1.If permitted by its organizational document, a captive company may apply to the
commissioner for a certificate of authority to provide property insurance, casualty insurance,
life insurance, disability income insurance, surety insurance, marine insurance, health
insurance, or a group health plan, with the following exceptions:
a.A pure captive company shall only insure risks of the company’s parent and affiliated
companies, and of the company’s controlled unaffiliated business entities.
b.An industrial insured captive company shall only insure risks of the industrial insured
company, comprised of the industrial insured group and the industrial insured group’s
affiliated companies, and the controlled unaffiliated business of an industrial insured group
or the industrial insured group’s
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1. If permitted by its organizational document, a captive company may apply to the
commissioner for a certificate of authority to provide property insurance, casualty insurance,
life insurance, disability income insurance, surety insurance, marine insurance, health
insurance, or a group health plan, with the following exceptions:
a. A pure captive company shall only insure risks of the company’s parent and affiliated
companies, and of the company’s controlled unaffiliated business entities.
b. An industrial insured captive company shall only insure risks of the industrial insured
company, comprised of the industrial insured group and the industrial insured group’s
affiliated companies, and the controlled unaffiliated business of an industrial insured group
or the industrial insured group’s affiliated companies.
c. A special purpose captive company shall not provide insurance or reinsurance for risks
unless approved by the commissioner.
d. A captive company or a branch captive company shall not do any of the following:
(1) Provide personal lines of insurance, including but not limited to motor vehicle
insurance, homeowner’s insurance, or any component of motor vehicle insurance or
homeowner’s insurance on a direct basis.
(2) Accept or cede reinsurance except as permitted by the commissioner by rule.
(3) Provide health insurance coverage or a group health plan unless the captive company
or the branch captive company provides the health insurance coverage or the group health
plan only for the parent company and the parent company’s affiliated companies.
(4) Write workers’ compensation insurance on a direct basis.
(5) Write life insurance on a direct basis.
§521J.2, CAPTIVE COMPANIES 4
e. A protected cell captive company shall not insure any risks other than those of the
protected cell captive company’s participants.
2. A captive company shall not write any insurance business unless the captive company
complies with all of the following:
a. The captive company obtains a certificate of authority from the commissioner prior to
writing any insurance business.
b. The captive company’s board of directors, board of managing members, or a reciprocal
insurer’s subscribers’ advisory committee, holds at least one annual meeting in the state.
c. The captive company maintains its principal place of business in the state.
d. The captive company designates a registered agent to accept service of process, files
the name and contact information and any subsequent changes regarding the registered
agent with the commissioner, and agrees that if the registered agent cannot be found with
reasonable diligence, the commissioner may act as an agent of the captive company with
respect to any action or proceeding and may be served pursuant to section 505.30.
3. a. Prior to receiving a certificate of authority, a captive company shall do all of the
following:
(1) File with the commissioner all of the following:
(a) A certified copy of the business entity’s organizational document.
(b) A statement under oath of an officer of the business entity showing the business
entity’s financial condition.
(c) Anyotherstatementordocumentrequiredbythecommissionerasestablishedbyrule.
(2) Submit a description of coverages, deductibles, coverage limits, rates, and any
additional information requested by the commissioner to the commissioner for approval.
(3) Provide a statement to the commissioner that describes all of the following:
(a) The character, reputation, and financial standing of the organizers of the business
entity.
(b) The character, reputation, financial responsibility, insurance experience, and business
qualifications of all officers, directors, and managing members of the business entity.
(4) Provide any other information required by the commissioner as established by rule.
b. If there is a subsequent material change in the information provided to the
commissionerunderparagraph“a”,thecaptivecompanyshallsubmitappropriatesupporting
documentation to the commissioner for approval. The captive company shall not offer any
additional lines of insurance until on or after the date on which the commissioner approves
the supporting documentation. The captive company shall inform the commissioner of any
change in rates within thirty calendar days of the captive company’s adoption of a change
in rate.
c. In addition to the information required under paragraphs “a” and “b”, each applicant
captive company shall file with the commissioner evidence of all of the following:
(1) The amount and liquidity of the captive company’s assets relative to the risks to be
assumed by the captive company.
(2) The adequacy of the expertise, experience, and character of the persons who will
manage the captive company.
(3) The overall soundness of the captive company’s plan of operation.
(4) The adequacy of the loss prevention program of the captive company’s parent,
members, or industrial insureds, as applicable.
(5) Any other factors deemed relevant by the commissioner to ascertain if the proposed
captive company will be able to meet the company’s policy obligations.
d. In addition to the information required under paragraph “a”, each applicant that is a
protected cell captive company shall file with the commissioner all of the following:
(1) A business plan that demonstrates, at a level of detail deemed sufficient by the
commissioner, how the applicant will account for the loss and expense experience of each
protected cell, and how the applicant will report the loss and expense experience of each
protected cell to the commissioner.
(2) A statement that acknowledges that all financial records of the protected cell captive
company, including records pertaining to any protected cells, shall be made available upon
5 CAPTIVE COMPANIES, §521J.4
request for inspection or examination by the commissioner or the commissioner’s designated
agent.
(3) A copy of each participant contract.
(4) Evidence that expenses will be allocated to each protected cell in a fair and equitable
manner.
e. In addition to the requirements of paragraph “a”, a captive company formed as a
reciprocal insurer shall file with the commissioner a certified copy of the power of attorney
of the reciprocal insurer’s attorney-in-fact, a certified copy of the reciprocal insurer’s
subscribers’ agreement, a statement under oath of the reciprocal insurer’s attorney-in-fact
that shows the reciprocal insurer’s financial condition, and any other statements or
documents required by the commissioner as established by rule.
f. All documents and information submitted pursuant to this subsection shall be
confidential and shall not be made public without the advance written consent of the
submitting company, with the following exceptions:
(1) The documents and information shall be discoverable by a party in a civil action or
in a contested case to which the captive company that submitted the information is a party
upon a showing by the party seeking to discover the information that the information sought
is relevant to, and necessary for, the furtherance of the action or case; the information sought
is unavailable from other nonconfidential sources; and that a subpoena issued by a judicial
or an administrative officer has been submitted to the commissioner.
(2) The commissioner may, in the commissioner’s discretion, disclose the documents and
information to a public official having jurisdiction over the regulation of insurance in another
state, or to a public official of the federal government, provided that the public official agrees
in writing to maintain the confidentiality of the information, and that the laws of the state in
which the public official serves require that the information remain confidential.
4. a. Each captive company, each individual series of members of a limited liability
company, and each protected cell shall pay a nonrefundable fee to the commissioner of two
hundred dollars for the examination, investigation, and processing of its application for a
certificate of authority. The commissioner shall be authorized to retain legal, financial, and
examination services from outside experts as necessary for review of the application, the
reasonable cost of which may be charged to the applicant.
b. Eachcaptiveinsurancecompany,eachindividualseriesofmembersofalimitedliability
company, and each protected cell shall pay an initial registration fee, and an annual renewal
registration fee, of three hundred dollars.
5. If the commissioner is satisfied with the documents and statements that an applicant
captive company has filed in compliance with this chapter, and the applicable provisions
of Title XIII, subtitle 1, the commissioner may grant a certificate of authority to the captive
company that permits the company to do the business of insurance in this state. The
certificate of authority must be renewed annually and may be renewed if the applicant is in
compliance with this chapter.