered agent cannot be found with reasonable diligence, 33 the commissioner may act as an agent of the captive company 34 with respect to any action or proceeding and may be served in 35 -10- SF 549 (2) 90 ko/rn/mb 10/ 31 |
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| 23 | | - | Senate File 549, p. 12 commissioner as established by rule. b. If there is a subsequent material change in the information provided to the commissioner under paragraph a , the captive company shall submit appropriate supporting documentation to the commissioner for approval. The captive company shall not offer any additional lines of insurance until on or after the date on which the commissioner approves the supporting documentation. The captive company shall inform the commissioner of any change in rates within thirty calendar days of the captive companys adoption of a change in rate. c. In addition to the information required under paragraphs a and b , each applicant captive company shall file with the commissioner evidence of all of the following: (1) The amount and liquidity of the captive companys assets relative to the risks to be assumed by the captive company. (2) The adequacy of the expertise, experience, and character of the persons who will manage the captive company. (3) The overall soundness of the captive companys plan of operation. (4) The adequacy of the loss prevention program of the captive companys parent, members, or industrial insureds, as applicable. (5) Any other factors deemed relevant by the commissioner to ascertain if the proposed captive company will be able to meet the companys policy obligations. d. In addition to the information required under paragraph a , each applicant that is a protected cell captive company shall file with the commissioner all of the following: (1) A business plan that demonstrates, at a level of detail deemed sufficient by the commissioner, how the applicant will account for the loss and expense experience of each protected cell, and how the applicant will report the loss and expense experience of each protected cell to the commissioner. (2) A statement that acknowledges that all financial records of the protected cell captive company, including records pertaining to any protected cells, shall be made available upon request for inspection or examination by the commissioner or the commissioners designated agent. (3) A copy of each participant contract. |
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| 23 | + | S.F. 549 accordance with section 505.30. 1 3. a. Prior to receiving a certificate of authority, a 2 captive company formed as a business entity shall do all of the 3 following: 4 (1) File with the commissioner a certified copy of the 5 business entitys organizational documents, a statement under 6 oath of an officer of the business entity showing the business 7 entitys financial condition, and any other statement or 8 document required by the commissioner as established by rule. 9 (2) Submit a description of coverages, deductibles, 10 coverage limits, and rates to the commissioner for approval. 11 (3) Provide a statement to the commissioner that describes 12 all of the following: 13 (a) The character, reputation, and financial standing of 14 the organizers of the business entity. 15 (b) The character, reputation, financial responsibility, 16 insurance experience, and business qualifications of all 17 officers, directors, and managing members of the business 18 entity. 19 (c) Any other information required by the commissioner as 20 established by rule. 21 b. If there is a subsequent material change in the 22 information provided to the commissioner under paragraph 23 a , the captive company shall submit appropriate supporting 24 documentation to the commissioner for approval. The captive 25 company shall not offer any additional lines of insurance until 26 on or after the date on which the commissioner approves the 27 supporting documentation. The captive company shall inform the 28 commissioner of any change in rates within thirty calendar days 29 of the captive companys adoption of a change in rate. 30 c. In addition to the information required under paragraphs 31 a and b , each applicant captive company shall file with the 32 commissioner evidence of all of the following: 33 (1) The amount and liquidity of the captive companys assets 34 relative to the risks to be assumed by the captive company. 35 -11- SF 549 (2) 90 ko/rn/mb 11/ 31 |
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| 25 | | - | Senate File 549, p. 13 (4) Evidence that expenses will be allocated to each protected cell in a fair and equitable manner. e. In addition to the requirements of paragraph a , a captive company formed as a reciprocal insurer shall file with the commissioner a certified copy of the power of attorney of the reciprocal insurers attorney-in-fact, a certified copy of the reciprocal insurers subscribers agreement, a statement under oath of the reciprocal insurers attorney-in-fact that shows the reciprocal insurers financial condition, and any other statements or documents required by the commissioner as established by rule. f. All documents and information submitted pursuant to this subsection shall be confidential and shall not be made public without the advance written consent of the submitting company, with the following exceptions: (1) The documents and information shall be discoverable by a party in a civil action or in a contested case to which the captive company that submitted the information is a party upon a showing by the party seeking to discover the information that the information sought is relevant to, and necessary for, the furtherance of the action or case; the information sought is unavailable from other nonconfidential sources; and that a subpoena issued by a judicial or an administrative officer has been submitted to the commissioner. (2) The commissioner may, in the commissioners discretion, disclose the documents and information to a public official having jurisdiction over the regulation of insurance in another state, or to a public official of the federal government, provided that the public official agrees in writing to maintain the confidentiality of the information, and that the laws of the state in which the public official serves require that the information remain confidential. 4. a. Each captive company, each individual series of members of a limited liability company, and each protected cell shall pay a nonrefundable fee to the commissioner of two hundred dollars for the examination, investigation, and processing of its application for a certificate of authority. The commissioner shall be authorized to retain legal, financial, and examination services from outside experts as |
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| 25 | + | S.F. 549 (2) The adequacy of the expertise, experience, and 1 character of the persons who will manage the captive company. 2 (3) The overall soundness of the captive companys plan of 3 operation. 4 (4) The adequacy of the loss prevention program of the 5 captive companys parent, members, or industrial insureds, as 6 applicable. 7 (5) Any other factors deemed relevant as established by 8 the commissioner by rule to ascertain if the proposed captive 9 company will be able to meet the companys policy obligations. 10 d. In addition to the information required under paragraph 11 a , each applicant that is a protected cell captive company 12 shall file with the commissioner all of the following: 13 (1) A business plan that demonstrates at a level of detail 14 deemed sufficient by the commissioner how the applicant will 15 account for the loss and expense experience of each protected 16 cell, and how the applicant will report the loss and expense 17 experience to the commissioner. 18 (2) A statement that acknowledges that all financial 19 records of the protected cell captive company, including 20 records pertaining to any protected cells, shall be made 21 available, upon request, for inspection or examination by the 22 commissioner or the commissioners designated agent. 23 (3) A copy of each participant contract. 24 (4) Evidence that expenses shall be allocated to each 25 protected cell in a fair and equitable manner. 26 e. In addition to the requirements of paragraph a , a 27 captive company formed as a reciprocal insurer shall file with 28 the commissioner a certified copy of the power of attorney of 29 the reciprocal insurers attorney-in-fact, a certified copy of 30 the reciprocal insurers subscribers agreement, a statement 31 under oath of the reciprocal insurers attorney-in-fact that 32 shows the reciprocal insurers financial condition, and any 33 other statements or documents required by the commissioner as 34 established by rule. 35 -12- SF 549 (2) 90 ko/rn/mb 12/ 31 |
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| 27 | | - | Senate File 549, p. 14 necessary for review of the application, the reasonable cost of which may be charged to the applicant. b. Each captive insurance company, each individual series of members of a limited liability company, and each protected cell shall pay an initial registration fee, and an annual renewal registration fee, of three hundred dollars. 5. If the commissioner is satisfied with the documents and statements that an applicant captive company has filed in compliance with this chapter, and the applicable provisions of Title XIII, subtitle 1, the commissioner may grant a certificate of authority to the captive company that permits the company to do the business of insurance in this state. The certificate of authority must be renewed annually and may be renewed if the applicant is in compliance with this chapter. Sec. 6. NEW SECTION . 521J.3 Captive companies names. A captive company shall not adopt a name that is the same, deceptively similar, or likely to be confused with or mistaken for any other existing business name already registered in this state. Sec. 7. NEW SECTION . 521J.4 Minimum capital and surplus requirements. 1. The commissioner shall not issue a certificate of authority to a captive company unless the captive company possesses and maintains unimpaired paid-in capital and surplus that meets the following requirements: a. Is not less than two hundred fifty thousand dollars for a pure captive company. b. Is not less than five hundred thousand dollars for an industrial insured captive company, including a captive risk retention group. c. Is an amount as determined by the commissioner after giving due consideration to the captive companys business plan, feasibility study, and pro forma documents, including, for a special purpose captive company, the nature of the risks to be insured. d. Is not less than five hundred thousand dollars for a protected cell captive company. If, however, the protected cell captive company does not assume any risks, the risks insured by the protected cells are homogenous, and there are |
