Washington’s Office of the Insurance Commissioner has proposed draft regulations for the implementation of its new captive insurance law.
Passed in May, the legislation allowed for the creation of a framework to register eligible captive insurers in the State of Washington in order to impose a 2 per cent premium tax on the risks covered by premiums allocable to the state during the previous calendar year.
The stakeholder draft determines an eligible captive insurer as one that provides property and casualty insurance only to a captive owner or its affiliates. Medical stop loss insurance and workers’ compensation directly covering the worker are excluded.
However, the draft notes that an eligible captive insurer may act as a reinsurer to assume risks from other insurers in these areas of coverage.
The registration fee will be set at $2,500, while registration must be renewed annually by 30 June.
The renewal process requires insurers to continue to satisfy eligibility requirements, as well as to disclose their methodology and analysis used to calculate their risks premium allocation for the previous year.
The stakeholder draft also states that tax must be paid annually by 1 March.
It notes that captive insurers that fail to report premiums and pay taxes for Washington risk between 1 January 2011 and 31 December 2020 by 1 March 2022 will be subjected to fines and penalties as unauthorised insurers.
