Bill Text: IA SF549 | 2023-2024 | 90th General Assembly | Enrolled

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Bill Title: A bill for an act relating to captive insurance companies, and including applicability provisions. (Formerly SF 509, SF 424.) Effective date: 07/01/2023, 01/01/2025. Applicability date: 01/01/2025.

Spectrum: Committee Bill

Status: (Passed) 2023-06-01 - Signed by Governor. S.J. 1087. [SF549 Detail]

Download: Iowa-2023-SF549-Enrolled.html

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Senate File 549 - Enrolled
Senate File 549
AN ACT
RELATING TO CAPTIVE INSURANCE COMPANIES, AND INCLUDING
APPLICABILITY PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 432.1, subsections 2 and 4, Code 2023,
are amended to read as follows:
2. The “applicable percent” for purposes of subsection 1 of
this section and section 432.2 is the following:
a. For calendar years beginning before the 2003 calendar
year, two percent.
b. For the 2003 calendar year, one and three-fourths
percent.
c. For the 2004 calendar year, one and one-half percent.
d. For the 2005 calendar year, one and one-fourth percent.
e. For the 2006 and subsequent calendar years year through
the 2023 calendar year , one percent.
f. For the 2024 calendar year, nine hundred seventy-five
thousandths of one percent.
g. For the 2025 calendar year, ninety-five hundredths of one
percent.
h. For the 2026 calendar year, nine hundred twenty-five
thousandths of one percent.
i. For the 2027 and subsequent calendar years, nine-tenths
of one percent.
4. The “applicable percent” for purposes of subsection 3 is
the following:

Senate File 549, p. 2
a. For calendar years beginning before the 2004 calendar
year, two percent.
b. For the 2004 calendar year, one and three-fourths
percent.
c. For the 2005 calendar year, one and one-half percent.
d. For the 2006 calendar year, one and one-fourth percent.
e. For the 2007 and subsequent calendar years year through
the 2023 calendar year , one percent.
f. For the 2024 calendar year, nine hundred seventy-five
thousandths of one percent.
g. For the 2025 calendar year, ninety-five hundredths of one
percent.
h. For the 2026 calendar year, nine hundred twenty-five
thousandths of one percent.
i. For the 2027 and subsequent calendar years, nine-tenths
of one percent.
Sec. 2. NEW SECTION . 432.1A Tax on premiums —— captive
insurance companies.
1. a. Each captive company under chapter 521J shall pay
on or before March 1 of each year a tax on the direct premiums
collected or contracted for on policies or contracts of
insurance written by the captive company during the immediately
preceding calendar year, after deducting from the direct
premiums the amounts paid to policyholders as return premiums,
including dividends on unabsorbed premiums or premium deposits
returned or credited to policyholders.
b. The tax due under paragraph “a” on direct premiums
collected or contracted for by a captive company shall be
calculated as follows:
(1) Seven-twentieths of one percent on the first twenty
million dollars of direct premiums.
(2) One-quarter of one percent on each dollar of direct
premiums after the first twenty million dollars collected under
subparagraph (1).
2. a. Each captive company under chapter 521J shall pay
on or before March 1 of each year a tax on assumed reinsurance
premiums. A reinsurance tax shall not apply to premiums for
risks or portions of risks that are subject to taxation on a
direct basis pursuant to subsection 1.

Senate File 549, p. 3
b. A reinsurance premium tax shall not be payable by a
captive company in connection with the receipt by the captive
company of assets in exchange for the assumption of loss
reserves and other liabilities of another insurer under common
ownership and control if the transaction is part of a plan
to discontinue the operations of the other insurer, and if
the intent of the parties to the transaction is to renew or
maintain the other insurer’s business with the captive company.
c. The amount of reinsurance tax due from a captive company
under paragraph “a” shall be calculated as follows:
(1) Two-tenths of one percent on the first twenty million
dollars of assumed reinsurance premiums.
(2) One-eighth of one percent on the twenty million
dollars of assumed reinsurance premiums collected after the
first twenty million dollars of assumed reinsurance premiums
collected under subparagraph (1).
(3) Five percent on each dollar of assumed reinsurance
premiums collected after the twenty million dollars collected
under subparagraph (1) and the twenty million dollars collected
under subparagraph (2).
3. a. (1) Except as provided in subparagraphs (2) and
(3), if the aggregate taxes as calculated under subsections
1 and 2 that are payable by a captive company are less than
five thousand dollars for any one tax year, the captive company
shall pay five thousand dollars in tax for that tax year.
(2) If a captive company is subject to the minimum tax under
subparagraph (1) in the calendar year in which the company is
first granted a certificate of authority under section 521J.2,
the tax shall be prorated as follows:
(a) If a certificate of authority is first granted in the
first quarter of the calendar year, the tax shall be five
thousand dollars.
(b) If a certificate of authority is first granted in the
second quarter of the calendar year, the tax shall be three
thousand seven hundred fifty dollars.
(c) If a certificate of authority is first granted in
the third quarter of the calendar year, the tax shall be two
thousand five hundred dollars.
(d) If a certificate of authority is first granted in the

Senate File 549, p. 4
fourth quarter of the calendar year, the tax shall be one
thousand five hundred dollars.
(3) If a captive company that is subject to the minimum tax
under subparagraph (1) surrenders the company’s certificate of
authority in the year that the captive company is subject to
the minimum tax, the tax shall be prorated on a quarterly basis
as follows:
(a) If the certificate of authority is surrendered in
the first quarter of the calendar year, the tax shall be one
thousand dollars.
(b) If the certificate of authority is surrendered in the
second quarter of the calendar year, the tax shall be two
thousand five hundred dollars.
(c) If the certificate of authority is surrendered in the
third quarter of the calendar year, the tax shall be three
thousand seven hundred fifty dollars.
(d) If the certificate of authority is surrendered in the
fourth quarter of the calendar year, the tax shall be five
thousand dollars.
b. Each protected cell in a protected cell captive company
shall be considered separately in determining the aggregate
tax to be paid by the protected cell captive company. If the
protected cell captive company insures any risks in addition
to the protected cells, the determination of the aggregate tax
shall, in addition to the protected cells, also include the
premium on all insured risks.
c. Each series of members of a limited liability company
formed as a special purpose captive company shall be considered
separately under this section, except that the minimum tax as
described in paragraph “a” shall be considered in the aggregate.
4. A captive company, other than a protected cell captive
company, shall not be required to pay aggregate taxes under
this section that exceed one hundred thousand dollars in any
one tax year.
5. Two or more captive companies under common ownership
and control shall be taxed as a single captive company. For
the purposes of this subsection, “common ownership and control”
means either of the following:
a. In the case of a stock corporation, the direct or

