Property and casualty insurance
SB 1547: Establishes Framework to Allow Captive Insurers in Oregon (Chapter 84, 2012 Oregon Laws)
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 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