Bill Text: OR SB1547 | 2012 | Regular Session | Enrolled
Bill Title: Relating to captive insurance; and declaring an emergency.
Spectrum: Unknown
Status: (Passed) 2012-03-27 - Effective date, March 27, 2012. [SB1547 Detail]
Download: Oregon-2012-SB1547-Enrolled.html
76th OREGON LEGISLATIVE ASSEMBLY--2012 Regular Session
Enrolled
Senate Bill 1547
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Senate Interim Committee on
Business, Transportation and Economic Development)
CHAPTER ................
AN ACT
Relating to captive insurance; limiting expenditures; and
declaring an emergency.
Be It Enacted by the People of the State of Oregon:
{ +
GENERAL REQUIREMENTS FOR CAPTIVE INSURERS + }
SECTION 1. { + Sections 2 to 22 of this 2012 Act are added to
and made a part of the Insurance Code. + }
SECTION 2. { + As used in sections 2 to 22 of this 2012 Act:
(1)(a) 'Affiliate' means a business entity that, because of
common ownership, common control, common operation or common
management, is in the same corporate system as a parent or a
member organization.
(b) For purposes of this subsection, 'common ownership, common
control, common operation or common management' means that two or
more business entities are owned, controlled, operated or managed
by the same person or group of persons with:
(A) Direct or indirect ownership of 80 percent or more of the
outstanding voting stock of the stock corporation for a captive
insurer that is a stock corporation;
(B) Direct or indirect ownership of 80 percent or more of the
surplus and the voting power of the mutual corporation for a
captive insurer that is a mutual corporation; or
(C) Direct or indirect ownership by the same member or members
of 80 percent or more of the membership interests in the limited
liability company for a captive insurer that is a limited
liability company.
(2) 'Alien captive insurer' means an insurer:
(a) Formed to transact insurance for a parent or affiliate of
the insurer; and
(b) Licensed under the laws of a nation other than the United
States that imposes statutory or regulatory standards:
(A) On a business entity transacting insurance in the other
nation; and
(B) In a form acceptable to the Director of the Department of
Consumer and Business Services.
Enrolled Senate Bill 1547 (SB 1547-B) Page 1
(3) 'Association' means a legal association of two or more
persons that has been in continuous existence for at least one
year if the association or its member organizations:
(a) Own, control, or hold with power to vote, all of the
outstanding voting securities of an association captive insurer
incorporated as a stock insurer;
(b) Have complete voting control over an association captive
insurer incorporated as a mutual insurer; or
(c) Have complete voting control over an association captive
insurer formed as a limited liability company.
(4) 'Association captive insurer' means a business entity that
insures the risks of:
(a) A member organization of the association;
(b) An affiliate of a member organization of the association;
or
(c) The association.
(5) 'Branch captive insurer' means an alien captive insurer
that holds a certificate of authority from the Director of the
Department of Consumer and Business Services to transact
insurance in this state through a business division with a
principal place of business in this state.
(6) 'Branch operation' means a business operation of a branch
captive insurer in this state.
(7) 'Captive insurer' means any of the following that is formed
or holds a certificate of authority issued under sections 2 to 22
of this 2012 Act:
(a) A pure captive insurer;
(b) A branch captive insurer;
(c) An association captive insurer; or
(d) A captive reinsurer.
(8) 'Captive reinsurer' means a reinsurer that is:
(a) Formed or holds a certificate of authority under sections 2
to 22 of this 2012 Act;
(b) Wholly owned by a qualifying reinsurer parent company; and
(c) A stock corporation.
(9) 'Controlled unaffiliated business' means a business entity:
(a) That is not in the same corporate system as a parent or the
parent's affiliate but has a contractual relationship with a
parent or affiliate; and
(b) Whose risks are managed by a pure captive insurer in
accordance with rules adopted by the Director of the Department
of Consumer and Business Services under section 4 of this 2012
Act.
(10) 'Foreign captive insurer' means an insurer:
(a) Formed to transact insurance for a parent or affiliate of
the insurer; and
(b) Licensed under the laws of another state that imposes
statutory or regulatory standards:
(A) On a business entity transacting insurance in the other
state or jurisdiction; and
(B) In a form acceptable to the Director of the Department of
Consumer and Business Services.
(11) 'Member organization' means a person that belongs to an
association.
(12) 'Parent' means a person that directly or indirectly owns,
controls, or holds with power to vote, more than 50 percent of:
(a) The outstanding voting securities of a pure captive
insurer; or
(b) The pure captive insurer, if the pure captive insurer is
formed as a limited liability company.
Enrolled Senate Bill 1547 (SB 1547-B) Page 2
(13) 'Pure captive insurer' means a business entity that
insures risks of a parent or affiliate of the business entity.
(14)(a) 'Qualifying reinsurer parent company' means an
accredited reinsurer in this state that has:
(A) A consolidated GAAP net worth of not less than $500
million; and
(B) Complies with the consolidated debt to total capital ratio
established by rule by the Director of the Department of Consumer
and Business Services.
(b) For purposes of this subsection 'consolidated GAAP net
worth' means the consolidated shareholders' equity determined in
accordance with generally accepted accounting principles for
reporting to the United States Securities and Exchange
Commission. + }
SECTION 3. { + (1) The provisions of the Insurance Code cited
in sections 2 to 22 of this 2012 Act apply to captive insurers.
