Texas is considering legislation advanced by the Texas Captive Insurance Association (TxCIA) in HB 1700 and SB 667, which would authorise pooling, credit for reinsurance, and equity dividends.
The Texas Senate Business and Commerce Committee, chaired by senator Kevin Eltife, took public testimony on SB 667 where Josh Magden, president of the TxCIA, testified in favour of the bill, and Andrew Marson, a member of the TxCIA Legislative Committee, also registered in support of the bill and was available as an expert witness.
Senators Kirk Watson and Larry Taylor raised a number of cases involving captive incorporations or re-domestications since the 2013 legislation, and the potential impact of the proposed changes on increased captive activity in the future, though no one testified in opposition.
It is anticipated that the committee will vote on 24 March on SB 667. If the vote is unanimous, the committee will have the option of sending it to the Local and Uncontested Calendar or to the full Senate.
The preferred route is the Uncontested Calendar which is often faster in obtaining full Senate Approval.
In either case, the expectation is to pass the full Senate by the end of March and then on to the House.
In the House, SB 667 will have a public hearing in the House Insurance Committee. Should it pass out of that committee, it will need approval of the full House before the end of May.
Members of the TxCIA Legislative Committee are continuing discussions with the Texas Department of Insurance over several changes to SB 667.
Topping the list is a provision that would allow Texas based captive insurers to take ‘credit’ for reinsurance procured from a commercial, non-admitted reinsurer (subject to approval by the Department of Insurance).
‘Credit’ meaning that the commercial reinsurer would not have to post collateral (for outstanding loss reserves) or be accredited in the state of Texas.
If consensus is developed on this issue and others, those changes would be put into a committee substitute and presented to the House Insurance Committee when it considers SB 667.