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| 27 | + | S.F. 549 f. All documents and information submitted pursuant to this 1 subsection shall be confidential and shall not be made public 2 without the advance written consent of the submitting company, 3 with the following exceptions: 4 (1) The documents and information shall be discoverable by 5 a party in a civil action or in a contested case to which the 6 captive company that submitted the information is a party upon 7 a showing by the party seeking to discover the information that 8 the information sought is relevant to, and necessary for, the 9 furtherance of the action or case; the information sought is 10 unavailable from other nonconfidential sources; and a subpoena 11 issued by a judicial or an administrative officer has been 12 submitted to the commissioner. 13 (2) The commissioner may, in the commissioners discretion, 14 disclose the documents and information to a public official 15 having jurisdiction over the regulation of insurance in another 16 state, or to a public official of the federal government, 17 provided that the public official agrees in writing to maintain 18 the confidentiality of the information, and that the laws of 19 the state in which the public official serves require that the 20 information remain confidential. 21 4. a. Each captive company, individual series of members 22 of a limited liability company, and protected cell shall pay 23 to the commissioner a nonrefundable fee of two hundred dollars 24 for the examination, investigation, and processing of its 25 application for a certificate of authority. The commissioner 26 shall be authorized to retain legal, financial, and examination 27 services from outside the department as necessary for review of 28 the application, the reasonable cost of which may be charged 29 to the applicant. 30 b. (1) Chapter 507 shall apply to examinations conducted 31 under this chapter. 32 (2) Each captive insurance company, each individual series 33 of members of a limited liability company, and each protected 34 cell shall pay an initial registration fee, and an annual 35 -13- SF 549 (2) 90 ko/rn/mb 13/ 31 |
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| 29 | | - | Senate File 549, p. 15 not more than ten cells, the commissioner may reduce the amount to an amount not less than two hundred fifty thousand dollars. e. Is not less than the applicable amount of capital and surplus required in paragraphs a through d , as determined based upon the organizational form of the alien captive company, for a branch captive company. The minimum capital and surplus shall be jointly held by the commissioner and the branch captive company in a bank of the federal reserve system as approved by the commissioner by rule. f. Is not less than fifty percent of the capital required for that type of captive company for a captive reinsurance company. 2. The commissioner may require additional capital and surplus for a captive company under subsection 1 based upon the type, volume, and nature of the insurance business transacted by the captive company. 3. The capital and surplus required under subsection 1 and subsection 2, if applicable, shall be in the form of cash, cash equivalent, or an irrevocable letter of credit on a form as prescribed by the commissioner by rule and as issued by a bank chartered by the state of Iowa, a member bank of the federal reserve system, or a bank chartered by another state if approved by the commissioner. Sec. 8. NEW SECTION . 521J.5 Captive companies formation. 1. A captive company must be formed or organized as a business entity as provided under this chapter. 2. An industrial insured captive company shall be formed or organized in one of the following ways: a. Incorporated as a stock insurer with the stock insurers capital divided into shares and held by the stockholders. b. Incorporated as a mutual insurer without capital stock. c. Organized as a reciprocal insurer as permitted by the commissioner by rule. d. Organized as a manager-managed limited liability company. 3. A captive company incorporated or organized in this state shall be incorporated or organized by at least one incorporator or organizer who is a resident of the state. 4. The capital stock of a captive company incorporated as a stock insurer may be authorized with no par value. |
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| 29 | + | S.F. 549 renewal registration fee, of three hundred dollars. 1 5. If the commissioner is satisfied with the documents 2 and statements that an applicant captive company has filed in 3 compliance with this chapter, and the applicable provisions of 4 Title XII, subtitle 1, the commissioner may grant a certificate 5 of authority to the captive company that permits the company to 6 do the business of insurance in this state. The certificate of 7 authority may be renewed if the applicant is in compliance with 8 this chapter and the certificate must be renewed annually. 9 Sec. 5. NEW SECTION . 521J.3 Captive companies names. 10 A captive company shall not adopt a name that is the same, 11 deceptively similar, or likely to be confused with or mistaken 12 for any other existing business name already registered in this 13 state. 14 Sec. 6. NEW SECTION . 521J.4 Minimum capital and surplus 15 requirements. 16 1. The commissioner shall not issue a certificate of 17 authority to a captive company unless the captive company 18 possesses and maintains unimpaired paid-in capital and surplus 19 that meets the following requirements: 20 a. Is not less than two hundred fifty thousand dollars for 21 a pure captive company. 22 b. Is not less than five hundred thousand dollars for an 23 industrial insured captive company, including a captive risk 24 retention group. 25 c. Is not less than five hundred thousand dollars for an 26 association captive company. 27 d. Is an amount as determined by the commissioner after 28 giving due consideration to the companys business plan, 29 feasibility study, and pro forma documents, including the 30 nature of the risks to be insured, for a special purpose 31 captive company. 32 e. Is not less than five hundred thousand dollars for a 33 protected cell captive company. If, however, the protected 34 cell captive company does not assume any risks, the risks 35 -14- SF 549 (2) 90 ko/rn/mb 14/ 31 |
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| 31 | | - | Senate File 549, p. 16 5. a. At least one member of the board of directors of a captive company shall be a resident of this state. A captive risk retention group shall have a minimum of five directors. b. A captive company formed as a limited liability company shall have at least one manager who is a resident of this state. A captive risk retention group formed as a limited liability company shall not be required to have a manager who is a resident of this state; however, the limited liability company shall maintain a board of directors of which at least one board member shall be a resident of this state. c. A reciprocal insurer shall have at least one member of the subscribers advisory committee who is a resident of this state. A captive risk retention group formed as a reciprocal insurer shall have a minimum of five members of the subscribers advisory committee who are residents of this state. 6. a. A captive company formed as a corporation or another business entity shall have the privileges of, and shall be subject to, state laws governing corporations or other business entities, and the applicable provisions of this chapter. b. In the event of a conflict between a state law governing corporations or other business entities and this chapter, this chapter shall take precedence. 7. a. A subscribers agreement, or other organizational document of a captive company formed as a reciprocal insurer, shall authorize a quorum of a subscribers advisory committee to consist of at least one-third of the number of members on the advisory committee. b. In addition to this chapter, a captive risk retention group shall be subject to chapter 515E. In the event of a conflict between chapter 515E and this chapter, this chapter shall take precedence. 8. Except as provided in section 521J.11, applicable provisions of chapter 508B shall apply to a merger, consolidation, conversion, mutualization, or voluntary dissolution by a captive company. 9. a. An alien captive company must apply to the secretary of state for a certificate of authority for the alien captive companys branch captive company to transact business in this |
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| 31 | + | S.F. 549 insured by the protected cells are homogenous, and if there are 1 not more than ten cells, the commissioner may reduce the amount 2 to an amount not less than two hundred fifty thousand dollars. 3 f. Is not less than the applicable amount of capital and 4 surplus required in paragraphs a through e , as determined 5 based upon the organizational form of the foreign captive 6 company, for a branch captive company. The minimum capital 7 and surplus shall be jointly held by the commissioner and the 8 branch captive company in a bank of the federal reserve system 9 as approved by the commissioner by rule. 10 g. Is not less than fifty percent of the capital required 11 for that type of captive company for a captive reinsurance 12 company. 13 2. The commissioner may require additional capital and 14 surplus for a captive company under subsection 1 based upon the 15 type, volume, and nature of the insurance business transacted 16 by the captive company. 17 3. The capital and surplus required under subsection 1 and 18 subsection 2, if applicable, shall be in the form of cash, 19 cash equivalent, or an irrevocable letter of credit on a form 20 as prescribed by the commissioner by rule and as issued by 21 a bank chartered by the state of Iowa, a member bank of the 22 federal reserve system, or a bank chartered by another state if 23 approved by the commissioner. 24 Sec. 7. NEW SECTION . 521J.5 Captive companies formation. 25 1. A captive company must be formed or organized as a 26 business entity as provided under this chapter. 27 2. An association captive company, or an industrial insured 28 captive company, shall be formed or organized in one of the 29 following ways: 30 a. Incorporated as a stock insurer with the stock insurers 31 capital divided into shares and held by the stockholders. 32 b. Incorporated as a mutual insurer without capital stock, 33 the governing body of which is elected by the members of the 34 mutual insurers association or associations. 35 -15- SF 549 (2) 90 ko/rn/mb 15/ 31 |
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| 33 | | - | Senate File 549, p. 17 state. b. A branch captive company established under this chapter to write, in this state, only insurance or reinsurance of the employee benefit business of the branch captive companys parent and affiliated companies shall be subject to the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. c. A branch captive company shall not conduct any insurance business in this state unless the branch captive company maintains the principal place of business for the companys branch operations in this state. Sec. 9. NEW SECTION . 521J.6 Dividends. 1. A captive company shall not pay a dividend out of, or other distribution with respect to, the minimum capital or surplus required under section 521J.4 without the prior written approval of the commissioner. 2. The commissioners approval of an ongoing plan for the payment of dividends or other distributions shall be conditioned upon retention, at the time of each payment, of capital and surplus in excess of the amounts specified by, or determined in accordance with, a formula approved by the commissioner by rule. Sec. 10. NEW SECTION . 521J.7 Reports. 1. A captive company shall be required to file an annual report with the commissioner that meets the following requirements: a. Except as provided in paragraph b , on or before April 1 of each year, each captive company and each captive risk retention group shall submit to the commissioner a report on the companys financial condition as of December 31 of the preceding year, as verified by oath of two of the companys or groups executive officers. The report shall be submitted in a form and manner as prescribed by the commissioner by rule. b. A captive company, other than a captive risk retention group, may apply to the commissioner to file the report required under paragraph a on a fiscal year-end basis. If the commissioner approves reporting on a fiscal year-end basis, the captive company shall comply with all of the following requirements: |
