Senate Bill 1547 authorizes captive insurers to operate
in Oregon, and set standards for captive formation, licensing,
classes of insurance that may be transacted and reporting
requirements.
As allowed in SB 1547, a captive insurer ("captive")
is an insurance company that is formed to provide certain
classes of insurance coverage to its parent organization
or its affiliates, not to the public as a whole. Many U.S.
and multinational corporations use captives to finance portions
of their insurance risks. A captive can be organized under
the laws of any jurisdiction that has a captive enabling
statute. The jurisdiction under which the captive is organized
is called the "domicile," and the captive is regulated
by the laws of that domicile. More than half of the states
allow captives.
Prior to passage of SB 1547, Oregon law did not allow a
captive insurer to be domiciled in this state. SB 1547 allows
the Department of Consumer and Business Services director
to authorize captives to organize and transact insurance
in this state. The bill specifies the classes of insurance
that can be transacted, capital and surplus requirements,
investment requirements, and reporting and regulatory examination
requirements. It also exempts certain captive documents
from disclosure as public records.
SB 1547 allows four types of captives to obtain a certificate
of authority in Oregon:
- Pure captive insurer - a business entity that insures
risks of a parent or affiliate of the business entity;
- Branch captive insurer - an alien captive insurer (formed
under the laws of another country) that holds a certificate
of authority to transact insurance in Oregon through a
business division with a principal place of business in
this state;
- Association captive insurer - a business entity that
insures the risks of: (a) a member organization of the
association, (b) an affiliate of a member organization
of the association, or (c) the association; or
- Captive reinsurer - a reinsurer that is: (a) formed
or holds a certificate of authority under SB 1547, (b)
wholly owned by a qualifying reinsurer parent company,
and (c) a stock corporation.
Captives may provide a range of insurance coverage, including
property, products liability, general liability, and professional
liability. However, SB 1547 prohibits a captive insurer
from providing workers' compensation insurance, life insurance,
health insurance, or any personal property or personal casualty
line of insurance, including personal motor vehicle insurance
coverage or homeowner's insurance.
SB 1547 requires a captive to possess and maintain capital
or surplus of not less than: (1) $250,000 for a pure captive
insurer; (2) $750,000 for an association captive insurer
incorporated as a stock insurer or as a mutual insurer;
and (3) $300 million for a captive reinsurer. A captive
must provide the director with an annual report of the financial
condition of the captive, and the captive is subject to
regular examinations by the director.
The director may suspend or revoke the certificate of authority
issued to a captive insurer if the captive is insolvent,
refuses or fails to submit an annual report, fails to submit
to an examination by the director, fails to meet the requirements
of SB 1547, or otherwise fails to comply with Oregon laws.
The bill includes as a source of the funding captive-related
activities in the DCBS a fee for application and renewal
of a certificate of authority to transact insurance as a
captive insurer.
- Effective Date: March 27, 2012
- Operative Date: July 1, 2012
