Washington State Senate Approves New Captive Insurance Fees and Taxes

Washington State Seal With George Washington On Green State Map

March 11, 2021 |

Washington State Seal With George Washington On Green State Map

Legislation approved March 9 by the Washington State Senate would set new requirements for captive insurance companies licensed in other domiciles but doing business in Washington State.

Under the legislation, S.B. 5315, which the state senate passed on a 49–0 vote, captives licensed elsewhere and operating in Washington would be required to pay an initial registration fee of $2,500, with the Washington Office of the Insurance Commissioner (OIC) given the authority to set the annual fee. The annual fee could not exceed $2,500.

In addition, captive insurance companies would be assessed an annual 2 percent premium tax on insurance provided to their parents or affiliates for Washington risks. The tax would have to paid each year no later than March 1.

However, captives affiliated with public institutions of higher education would be exempt from the premium tax.

The legislation also would require captive insurance companies licensed elsewhere but doing business in Washington to pay the 2 percent premium tax on coverage they provided in the state going back to January 1, 2011.

The measure, though, does not authorize the licensing of captive insurance companies in the state.

State insurance regulators applaud the measure as a fair compromise.

"This is a compromise that will benefit the industry and consumers. Businesses will continue to have access to captive insurance benefits, and consumers will know the insurance commissioner is overseeing the way captives operate in Washington. It also ensures captive insurers pay their fair share of the insurance premium tax," said Steve Valandra, deputy commissioner for public affairs at the OIC in Olympia, Washington.

March 11, 2021