D.C.’s revised captive laws in effect

Two changes to captive insurance laws passed by the Council of the District of Columbia went into effect on March 14, 2007. Supporters see the changes as giving captives more flexibility and making the District a more inviting environment for these alternative self-insurance organizations.

The Captive Insurance Amendment Act updates and expands the Captive Insurance Company Act of 2004 on the formation and structure of protected cell captive insurers, providing greater flexibility to captive owners, managers and regulators regarding the status and actions of protected cell companies.

The Special Purpose Financial Captive Act provides securitization of risk and allows access to capital markets through special purpose captives, which promises to make the District’s captive laws more compact and easy to use.

The changes were hailed by Insurance Commissioner Thomas E. Hampton. “The establishment of a regulatory scheme for securitizing insurance risks in a captive and the amendments to our protected cell statute will put the District ahead of other jurisdictions in our captive insurance regulation and attract more captive insurance companies to the District,” said Hampton.

Since 2001, when the District enacted its captive insurance law, it has licensed more than 70 companies, including those owned by such organizations as the American Society of Association Executives, General Motors and the Port Authority of New York and New Jersey.

The Captive Insurance Council of the District of Columbia, worked with DISB on the new laws.

“Now our captive regulations will be the most advanced in the United States in terms of access to capital investment and flexibility in forming protected cell insurance companies,” said Larry Smith, chair of CIC-DC. “Each captive insurance company that locates in the District has a multiplier economic effect through its business presence, its capital deposits and the use of local professional service providers.”