Michigan’s captive industry gets off the ground

01/09/2009

Fledgling captive domicile Michigan has licensed two captives since officially enacting its captive law in March 2008.

David Piner, director of captives for the Office of Financial and Insurance Regulation, an agency within the Michigan Department of Energy, Labor & Economic Growth, confirmed the department has licensed two captives in the past year.

Squire Reassurance Company, a special purpose financial captive (SPFC) was licensed on 10 September 2008 and pure captive Southeast Michigan Physicians Insurance was licensed on 19June 2009.

Piner said the level of interest in Michigan as a captive domicile has been moderate to date. “There was an initial burst of activity and interest,” he said. “We haven’t seen any recent application filings. We did receive a total of three applications, but one of them decided not to pursue it.”

One of the main drivers for Michigan setting up its captive law was to accommodate the desire to set up the Squire SPFC, but Piner says he also has a meeting set up to discuss the repatriation of a Michigan-owned captive from the Cayman Islands.

“It seems a lot of the interest we are getting is from established captives coming back to Michigan,” he said.

“The Michigan economy has suffered some sizeable hits, so it’s like the parents are looking to bring the business back here now we have the laws to allow for it and to do something good for the state of Michigan.”

While the state does have provisions for cell captive legislation, Piner says it still needs to do some work on the infrastructure of the captive programme.

“Because the legislation was fast-tracked there were some omissions so there is a need to go back and re-visit some of those. For example, if you look at chapter 46 of the insurance code, there is no mention of captive managers,” he said.

Piner added that the department is in the process of promulgating rules and regulations that would address the licensing of captive managers. “We’re not in a position to do any marketing right now until some of these gaps have been filled,” he said.