Lowers the minimum capital and surplus requirement for pure captive insurers and removes the prohibition on providing workers' compensation and employee liability insurance. (8/1/12) (EN NO IMPACT See Note)
Impact
By lowering these capital requirements, SB205 seeks to promote the growth of the captive insurance market in Louisiana, which could lead to increased economic activity and job creation in the insurance sector. Additionally, the bill allows captive insurers to provide workers' compensation and employee liability insurance, a move that broadens the scope of coverage available through captive insurers. This could enhance the competitiveness of local businesses that utilize these insurance products.
Summary
Senate Bill 205 aims to amend the regulations surrounding captive insurers in Louisiana. The bill notably reduces the unimpaired paid-in capital requirements for both pure and association captive insurers. Specifically, it lowers the requirement for pure captive insurers from $2 million to $1.5 million and for association captive insurers from $2 million to $1 million. This change is expected to facilitate the establishment and operation of captive insurance businesses within the state, potentially attracting more companies to set up their insurance operations in Louisiana.
Sentiment
The sentiment around SB205 is largely positive, particularly among business advocates who view the bill as a step toward economic development and more flexible insurance solutions for companies. Supporters argue that the bill makes Louisiana a more attractive destination for captive insurers, thus promoting business-friendly policies. However, there are concerns from some regulatory bodies about the potential risks associated with lowering capital requirements and the implications for oversight and consumer protection.
Contention
One point of contention is associated with the appropriateness of reduced capital requirements for captive insurers and the potential risks this might pose to policyholders. Critics worry that lower thresholds could compromise the financial stability and reliability of these insurers, raising questions about their ability to fulfill claims, especially in times of financial distress. This debate highlights a tension between fostering business growth and ensuring adequate safeguards for consumers.
Enacting the Kansas protected cell captive insurance company act, providing for the redomestication of a foreign or alien captive insurance company and updating certain terms, requirements and conditions of the captive insurance act, reducing insurance company premium tax rates, creating parity between the insurance agent and public adjuster licensing requirements, authorizing insurers to file certain travel insurance policies under the accident and health line of insurance and authorizing the commissioner of insurance to select and announce the version of certain instructions, calculations and documents in effect for the upcoming calendar year and cause such announcement to be published in the Kansas register not later than December 1 of the current year.