Senate File 549, p. 5
indirect ownership of eighty percent or more of the outstanding
voting stock of two or more corporations by the same
shareholder or shareholders.
b. In the case of a mutual insurer, the direct or indirect
ownership of eighty percent or more of the surplus, and the
voting power of two or more insurers, by the same member or
members.
6. Only the branch business of a branch captive company
shall be subject to taxation under this section.
7. The tax provided for in this section shall be calculated
on an annual basis notwithstanding a policy or a contract
of insurance, or a contract of reinsurance, that is issued
on a multiyear basis. In the case of a multiyear policy or
a multiyear contract, the premium shall be prorated for the
purpose of calculating the appropriate tax.
Sec. 3. Section 507C.3, Code 2023, is amended by adding the
following new subsection:
NEW SUBSECTION . 8. Captive companies under chapter 521J.
Sec. 4. NEW SECTION . 521J.1 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Affiliated company” means a company that is in the
same corporate system as a parent, an industrial insured, or
a member based on common ownership, control, operation, or
management.
2. “Alien captive company” means a captive company
formed under the laws of an alien jurisdiction that imposes
statutory or regulatory standards in a form acceptable to the
commissioner on companies transacting the business of insurance
in such jurisdiction.
3. “Branch business” means any insurance business transacted
by a branch captive company in this state.
4. “Branch captive company” means an alien captive company
authorized by the commissioner by rule to transact the business
of insurance in this state through a business entity with its
principal place of business in this state.
5. “Branch operations” means any business operations of a
branch captive company.
6. “Business entity” means a corporation, a limited

Senate File 549, p. 6
liability company, or other legal entity formed by an
organizational document. “Business entity” does not include a
sole proprietorship.
7. “Captive company” means any pure captive company,
protected cell captive company, special purpose captive
company, or industrial insured captive company formed or
authorized under this chapter.
8. “Captive reinsurance company” means a captive insurance
company in this state, as authorized by the commissioner by
rule, that reinsures the risk ceded by any other insurer.
9. “Captive risk retention group” means a captive insurance
risk retention group formed under this chapter and that is
subject to chapter 515E.
10. “Cash equivalent” means any short-term, highly liquid
investment with an original maturity of three months or less
that is readily convertible to known amounts of cash.
11. “Commissioner” means the commissioner of insurance.
12. “Controlled unaffiliated business entity” means a
business entity or sole proprietorship that meets all of the
following requirements:
a. The business entity or sole proprietorship is not in a
parent’s corporate system that consists of the parent and any
affiliated companies.
b. The business entity or sole proprietorship has an
existing, controlling contractual relationship with the parent
or an affiliated company.
c. The business entity’s or sole proprietorship’s risks
are managed by a pure captive company or an industrial insured
captive company, as applicable.
13. “Excess workers’ compensation insurance” means, for
an employer that has insured or self-insured the employer’s
workers’ compensation risks in accordance with applicable state
or federal law, insurance in excess of a specified per-incident
or aggregate limit as established by the commissioner by rule.
14. “Industrial insured” means an insured that meets all of
the following requirements:
a. The insured procures the insurance of any risk by use
of the services of a full-time employee acting as an insurance
manager or buyer.

Senate File 549, p. 7
b. The insured’s aggregate annual premiums for insurance on
all risks are at least twenty-five thousand dollars.
c. The insured employs a minimum of twenty-five full-time
employees.
15. “Industrial insured captive company” means an insurance
company that insures the risks of industrial insureds,
comprised of the industrial insured group and the industrial
insured group’s affiliated companies and the risks of the
controlled unaffiliated business of an industrial insured or
its affiliates.
16. “Industrial insured group” means a group of industrial
insureds that meets either of the following requirements:
a. The group collectively owns, controls, or holds with
the power to vote all of the outstanding voting securities
of an industrial insured captive company incorporated as a
stock insurer, or has complete voting control over any of the
following:
(1) An industrial insured captive company incorporated as
a mutual insurer.
(2) An industrial insured captive company formed as a
reciprocal insurer.
(3) An industrial insured captive company formed as a
limited liability company.
b. The group is a captive risk retention group.
17. “Mutual insurer” means a business entity that does
not have capital stock, and that has a governing body elected
by the insurer’s policyholders. “Mutual insurer” includes a
nonprofit corporation with members.
18. “Organizational document” means articles of
incorporation, articles of organization, a subscribers’
agreement, a charter, or any other document that can legally
establish a business entity in this state.
19. “Parent” means a sole proprietorship, a business entity,
or an individual that directly or indirectly owns, controls,
or holds with power to vote more than fifty percent of the
outstanding voting securities or membership interests of a
captive company.
20. “Participant” means a sole proprietorship or a business
entity and any affiliates that are insured by a protected cell

Senate File 549, p. 8
captive company and whose losses are limited by a participant
contract to such participant’s pro rata share of the assets
of one or more protected cells identified in the participant
contract.
21. “Participant contract” means a contract by which
a protected cell captive company insures the risks of a
participant and limits the losses of each participant in the
contract to the participant’s pro rata share of the assets of
one or more protected cells as identified in the contract.
22. “Protected cell” means a separate account established
by a protected cell captive company formed or authorized
under this chapter in which an identified pool of assets and
liabilities are segregated and insulated, as provided in
section 521J.17, from the remainder of the protected cell
captive company’s assets and liabilities in accordance with
the terms of one or more participant contracts to fund the
liability of the protected cell captive company with respect to
the participants.
23. “Protected cell assets” means all assets, contract
rights, and general intangibles identified and attributable to
a specific protected cell of a protected cell captive company.
24. “Protected cell captive company” means a captive company
that meets all of the following requirements:
a. The minimum legally required capital and surplus of the
company is provided by one or more sponsors.
b. The company is formed or authorized under this chapter.
c. The company insures the risks of separate participants
through participant contracts.
d. The company funds the company’s liability to each
participant through one or more protected cells, and segregates
the assets of each protected cell from the assets of other
protected cells, and from the assets of the protected cell
captive company’s general account.
e. The company is incorporated or formed as a limited
liability company.
25. “Protected cell liabilities” means all liabilities
and other obligations identified with and attributable to a
specific protected cell of a protected cell captive company.
26. “Public records” means the same as defined in section

Senate File 549, p. 9
22.1.
27. “Pure captive company” means an insurance company that
insures the risks of the company’s parent and the parent’s
affiliated companies, and the risks of controlled unaffiliated
business entities.
28. “Qualified actuary” means an individual who meets all
of the following requirements:
a. The individual is a member of the American academy of
actuaries.
b. The individual is qualified to provide the certifications
as described in the United States qualifications standards
promulgated by the American academy of actuaries pursuant
to the code of professional conduct adopted by the American
academy of actuaries, the society of actuaries, the American
society of pension professionals and actuaries, the casualty
actuarial society, and the conference of consulting actuaries.
29. “Series of members” means a group or collection of
members of a limited liability company who share interests
and who have separate rights, powers, or duties with respect
to property, obligations, or profits and losses associated
with property or obligations, and who are specified in the
organizational document or operating agreement of the limited
liability company, or that are specified by one or more
members or managers of the limited liability company or other
persons as provided in the organizational document or operating
agreement.
30. “Sole proprietorship” means an individual who does
business in a noncorporate form.
31. “Special purpose captive company” means a captive
company that is formed or authorized under this chapter that
does not meet the definition of any other type of captive
company as defined in this section, or that is formed by, on
behalf of, or for the benefit of a political subdivision of
this state.
32. “Sponsor” means any person that meets the requirements
of sections 521J.17 and 521J.18, and that is approved by the
commissioner to do all of the following:
a. Provide all or part of the capital and surplus required
of a protected cell captive company by law.

