The Kansas state government has submitted a bill to update and modernise captive insurance laws in the state.
Senate Bill No. 410, which was introduced by the Senate Committee on Financial Institutions and Insurance on 14 February 2018, proposed to create two new types of captives, branch captives and special purpose insurance captives, as well as specify the regulatory structure for each.
The bill, amongst other changes, also proposes to amend the law relating to companies subject to premium taxes. The new law would specify the tax rate for direct and assumed reinsurance premiums, the maximum tax annually, and require tax to be calculated annually unless allocated for multi-year policies or contracts.
Additionally, the bill, which was submitted on behalf of Department of Insurance, would permit the Ken Selzer, commissioner of the state, to adopt rules and regulations establishing standards for pure captives.
As part of the amendments, there would be a small additional cost to regulate an increased level of captive activity in Kansas. The extra money would eventually be offset by fees charged to register and maintain the captive in the state, according to Ken Selzer, commissioner of insurance for the Kansas Insurance Department.
In a testimony written in support of the bill, Selzer said: “This small additional cost and effort by the Kansas Insurance Department would be far more than offset by the additional economic development benefits to Kansas.”
He added: “These benefits include retaining in our state those captives that Kansas based corporations would already create to serve their risk management needs, rather than having them look to Missouri, Texas or other jurisdiction for a location for their captive.”
The new changes will come into effect and be in force from and after its publication in the state’s statute book.