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| 33 | + | S.F. 549 c. Organized as a reciprocal insurer as permitted by the 1 commissioner by rule. 2 d. Organized as a manager-managed limited liability company. 3 3. A captive company incorporated or organized in this state 4 shall be incorporated or organized by at least one incorporator 5 or organizer who is a resident of this state. 6 4. The capital stock of a captive company incorporated as a 7 stock insurer may be authorized with no par value. 8 5. a. At least one of the members of the board of directors 9 of a captive company shall be a resident of this state. A 10 captive risk retention group shall have a minimum of five 11 directors. 12 b. A captive company formed as a limited liability company 13 shall have at least one manager who is a resident of the state. 14 A captive risk retention group formed as a limited liability 15 company shall not be required to have a manager who is a 16 resident of this state; however, the company shall maintain a 17 board of directors of which at least one board member shall be 18 a resident of this state. 19 c. A reciprocal insurer shall have at least one member 20 of the subscribers advisory committee who is a resident 21 of this state. A captive risk retention group formed as a 22 reciprocal insurer shall have a minimum of five members of 23 the subscribers advisory committee who are residents of this 24 state. 25 6. a. A captive company formed as a corporation or another 26 business entity shall have the privileges of, and shall be 27 subject to, state laws governing corporations or other business 28 entities, and the applicable provisions of this chapter. 29 b. In the event of a conflict between a state law governing 30 corporations or other business entities and this chapter, this 31 chapter shall control. 32 7. a. A subscribers agreement, or other organizing 33 document of a captive company formed as a reciprocal insurer, 34 shall authorize a quorum of a subscribers advisory committee 35 -16- SF 549 (2) 90 ko/rn/mb 16/ 31 |
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| 35 | | - | Senate File 549, p. 18 (1) Subject to subparagraph (2), the captives company report shall be filed no later than ninety calendar days after the close of the companys fiscal year. (2) Prior to April 1, the captive company shall file a report covering the immediately preceding calendar year with the commissioner to provide sufficient information to support the captive companys premium tax return under section 432.1A. c. Each captive company shall use generally accepted accounting principles, unless the commissioner requires, approves, or accepts the use of statutory accounting principles or any other comprehensive accounting principles for the companys report. The commissioner may require, approve, or accept any appropriate or necessary modifications of statutory accounting principles or other comprehensive accounting principles based on the type of insurance and kinds of insurers that are included in a captive companys report. The report may include letters of credit that are established, issued, or confirmed by any of the following: (1) A bank chartered in this state. (2) A member of the federal reserve system. (3) A bank chartered by another state, if approved by the commissioner. d. An actuarial opinion from a qualified actuary regarding the adequacy of the companys required reserves to make full provision for the companys liabilities, insured or reinsured, shall be included in the report. The qualified actuary shall submit a memorandum to the commissioner that details the qualified actuarys support for the actuarial opinion. The commissioner may require that additional information be submitted to supplement the actuarial opinion. e. All captive companies shall be audited annually by an independent certified public accountant and shall annually file the audited financial report with the commissioner on or before June 1, as a supplement to the annual report required under section 521J.7, subsection 1. f. A captive company may request an extension to file a report required by this section. A written request for an extension must be received by the commissioner not less than ten days before the filing due date, and the request must |
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| 35 | + | S.F. 549 to consist of at least one-third of the number of members on 1 the advisory committee. 2 b. In addition to this chapter, a captive risk retention 3 group shall be subject to chapter 515E. In the event of a 4 conflict between chapter 515E and this chapter, this chapter 5 shall prevail. 6 8. Except as provided in section 521J.11, applicable 7 provisions of chapter 508B shall apply to a merger, 8 consolidation, conversion, mutualization, or voluntary 9 dissolution by a captive company. 10 9. a. A foreign captive company must apply to the secretary 11 of state for a certificate of authority for the foreign captive 12 companys branch captive company to transact business in this 13 state. 14 b. A branch captive company established under this chapter 15 to write, in this state, only insurance or reinsurance of the 16 employee benefit business of the branch captive companys 17 parent and affiliated companies shall be subject to the federal 18 Employee Retirement Income Security Act of 1974, 29 U.S.C. 19 1001, et seq. 20 c. A branch captive company shall not do any insurance 21 business in this state unless the branch captive company 22 maintains the principal place of business for the companys 23 branch operations in this state. 24 Sec. 8. NEW SECTION . 521J.6 Dividends. 25 1. A captive company shall not pay a dividend out of, or 26 other distribution with respect to, the minimum capital or 27 surplus required under section 521J.4 without the prior written 28 approval of the commissioner. 29 2. The commissioners approval of an ongoing plan for 30 the payment of dividends or other distributions shall be 31 conditioned upon retention, at the time of each payment, of 32 capital surplus in excess of the amounts specified by, or 33 determined in accordance with, a formula as approved by the 34 commissioner by rule. 35 -17- SF 549 (2) 90 ko/rn/mb 17/ 31 |
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| 37 | | - | Senate File 549, p. 19 contain sufficient details to enable the commissioner to make an informed decision regarding the request. The commissioner may grant a thirty-day extension upon a determination by the commissioner that a captive company has good cause for the extension. g. A captive company may be required to file a report on the captive companys financial condition on a semiannual, quarterly, monthly, or other basis as determined by the commissioner. h. Captive companies shall file all reports required under this section in the form and manner prescribed by the commissioner by rule. 2. All reports filed pursuant to this section shall be considered confidential and shall not be a public record. Sec. 11. NEW SECTION . 521J.8 Examinations. 1. a. Except for captive risk retention groups as provided under paragraph c , the commissioner may examine each captive companys compliance with this chapter, and may examine the affairs, transactions, accounts, records, and assets of each captive company as the commissioner deems necessary. b. The commissioner shall upon the completion of an examination under paragraph a , or at such regular intervals prior to completion of an examination as the commissioner determines, prepare an account of the costs incurred in performing and preparing the report of the examination which shall be charged to and paid by the captive company examined. If the captive company fails or refuses to pay the charges, the charges may be recovered in an action brought in the name of the state. c. The commissioner shall examine the affairs, transactions, accounts, records, and assets of each captive risk retention group as the commissioner deems necessary, but no less frequently than every three calendar years. A report produced pursuant to the examination of a captive risk retention group under this section shall be a public record. 2. Except as provided in subsection 3, this section shall apply to all business written by a captive company. 3. An examination of a branch captive company shall be conducted only on the branch business and branch operations if |
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| 37 | + | S.F. 549 Sec. 9. NEW SECTION . 521J.7 Reports. 1 1. A captive company shall be required to file an annual 2 report with the commissioner under the following circumstances: 3 a. Except as provided in paragraph b , on or before April 4 1 of each year, each captive company and each captive risk 5 retention group shall submit to the commissioner a report on 6 the companys financial condition, in a form and manner as 7 prescribed by the commissioner by rule, and as verified by oath 8 of two of the companys or groups executive officers. 9 b. A captive company, other than a captive risk retention 10 group, may apply to the commissioner to file the report 11 required under paragraph a on a fiscal year-end basis. If 12 the commissioner grants the captive company an alternative 13 reporting date, the company shall comply with all of the 14 following requirements: 15 (1) Subject to subparagraph (2), the report shall be filed 16 no later than ninety calendar days after the close of the 17 companys fiscal year. 18 (2) A report covering the immediately preceding calendar 19 year shall be filed with the commissioner prior to April 1 of 20 each year to provide sufficient information to support the 21 captive companys premium tax return under section 432.1A. 22 c. Each captive company shall use generally accepted 23 accounting principles, unless the commissioner requires the use 24 of statutory accounting principles, for the companys report. 25 The report may include letters of credit that are established, 26 issued, or confirmed by a bank chartered in this state, a 27 member of the federal reserve system, or a bank chartered by 28 another state if acceptable to the commissioner. 29 d. On or before April 1 of each year, each branch captive 30 company shall submit to the commissioner a copy of all reports 31 required to be filed under the laws of the branch captive 32 companys domiciliary jurisdiction, and as verified by oath of 33 two of the branch captive companys executive officers. If the 34 commissioner is satisfied that the annual report filed by the 35 -18- SF 549 (2) 90 ko/rn/mb 18/ 31 |