Senate File 549, p. 10
b. Organize and operate a protected cell captive company.
Sec. 5. NEW SECTION . 521J.2 Certificate of authority.
1. If permitted by its organizational document, a captive
company may apply to the commissioner for a certificate of
authority to provide property insurance, casualty insurance,
life insurance, disability income insurance, surety insurance,
marine insurance, health insurance, or a group health plan,
with the following exceptions:
a. A pure captive company shall only insure risks of the
company’s parent and affiliated companies, and of the company’s
controlled unaffiliated business entities.
b. An industrial insured captive company shall only insure
risks of the industrial insured company, comprised of the
industrial insured group and the industrial insured group’s
affiliated companies, and the controlled unaffiliated business
of an industrial insured group or the industrial insured
group’s affiliated companies.
c. A special purpose captive company shall not provide
insurance or reinsurance for risks unless approved by the
commissioner.
d. A captive company or a branch captive company shall not
do any of the following:
(1) Provide personal lines of insurance, including but not
limited to motor vehicle insurance, homeowner’s insurance,
or any component of motor vehicle insurance or homeowner’s
insurance on a direct basis.
(2) Accept or cede reinsurance except as permitted by the
commissioner by rule.
(3) Provide health insurance coverage or a group health
plan unless the captive company or the branch captive company
provides the health insurance coverage or the group health plan
only for the parent company and the parent company’s affiliated
companies.
(4) Write workers’ compensation insurance on a direct
basis.
(5) Write life insurance on a direct basis.
e. A protected cell captive company shall not insure any
risks other than those of the protected cell captive company’s
participants.

Senate File 549, p. 11
2. A captive company shall not write any insurance business
unless the captive company complies with all of the following:
a. The captive company obtains a certificate of authority
from the commissioner prior to writing any insurance business.
b. The captive company’s board of directors, board of
managing members, or a reciprocal insurer’s subscribers’
advisory committee, holds at least one annual meeting in the
state.
c. The captive company maintains its principal place of
business in the state.
d. The captive company designates a registered agent
to accept service of process, files the name and contact
information and any subsequent changes regarding the
registered agent with the commissioner, and agrees that if the
registered agent cannot be found with reasonable diligence, the
commissioner may act as an agent of the captive company with
respect to any action or proceeding and may be served pursuant
to section 505.30.
3. a. Prior to receiving a certificate of authority, a
captive company shall do all of the following:
(1) File with the commissioner all of the following:
(a) A certified copy of the business entity’s
organizational document.
(b) A statement under oath of an officer of the business
entity showing the business entity’s financial condition.
(c) Any other statement or document required by the
commissioner as established by rule.
(2) Submit a description of coverages, deductibles,
coverage limits, rates, and any additional information
requested by the commissioner to the commissioner for approval.
(3) Provide a statement to the commissioner that describes
all of the following:
(a) The character, reputation, and financial standing of
the organizers of the business entity.
(b) The character, reputation, financial responsibility,
insurance experience, and business qualifications of all
officers, directors, and managing members of the business
entity.
(4) Provide any other information required by the

Senate File 549, p. 12
commissioner as established by rule.
b. If there is a subsequent material change in the
information provided to the commissioner under paragraph
“a” , the captive company shall submit appropriate supporting
documentation to the commissioner for approval. The captive
company shall not offer any additional lines of insurance until
on or after the date on which the commissioner approves the
supporting documentation. The captive company shall inform the
commissioner of any change in rates within thirty calendar days
of the captive company’s adoption of a change in rate.
c. In addition to the information required under paragraphs
“a” and “b” , each applicant captive company shall file with the
commissioner evidence of all of the following:
(1) The amount and liquidity of the captive company’s assets
relative to the risks to be assumed by the captive company.
(2) The adequacy of the expertise, experience, and
character of the persons who will manage the captive company.
(3) The overall soundness of the captive company’s plan of
operation.
(4) The adequacy of the loss prevention program of the
captive company’s parent, members, or industrial insureds, as
applicable.
(5) Any other factors deemed relevant by the commissioner to
ascertain if the proposed captive company will be able to meet
the company’s policy obligations.
d. In addition to the information required under paragraph
“a” , each applicant that is a protected cell captive company
shall file with the commissioner all of the following:
(1) A business plan that demonstrates, at a level of detail
deemed sufficient by the commissioner, how the applicant will
account for the loss and expense experience of each protected
cell, and how the applicant will report the loss and expense
experience of each protected cell to the commissioner.
(2) A statement that acknowledges that all financial
records of the protected cell captive company, including
records pertaining to any protected cells, shall be made
available upon request for inspection or examination by the
commissioner or the commissioner’s designated agent.
(3) A copy of each participant contract.

Senate File 549, p. 13
(4) Evidence that expenses will be allocated to each
protected cell in a fair and equitable manner.
e. In addition to the requirements of paragraph “a” , a
captive company formed as a reciprocal insurer shall file with
the commissioner a certified copy of the power of attorney of
the reciprocal insurer’s attorney-in-fact, a certified copy of
the reciprocal insurer’s subscribers’ agreement, a statement
under oath of the reciprocal insurer’s attorney-in-fact that
shows the reciprocal insurer’s financial condition, and any
other statements or documents required by the commissioner as
established by rule.
f. All documents and information submitted pursuant to this
subsection shall be confidential and shall not be made public
without the advance written consent of the submitting company,
with the following exceptions:
(1) The documents and information shall be discoverable
by a party in a civil action or in a contested case to which
the captive company that submitted the information is a party
upon a showing by the party seeking to discover the information
that the information sought is relevant to, and necessary for,
the furtherance of the action or case; the information sought
is unavailable from other nonconfidential sources; and that a
subpoena issued by a judicial or an administrative officer has
been submitted to the commissioner.
(2) The commissioner may, in the commissioner’s discretion,
disclose the documents and information to a public official
having jurisdiction over the regulation of insurance in another
state, or to a public official of the federal government,
provided that the public official agrees in writing to maintain
the confidentiality of the information, and that the laws of
the state in which the public official serves require that the
information remain confidential.
4. a. Each captive company, each individual series of
members of a limited liability company, and each protected
cell shall pay a nonrefundable fee to the commissioner of
two hundred dollars for the examination, investigation, and
processing of its application for a certificate of authority.
The commissioner shall be authorized to retain legal,
financial, and examination services from outside experts as

