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Alabama Adds 14 New Captive Insurance Companies in 2019

Green road sign with Alabama written on it and a blue sky with clouds in the background.
March 18, 2020

Continuing impressive growth, the Alabama Department of Insurance licensed 14 captive insurance companies in 2019, the second straight year the state hit that licensing mark.

With 73 captive insurance companies at the end of 2019, Alabama is one of the larger captive insurance domiciles in the southeastern United States, with captive growth expected to continue, state regulators say.

"We are in various stages on several applications and hope to have them completed in the near future," said Sean Duke, insurance examinations supervisor with the Alabama Department of Insurance in Montgomery.

Alabama lawmakers are now considering legislation to enhance the appeal of the state as a captive insurance domicile.

Under the legislation, H.B. 220, which the Alabama House of Representatives passed last month on a 94–0 vote, so-called branch captives would be able to fund all coverages. That would be a significant change from current law, which restricts branch captives to writing employee benefit coverages that are subject to a federal benefits law—the Employee Retirement Income Security Act of 1974.

The measure also would formalize an existing regulatory practice under which a dormant captive insurer can retain its license for up to 5 years after it stops doing business.

In addition, the legislation would allow so-called coastal captive insurance companies to directly write coverages instead of having to use a fronting insurer.

The bill now is awaiting final action by the Alabama Senate.

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