Washington Insurance Commissioner Mike Kreidler has ordered unauthorised insurers Olympic Casualty Insurance and ASA Assurance to stop insuring risk in Washington state for their parent companies Starbucks and Alaska Air Group.
The order against Olympic Casualty Insurance has been stayed pending an administrative hearing.
Both companies are captive insurers and are not authorised under Washington state law.
In September 2019, Kreidler ordered ASA Assurance to pay more than $2.5 million in unpaid premium tax and penalties owed to Washington state.
The fine handed to ASA Assurance, its insureds and affiliates, included a fee of $1.8 million for unpaid premium tax, $0.2 million in interest, and $0.36 million in penalties.
ASA demanded a hearing, set for 13 July 2020.
In December 2019, Kriedler ordered Olympic Casualty Insurance, a captive insurer for Starbucks, to pay $22.8 million in unpaid premium taxes, interest, and penalties and a $1.1 million fine.
Olympic issued 44 policies in Washington state from 2008 until 2019, collecting $633.4 million in premiums. Olympic demanded a hearing; the pre-hearing conference is 14 January 2020. A stay is in place for the fine and the order to cease and desist pending the outcome of the hearing.
To date, 16 captives have self-reported and two captives have paid $2.9 million in unpaid premium taxes and $1.4 million in fines, tax penalties and interest to Washington state.
Kreidler reached a settlement of $876,820 with Cypress, a captive insurer for Microsoft Corporation in August 2018. In addition, the insurance commissioner reached a settlement of $3.6 million with NW Re Limited, a captive insurer for Costco Wholesale Corporation in March 2019.
Captive insurance has been included in the Washington State Office of the Insurance Commissioner's 2020 legislative priorities list.
Washington state law currently provides no statutory framework to allow the formation of captive insurance companies within the state.
A statement, released by the Washington State Office of the Insurance Commissioner, explained that during 2019, the Office of the Insurance Commissioner began investigating Washington state-based companies who had formed their own captive insurance companies.
These companies have been cooperating in the investigations by the Office of the Insurance Commissioner and are working with the Office of the Insurance Commissioner on legislation for this year.