Senate File 549, p. 14
necessary for review of the application, the reasonable cost of
which may be charged to the applicant.
b. Each captive insurance company, each individual series of
members of a limited liability company, and each protected cell
shall pay an initial registration fee, and an annual renewal
registration fee, of three hundred dollars.
5. If the commissioner is satisfied with the documents
and statements that an applicant captive company has filed in
compliance with this chapter, and the applicable provisions
of Title XIII, subtitle 1, the commissioner may grant a
certificate of authority to the captive company that permits
the company to do the business of insurance in this state. The
certificate of authority must be renewed annually and may be
renewed if the applicant is in compliance with this chapter.
Sec. 6. NEW SECTION . 521J.3 Captive companies —— names.
A captive company shall not adopt a name that is the same,
deceptively similar, or likely to be confused with or mistaken
for any other existing business name already registered in this
state.
Sec. 7. NEW SECTION . 521J.4 Minimum capital and surplus
requirements.
1. The commissioner shall not issue a certificate of
authority to a captive company unless the captive company
possesses and maintains unimpaired paid-in capital and surplus
that meets the following requirements:
a. Is not less than two hundred fifty thousand dollars for
a pure captive company.
b. Is not less than five hundred thousand dollars for an
industrial insured captive company, including a captive risk
retention group.
c. Is an amount as determined by the commissioner after
giving due consideration to the captive company’s business
plan, feasibility study, and pro forma documents, including,
for a special purpose captive company, the nature of the risks
to be insured.
d. Is not less than five hundred thousand dollars for a
protected cell captive company. If, however, the protected
cell captive company does not assume any risks, the risks
insured by the protected cells are homogenous, and there are

Senate File 549, p. 15
not more than ten cells, the commissioner may reduce the amount
to an amount not less than two hundred fifty thousand dollars.
e. Is not less than the applicable amount of capital and
surplus required in paragraphs “a” through “d” , as determined
based upon the organizational form of the alien captive
company, for a branch captive company. The minimum capital
and surplus shall be jointly held by the commissioner and the
branch captive company in a bank of the federal reserve system
as approved by the commissioner by rule.
f. Is not less than fifty percent of the capital required
for that type of captive company for a captive reinsurance
company.
2. The commissioner may require additional capital and
surplus for a captive company under subsection 1 based upon the
type, volume, and nature of the insurance business transacted
by the captive company.
3. The capital and surplus required under subsection 1 and
subsection 2, if applicable, shall be in the form of cash,
cash equivalent, or an irrevocable letter of credit on a form
as prescribed by the commissioner by rule and as issued by
a bank chartered by the state of Iowa, a member bank of the
federal reserve system, or a bank chartered by another state if
approved by the commissioner.
Sec. 8. NEW SECTION . 521J.5 Captive companies —— formation.
1. A captive company must be formed or organized as a
business entity as provided under this chapter.
2. An industrial insured captive company shall be formed or
organized in one of the following ways:
a. Incorporated as a stock insurer with the stock insurer’s
capital divided into shares and held by the stockholders.
b. Incorporated as a mutual insurer without capital stock.
c. Organized as a reciprocal insurer as permitted by the
commissioner by rule.
d. Organized as a manager-managed limited liability company.
3. A captive company incorporated or organized in this state
shall be incorporated or organized by at least one incorporator
or organizer who is a resident of the state.
4. The capital stock of a captive company incorporated as a
stock insurer may be authorized with no par value.

Senate File 549, p. 16
5. a. At least one member of the board of directors of a
captive company shall be a resident of this state. A captive
risk retention group shall have a minimum of five directors.
b. A captive company formed as a limited liability company
shall have at least one manager who is a resident of this
state. A captive risk retention group formed as a limited
liability company shall not be required to have a manager who
is a resident of this state; however, the limited liability
company shall maintain a board of directors of which at least
one board member shall be a resident of this state.
c. A reciprocal insurer shall have at least one member
of the subscribers’ advisory committee who is a resident
of this state. A captive risk retention group formed as a
reciprocal insurer shall have a minimum of five members of
the subscribers’ advisory committee who are residents of this
state.
6. a. A captive company formed as a corporation or another
business entity shall have the privileges of, and shall be
subject to, state laws governing corporations or other business
entities, and the applicable provisions of this chapter.
b. In the event of a conflict between a state law governing
corporations or other business entities and this chapter, this
chapter shall take precedence.
7. a. A subscribers’ agreement, or other organizational
document of a captive company formed as a reciprocal insurer,
shall authorize a quorum of a subscribers’ advisory committee
to consist of at least one-third of the number of members on
the advisory committee.
b. In addition to this chapter, a captive risk retention
group shall be subject to chapter 515E. In the event of a
conflict between chapter 515E and this chapter, this chapter
shall take precedence.
8. Except as provided in section 521J.11, applicable
provisions of chapter 508B shall apply to a merger,
consolidation, conversion, mutualization, or voluntary
dissolution by a captive company.
9. a. An alien captive company must apply to the secretary
of state for a certificate of authority for the alien captive
company’s branch captive company to transact business in this

Senate File 549, p. 17
state.
b. A branch captive company established under this chapter
to write, in this state, only insurance or reinsurance of the
employee benefit business of the branch captive company’s
parent and affiliated companies shall be subject to the federal
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§1001, et seq.
c. A branch captive company shall not conduct any insurance
business in this state unless the branch captive company
maintains the principal place of business for the company’s
branch operations in this state.
Sec. 9. NEW SECTION . 521J.6 Dividends.
1. A captive company shall not pay a dividend out of, or
other distribution with respect to, the minimum capital or
surplus required under section 521J.4 without the prior written
approval of the commissioner.
2. The commissioner’s approval of an ongoing plan for
the payment of dividends or other distributions shall be
conditioned upon retention, at the time of each payment, of
capital and surplus in excess of the amounts specified by,
or determined in accordance with, a formula approved by the
commissioner by rule.
Sec. 10. NEW SECTION . 521J.7 Reports.
1. A captive company shall be required to file an annual
report with the commissioner that meets the following
requirements:
a. Except as provided in paragraph “b” , on or before April
1 of each year, each captive company and each captive risk
retention group shall submit to the commissioner a report on
the company’s financial condition as of December 31 of the
preceding year, as verified by oath of two of the company’s or
group’s executive officers. The report shall be submitted in a
form and manner as prescribed by the commissioner by rule.
b. A captive company, other than a captive risk retention
group, may apply to the commissioner to file the report
required under paragraph “a” on a fiscal year-end basis. If
the commissioner approves reporting on a fiscal year-end basis,
the captive company shall comply with all of the following
requirements:

Senate File 549, p. 18
(1) Subject to subparagraph (2), the captive’s company
report shall be filed no later than ninety calendar days after
the close of the company’s fiscal year.
(2) Prior to April 1, the captive company shall file a
report covering the immediately preceding calendar year with
the commissioner to provide sufficient information to support
the captive company’s premium tax return under section 432.1A.
c. Each captive company shall use generally accepted
accounting principles, unless the commissioner requires,
approves, or accepts the use of statutory accounting principles
or any other comprehensive accounting principles for the
company’s report. The commissioner may require, approve, or
accept any appropriate or necessary modifications of statutory
accounting principles or other comprehensive accounting
principles based on the type of insurance and kinds of insurers
that are included in a captive company’s report. The report
may include letters of credit that are established, issued, or
confirmed by any of the following:
(1) A bank chartered in this state.
(2) A member of the federal reserve system.
(3) A bank chartered by another state, if approved by the
commissioner.
d. An actuarial opinion from a qualified actuary regarding
the adequacy of the company’s required reserves to make full
provision for the company’s liabilities, insured or reinsured,
shall be included in the report. The qualified actuary
shall submit a memorandum to the commissioner that details
the qualified actuary’s support for the actuarial opinion.
The commissioner may require that additional information be
submitted to supplement the actuarial opinion.
e. All captive companies shall be audited annually by an
independent certified public accountant and shall annually file
the audited financial report with the commissioner on or before
June 1, as a supplement to the annual report required under
section 521J.7, subsection 1.
f. A captive company may request an extension to file a
report required by this section. A written request for an
extension must be received by the commissioner not less than
ten days before the filing due date, and the request must

Senate File 549, p. 19
contain sufficient details to enable the commissioner to make
an informed decision regarding the request. The commissioner
may grant a thirty-day extension upon a determination by the
commissioner that a captive company has good cause for the
extension.
g. A captive company may be required to file a report on
the captive company’s financial condition on a semiannual,
quarterly, monthly, or other basis as determined by the
commissioner.
h. Captive companies shall file all reports required
under this section in the form and manner prescribed by the
commissioner by rule.
2. All reports filed pursuant to this section shall be
considered confidential and shall not be a public record.
Sec. 11. NEW SECTION . 521J.8 Examinations.
1. a. Except for captive risk retention groups as provided
under paragraph “c” , the commissioner may examine each captive
company’s compliance with this chapter, and may examine the
affairs, transactions, accounts, records, and assets of each
captive company as the commissioner deems necessary.
b. The commissioner shall upon the completion of an
examination under paragraph “a” , or at such regular intervals
prior to completion of an examination as the commissioner
determines, prepare an account of the costs incurred in
performing and preparing the report of the examination which
shall be charged to and paid by the captive company examined.
If the captive company fails or refuses to pay the charges, the
charges may be recovered in an action brought in the name of
the state.
c. The commissioner shall examine the affairs, transactions,
accounts, records, and assets of each captive risk retention
group as the commissioner deems necessary, but no less
frequently than every three calendar years. A report produced
pursuant to the examination of a captive risk retention group
under this section shall be a public record.
2. Except as provided in subsection 3, this section shall
apply to all business written by a captive company.
3. An examination of a branch captive company shall be
conducted only on the branch business and branch operations if

Senate File 549, p. 20
all of the following requirements are met:
a. The branch captive company annually provides the
commissioner a certificate of compliance, or equivalent, that
was issued by or filed with the licensing authority of the
jurisdiction in which the branch captive company is formed.
b. The branch captive company demonstrates to the
satisfaction of the commissioner that the company is operating
in sound financial condition and in compliance with all
applicable law and regulations of the jurisdiction in which the
branch captive company is formed.
4. As a condition of authorization of a branch captive
company, the alien captive company shall grant authority to
the commissioner for examination of the affairs of the alien
captive company in the jurisdiction in which the alien captive
company is formed.
5. The applicable provisions of chapter 507 shall apply to
examinations conducted under this chapter.
Sec. 12. NEW SECTION . 521J.9 Suspension or revocation.
1. A captive company’s certificate of authority to conduct
the business of insurance in this state may be suspended or
revoked by the commissioner for any of the following reasons:
a. Insolvency or impairment of capital or surplus.
b. Failure to meet and maintain the minimum capital and
surplus requirements under section 521J.4.
c. Refusal or failure to submit an annual report pursuant
to section 521J.7, or to submit any other report or statement
required by law or by lawful order of the commissioner.
d. Failure to comply with the captive company’s own charter,
bylaws, or other organizational document.
e. Failure to submit to an examination as required under
section 521J.8.
f. Use of methods that render the captive company’s
operation detrimental, or the company’s condition unsound, with
respect to the company’s policyholders or to the public.
g. Failure to pay tax on premiums as required under section
432.1A.
h. Failure to submit or pay any fee under this chapter.
i. Failure to submit to or pay the cost of any examination
under this chapter.

Senate File 549, p. 21
j. Failure to comply with the laws of this state.
2. a. If the commissioner finds upon examination, hearing,
or other review that a captive company has committed an
act specified in subsection 1, the commissioner may suspend
or revoke the company’s certificate of authority if the
commissioner deems it in the best interest of the public or of
the policyholders of the captive company.
b. If the commissioner does not revoke a captive company’s
certificate of authority during a suspension imposed by the
commissioner under paragraph “a” , the company’s certificate of
authority may be reinstated if the commissioner finds that the
cause of the suspension has been rectified.
Sec. 13. NEW SECTION . 521J.10 Excess workers’ compensation
insurance.
1. A captive company may provide excess workers’
compensation insurance to the captive company’s parent and
affiliated companies unless the laws of the state that has
jurisdiction over the transaction prohibits the captive company
from providing excess workers’ compensation insurance.
2. A captive company may reinsure workers’ compensation of
a qualified self-insured plan of the captive company’s parent
and affiliated companies.
Sec. 14. NEW SECTION . 521J.11 Captive mergers.
1. A merger between captive stock insurers, or a merger
between captive mutual insurers, shall meet the requirements
of chapter 521 and section 521J.5, as applicable. The
commissioner may, at the commissioner’s discretion, provide
notice to the public of a proposed merger prior to the
commissioner’s approval or disapproval of a merger.
2. An industrial insured group formed as a stock insurer
or as a mutual insurer may be converted to or merged with a
reciprocal insurer under this section.
3. A plan for conversion or merger shall meet all of the
following requirements:
a. (1) The plan shall be fair and equitable to the
shareholders in the case of a stock insurer, or to the
policyholders in the case of a mutual insurer.
(2) The plan shall provide for the purchase of the shares
of any nonconsenting shareholder of a stock insurer, or of the

Senate File 549, p. 22
policyholder interests of any nonconsenting policyholder of a
mutual insurer.
b. A plan for conversion to a reciprocal insurer must be
approved by the commissioner. The commissioner shall not
approve a plan unless the plan meets all of the following
requirements:
(1) The plan provides for a hearing upon notice to the
insurer, directors, officers, and stockholders or policyholders
who have the right to appear at the hearing, unless the
commissioner waives or modifies the requirements for the
hearing.
(2) (a) In the case of a stock insurer, the plan provides
for the conversion of the existing stockholder interests into
subscriber interests in the resulting reciprocal insurer
proportionate to the existing stockholder interests, and is
approved by a majority of the shareholders who are entitled to
vote, and who are represented at a regular or special meeting
at which a quorum is present either in person or by proxy.
(b) In the case of a mutual insurer, the plan provides
for the conversion of the existing policyholder interests
into subscriber interests in the resulting reciprocal insurer
proportionate to the existing policyholder interests, and
is approved by a majority of the voting interests of the
policyholders who are represented at a regular or special
meeting at which a quorum is present either in person or by
proxy.
(3) The plan meets the applicable requirements of section
521J.5.
c. If the commissioner approves a plan of conversion, the
certificate of authority for the converting insurer shall be
amended to state that the converting insurer is a reciprocal
insurer. The conversion shall be effective and the corporate
existence of the converting entity shall cease to exist on the
date on which the amended certificate of authority is issued to
the attorney-in-fact for the reciprocal insurer. The resulting
reciprocal insurer shall file the articles of merger or the
articles of conversion with the secretary of state.
Sec. 15. NEW SECTION . 521J.12 Captive insurance ——
regulatory and supervision fund —— appropriation.