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| 39 | | - | Senate File 549, p. 20 all of the following requirements are met: a. The branch captive company annually provides the commissioner a certificate of compliance, or equivalent, that was issued by or filed with the licensing authority of the jurisdiction in which the branch captive company is formed. b. The branch captive company demonstrates to the satisfaction of the commissioner that the company is operating in sound financial condition and in compliance with all applicable law and regulations of the jurisdiction in which the branch captive company is formed. 4. As a condition of authorization of a branch captive company, the alien captive company shall grant authority to the commissioner for examination of the affairs of the alien captive company in the jurisdiction in which the alien captive company is formed. 5. The applicable provisions of chapter 507 shall apply to examinations conducted under this chapter. Sec. 12. NEW SECTION . 521J.9 Suspension or revocation. 1. A captive companys certificate of authority to conduct the business of insurance in this state may be suspended or revoked by the commissioner for any of the following reasons: a. Insolvency or impairment of capital or surplus. b. Failure to meet and maintain the minimum capital and surplus requirements under section 521J.4. c. Refusal or failure to submit an annual report pursuant to section 521J.7, or to submit any other report or statement required by law or by lawful order of the commissioner. d. Failure to comply with the captive companys own charter, bylaws, or other organizational document. e. Failure to submit to an examination as required under section 521J.8. f. Use of methods that render the captive companys operation detrimental, or the companys condition unsound, with respect to the companys policyholders or to the public. g. Failure to pay tax on premiums as required under section 432.1A. h. Failure to submit or pay any fee under this chapter. i. Failure to submit to or pay the cost of any examination under this chapter. |
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| 39 | + | S.F. 549 foreign branch captive company in the companys domiciliary 1 jurisdiction provides adequate information concerning the 2 financial condition of the branch captive company, the 3 commissioner may waive the requirement for completion of 4 the branch captive insurance companys annual statement for 5 business written in the foreign jurisdiction. 6 2. All reports filed pursuant to this section shall be 7 considered confidential and shall not be a public record under 8 chapter 22. 9 Sec. 10. NEW SECTION . 521J.8 Examinations. 10 1. a. Except for captive risk retention groups as provided 11 under paragraph b , the commissioner may examine the affairs, 12 transactions, accounts, records, and assets of each captive 13 company as the commissioner deems necessary. 14 b. The commissioner shall examine the affairs, transactions, 15 accounts, records, and assets of each captive risk retention 16 group as the commissioner deems necessary, but no less 17 frequently than every three calendar years. 18 2. A report produced pursuant to the examination of a 19 captive risk retention group under this section shall be a 20 public record. 21 3. Except as provided in subsection 4, this section shall 22 apply to all business written by a captive company. 23 4. A branch captive company examination shall only be 24 conducted on the branch business and branch operations if 25 the branch captive company has satisfied the requirements 26 of section 521J.7, subsection 1, paragraph d , to the 27 satisfaction of the commissioner. 28 5. As a condition of authorization of a branch captive 29 company, the foreign captive company shall grant authority to 30 the commissioner for examination of the affairs of the foreign 31 captive company in the foreign captive companys domiciliary 32 jurisdiction. 33 6. The applicable provisions of chapter 507 shall apply to 34 examinations conducted under this chapter. 35 -19- SF 549 (2) 90 ko/rn/mb 19/ 31 |
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| 41 | | - | Senate File 549, p. 21 j. Failure to comply with the laws of this state. 2. a. If the commissioner finds upon examination, hearing, or other review that a captive company has committed an act specified in subsection 1, the commissioner may suspend or revoke the companys certificate of authority if the commissioner deems it in the best interest of the public or of the policyholders of the captive company. b. If the commissioner does not revoke a captive companys certificate of authority during a suspension imposed by the commissioner under paragraph a , the companys certificate of authority may be reinstated if the commissioner finds that the cause of the suspension has been rectified. Sec. 13. NEW SECTION . 521J.10 Excess workers compensation insurance. 1. A captive company may provide excess workers compensation insurance to the captive companys parent and affiliated companies unless the laws of the state that has jurisdiction over the transaction prohibits the captive company from providing excess workers compensation insurance. 2. A captive company may reinsure workers compensation of a qualified self-insured plan of the captive companys parent and affiliated companies. Sec. 14. NEW SECTION . 521J.11 Captive mergers. 1. A merger between captive stock insurers, or a merger between captive mutual insurers, shall meet the requirements of chapter 521 and section 521J.5, as applicable. The commissioner may, at the commissioners discretion, provide notice to the public of a proposed merger prior to the commissioners approval or disapproval of a merger. 2. An industrial insured group formed as a stock insurer or as a mutual insurer may be converted to or merged with a reciprocal insurer under this section. 3. A plan for conversion or merger shall meet all of the following requirements: a. (1) The plan shall be fair and equitable to the shareholders in the case of a stock insurer, or to the policyholders in the case of a mutual insurer. (2) The plan shall provide for the purchase of the shares of any nonconsenting shareholder of a stock insurer, or of the |
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| 41 | + | S.F. 549 Sec. 11. NEW SECTION . 521J.9 Suspension or revocation. 1 1. A captive companys certificate of authority to conduct 2 the business of insurance in this state may be suspended by the 3 commissioner for any of the following reasons: 4 a. Insolvency or impairment of capital or surplus. 5 b. Failure to meet and maintain the minimum capital and 6 surplus requirements under section 521J.4. 7 c. Refusal or failure to submit an annual report pursuant 8 to section 521J.7, or to submit any other report or statement 9 required by law or by lawful order of the commissioner. 10 d. Failure to comply with the captive companys own charter, 11 bylaws, or other organizational document. 12 e. Failure to submit to an examination as required under 13 section 521J.8. 14 f. Use of methods that render the captive companys 15 operation detrimental, or the companys condition unsound, with 16 respect to the public or to the companys policyholders. 17 g. Failure to pay tax on premiums as required under chapter 18 432.1A. 19 h. Failure to comply with applicable laws of this state. 20 2. a. If the commissioner finds upon examination, hearing, 21 or other review that a captive company has committed an 22 act specified in subsection 1, the commissioner may suspend 23 or revoke the companys certificate of authority if the 24 commissioner deems it in the best interest of the public or of 25 the policyholders of the captive company. 26 b. If the commissioner does not revoke a captive companys 27 certificate of authority during a suspension imposed by the 28 commissioner under paragraph a , the companys certificate of 29 authority may be reinstated if the commissioner finds that the 30 cause of the suspension has been rectified. 31 Sec. 12. NEW SECTION . 521J.10 Excess workers compensation 32 insurance. 33 1. A captive company may provide excess workers 34 compensation insurance to the captive companys parent and 35 -20- SF 549 (2) 90 ko/rn/mb 20/ 31 |
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| 43 | | - | Senate File 549, p. 22 policyholder interests of any nonconsenting policyholder of a mutual insurer. b. A plan for conversion to a reciprocal insurer must be approved by the commissioner. The commissioner shall not approve a plan unless the plan meets all of the following requirements: (1) The plan provides for a hearing upon notice to the insurer, directors, officers, and stockholders or policyholders who have the right to appear at the hearing, unless the commissioner waives or modifies the requirements for the hearing. (2) (a) In the case of a stock insurer, the plan provides for the conversion of the existing stockholder interests into subscriber interests in the resulting reciprocal insurer proportionate to the existing stockholder interests, and is approved by a majority of the shareholders who are entitled to vote, and who are represented at a regular or special meeting at which a quorum is present either in person or by proxy. (b) In the case of a mutual insurer, the plan provides for the conversion of the existing policyholder interests into subscriber interests in the resulting reciprocal insurer proportionate to the existing policyholder interests, and is approved by a majority of the voting interests of the policyholders who are represented at a regular or special meeting at which a quorum is present either in person or by proxy. (3) The plan meets the applicable requirements of section 521J.5. c. If the commissioner approves a plan of conversion, the certificate of authority for the converting insurer shall be amended to state that the converting insurer is a reciprocal insurer. The conversion shall be effective and the corporate existence of the converting entity shall cease to exist on the date on which the amended certificate of authority is issued to the attorney-in-fact for the reciprocal insurer. The resulting reciprocal insurer shall file the articles of merger or the articles of conversion with the secretary of state. Sec. 15. NEW SECTION . 521J.12 Captive insurance regulatory and supervision fund appropriation. |
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| 43 | + | S.F. 549 affiliated companies unless the laws of the state that has 1 jurisdiction over the transaction prohibits the captive company 2 from providing excess workers compensation insurance. 3 2. A captive company may reinsure workers compensation of 4 a qualified self-insured plan of the captive companys parent 5 and affiliated companies. 6 Sec. 13. NEW SECTION . 521J.11 Captive mergers. 7 1. A merger between captive stock insurers, or a merger 8 between captive mutual insurers, shall meet the requirements 9 of chapter 521 and section 521J.5, as applicable. The 10 commissioner may, at the commissioners discretion, provide 11 notice to the public of a proposed merger prior to approval or 12 disapproval of a merger. 13 2. An association captive company, or an industrial insured 14 group formed as a stock insurer or as a mutual insurer, may be 15 converted to or merged with a reciprocal insurer under this 16 section. 17 3. A plan for conversion or merger shall meet all of the 18 following requirements: 19 a. (1) The plan shall be fair and equitable to the 20 shareholders in the case of a stock insurer, or to the 21 policyholders in the case of a mutual insurer. 22 (2) The plan shall provide for the purchase of the shares 23 of any nonconsenting shareholder of a stock insurer, or of the 24 policyholder interests of any nonconsenting policyholder of a 25 mutual insurer. 26 b. A plan for conversion to a reciprocal insurer must be 27 approved by the commissioner. The commissioner shall not 28 approve a plan unless the plan meets all of the following 29 requirements: 30 (1) The plan provides for a hearing upon notice to the 31 insurer, directors, officers, and stockholders or policyholders 32 who have the right to appear at the hearing, unless the 33 commissioner waives or modifies the requirements for the 34 hearing. 35 -21- SF 549 (2) 90 ko/rn/mb 21/ 31 |
