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23rd of February 2012

News

New captive domiciles help RRGs says industry

Vicky Beckett 27/01/2012

Many entities within the captive and risk retention group (RRG) community have reacted positively to Florida’s new captive legislation.
 
The Florida captive insurance legislation was unanimously passed by the Senate Budget Subcommittee on General Government Appropriations and the House Economic Affairs Committee on January 12.
 
The new bill would potentially allow for the creation of pure captives, association, industrial insured, special purpose, and reinsurance captives.
 
Sanford Elsass, Chairman of the board of directors for the National Risk Retention Association (NRRA), said: “Florida has historically not been very supportive of captives and RRGs, but this bill is very positive for RRG’s and captives and we are supportive of that legislation. It is definitely a step in the right direction for the state and for the industry.”
 
There had been some speculation that if every state took on captive legislation certain types of RRG may become redundant. Elsass said he takes the opposite view. 
 
He said: “Since unlike most captive structures that are restricted to doing business in their state of domicile, the ability of RRGs to operate in all 50 states, including their state of domicile, will continue to make the flexibility of the RRG structure more appealing to any entity having members in different states.”
 
“The real question,” Elsass said, “is whether those states passing new legislation will closely draft their laws to be in conformity with the federal law that controls RRGs and purchasing groups, or attempt to draft laws that are designed to allow those states to overregulate RRGs, which would be preempted by federal law.  
 
“Obviously, if the states follow the federal law, the less interference RRGs are likely to encounter. 
"It is probably too early to assess the long term effects of such growing legislation." 
 
“In the recent years since new laws have been emerging, the growth of RRGs has consistently tracked with that of captives in general.
 
“One of the primary services that NRRA provides to its members is our legislative, regulatory and judicial advocacy to positively participate in this process,” he added.

Tags: Captive, Domicile, Florida, Groups, Insurance, Legislation, NRRA, Retention, Risk, Sandy Elsass

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