Senate File 549, p. 23
1. A captive insurance regulatory and supervision fund is
established in the state treasury under the control of the
division. The fund shall consist of all moneys deposited
in the fund pursuant to this section and any other moneys
appropriated to or deposited in the fund.
2. All fees, assessments, fines, and administrative
penalties collected under this chapter shall be deposited in
the fund.
3. Moneys in the fund are appropriated to the division to
administer this chapter, including the maintenance of staff,
associated expenses, and necessary contractual services, and
for the reimbursement of reasonable expenses incurred by the
division to promote captive insurance in this state.
4. a. Notwithstanding section 8.33, moneys in the fund
that remain unencumbered or unobligated at the close of a
fiscal year shall not revert but shall remain available for
expenditure for the purposes designated.
b. At the close of each fiscal year, if unencumbered
or unobligated moneys remaining in the captive insurance
regulatory and supervision fund exceed five hundred thousand
dollars, moneys in excess of that amount shall be transferred
from the captive insurance regulatory and supervision fund to
the general fund of the state.
5. The division may temporarily use moneys from the general
fund of the state to pay expenses in excess of moneys available
in the captive insurance regulatory and supervision fund for
the purposes designated in this section if those additional
expenditures are fully reimbursable and the division reimburses
the general fund of the state in full by the close of the fiscal
year. Because any general fund moneys used shall be fully
reimbursed, such temporary use of moneys from the general fund
of the state shall not constitute an appropriation for purposes
of calculating the state general fund expenditure limitation
pursuant to section 8.54.
Sec. 16. NEW SECTION . 521J.13 Legal investments.
1. a. Industrial insured captive companies and captive risk
retention groups shall comply with investment requirements as
established by the commissioner by rule. The commissioner may
approve the use of alternative reliable methods of valuation

Senate File 549, p. 24
and rating.
b. If a captive company’s admitted assets total less
than five million dollars, the commissioner may approve an
investment of up to twenty percent of the captive company’s
admitted assets in rated credit instruments in any one
investment that meets the requirements established by the
commissioner by rule.
2. A pure captive company, or a protected cell captive
company, shall not be subject to any restrictions on allowable
investments, except that the commissioner may prohibit or limit
any investment that threatens the solvency or liquidity of the
pure captive company.
3. Any captive company may make loans to any of the captive
company’s affiliates with prior written approval of the
commissioner, and each loan must be evidenced by a note in a
form as approved by the commissioner by rule. Loans made from
minimum capital and surplus funds required by section 521J.4
shall be prohibited.
Sec. 17. NEW SECTION . 521J.14 Reinsurance.
1. Subject to the prior approval of the commissioner, a
captive company may provide reinsurance on risks ceded by any
other insurer.
2. Any captive company may take credit for reserves on
risks, or portions of risks, ceded to reinsurers as provided
under chapter 521B. In order to cede or take credit for the
reinsurance of risks or portions of risks ceded to reinsurers
that do not comply with chapter 521B, a captive company shall
obtain the prior approval of the commissioner.
3. Insurance by a captive company of any workers’
compensation qualified self-insured plan of the captive
company’s parent and affiliates shall be deemed to be
reinsurance under this chapter.
4. In addition to reinsurers authorized under chapter 521B,
a captive company may take credit for the reinsurance of risks
or portions of risk ceded to a pool or exchange acting as a
reinsurer which has been authorized by the commissioner. The
commissioner may require documents, financial information, or
other evidence that such a reinsurance pool or exchange will be
able to provide adequate security for the reinsurance pool’s or

Senate File 549, p. 25
exchange’s financial obligations. The commissioner may deny
authorization or impose any limitations on the activities of
a reinsurance pool or exchange that, in the commissioner’s
judgment, are necessary and proper to provide adequate security
for the ceding captive company and for the protection and
benefit of the public.
5. No credit shall be allowed for reinsurance if the
reinsurance contract does not result in the complete transfer
of the risk or liability to the reinsurer.
6. No credit shall be allowed, as an asset or a deduction
from liability, to any ceding insurer for reinsurance unless
the reinsurance is payable by the assuming insurer on the basis
of the liability of the ceding insurer under the contract
reinsured without diminution because of the insolvency of the
ceding insurer.
7. Reinsurance under this section shall be effected
through a written agreement of reinsurance setting forth the
terms, provisions, and conditions governing the reinsurance.
The commissioner may require that complete copies of all
reinsurance agreements be filed with and approved by the
commissioner.
Sec. 18. NEW SECTION . 521J.15 Rating organizations.
A captive company shall not be required to join a rating
organization.
Sec. 19. NEW SECTION . 521J.16 Compulsory organizations.
A captive company shall not join or contribute financially
to any plan, pool, association, or guaranty or insolvency
fund in this state. A captive company, a captive company’s
insureds, a captive company’s parent, and any company
affiliated with a captive company shall not receive any benefit
from a plan, pool, association, or guaranty or insolvency
fund for claims arising out of the operations of the captive
company.
Sec. 20. NEW SECTION . 521J.17 Protected cell captive
companies.
1. One or more sponsors may form a protected cell captive
company.
2. A protected cell captive company formed or authorized
under this chapter shall be subject to all of the following

Senate File 549, p. 26
requirements:
a. (1) A protected cell captive company may establish one
or more protected cells subject to the prior written approval
of the commissioner of a plan of operation submitted by the
protected cell captive company for each protected cell. The
plan of operation shall include but is not limited to the
specific business objectives and investment guidelines of the
protected cell.
(2) Upon the commissioner’s approval of the protected cell
captive company’s plan of operation, the company, in accordance
with the approved plan of operation, may attribute insurance
obligations with respect to its insurance business to the
protected cell.
(3) A protected cell captive company shall transfer
all assets attributable to a protected cell to one or more
separately established and separately identified protected cell
accounts bearing the name or designation of that protected
cell. Each protected cell shall have a distinct name or
designation that must include the words “protected cell”.
Protected cell assets shall be held in the protected cell
accounts for the purpose of satisfying the obligations of the
specific protected cell.
(4) Each protected cell shall be incorporated. An
incorporated protected cell may be organized and operated
in any form of business organization as authorized by the
commissioner by rule. Each protected cell of a protected cell
captive company shall be treated as a captive insurance company
under this chapter, except that the limit on maximum yearly
aggregate taxes paid under section 432.1A, subsection 4, shall
not apply. Unless otherwise permitted by the organizational
document of a protected cell captive company, each protected
cell of the protected cell captive company must have the same
directors, secretary, and registered office as the protected
cell captive company.
b. All attributions of assets and liabilities between a
protected cell and the protected cell captive company’s general
account shall be in accordance with the plan of operation and
the participant contracts as approved by the commissioner. No
other attribution of assets and liabilities shall be made by