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| 45 | | - | Senate File 549, p. 23 1. A captive insurance regulatory and supervision fund is established in the state treasury under the control of the division. The fund shall consist of all moneys deposited in the fund pursuant to this section and any other moneys appropriated to or deposited in the fund. 2. All fees, assessments, fines, and administrative penalties collected under this chapter shall be deposited in the fund. 3. Moneys in the fund are appropriated to the division to administer this chapter, including the maintenance of staff, associated expenses, and necessary contractual services, and for the reimbursement of reasonable expenses incurred by the division to promote captive insurance in this state. 4. a. Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of a fiscal year shall not revert but shall remain available for expenditure for the purposes designated. b. At the close of each fiscal year, if unencumbered or unobligated moneys remaining in the captive insurance regulatory and supervision fund exceed five hundred thousand dollars, moneys in excess of that amount shall be transferred from the captive insurance regulatory and supervision fund to the general fund of the state. 5. The division may temporarily use moneys from the general fund of the state to pay expenses in excess of moneys available in the captive insurance regulatory and supervision fund for the purposes designated in this section if those additional expenditures are fully reimbursable and the division reimburses the general fund of the state in full by the close of the fiscal year. Because any general fund moneys used shall be fully reimbursed, such temporary use of moneys from the general fund of the state shall not constitute an appropriation for purposes of calculating the state general fund expenditure limitation pursuant to section 8.54. Sec. 16. NEW SECTION . 521J.13 Legal investments. 1. a. Industrial insured captive companies and captive risk retention groups shall comply with investment requirements as established by the commissioner by rule. The commissioner may approve the use of alternative reliable methods of valuation |
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| 45 | + | S.F. 549 (2) (a) In the case of a stock insurer, the plan provides 1 for the conversion of the existing stockholder interests into 2 subscriber interests in the resulting reciprocal insurer 3 proportionate to the existing stockholder interests, and is 4 approved by a majority of the shareholders who are entitled to 5 vote and who are represented at a regular or special meeting at 6 which a quorum is present either in person or by proxy. 7 (b) In the case of a mutual insurer, the plan provides 8 for the conversion of the existing policyholder interests 9 into subscriber interests in the resulting reciprocal insurer 10 proportionate to the existing policyholder interests, and 11 is approved by a majority of the voting interests of the 12 policyholders who are represented at a regular or special 13 meeting at which a quorum is present either in person or by 14 proxy. 15 (3) The plan meets the applicable requirements of section 16 521J.5. 17 c. If the commissioner approves a plan of conversion, the 18 certificate of authority for the converting insurer shall be 19 amended to state that the converting insurer is a reciprocal 20 insurer. The conversion shall be effective and the corporate 21 existence of the converting entity shall cease to exist on the 22 date on which the amended certificate of authority is issued to 23 the attorney-in-fact for the reciprocal insurer. The resulting 24 reciprocal insurer shall file the articles of merger or the 25 articles of conversion with the secretary of state. 26 Sec. 14. NEW SECTION . 521J.12 Captive insurance regulatory 27 and supervision account. 28 1. A captive insurance regulatory and supervision account 29 is established in the state general fund under the control 30 of the division and moneys in the account shall be used to 31 provide the financial means for the division to administer 32 this chapter, and for the reimbursement of reasonable expenses 33 incurred by the division to promote captive insurance in this 34 state. 35 -22- SF 549 (2) 90 ko/rn/mb 22/ 31 |
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| 47 | | - | Senate File 549, p. 24 and rating. b. If a captive companys admitted assets total less than five million dollars, the commissioner may approve an investment of up to twenty percent of the captive companys admitted assets in rated credit instruments in any one investment that meets the requirements established by the commissioner by rule. 2. A pure captive company, or a protected cell captive company, shall not be subject to any restrictions on allowable investments, except that the commissioner may prohibit or limit any investment that threatens the solvency or liquidity of the pure captive company. 3. Any captive company may make loans to any of the captive companys affiliates with prior written approval of the commissioner, and each loan must be evidenced by a note in a form as approved by the commissioner by rule. Loans made from minimum capital and surplus funds required by section 521J.4 shall be prohibited. Sec. 17. NEW SECTION . 521J.14 Reinsurance. 1. Subject to the prior approval of the commissioner, a captive company may provide reinsurance on risks ceded by any other insurer. 2. Any captive company may take credit for reserves on risks, or portions of risks, ceded to reinsurers as provided under chapter 521B. In order to cede or take credit for the reinsurance of risks or portions of risks ceded to reinsurers that do not comply with chapter 521B, a captive company shall obtain the prior approval of the commissioner. 3. Insurance by a captive company of any workers compensation qualified self-insured plan of the captive companys parent and affiliates shall be deemed to be reinsurance under this chapter. 4. In addition to reinsurers authorized under chapter 521B, a captive company may take credit for the reinsurance of risks or portions of risk ceded to a pool or exchange acting as a reinsurer which has been authorized by the commissioner. The commissioner may require documents, financial information, or other evidence that such a reinsurance pool or exchange will be able to provide adequate security for the reinsurance pools or |
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| 47 | + | S.F. 549 2. All fees, assessments, fines, and administrative 1 penalties collected under this chapter shall be deposited in 2 the captive insurance regulatory and supervision account. 3 3. All payments from the captive insurance regulatory 4 and supervision account that are made for the maintenance of 5 staff and associated expenses, including necessary contractual 6 services, shall only be disbursed from the state treasury 7 upon a warrant issued by the commissioner, after receipt by 8 the commissioner of proper documentation regarding services 9 rendered and expenses incurred. 10 4. The balance in the captive insurance regulatory and 11 supervision account at the end of each fiscal year shall revert 12 to the general fund. 13 Sec. 15. NEW SECTION . 521J.13 Legal investments. 14 1. a. Industrial insured captive companies, association 15 captive companies, and captive risk retention groups shall 16 comply with investment requirements as established by the 17 commissioner by rule. The commissioner may approve the use of 18 alternative reliable methods of valuation and rating. 19 b. If a captive companys admitted assets total less 20 than five million dollars, the commissioner may approve an 21 investment of up to twenty percent of the captive companys 22 admitted assets in rated credit instruments in any one 23 investment that meets the requirements as established by the 24 commissioner by rule. 25 2. A pure captive company, or a protected cell captive 26 company, shall not be subject to any restrictions on allowable 27 investments, except that the commissioner may prohibit or limit 28 any investment that threatens the solvency or liquidity of the 29 pure captive company. 30 3. Any captive company may make loans to any of the captive 31 companys affiliates with prior written approval of the 32 commissioner, and each loan must be evidenced by a note in a 33 form as approved by the commissioner by rule. Loans made from 34 minimum capital and surplus funds required by section 521J.4 35 -23- SF 549 (2) 90 ko/rn/mb 23/ 31 |
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| 49 | | - | Senate File 549, p. 25 exchanges financial obligations. The commissioner may deny authorization or impose any limitations on the activities of a reinsurance pool or exchange that, in the commissioners judgment, are necessary and proper to provide adequate security for the ceding captive company and for the protection and benefit of the public. 5. No credit shall be allowed for reinsurance if the reinsurance contract does not result in the complete transfer of the risk or liability to the reinsurer. 6. No credit shall be allowed, as an asset or a deduction from liability, to any ceding insurer for reinsurance unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding insurer under the contract reinsured without diminution because of the insolvency of the ceding insurer. 7. Reinsurance under this section shall be effected through a written agreement of reinsurance setting forth the terms, provisions, and conditions governing the reinsurance. The commissioner may require that complete copies of all reinsurance agreements be filed with and approved by the commissioner. Sec. 18. NEW SECTION . 521J.15 Rating organizations. A captive company shall not be required to join a rating organization. Sec. 19. NEW SECTION . 521J.16 Compulsory organizations. A captive company shall not join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this state. A captive company, a captive companys insureds, a captive companys parent, and any company affiliated with a captive company shall not receive any benefit from a plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of the captive company. Sec. 20. NEW SECTION . 521J.17 Protected cell captive companies. 1. One or more sponsors may form a protected cell captive company. 2. A protected cell captive company formed or authorized under this chapter shall be subject to all of the following |
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| 49 | + | S.F. 549 are prohibited. 1 Sec. 16. NEW SECTION . 521J.14 Reinsurance. 2 1. Subject to the prior approval of the commissioner, a 3 captive company may provide reinsurance on risks ceded by any 4 other insurer. 5 2. Any captive company may take credit for reserves on 6 risks, or portions of risks, ceded to reinsurers as provided 7 under chapter 521B. 8 Sec. 17. NEW SECTION . 521J.15 Rating organizations. 9 A captive company shall not be required to join a rating 10 organization. 11 Sec. 18. NEW SECTION . 521J.16 Compulsory organizations. 12 A captive company shall not join or contribute financially 13 to any plan, pool, association, or guaranty or insolvency fund 14 in this state; and a captive company, a captive companys 15 insureds, a captive companys parent, any company affiliated 16 with a captive company, and any member of an association shall 17 not receive any benefit from a plan, pool, association, or 18 guaranty or insolvency fund for claims arising out of the 19 operations of the captive company. 20 Sec. 19. NEW SECTION . 521J.17 Protected cell captive 21 companies. 22 1. One or more sponsors may form a protected cell captive 23 company. 24 2. A protected cell captive company formed or authorized 25 under this chapter shall be subject to all of the following 26 requirements: 27 a. (1) A protected cell captive company may establish one 28 or more protected cells subject to the prior written approval 29 of the commissioner of a plan of operation submitted by the 30 protected cell captive company for each protected cell. The 31 plan of operation shall include but is not limited to the 32 specific business objectives and investment guidelines of the 33 protected cell. 34 (2) Upon the commissioners approval of the protected cell 35 -24- SF 549 (2) 90 ko/rn/mb 24/ 31 |
