The Texas Department of Insurance (TDI) has approved the formation of a new captive insurer and the redomestication of two other captive entities under new rules adopted to implement Senate Bill (SB) 734.
The legislation authored by Senator John Carona and sponsored by John Smithee has removed regulatory barriers that previously forced captives to be headquartered outside of the state.
Today, a license application was approved for Commerce Way Insurance Company to form a new captive operation in Texas. Redomestication applications also were approved for CART Assurance Company and Prize Indemnity, LLC.
“Our state is now open for business for captive insurers seeking to move to Texas or to set up new operations here. The statute has provided for a safe and stable entry of a new type of risk transfer mechanism into the state,” said Commissioner of Insurance Julia Rathgeber.
Senator Carona commented: “This legislation will reduce the cost to businesses relying on out-of-state captive insurance companies. It will also provide incentives for companies to form or redomesticate pure captive insurance companies in Texas.”
SB 734 requires that affiliated companies have significant operations in Texas in order to form or move a captive here. Captives licensed in Texas can only insure operational risks of affiliated companies and controlled unaffiliated business; the statute prohibits captives from accepting insurance policy risks of an insurance affiliate.
