The Washington State Office of the Insurance Commissioner has issued a cease and desist against CCW Safe and 2A Insurance Company, effective of 22 November 2019.
2A Insurance, a segregated account of First Property and Casualty, is based in the Bahamas and managed by Hamilton Captive Management, located in South Carolina.
The order requires CCW Safe and 2A Insurance’s officers, directors, trustees, employees, agents, and affiliates to cease and desist from engaging in or transacting the unauthorised business of insurance in the state of Washington.
It also ordered CCW Safe and 2A Insurance to stop seeking, pursuing and obtaining any insurance or service contract business in the state of Washington; and soliciting Washington residents to sell any insurance issued or to be issued by an unauthorised insurer, as well as inducing them to purchase any insurance contract.
The order stated that CCW Safe and 2A Insurance doesn’t hold a certificate of authority to transact insurance in Washington State, doesn’t hold a Washington state surplus line broker’s license to place non-admitted insurance in the state, nor is insurance coverage provided by the captive placed through a surplus line broker licensed in the state.
CCW Safe and 2A Insurance Company also failed to timely pay 2 percent premium taxes.
In addition, the order stated that CCW Safe and 2A Insurance Company are not allowed to fulfil the terms of contracts formed prior to 22 November 2019.
CCW Safe and 2A Insurance Company have the right to demand a hearing.
Washington OIC also issued a cease and desist order to Microsoft’s Arizona-based captive, Cypress Insurance in May last year.
In addition, the state’s OIC ordered Costco’s captive insurance company, NW Re limited, to pay $2.4 million in unpaid premium taxes and $1.2 million in fines, tax penalties, and interest, after self-reporting its ‘unauthorised activity’ in December 2018.
The most recent fine was handed to Alaska Air’s Hawaii-domiciled captive insurance company for unpaid tax, interest, and penalties, which ordered the captive to pay a total of $2.5 million.
In September, Washington OIC revealed that captive insurance has been included on its 2020 legislative priorities list.
Washington state law currently provides no statutory framework to allow the formation of captive insurance companies within the state.
A statement, released by the Washington State OIC, explained that during the past year, the OIC began investigating Washington state-based companies who had formed their own captive insurance companies.