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Captive Insurer Approved for Addition of Employee Benefit Coverage in NJ

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June 15, 2015
New Jersey Department of Banking and Insurance Commissioner Ken Kobylowski recently announced the approval of a new line of authority for the captive insurer formed last year by Healthcare Services Group, Inc. (HCSG), of Bensalem, Pennsylvania, according to a department press release. Under the new authority, HCSG joins a new but growing area of captive insurance for company employee benefit plans.
“Healthcare Service Group’s expansion of its captive insurance company is a testament to the company’s innovation and another indicator of the strength of New Jersey’s captive market,” Mr. Kobylowski said, as quoted in the press release. “HCSG’s expansion of a captive approved just last year shows how captives can adapt quickly to help companies cover additional risks and grow their business.”

HCSG, founded in 1976, provides professional management of healthcare industry services such as housekeeping, laundry, dining, and nutrition. The company employs 45,000 in 48 states and services more than 3,700 housekeeping/laundry facilities and more than 900 dining/nutrition facilities. In New Jersey, HCSG provides services to 116 facilities and employs 1,570 individuals.

In January 2014, HCSG received approval to form a captive insurer to write general liability deductible reimbursement coverage for the company. Under the new authority, lines of business covered by the captive will include limited medical, short-term disability, and term life. The plans are regulated by the Employee Retirement Income Security Act (ERISA) of 1974, which also required approval of the transaction by the US Department of Labor.

“It was a pleasure working with New Jersey on the captive’s business plan change,” said Andrew Kush, senior vice president of Human Resources and Risk Management, Healthcare Services Group, as quoted in the press release. “The regulators were thorough but expeditious in their review, which is clearly a testament to their expertise within the industry and commitment to the captive insurance community.”

Prior to the enactment of the Captive Insurance Law, P.L.2011, c.25, New Jersey companies that wished to form captives had to do so in other states and countries, the press release explained. Today, New Jersey companies can use the law to insure their New Jersey risk in New Jersey.

Since the law became effective, the department has approved the formation or redomestication of 17 captive insurance companies, and there are currently several other potential captive insurance companies in various stages of approval in New Jersey, according to the press release.
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