A bill that was submitted during the Washington State 2021 legislative session was signed by Speaker of the House Laurie Jinkins on 12 April.
The bill will now be passed onto Governor Jay Inslee's desk, who can sign the bill into law, veto all or part of the bill, or take no action at all.
Submitted in January, the bill would see the creation of a framework for registering eligible captive insurers and imposing a premium tax on the risk covered by premiums allocable to the state.
It also proposed that eligible captive insurers must pay a 2 per cent premium tax for insurance directly procured by and provided to its parent or affiliate for Washington risks during the preceding calendar year.
One official that testified before a legislative committee in January said the new framework provides regulatory authority over captive insurance and ensures there are important consumer protections.
The official stated: “This bill authorises the use of captives and allows for appropriate oversight and taxation. After passage of this bill, the revenue assumptions may increase as companies reinstate their captive.”
Captives would also be required to pay an initial registration fee of $2,500, and a renewal fee may be set by the OIC not to exceed $2,500 per year.
It highlighted that an eligible captive insurer that fails to register is subject to penalties and fines applicable to unlawful unauthorised insurers.
Registered eligible captive insurers may only provide property and casualty insurance to a captive owner or to the captive owner's affiliates and obtain or provide reinsurance for ceded or assumed risks insured in this state or elsewhere.
It explained if not previously paid to the OIC, premium taxes are due from an eligible captive insurer for any period after 1 January 2011, but are not subject to penalties and fees. As of 1 July 2021, penalties, interest, and fees may be imposed on registered eligible captive insurers.
In March, the bill passed the Senate with 49-0 in favour.
The bill was sent to follow the same process in the House of Representatives. On 9 April, the bill passed the house with 96 yeas, 96; one nay; zero absent; one excused.
Washington Insurance Commissioner Mike Kreidler spoke to Captive Insurance Times in February 2020 about his views and plans for captive insurance operating with Washington State.
