There is no clear answer to whether more US states will emulate the aggressive stance on captive insurance companies taken by the State of Washington Office of the Insurance Commissioner, says Mikhail Raybshteyn, Americas captive services deputy leader, EY Global Captive Network.
Washington state insurance commissioner Mike Kreidler has taken an aggressive stance on captive insurance companies, accusing them of being “unlawful” and targeting captives domiciled in other jurisdictions that are insuring risks in the state of Washington.
The captives of both Microsoft and Costco settled with the commissioner and paid unpaid premium taxes, interest and penalties.
Speaking on the ‘addressing extra-domicile regulatory and premium tax risks’ panel at the Captive Insurance Companies Association 2019 conference, Raybshteyn said the question remains whether other states that don’t have a captive statute will follow in Washington’s footsteps.
He added: “The question remains evident. I don’t think there is a clear cut answer. We don’t have an indication from states outside Washington that don’t have captive laws that they’re going to follow suit.”
Speaking in a different session, David Provost, deputy commissioner for captive insurance at the Vermont Department of Financial Regulation, suggested the situation in Washington was unique.
He explained: “There are large corporations and no income tax for businesses. The large corporations like Microsoft are paying a relatively small amount of tax, so it is hard for them to stand up.”
“I don't know if it will bleed over because Washington is unique.”
