- Texas Department of Insurance Accepting Applications for Captive Insurers to Relocate to Texas
- November 20, 2013
- Law Firm: Colodny Fass Talenfeld Karlinsky Abate Webb P.A. - Fort Lauderdale Office
The Texas Department of Insurance ("TDI") announced today, November 13, 2013, that it has begun accepting applications from captive insurance companies located in other jurisdictions that would like to relocate to Texas. The TDI will license the companies under a law change approved by the 83rd Texas Legislature and signed by Texas Governor Rick Perry on June 5, 2013.
Senate Bill 734, sponsored by Senator John Corona (R-Dallas), provides the TDI with the ability to license captives to insure the risks of parent companies and affiliates, as well as controlled unaffiliated businesses. A captive is defined as an insurance company formed by another company to cover its own risks. In the past, Texas-based companies wanting to self-insure through a captive were forced to form the operations outside of the Lone Star State.
"I am pleased that the Texas Department of Insurance is moving forward with the implementation of SB 734, which authorizes the creation of captive insurance companies in Texas," Senator Corona said. "My hope is that this legislation will encourage businesses to form captive insurance companies within the state and also provide incentive for those companies with existing captive insurance companies to re-domesticate in Texas."
"This law change will support economic development efforts in our state by allowing companies already doing business here to locate their captive insurance operations within our borders," said Texas Insurance Commissioner Julia Rathgeber.
The Texas statute requires that parent companies have significant operations in Texas in order to form a captive here. Texas-based captives can only insure operational risks of affiliated companies and controlled unaffiliated business. SB 734 prohibits captives from accepting insurance policy risks of an insurance affiliate.
TDI is currently accepting re-domestication applications for captive insurers with existing track records, as well as accepting registrations for captive managers. Applications for new captive operations will be accepted at a later date after final adoption of the captive rules.
TDI has posted its formal captive rule proposal to the TDI Website at: http://www.tdi.texas.gov/rules/2013/parules.html. The proposal will be published in the Texas Register on November 22, 2013. Public comments will be accepted until December 23, 2013.