Iowa Legislature Approves Captive Insurance Updates, Adds Life Reinsurance Framework

The Iowa legislature has approved House File 2766, a bill that updates the state's captive insurance law and establishes a framework for life captive reinsurance companies. The measure has passed both chambers and awaits action by the governor. 

The bill revises multiple provisions within Iowa's existing captive insurance statute, including definitions, licensing requirements, and regulatory oversight. Among the updates, the legislation modifies how captive insurers apply for a certificate of authority, including requirements to submit organizational documents for approval by the insurance commissioner prior to filing with the secretary of state.  

The measure also addresses permitted lines of coverage, providing that a captive company may be authorized to offer property, casualty, life, disability, and health insurance, as well as participate in risk transfer arrangements using parametric contracts.  

Additional revisions address financial and reporting requirements, including annual financial statements, actuarial opinions on reserve adequacy, and audited financial reports. The commissioner is authorized to require more frequent reporting and additional information to monitor a captive company's financial condition and operations.  

The bill also includes provisions addressing the confidentiality of certain filings, specifying that tax returns submitted under the statute are not subject to public inspection.  

The legislation includes updates affecting protected cell captive companies, clarifying that individual cells operate as separate legal business entities with segregated assets and liabilities. It also addresses minimum capital requirements for certain captive structures and outlines permissible forms of capital, including cash, marketable securities, and letters of credit.  

In addition to these revisions, the bill creates a new subchapter establishing a regulatory structure for life captive reinsurance companies. These entities are defined as captive insurers that reinsure risks from affiliated life insurers and are subject to specific licensing and operational requirements.  

Under the bill, life captive reinsurance companies must maintain a minimum of $5 million in capital and surplus, operate from a principal place of business in Iowa, and obtain a certificate of authority based on a submitted plan of operation and supporting actuarial and financial documentation.  

The new framework also includes requirements related to actuarial certification, risk-based capital, and ongoing reporting, including quarterly and annual financial filings and internal control reporting. The commissioner is authorized to examine life captive reinsurance companies and to suspend or revoke certificates of authority under specified conditions.  

Separately, the bill includes provisions addressing redomestication, allowing foreign or alien captive companies that move to Iowa to be taxed on premiums written after redomestication, with conditions tied to deferred premium tax elections.