Georgia attorney sets out captive expansion plans

06/11/2009

Maria Sheffield, an attorney with Georgia law firm Burr, Forman, has expressed the hope that the captive jurisdiction can "compete on a level with Vermont or South Carolina" following reform of its captive law.

Sheffield, who recently announced her candidacy for the role of Insurance Commissioner following incumbent John Oxendine's decision to run for governor, has expressed her desire to develop Georgia as a captive domicile.

"We have had a captive law in Georgia that goes back to the 1980s but we've never really embraced it - we've not updated the law or kept it current with what other states are doing with their captive insurance programmes," said Sheffield.

The Georgia Republican primaries are not until July 2010, but Sheffield has set out her stall for the role of Commissioner on the basis that she will be able to create new jobs in the insurance sector.

"Jobs in the insurance industry generally pay about $20,000 more on average than many other corporate jobs," said Sheffield. "I would like to work with the Atlanta Metro and Georgia chambers of commerce to promote the industry."

Sheffield, who worked at Georgia Department of Insurance (DoI) for six years before going into private practice, argues that Georgia has the necessary infrastructure for alternative risk to make the most of its captive market.

As an attorney her practice has involved working with captive insurance companies, risk retention groups, purchasing groups and self-insurance groups and she also claims to have been actively involved in captive associations across the country.

However, Sheffield will face an uphill struggle to expand captive regulatory provisions if she secures the commissioner's job, with insurance division resources stretched in most states.

"I want to tap someone who is an expert in dealing with captives and bring them in - a Bill White," she said. "Of course, with the state currently facing a $4bn deficit, immediately hiring someone for this position might be difficult."

Sheffield said she would also like to have staff "traveling and promoting Georgia" but admits that budgetary constraints would also apply for marketing activities.

"A number people at the Georgia DoI have lost their jobs and, as I understand it, we have fewer people working there today than we did 16 years ago," she said.

With a number of major corporate headquarters in the state, many of whom have captives in other jurisdictions, the former DoI employee says the potential for new captive formations is palpable.

But Georgia will need to thoroughly overhaul its captive legislation to compete with the nearby domiciles of Kentucky and South Carolina.

With 18 captives it is ahead in sheer captive numbers of newcomers like Louisiana and Missouri and undeveloped captive states like Alabama, Arkansas and Tennessee.

However, Georgia's law only currently allows for pure, association and industrial insured captives. At the very least it will need to add some form of sponsored or cell captive structure to attract small and medium-sized businesses as well as large corporates and possibly special purpose vehicles to attract capital market business.

"Initially I think it's going to be difficult because if we immediately change the law when there's a new insurance commissioner I don't think we're going to get an immediate rush of people trying to get captive licenses in Georgia" admits Sheffield.

"It's going to take years for people to appreciate that we're trying to develop the industry here."