Senate File 549, p. 27
a protected cell captive company between the protected cell
captive company’s general account and the company’s protected
cells. Any attribution of assets and liabilities between the
general account and a protected cell shall be in cash or in
readily marketable securities with established market values.
c. The establishment of a protected cell shall create, with
respect to the protected cell, a legal person separate from
the protected cell captive company. Amounts attributed to a
protected cell under this chapter, including assets transferred
to a protected cell account, shall be owned by the protected
cell and the protected cell captive company shall not be a
trustee, or hold itself out to be a trustee, with respect to
the protected cell assets of that protected cell account.
d. A protected cell captive company may contract with
or arrange for an investment adviser or other third party,
approved by the commissioner, to manage the protected cell
assets of a protected cell if all remuneration, expenses,
and other compensation of the third party are paid from the
protected cell assets of that protected cell, and not from the
protected cell assets of other protected cells or the assets of
the protected cell captive company’s general account.
e. (1) A protected cell captive company shall establish the
administrative and accounting procedures necessary to properly
identify each protected cell of the protected cell captive
company, and the protected cell assets and protected cell
liabilities attributable to each protected cell. The directors
of a protected cell captive company shall be responsible for
all of the following:
(a) Maintaining the assets and liabilities of protected
cells separately, and separately identifiable, from the assets
and liabilities of the protected cell captive company’s general
account.
(b) Maintaining protected cell assets and protected cell
liabilities attributable to one protected cell separate,
and separately identifiable, from protected cell assets and
protected cell liabilities attributable to another protected
cell.
(2) If a protected cell captive company fails to comply with
subparagraph (1), the remedy of tracing shall be applicable to

Senate File 549, p. 28
protected cell assets commingled with protected cell assets of
other protected cells, or commingled with the assets of the
protected cell captive company’s general account. The remedy
of tracing shall not be the exclusive remedy.
f. When establishing a protected cell, a protected cell
captive company shall attribute assets with a value at least
equal to the reserves attributed to that protected cell to the
protected cell.
3. Each protected cell shall be accounted for separately
on the books and records of the protected cell captive company
to reflect the financial condition and result of operations of
the protected cell, including but not limited to the net income
or loss, dividends or other distributions to participants, and
any other factor provided in the participant contract, or as
required by the commissioner by rule.
4. The assets of a protected cell shall not be chargeable
with liabilities arising from any other insurance business of
the protected cell captive company.
5. A protected cell captive company shall not make a
sale, exchange, or other transfer of assets among any of
the company’s protected cells without the consent of the
participants of each affected protected cell.
6. A protected cell shall not make a sale, exchange,
transfer of assets, dividend, or distribution to a sponsor
or to a participant without the commissioner’s prior written
approval, which shall not be given if the sale, exchange,
transfer, dividend, or distribution will result in the
insolvency or impairment of the protected cell.
7. A protected cell captive company shall annually file
with the commissioner any financial reports required by the
commissioner, as established by rule, and shall include,
without limitation, accounting statements detailing the
finances of each protected cell.
8. A protected cell captive company shall notify the
commissioner in writing within ten business days from the date
that a protected cell has become impaired or insolvent, or is
otherwise unable to meet its claim or expense obligations.
9. A participant contract shall not take effect without the
commissioner’s prior written approval.

Senate File 549, p. 29
10. An addition of any new protected cell, or the withdrawal
of any participant of an existing protected cell, shall
constitute a change in the business plan of the protected cell
captive company, and the change shall not become effective
without the prior written approval of the commissioner.
11. With respect to each protected cell, business written
by a protected cell captive company shall be fronted by an
insurance company authorized under the laws of any state, or as
approved by the commissioner.
12. If a protected cell captive company’s business is
reinsured, with respect to each protected cell, the protected
cell captive company shall comply with at least one of the
following requirements:
a. The business shall be reinsured by a reinsurer authorized
or approved by the commissioner.
b. The business shall be secured by a trust fund that is
located in the United States for the benefit of policyholders
and claimants, and which is funded by an irrevocable letter of
credit or other asset that is acceptable to the commissioner,
and that is subject to all of the following:
(1) The amount of security provided by the trust fund shall
not be less than the reserves associated with the liabilities
that are not fronted or reinsured, including but not limited
to reserves for losses that are allocated for loss adjustment
expenses, incurred but not reported losses, and unearned
premiums for business written through the participant’s
protected cell.
(2) The commissioner may require the protected cell captive
company to increase the funding of any trust.
(3) If the form of security in the trust is a letter of
credit, the letter of credit shall be established, issued, or
confirmed by a bank chartered in this state, a member of the
federal reserve system, or a bank chartered by another state if
the bank is approved by the commissioner.
(4) The commissioner shall approve the form and terms of the
trust and trust instrument.
Sec. 21. NEW SECTION . 521J.18 Sponsors —— qualifications.
A sponsor of a protected cell captive company may be
any person approved by the commissioner, based on the

Senate File 549, p. 30
commissioner’s determination that the approval of such person
as a sponsor is consistent with the purposes of this chapter.
In evaluating the qualifications of a proposed sponsor, the
commissioner shall consider the type and structure of the
proposed sponsor entity, the sponsor’s experience in financial
operations, the sponsor’s financial stability, the sponsor’s
business reputation, and any other factors deemed relevant
by the commissioner. A risk retention group shall not be a
sponsor of a protected cell captive company.
Sec. 22. NEW SECTION . 521J.19 Delinquency.
1. Except as otherwise provided in this section, chapter
507C shall apply to a protected cell captive company.
2. Upon any order of supervision, rehabilitation, or
liquidation of a protected cell captive company, the receiver
shall manage the assets and liabilities of the protected cell
captive company pursuant to this section.
3. Notwithstanding chapter 507C or any other provision to
law to the contrary, in the conservation, rehabilitation, or
liquidation of a protected cell captive company, all of the
following requirements shall be met:
a. The assets and liabilities of a protected cell shall at
all times be kept separate from, and shall not be commingled
with, those of other protected cells and the protected cell
captive company.
b. The assets of a protected cell shall not be used to
pay any expenses or claims other than the expenses or claims
attributable to the protected cell.
c. If the sponsor consents and the commissioner has
granted prior written approval, the assets of the protected
cell captive company’s general account may be used to pay any
expenses or claims attributable solely to a protected cell
or protected cells of the protected cell captive company.
Notwithstanding section 521J.4, if the assets of the protected
cell captive company’s general account are used to pay expenses
or claims attributed solely to a protected cell or protected
cells of the protected cell captive company, the sponsor shall
not be required to contribute additional capital and surplus to
the protected cell captive company’s general account.
d. A protected cell captive company’s capital and surplus