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| 51 | | - | Senate File 549, p. 26 requirements: a. (1) A protected cell captive company may establish one or more protected cells subject to the prior written approval of the commissioner of a plan of operation submitted by the protected cell captive company for each protected cell. The plan of operation shall include but is not limited to the specific business objectives and investment guidelines of the protected cell. (2) Upon the commissioners approval of the protected cell captive companys plan of operation, the company, in accordance with the approved plan of operation, may attribute insurance obligations with respect to its insurance business to the protected cell. (3) A protected cell captive company shall transfer all assets attributable to a protected cell to one or more separately established and separately identified protected cell accounts bearing the name or designation of that protected cell. Each protected cell shall have a distinct name or designation that must include the words protected cell. Protected cell assets shall be held in the protected cell accounts for the purpose of satisfying the obligations of the specific protected cell. (4) Each protected cell shall be incorporated. An incorporated protected cell may be organized and operated in any form of business organization as authorized by the commissioner by rule. Each protected cell of a protected cell captive company shall be treated as a captive insurance company under this chapter, except that the limit on maximum yearly aggregate taxes paid under section 432.1A, subsection 4, shall not apply. Unless otherwise permitted by the organizational document of a protected cell captive company, each protected cell of the protected cell captive company must have the same directors, secretary, and registered office as the protected cell captive company. b. All attributions of assets and liabilities between a protected cell and the protected cell captive companys general account shall be in accordance with the plan of operation and the participant contracts as approved by the commissioner. No other attribution of assets and liabilities shall be made by |
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| 51 | + | S.F. 549 captive companys plan of operation, the company, in accordance 1 with the approved plan of operation, may attribute insurance 2 obligations with respect to its insurance business to the 3 protected cell. 4 (3) A protected cell captive company shall transfer 5 all assets attributable to a protected cell to one or more 6 separately established and separately identified protected cell 7 accounts bearing the name or designation of that protected 8 cell. Each protected cell shall have a distinct name or 9 designation that must include the words protected cell. 10 Protected cell assets shall be held in the protected cell 11 accounts for the purpose of satisfying the obligations of the 12 specific protected cell. 13 (4) Each protected cell must be incorporated. An 14 incorporated protected cell may be organized and operated 15 in any form of business organization as authorized by the 16 commissioner by rule. Each protected cell of a protected 17 cell captive company shall be treated as a captive insurance 18 company under this chapter, except that the limit on maximum 19 yearly aggregate taxes paid under section 432.1A, subsection 4, 20 shall not apply. Unless otherwise permitted by the articles of 21 incorporation or other organizational document of a protected 22 cell captive company, each protected cell of the protected cell 23 captive company must have the same directors, secretary, and 24 registered office as the protected cell captive company. 25 b. All attributions of assets and liabilities between a 26 protected cell and the protected cell captive companys general 27 account shall be in accordance with the plan of operation and 28 the participant contracts as approved by the commissioner. No 29 other attribution of assets and liabilities shall be made by 30 a protected cell captive company between the protected cell 31 captive companys general account and the companys protected 32 cells. Any attribution of assets and liabilities between the 33 general account and a protected cell shall be in cash or in 34 readily marketable securities with established market values. 35 -25- SF 549 (2) 90 ko/rn/mb 25/ 31 |
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| 53 | | - | Senate File 549, p. 27 a protected cell captive company between the protected cell captive companys general account and the companys protected cells. Any attribution of assets and liabilities between the general account and a protected cell shall be in cash or in readily marketable securities with established market values. c. The establishment of a protected cell shall create, with respect to the protected cell, a legal person separate from the protected cell captive company. Amounts attributed to a protected cell under this chapter, including assets transferred to a protected cell account, shall be owned by the protected cell and the protected cell captive company shall not be a trustee, or hold itself out to be a trustee, with respect to the protected cell assets of that protected cell account. d. A protected cell captive company may contract with or arrange for an investment adviser or other third party, approved by the commissioner, to manage the protected cell assets of a protected cell if all remuneration, expenses, and other compensation of the third party are paid from the protected cell assets of that protected cell, and not from the protected cell assets of other protected cells or the assets of the protected cell captive companys general account. e. (1) A protected cell captive company shall establish the administrative and accounting procedures necessary to properly identify each protected cell of the protected cell captive company, and the protected cell assets and protected cell liabilities attributable to each protected cell. The directors of a protected cell captive company shall be responsible for all of the following: (a) Maintaining the assets and liabilities of protected cells separately, and separately identifiable, from the assets and liabilities of the protected cell captive companys general account. (b) Maintaining protected cell assets and protected cell liabilities attributable to one protected cell separate, and separately identifiable, from protected cell assets and protected cell liabilities attributable to another protected cell. (2) If a protected cell captive company fails to comply with subparagraph (1), the remedy of tracing shall be applicable to |
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| 53 | + | S.F. 549 c. The establishment of a protected cell shall create, with 1 respect to that protected cell, a legal person separate from 2 the protected cell captive company. Amounts attributed to a 3 protected cell under this chapter, including assets transferred 4 to a protected cell account, shall be owned by the protected 5 cell and the protected cell captive company shall not be a 6 trustee, or hold itself out to be a trustee, with respect 7 to the protected cell assets of that protected cell account. 8 A protected cell captive company may allow for a security 9 interest to attach to protected cell assets or to a protected 10 cell account if the security interest is in favor of a creditor 11 of the protected cell and is otherwise allowed under applicable 12 law. 13 d. A protected cell captive company may contract with or 14 arrange for an investment adviser, commodity trading adviser, 15 or other third party to manage the protected cell assets of 16 a protected cell if all remuneration, expenses, and other 17 compensation of the third party are paid from the protected 18 cell assets of that protected cell, and not from the protected 19 cell assets of other protected cells or the assets of the 20 protected cell captive companys general account. 21 e. (1) A protected cell captive company shall establish 22 the administrative and accounting procedures necessary to 23 properly identify each protected cell of the protected cell 24 captive company, and the protected cell assets and protected 25 cell liabilities attributable to each protected cell. The 26 directors of a protected cell captive company shall do all of 27 the following: 28 (a) Maintain the assets and liabilities of protected cells 29 separately, and separately identifiable, from the assets and 30 liabilities of the protected cell captive companys general 31 account. 32 (b) Maintain protected cell assets and protected cell 33 liabilities attributable to one protected cell separate, 34 and separately identifiable, from protected cell assets and 35 -26- SF 549 (2) 90 ko/rn/mb 26/ 31 |
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| 55 | | - | Senate File 549, p. 28 protected cell assets commingled with protected cell assets of other protected cells, or commingled with the assets of the protected cell captive companys general account. The remedy of tracing shall not be the exclusive remedy. f. When establishing a protected cell, a protected cell captive company shall attribute assets with a value at least equal to the reserves attributed to that protected cell to the protected cell. 3. Each protected cell shall be accounted for separately on the books and records of the protected cell captive company to reflect the financial condition and result of operations of the protected cell, including but not limited to the net income or loss, dividends or other distributions to participants, and any other factor provided in the participant contract, or as required by the commissioner by rule. 4. The assets of a protected cell shall not be chargeable with liabilities arising from any other insurance business of the protected cell captive company. 5. A protected cell captive company shall not make a sale, exchange, or other transfer of assets among any of the companys protected cells without the consent of the participants of each affected protected cell. 6. A protected cell shall not make a sale, exchange, transfer of assets, dividend, or distribution to a sponsor or to a participant without the commissioners prior written approval, which shall not be given if the sale, exchange, transfer, dividend, or distribution will result in the insolvency or impairment of the protected cell. 7. A protected cell captive company shall annually file with the commissioner any financial reports required by the commissioner, as established by rule, and shall include, without limitation, accounting statements detailing the finances of each protected cell. 8. A protected cell captive company shall notify the commissioner in writing within ten business days from the date that a protected cell has become impaired or insolvent, or is otherwise unable to meet its claim or expense obligations. 9. A participant contract shall not take effect without the commissioners prior written approval. |
