Nevada Captive Bill Would Expand Commissioner's Review Authority
April 06, 2021
The Nevada insurance commissioner would be given new authority to review the qualifications of a captive insurer's manager and, if appropriate, disqualify the manager or suspend or revoke the captive's license under A.B. 45, legislation now under consideration by state lawmakers.
Nevada insurance regulators say the new authority is needed to protect captive insurance companies from managers who turn out to be unqualified.
"Allowing the commissioner to periodically review the qualifications of a captive manager is to help ensure an unsuitable person can be disqualified [from] serving in that capacity," said Nick Stosic, deputy commissioner at the Nevada Division of Insurance (NDI).
The legislation also would include changes for captive insurance companies that file for dormancy. Under current law, captives that file for dormancy and receive what is known as a Certificate of Dormancy (CDA) are not, among other things, required to pay premium taxes. The CDA can be in effect for up to 5 years.
Nevada law, though, is silent on what happens if a dormant captive does not file to renew the CDA before the end of the CDA's 5-year effective period, according to state regulators.
Under the legislation, if a captive insurance company does not renew the CDA on time and does not meet the requirements to hold an active captive license, the NDI would move to revoke the captive's license.
In addition, the legislation would set new rules for risk retention groups (RRGs) that are licensed in other states but want to do business in Nevada. Under the measure, out-of-state RRGs would be required to file a registration statement and pay required registration fees.
Nevada is a major US captive insurance domicile. Currently, Nevada has 163 captives. In 2019, the most recent year for which statistics are available, Nevada captives generated $389.4 million in premium volume.
April 06, 2021