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Oklahoma Legislation Specifies Captive Premium Tax Distribution

Image of New Legislation Introduced
May 18, 2020

Legislation approved by Oklahoma lawmakers and signed into law May 19 by Governor Kevin Stitt specifies how premium taxes paid by captive insurance companies must be allocated by the state insurance commissioner.

Under the measure, H.B. 3864, which takes effect July 1, 45 percent of the first $500,000 in collected captive premium taxes will be distributed to the state's General Revenue Fund, 36 percent to the Oklahoma Firefighters Pension and Retirement Fund, 14 percent to the Oklahoma Police Pension and Retirement Fund, and 5 percent to the state's Law Enforcement Retirement Fund.

The legislation specifies that 100 percent of the next $250,000 in premium taxes will go to the Oklahoma Insurance Department. Premium tax revenue above $750,000 will be distributed in the same percentages as the first $500,000 for the firefighters, police, and law enforcement retirement funds, with 30 percent going to the Oklahoma Insurance Department and 14 percent going to the state's General Revenue Fund.

The current $100,000 cap on the maximum annual premium tax paid by captive insurance companies will remain in place, as will the $5,000 minimum annual tax assessment.

Oklahoma is a midsized captive domicile. Currently, 47 captives are licensed in the state. In 2019, Oklahoma captives' premium volume was $224.5 million, up sharply from just $111.5 million in 2015.

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