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| 55 | + | S.F. 549 protected cell liabilities attributable to another protected 1 cell. 2 (2) If a protected cell captive company fails to comply with 3 subparagraph (1), the remedy of tracing shall be applicable to 4 protected cell assets commingled with protected cell assets of 5 other protected cells, or commingled with the assets of the 6 protected cell captive companys general account. The remedy 7 of tracing shall not be the exclusive remedy. 8 f. When establishing a protected cell, a protected cell 9 captive company shall attribute assets with a value at least 10 equal to the reserves attributed to that protected cell to the 11 protected cell. 12 3. Each protected cell shall be accounted for separately 13 on the books and records of the protected cell captive company 14 to reflect the financial condition and result of operations of 15 the protected cell, including but not limited to the net income 16 or loss, dividends or other distributions to participants, and 17 any other factor provided in the participant contract or as 18 required by the commissioner by rule. 19 4. The assets of a protected cell shall not be chargeable 20 with liabilities arising from any other insurance business of 21 the protected cell captive company. 22 5. A sale, exchange, or other transfer of assets shall 23 not be made by a protected cell captive company among any 24 of the companys protected cells without the consent of the 25 participants of each affected protected cell. 26 6. A sale, exchange, transfer of assets, dividend, or 27 distribution shall not be made from a protected cell to a 28 sponsor or to a participant without the commissioners prior 29 written approval, which shall not be given if the sale, 30 exchange, transfer, dividend, or distribution will result in 31 the insolvency or impairment of the protected cell. 32 7. A protected cell captive company shall annually file 33 with the commissioner any financial reports required by the 34 commissioner as established by rule, and shall include, without 35 -27- SF 549 (2) 90 ko/rn/mb 27/ 31 |
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| 57 | | - | Senate File 549, p. 29 10. An addition of any new protected cell, or the withdrawal of any participant of an existing protected cell, shall constitute a change in the business plan of the protected cell captive company, and the change shall not become effective without the prior written approval of the commissioner. 11. With respect to each protected cell, business written by a protected cell captive company shall be fronted by an insurance company authorized under the laws of any state, or as approved by the commissioner. 12. If a protected cell captive companys business is reinsured, with respect to each protected cell, the protected cell captive company shall comply with at least one of the following requirements: a. The business shall be reinsured by a reinsurer authorized or approved by the commissioner. b. The business shall be secured by a trust fund that is located in the United States for the benefit of policyholders and claimants, and which is funded by an irrevocable letter of credit or other asset that is acceptable to the commissioner, and that is subject to all of the following: (1) The amount of security provided by the trust fund shall not be less than the reserves associated with the liabilities that are not fronted or reinsured, including but not limited to reserves for losses that are allocated for loss adjustment expenses, incurred but not reported losses, and unearned premiums for business written through the participants protected cell. (2) The commissioner may require the protected cell captive company to increase the funding of any trust. (3) If the form of security in the trust is a letter of credit, the letter of credit shall be established, issued, or confirmed by a bank chartered in this state, a member of the federal reserve system, or a bank chartered by another state if the bank is approved by the commissioner. (4) The commissioner shall approve the form and terms of the trust and trust instrument. Sec. 21. NEW SECTION . 521J.18 Sponsors qualifications. A sponsor of a protected cell captive company may be any person approved by the commissioner, based on the |
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| 57 | + | S.F. 549 limitation, accounting statements detailing the finances of 1 each protected cell. 2 8. A protected cell captive company shall notify the 3 commissioner in writing within twenty business days from the 4 date that a protected cell has become impaired or insolvent, or 5 is otherwise unable to meet its claim or expense obligations. 6 9. A participant contract shall not take effect without the 7 commissioners prior written approval. 8 10. An addition of any new protected cell, or the withdrawal 9 of any participant of an existing protected cell, shall 10 constitute a change in the business plan of the protected cell 11 captive company and the change shall not become effective 12 without the prior written approval of the commissioner. 13 11. With respect to each protected cell, business written 14 by a protected cell captive company shall be fronted by an 15 insurance company authorized under the laws of any state, or as 16 approved by the commissioner. 17 12. If a protected cell captive companys business is 18 reinsured, with respect to each protected cell, the protected 19 cell captive company shall comply with at least one of the 20 following requirements: 21 a. The business shall be reinsured by a reinsurer authorized 22 or approved by the commissioner. 23 b. The business shall be secured by a trust fund that is 24 located in the United States for the benefit of policyholders 25 and claimants, and which is funded by an irrevocable letter of 26 credit or other asset that is acceptable to the commissioner, 27 and that is subject to all of the following: 28 (1) The amount of security provided by the trust fund shall 29 not be less than the reserves associated with the liabilities 30 that are not fronted or reinsured, including but not limited 31 to reserves for losses that are allocated for loss adjustment 32 expenses, incurred but not reported losses, and unearned 33 premiums for business written through the participants 34 protected cell. 35 -28- SF 549 (2) 90 ko/rn/mb 28/ 31 |
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| 59 | | - | Senate File 549, p. 30 commissioners determination that the approval of such person as a sponsor is consistent with the purposes of this chapter. In evaluating the qualifications of a proposed sponsor, the commissioner shall consider the type and structure of the proposed sponsor entity, the sponsors experience in financial operations, the sponsors financial stability, the sponsors business reputation, and any other factors deemed relevant by the commissioner. A risk retention group shall not be a sponsor of a protected cell captive company. Sec. 22. NEW SECTION . 521J.19 Delinquency. 1. Except as otherwise provided in this section, chapter 507C shall apply to a protected cell captive company. 2. Upon any order of supervision, rehabilitation, or liquidation of a protected cell captive company, the receiver shall manage the assets and liabilities of the protected cell captive company pursuant to this section. 3. Notwithstanding chapter 507C or any other provision to law to the contrary, in the conservation, rehabilitation, or liquidation of a protected cell captive company, all of the following requirements shall be met: a. The assets and liabilities of a protected cell shall at all times be kept separate from, and shall not be commingled with, those of other protected cells and the protected cell captive company. b. The assets of a protected cell shall not be used to pay any expenses or claims other than the expenses or claims attributable to the protected cell. c. If the sponsor consents and the commissioner has granted prior written approval, the assets of the protected cell captive companys general account may be used to pay any expenses or claims attributable solely to a protected cell or protected cells of the protected cell captive company. Notwithstanding section 521J.4, if the assets of the protected cell captive companys general account are used to pay expenses or claims attributed solely to a protected cell or protected cells of the protected cell captive company, the sponsor shall not be required to contribute additional capital and surplus to the protected cell captive companys general account. d. A protected cell captive companys capital and surplus |
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| 59 | + | S.F. 549 (2) The commissioner may require the protected cell captive 1 company to increase the funding of any trust. 2 (3) If the form of security in the trust is a letter of 3 credit, the letter of credit shall be established, issued, or 4 confirmed by a bank chartered in this state, a member of the 5 federal reserve system, or a bank chartered by another state if 6 the bank is approved by the commissioner. 7 (4) The commissioner shall approve the form and terms of the 8 trust and trust instrument. 9 Sec. 20. NEW SECTION . 521J.18 Sponsors qualifications. 10 A sponsor of a protected cell captive company must 11 be an insurer authorized under the laws of any state, a 12 reinsurer authorized under the laws of any state, a captive 13 insurance company formed or authorized under this chapter, an 14 insurance producer licensed in this state and approved by the 15 commissioner, or any other person approved by the commissioner. 16 Sec. 21. NEW SECTION . 521J.19 Delinquency. 17 If delinquency proceedings are initiated against a protected 18 cell captive company, the assets of a protected cell shall 19 not be used to pay any expenses other than those attributable 20 to the protected cell, and the capital and surplus of the 21 protected cell captive company shall be available at all times 22 to pay expenses of, or claims against, the protected cell 23 captive company. 24 Sec. 22. NEW SECTION . 521J.20 Participants. 25 Individuals, business entities, and sponsors may be a 26 participant in a protected cell captive company. A participant 27 shall not be required to be a shareholder of a protected cell 28 captive company or of the protected cell captive companys 29 affiliate. 30 Sec. 23. NEW SECTION . 521J.21 Investments combined 31 assets. 32 The assets of two or more protected cells may be combined 33 for the purpose of investment by a protected cell captive 34 company, and combining the protected cells assets shall not 35 -29- SF 549 (2) 90 ko/rn/mb 29/ 31 |
