Oklahoma’s insurance commissioner Glen Mulready has issued a notice to advise all participants in the captive insurance industry on the reduction of required capital for certain special purpose captive insurance companies.
The Oklahoma insurance department (OID) pursuant to 36 O.S. § 6470.20 and 6470.34 determined that as of the 16 September 2020, the capital requirement for certain special purpose captive insurers will be reduced from $250,000 to $50,000.
The reduction in minimum capital and surplus is available only to special purpose captive insurers organised as a 'series' pursuant to 18 O.S. § 2054.4 and does not accept or receive direct or assumed risk; does not issue any form of an insurance contract; insures the risks of its participants only through separate participant contracts.
Additionally, special purpose captive insurers will need to fund liability to each participant through one or more protected cells and segregate the assets and liabilities of each protected cell from the assets and liabilities of other protected cells and from the assets of the special purpose vehicle insurance company's general account.
Jerry Messick, CEO of Elevate Risk Solutions, said: “For instance, it will allow a broker to sponsor a series captive structure without having to commit a large statutory capital amount. As the sponsor allows no liability at its level, it naturally forces each series captive to provide its own adequate level of risk capital to operate.”
“The fact the commissioner and his team researched this and was quickly responsive to an industry need is yet another reason Oklahoma is focused on developing its captive regulatory platform,” Messick added.
Commissioner Mulready noted that written application for this reduction is required and needs to be directed to the captive division.
He added that if this reduction allowance is approved, the reduction will be documented by a company-specific order.
Additionally, in May, Oklahoma’s governor Kevin Sitt has signed HB 3864 into law, which sets out how premium taxes by captive insurers should be distributed within the state of Oklahoma.
