Porter Wright Morris & Arthur
Mark Koogler of Porter Wright Morris & Arthur tells CIT about Ohio’s intentions to enter captive insurance and what it still needs to do to get there
Why has Ohio decided to enter the captive business?
In January 2011, I approached the Ohio Insurance Department and state legislators to resurrect the state’s entry into the captive arena. Several years prior, the state legislature was looking into a captive insurance bill, but due to conflicting interests, the bill did not proceed past interested parties meetings.
However, the new Ohio governor John Kasich campaigned on a pledge to retain and attract business, and create jobs in Ohio.
My idea to resurrect the captive bill in Ohio was a result of this pledge. I believed that this proposal would resonate with the Ohio Department of Insurance because the superintendent of insurance is also the Ohio lieutenant governor.
I also believe a captive bill will complement the new business environment in Ohio and support the robust insurance industry in the state. As a result of my discussions, I was asked to prepare the first draft of the captive bill and I updated the Ohio Department of Insurance with respect to other captive laws and governance matters as it considered the pros and cons of a captive law.
When will the captive legislation in Ohio pass?
The Ohio House of Representatives passed the captive bill on 4 June, and the bill is now with the Ohio Senate. At this time, to my knowledge, the Ohio Senate is expected to pass the bill after the Ohio General Assembly summer recess to allow the governor to sign the bill into law later this year.
What types of captives is Ohio intending to authorise?
The Ohio captive bill allows the formation of two types of captives: pure captives, and protected cell captives.
A great number of established US states currently offering captive insurance. What will Ohio offer that other domiciles currently do not?
The Ohio captive bill is not currently designed to offer significant differences from other US states’ captive laws. Ohio is interested in getting its toes into the water and seeing what developments occur as a result of offering an opportunity for Ohio-based companies and companies doing business in Ohio to either establish captives or bring their captive business back to the state.
The Ohio captive bill, particularly the provisions permitting the formation of protected cell captives, is based on the captive laws of several other states that have championed their cause. I believe pure captives will be the primary focus of Ohio businesses after the bill is passed. However, I hope that as the captive industry obtains a foothold in Ohio, interested parties will be supportive of expanding the currently proposed bill.
What has interest in establishing a captive in Ohio been like?
The captive bill has generated a lot of interest in captives for Ohio-based companies and those doing business in Ohio. In addition, a number of insurance professionals are preparing to educate their clients on the benefits of captives in anticipation of the bill’s passage.
In my opinion, the Ohio captive bill may be a catalyst for the redomestication of a number of captives domiciled in foreign jurisdictions by Ohio-based companies, such as hospital systems, manufacturers and insurers.
In addition, a lot of Ohio businesses have heard of captives but do not know much about them. An Ohio captive law will present an opportunity to discuss the formation of captives for these companies. Interest in a captive law predated the current legislation and led several years ago to the establishment of the Ohio Captive Insurance Association. This association, like many of its counterparts in other jurisdictions, is designed to educate existing and prospective captive owners on the benefits and uses of a captive insurer while encouraging the growth of a captive environment in Ohio. CIT