Senate File 549, p. 31
shall be available at all times to pay any expenses of, or
claims against, the protected cell captive company.
4. Notwithstanding chapter 507C or any other provision
of law to the contrary, in the event of an insolvency of
a protected cell captive company where the commissioner
determines that one or more protected cells remain solvent, the
commissioner may separate such cells from the protected cell
captive company and, on application of the sponsor, may allow
for the conversion of such protected cells into one or more
new or existing protected cell captive companies, or one or
more other captive companies, pursuant to a plan of operation
approved by the commissioner.
Sec. 23. NEW SECTION . 521J.20 Participants.
Individuals, business entities, and sponsors may be a
participant in a protected cell captive company. A participant
shall not be required to be a shareholder of a protected cell
captive company, or of the protected cell captive company’s
affiliate.
Sec. 24. NEW SECTION . 521J.21 Investments —— combined
assets.
The assets of two or more protected cells may be combined
for the purpose of investment by a protected cell captive
company, and combining the protected cells’ assets shall not
be construed as defeating the segregation of the assets for
accounting or any other purpose. Protected cell captive
companies and protected cells shall comply with the applicable
investment requirements contained in section 521J.13; however,
compliance with such investment requirements shall be waived
for protected cell captive companies to the extent that credit
for reinsurance ceded to reinsurers is allowed under section
521J.14, or to the extent that waiver of compliance with the
investment requirements is deemed reasonable and appropriate by
the commissioner. The commissioner may exercise discretion in
approving the accounting standards used by the company.
Sec. 25. NEW SECTION . 521J.22 Dormant captive companies.
1. As used in this section, “dormant captive company” means
a captive company, other than a captive risk retention group,
that meets all of the following:
a. The captive company has ceased transacting the business

Senate File 549, p. 32
of insurance, including the issuance of insurance policies.
b. The captive company does not have any remaining
liabilities associated with its insurance business transactions
or insurance policies issued prior to the captive company’s
filing of an application for a certificate of dormancy under
subsection 2.
2. Any captive company that is domiciled in this state and
that complies with this section may apply to the commissioner
for a certificate of dormancy. A certificate of dormancy shall
be subject to expiration five calendar years from the date that
the certificate is issued, and the commissioner shall not renew
a certificate of dormancy.
3. a. A captive company that has been issued a certificate
of dormancy shall comply with all of the following:
(1) The dormant captive company shall possess and maintain
unimpaired, paid-in capital and surplus of not less than
twenty-five thousand dollars.
(2) Within ninety calendar days of the dormant captive
company’s fiscal year end, the company shall annually submit to
the commissioner a report on the company’s financial condition,
verified by oath of two of the company’s executive officers, in
the form and manner as established by the commissioner by rule.
(3) The dormant captive company shall pay an annual one
thousand dollar dormancy tax, due on or before March 1, if
for any portion of the immediately preceding calendar year
the captive company held a certificate of dormancy. Each
series of members and each protected cell shall be considered
separate for purposes of paying the annual dormancy tax under
a certificate of dormancy. A dormant captive company is not
otherwise liable for any annual renewal as provided in section
521J.2, subsection 4, paragraph “b” .
b. A dormant captive insurance company that has been issued
a certificate of dormancy shall not be subject to or liable
for the payment of tax under section 432.1A from the date
the certificate of dormancy is issued through the date the
certificate of dormancy expires.
4. A dormant captive company shall be subject to examination
under section 521J.9 for any year in which the company does not
qualify as a dormant captive company. In the commissioner’s

Senate File 549, p. 33
discretion, a dormant captive company shall be subject to
examination under section 521J.9 for any year in which the
dormant captive company qualifies as a dormant captive company.
5. Prior to a dormant captive company issuing an
insurance policy, the dormant captive company shall apply
to the commissioner for approval to surrender the company’s
certificate of dormancy and to resume conducting the business
of insurance.
6. A dormant captive company’s certificate of dormancy
shall be revoked if the company violates this section.
Sec. 26. NEW SECTION . 521J.23 Workers’ compensation ——
compliance with state and federal laws.
1. This chapter shall not be construed to exempt a captive
company, a captive company’s parent, or a captive company’s
affiliated companies from compliance with applicable state and
federal laws governing workers’ compensation insurance.
2. This chapter shall not be construed to divest the
division of workers’ compensation of any jurisdiction, as
authorized by law, over workers’ compensation self-insurance
plans.
Sec. 27. NEW SECTION . 521J.24 Books and records.
1. a. Unless otherwise approved by the commissioner, a
captive company shall maintain the captive company’s original
books, records, documents, accounts, vouchers, and agreements
in this state and make them available for examination
and inspection by the commissioner as requested by the
commissioner. The captive company may store and reproduce the
books, records, documents, accounts, vouchers, and agreements
electronically.
b. All books, records, documents, accounts, vouchers, and
agreements shall be kept in a manner that the commissioner can
readily ascertain the captive company’s financial condition,
affairs, and operations; can readily verify the captive
company’s financial statements; and can confirm the captive
company’s compliance with this chapter.
2. Unless otherwise approved by the commissioner, all
books, records, documents, accounts, vouchers, and agreements
maintained by a captive company under subsection 1 shall
remain available in the state until the commissioner approves

Senate File 549, p. 34
destruction or other disposition of the books, records,
documents, accounts, vouchers, and agreements.
Sec. 28. NEW SECTION . 521J.26 Risk management of controlled
unaffiliated business —— standards.
The commissioner may adopt rules establishing standards to
ensure that a parent or affiliated company is able to exercise
control of the risk management function of any controlled
unaffiliated business to be insured by a captive company. If
rules are not adopted to establish standards pursuant to this
section, the commissioner may approve the coverage of such
risks on a case-by-case basis.
Sec. 29. NEW SECTION . 521J.27 Rules.
The commissioner shall adopt rules pursuant to chapter 17A
to implement and administer this chapter.
Sec. 30. FUTURE REPEAL. Chapter 521G, Code 2023, is
repealed effective January 1, 2025.
Sec. 31. APPLICABILITY. The following applies January 1,
2025, to protected cell captive companies formed, authorized,
or continued on or after that date:
The section of this Act enacting section 521J.17.
______________________________ ______________________________
AMY SINCLAIR PAT GRASSLEY
President of the Senate Speaker of the House
I hereby certify that this bill originated in the Senate and
is known as Senate File 549, Ninetieth General Assembly.
______________________________
W. CHARLES SMITHSON
Secretary of the Senate
Approved _______________, 2023 ______________________________
KIM REYNOLDS
Governor