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| 61 | | - | Senate File 549, p. 31 shall be available at all times to pay any expenses of, or claims against, the protected cell captive company. 4. Notwithstanding chapter 507C or any other provision of law to the contrary, in the event of an insolvency of a protected cell captive company where the commissioner determines that one or more protected cells remain solvent, the commissioner may separate such cells from the protected cell captive company and, on application of the sponsor, may allow for the conversion of such protected cells into one or more new or existing protected cell captive companies, or one or more other captive companies, pursuant to a plan of operation approved by the commissioner. Sec. 23. NEW SECTION . 521J.20 Participants. Individuals, business entities, and sponsors may be a participant in a protected cell captive company. A participant shall not be required to be a shareholder of a protected cell captive company, or of the protected cell captive companys affiliate. Sec. 24. NEW SECTION . 521J.21 Investments combined assets. The assets of two or more protected cells may be combined for the purpose of investment by a protected cell captive company, and combining the protected cells assets shall not be construed as defeating the segregation of the assets for accounting or any other purpose. Protected cell captive companies and protected cells shall comply with the applicable investment requirements contained in section 521J.13; however, compliance with such investment requirements shall be waived for protected cell captive companies to the extent that credit for reinsurance ceded to reinsurers is allowed under section 521J.14, or to the extent that waiver of compliance with the investment requirements is deemed reasonable and appropriate by the commissioner. The commissioner may exercise discretion in approving the accounting standards used by the company. Sec. 25. NEW SECTION . 521J.22 Dormant captive companies. 1. As used in this section, dormant captive company means a captive company, other than a captive risk retention group, that meets all of the following: a. The captive company has ceased transacting the business |
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| 61 | + | S.F. 549 be construed as defeating the segregation of the assets for 1 accounting or any other purpose. 2 Sec. 24. NEW SECTION . 521J.22 Dormant captive companies. 3 1. As used in this section, dormant captive company means 4 a captive company, other than a captive risk retention group, 5 that meets all of the following: 6 a. The captive company has ceased transacting the business 7 of insurance, including the issuance of insurance policies. 8 b. The captive company does not have any remaining 9 liabilities associated with its insurance business transactions 10 or insurance policies issued prior to the captive companys 11 filing of an application for a certificate of dormancy under 12 subsection 2. 13 2. Any captive company that is domiciled in this state and 14 that complies with this section may apply to the commissioner 15 for a certificate of dormancy. A certificate of dormancy shall 16 be subject to expiration on or after five calendar years from 17 the date that the certificate is issued, and the commissioner 18 shall not renew a certificate of dormancy. 19 3. a. A captive company that has been issued a certificate 20 of dormancy shall comply with all of the following: 21 (1) The dormant captive company shall possess and maintain 22 unimpaired, paid-in capital and surplus of not less than 23 twenty-five thousand dollars. 24 (2) Within ninety calendar days of the dormant captive 25 companys fiscal year end, the company shall annually submit to 26 the commissioner a report on the companys financial condition, 27 verified by oath of two of the companys executive officers, in 28 the form and manner as established by the commissioner by rule. 29 (3) The dormant captive company shall pay a one thousand 30 dollar dormancy tax, due annually on or before March 1, if 31 for any portion of the immediately preceding calendar year 32 the captive company held a certificate of dormancy. Each 33 series of members and each protected cell shall be considered 34 separate for purposes of paying the annual dormancy tax under 35 -30- SF 549 (2) 90 ko/rn/mb 30/ 31 |
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| 63 | | - | Senate File 549, p. 32 of insurance, including the issuance of insurance policies. b. The captive company does not have any remaining liabilities associated with its insurance business transactions or insurance policies issued prior to the captive companys filing of an application for a certificate of dormancy under subsection 2. 2. Any captive company that is domiciled in this state and that complies with this section may apply to the commissioner for a certificate of dormancy. A certificate of dormancy shall be subject to expiration five calendar years from the date that the certificate is issued, and the commissioner shall not renew a certificate of dormancy. 3. a. A captive company that has been issued a certificate of dormancy shall comply with all of the following: (1) The dormant captive company shall possess and maintain unimpaired, paid-in capital and surplus of not less than twenty-five thousand dollars. (2) Within ninety calendar days of the dormant captive companys fiscal year end, the company shall annually submit to the commissioner a report on the companys financial condition, verified by oath of two of the companys executive officers, in the form and manner as established by the commissioner by rule. (3) The dormant captive company shall pay an annual one thousand dollar dormancy tax, due on or before March 1, if for any portion of the immediately preceding calendar year the captive company held a certificate of dormancy. Each series of members and each protected cell shall be considered separate for purposes of paying the annual dormancy tax under a certificate of dormancy. A dormant captive company is not otherwise liable for any annual renewal as provided in section 521J.2, subsection 4, paragraph b . b. A dormant captive insurance company that has been issued a certificate of dormancy shall not be subject to or liable for the payment of tax under section 432.1A from the date the certificate of dormancy is issued through the date the certificate of dormancy expires. 4. A dormant captive company shall be subject to examination under section 521J.9 for any year in which the company does not qualify as a dormant captive company. In the commissioners |
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| 64 | | - | |
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| 65 | | - | Senate File 549, p. 33 discretion, a dormant captive company shall be subject to examination under section 521J.9 for any year in which the dormant captive company qualifies as a dormant captive company. 5. Prior to a dormant captive company issuing an insurance policy, the dormant captive company shall apply to the commissioner for approval to surrender the companys certificate of dormancy and to resume conducting the business of insurance. 6. A dormant captive companys certificate of dormancy shall be revoked if the company violates this section. Sec. 26. NEW SECTION . 521J.23 Workers compensation compliance with state and federal laws. 1. This chapter shall not be construed to exempt a captive company, a captive companys parent, or a captive companys affiliated companies from compliance with applicable state and federal laws governing workers compensation insurance. 2. This chapter shall not be construed to divest the division of workers compensation of any jurisdiction, as authorized by law, over workers compensation self-insurance plans. Sec. 27. NEW SECTION . 521J.24 Books and records. 1. a. Unless otherwise approved by the commissioner, a captive company shall maintain the captive companys original books, records, documents, accounts, vouchers, and agreements in this state and make them available for examination and inspection by the commissioner as requested by the commissioner. The captive company may store and reproduce the books, records, documents, accounts, vouchers, and agreements electronically. b. All books, records, documents, accounts, vouchers, and agreements shall be kept in a manner that the commissioner can readily ascertain the captive companys financial condition, affairs, and operations; can readily verify the captive companys financial statements; and can confirm the captive companys compliance with this chapter. 2. Unless otherwise approved by the commissioner, all books, records, documents, accounts, vouchers, and agreements maintained by a captive company under subsection 1 shall remain available in the state until the commissioner approves |
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| 66 | | - | |
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| 67 | | - | Senate File 549, p. 34 destruction or other disposition of the books, records, documents, accounts, vouchers, and agreements. Sec. 28. NEW SECTION . 521J.26 Risk management of controlled unaffiliated business standards. The commissioner may adopt rules establishing standards to ensure that a parent or affiliated company is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by a captive company. If rules are not adopted to establish standards pursuant to this section, the commissioner may approve the coverage of such risks on a case-by-case basis. Sec. 29. NEW SECTION . 521J.27 Rules. The commissioner shall adopt rules pursuant to chapter 17A to implement and administer this chapter. Sec. 30. FUTURE REPEAL. Chapter 521G, Code 2023, is repealed effective January 1, 2025. Sec. 31. APPLICABILITY. The following applies January 1, 2025, to protected cell captive companies formed, authorized, or continued on or after that date: The section of this Act enacting section 521J.17. ______________________________ AMY SINCLAIR President of the Senate ______________________________ PAT GRASSLEY Speaker of the House I hereby certify that this bill originated in the Senate and is known as Senate File 549, Ninetieth General Assembly. ______________________________ W. CHARLES SMITHSON Secretary of the Senate Approved _______________, 2023 ______________________________ KIM REYNOLDS Governor |
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| 63 | + | S.F. 549 a certificate of dormancy. A dormant captive company is not 1 otherwise liable for any annual renewal as provided in section 2 521J.2, subsection 4, paragraph b , subparagraph (2). 3 b. A dormant captive insurance company that has been issued 4 a certificate of dormancy shall not be subject to or liable 5 for the payment of tax under section 432.1A, or be subject to 6 examination under section 521J.8, from the date the certificate 7 is issued through the date the certificate expires. 8 4. Prior to a dormant captive company issuing an 9 insurance policy, the dormant captive company shall apply 10 to the commissioner for approval to surrender the companys 11 certificate of dormancy and to resume conducting the business 12 of insurance. 13 5. A dormant captive companys certificate of dormancy 14 shall be revoked if the company violates this section. 15 Sec. 25. NEW SECTION . 521J.23 Workers compensation 16 compliance with state and federal laws. 17 This chapter shall not be construed to exempt a captive 18 company, a captive companys parent, or a captive companys 19 affiliated companies from compliance with applicable state and 20 federal laws governing workers compensation insurance. 21 Sec. 26. NEW SECTION . 521J.24 Rules. 22 The commissioner shall adopt rules pursuant to chapter 17A 23 to implement and administer the provisions of this chapter. 24 Sec. 27. FUTURE REPEAL. Chapter 521G, Code 2023, is 25 repealed effective January 1, 2025. 26 Sec. 28. APPLICABILITY. The following applies January 1, 27 2025, to protected cell captive companies formed, authorized, 28 or continued on or after that date: 29 The section of this Act enacting section 521J.17. 30 -31- SF 549 (2) 90 ko/rn/mb 31/ 31 |
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