The Louisiana Department of Insurance promulgates Regulation 139, setting out the rules and procedural requirements for captive insurance companies and risk retention groups domiciled in the state. The regulation was published in the Louisiana Register on 20 September and takes effect on publication. It implements Act 313 of the 2025 Regular Session of the Louisiana Legislature. The act enacted R.S. 22:550.1 through 550.32, now known as the Creating Holistic Options in Coverage for Enterprise and Self-Insurance (CHOICES) Law. The department describes the act as establishing a comprehensive framework for the formation, licensing, regulation and taxation of domestic captives and risk retention groups. Louisiana's captive insurance subpart dates back to legislation enacted in 2008, and Act 313 amended it and gave it its new name. The regulation defines a captive insurance company as a pure captive, association captive, risk retention group or affiliated reinsurance company. Applicants must hold a pre-application meeting with the department before submitting an application for admission. The meeting allows the department to understand the applicant's organisation, insurance needs, business plan and ownership structure. Meetings are scheduled through the Office of Licensing and may be held in person or virtually. A captive or risk retention group may not adopt a name until the commissioner has reviewed and approved it. The name must not be the same as, or deceptively similar to, that of any other licensed insurer or company authorised to do business in the state. With the commissioner's approval, companies may be incorporated by fewer than five natural persons as stock or nonstock corporations. They may also be formed as limited liability companies, partnerships, limited partnerships, statutory trusts or other legal entities. Organisational documents must be submitted to the commissioner for approval before they are filed. Policy forms must be filed with the application, and the commissioner may disapprove a form or require its modification. Risk retention groups must maintain corporate governance standards substantially similar to those adopted by the National Association of Insurance Commissioners. The board of a risk retention group or captive may consist of fewer than five members with the commissioner's approval. The commissioner may waive any requirement of the regulation for risk retention groups, unless the waiver would breach NAIC accreditation requirements. Captive managers must be authorised by the commissioner before providing management services. They must also be experienced, competent and knowledgeable in captive operations. Certified public accountants must be in good standing with the American Institute of Certified Public Accountants and licensed in at least one state. Actuaries must be qualified as defined in the NAIC property and casualty annual statement instructions, with at least three years of experience in establishing or reviewing property and casualty loss and loss expense reserves. All three require the commissioner's authorisation, and the commissioner may deny or withdraw approval. Companies must give the commissioner written notice at least 30 days before changing an approved accountant, actuary or captive manager. The same notice applies before any material change affecting operations, governance, financial condition or business plan. The regulation defines material change broadly, including changes in ownership or control, substantial alterations to reinsurance arrangements, and capital contributions or reductions. Capital may be held as cash, cash equivalents, bonds, marketable securities, surplus debentures, letters of credit, an approved trust pledged to the commissioner, or direct general obligations of the US government. It may also be held in another form the commissioner approves. The commissioner may require a deposit held in trust for policyholders, supported by an approved custodial agreement. A captive or risk retention group may be permitted to expose itself to loss on a single risk of up to 30 per cent of its capital and surplus, with reinsured portions deducted. Association captives are excluded from that provision. A statement of financial condition is due annually by 1 March, verified on oath by at least two executive officers. Risk retention groups use the NAIC annual statement blank and accounting practices. An audited statement is due by 30 June, prepared under US generally accepted accounting principles and including an independent accountant's report, financial statements and a report evaluating internal controls. An annual actuarial certification of loss and loss expense reserves is also required. The commissioner may require companies to file property and casualty rates on an actuarially justified basis. The commissioner may disapprove a filing that raises solvency concerns. Captives and risk retention groups organised elsewhere may redomesticate to Louisiana with the commissioner's approval. They must file a plan of redomestication, a certificate of good standing from the current domicile, and organisational documents amended to comply with Louisiana law. A redomesticated company is deemed to have continued its corporate existence without interruption. Companies may apply for a certificate of dormancy if they have ceased transacting insurance and either have no remaining policy liabilities or have made provision for them satisfactory to the commissioner. While dormant, they must maintain their certificate of authority and good standing. They may write no insurance business beyond runoff or settlement of existing liabilities, and must continue to file annual statements and pay fees. Approval is required before resuming operations, and the commissioner may revoke a certificate of dormancy. The regulation defines principal place of business as the primary physical office in the state where the company conducts its core administrative and managerial functions and keeps its books and records. A mailing address, registered office or address used solely for service of process does not by itself qualify. The commissioner may fine a company and may refuse to issue, suspend or revoke a certificate of authority. The commissioner may also issue cease and desist orders requiring corrective action. Questions about the regulation can be sent to the department at regulations@ldi.la.gov.
