The Kansas state government has passed a bill to update and modernise its captive insurance law.
SB 410, which was approved by Kansas governor Jeff Colyer on 12 April 2018, amends and creates law relating to captives by establishing the Captive Insurance Act under the Insurance Code.
The act creates two new types of captives, branch and special purpose, and specifies the regulatory structure for each.
Amongst other legislative changes, it also introduces amendments to the law relating to companies subject to premium taxes, specifying the tax rate for direct and assumed reinsurance premiums, the maximum tax annually, and requiring tax to be calculated annually unless allocated for multi-year policies or contracts.
The bill, which was first introduced to the Senate in February 2018 and was sponsored by the Senate Financial Institutions and Insurance Committee, would also permit the state’s insurance commissioner to adopt rules and regulations establishing standards for pure captives.
Changes will also be made to capital requirements for captives, altering the requirements for maintaining capital and surplus from $100,000 to $250,000 for pure captives and from $200,000 to $500,000 for association captives.
There will be a small additional cost to regulate an increased level of captive activity in the Sunflower State, a cost which will eventually be offset by fees charged to register and maintain the captive.
Captive insurance companies that were not in existence on 1 January 2018 will be required to pay a nonrefundable fee of $10,000, with a yearly renewal fee set at $10,000.
Captives already in existence on 1 January 2018 will pay an annual renewal fee of $110 until 1 January 2028, after which that fee will increase to $10,000.
