Florida Becomes Latest Home to Captives
Currently, nearly half the states in the U.S. allow captive insurance entities to operate. Florida is the latest to join the list, with Governor Rick Scott recently signing into law a measure allowing the formation of captive insurance companies in the state. The measure, H.B. 1101, allows the formation of single-parent captives, special-purpose captives, industrial insurance captives and captive reinsurance companies. The new law takes effect this coming July.
Captive reinsurance companies are required to have a minimum of the greater of $300 million or 10% of reserves in capital and surplus. Captives licensed in Florida will be required to hold at least one annual board meeting in the state and appoint a registered resident agent to act on their behalf. Captives and captive reinsurance companies must pay a $1,500 application fee and a $1,000 annual renewal fee.
Captive insurance companies represent a significant component of the alternative risk market. And because of their growth, strength, and utility over the past decade, captive insurance companies are no longer considered by many insurance professionals to be a truly “alternative” insurance market. The use of a captive is now seen as an integral part of general business risk management.
Captives provide insureds with reduced cost of coverage, direct access to reinsurers, provision of broader or otherwise unavailable coverage, mitigation of the market swings of commercial insurance, improved cash flow, risk spreading, improved risk retention capability, and integration with an overall risk management plan.
What’s more, while captives provide insurance primarily in the areas of general liability and workers compensation, the structure can be used to address what once were considered more unusual risks, such as kidnapping and ransom, terrorism, etc.
At Caitlin-Morgan, we provide a variety of captive solutions. Our expert consultants will assess your clients’ needs and customize a captive solution that is perfect for them. Give us a call at: 877.226.1027.
Posted in: Captive Solutions