In addition, the provisions of the Insurance Code set forth in
ORS chapter 731 relating to administration of the insurance laws
apply to captive insurers to the extent not inconsistent with the
express provisions of sections 2 to 22 of this 2012 Act.
(2) In addition to the provisions of the Insurance Code set
forth in subsection (1) of this section, ORS 705.137 and 705.139
apply to captive insurers. + }
SECTION 4. { + The Director of the Department of Consumer and
Business Services may adopt rules for the administration of
sections 2 to 22 of this 2012 Act. + }
SECTION 5. { + All documents, materials and other information
in the possession of the Department of Consumer and Business
Services under sections 2 to 22 of this 2012 Act are confidential
and subject to public disclosure only as provided in ORS
705.137. + }
SECTION 6. { + (1)(a) When permitted by its articles of
incorporation or its charter and bylaws, a captive insurer may
apply to the Director of the Department of Consumer and Business
Services for a certificate of authority to transact any class of
insurance.
(b) Notwithstanding paragraph (a) of this subsection:
(A) A pure captive insurer may not insure a risk other than a
risk of its parent or affiliate or a controlled unaffiliated
business.
(B) An association captive insurer may not insure a risk other
than a risk of:
(i) An affiliate;
(ii) A member organization of its association; or
(iii) An affiliate of a member organization of its association.
(C) A captive insurer may not provide workers' compensation
insurance, life insurance, health insurance or any personal
property or personal casualty line of insurance, including but
not limited to personal motor vehicle insurance coverage and
homeowner's insurance, and any component of such coverage.
(D) A captive insurer may not accept or cede reinsurance except
as provided in section 11 of this 2012 Act.
(2) To transact insurance in this state, a captive insurer
must:
(a) Obtain from the director a certificate of authority that
authorizes the captive insurer to transact insurance in this
state;
(b) Appoint a resident registered agent to accept service of
process and to otherwise act on behalf of the captive insurer in
this state; and
Enrolled Senate Bill 1547 (SB 1547-B) Page 3
(c)(A) Hold at least once each year in this state a board of
directors meeting; and
(B) Maintain in this state:
(i) The principal place of business of the captive insurer; or
(ii) In the case of a branch captive insurer, the principal
place of business for the branch operations of the branch captive
insurer.
(3) In the case of a captive insurer formed as a corporation,
if the registered agent cannot be found with reasonable diligence
at the registered office of the captive insurer, the director is
the agent of the captive insurer upon whom process, notice or
demand may be served.
(4)(a) An applicant captive insurer formed as a corporation
shall file with the director:
(A) Certified copies of the articles of incorporation or the
charter and bylaws of the corporation;
(B) A statement under oath of the president and secretary of
the corporation showing the financial condition of the
corporation; and
(C) Any other statement or document required by the director as
adopted by rule.
(b) In addition to the other information required by this
subsection, an applicant captive insurer shall file with the
director evidence of:
(A) The amount and liquidity of the assets of the applicant
captive insurer relative to the risks to be assumed by the
applicant captive insurer;
(B) The adequacy of the expertise, experience and character of
the individual who will manage the applicant captive insurer;
(C) The overall soundness of the plan of operation of the
applicant captive insurer;
(D) The adequacy of the loss prevention programs for any parent
or member organization of the applicant captive insurer; and
(E) Any other factor the director adopts by rule and considers
relevant in ascertaining whether the applicant captive insurer is
able to meet the policy obligations of the applicant captive
insurer.
(5)(a) A captive insurer shall pay to the department
nonrefundable fees established by the director by rule for:
(A) Examining, investigating and processing the captive
insurer's application for issuance of a certificate of authority;
(B) Obtaining a certificate of authority for the year the
director issues a certificate of authority to the captive insurer
in an amount not less than $5,000; and
(C) Renewing a certificate of authority in an amount not less
than $5,000.
(b) The fees a captive insurer pays to the Department of
Consumer and Business Services for obtaining or renewing a
certificate of authority are in lieu of any payment of premium
assessment on receipt of premium by the captive insurer. Fees for
obtaining or renewing a certificate of authority may be increased
by the department by rule and may be scaled on the basis of
premiums the captive insurer collects in any given year.
(c) The director may retain legal, financial and examination
services from outside the department to perform any functions
described in sections 2 to 22 of this 2012 Act and may charge the
applicant captive insurer the reasonable cost of services
performed.
(6) If the director is satisfied that the documents and
statements filed by the applicant captive insurer meet the
Enrolled Senate Bill 1547 (SB 1547-B) Page 4
requirements of sections 2 to 22 of this 2012 Act, the director
may issue a certificate of authority that authorizes the captive
insurer to transact insurance in this state.
(7) A certificate of authority issued under this section
expires annually and must be renewed by December 31 of each year
beginning with the year following the year that the original
certificate was issued.
(8) Upon approval of the director, a foreign or alien captive
insurer may become a domestic captive insurer by complying with
all of the requirements of the Insurance Code relative to the
organization and licensing of a domestic captive insurer of the
same or equivalent type in this state and by filing with the
director certified copies of the insurer's articles of
association, charter or other organizational document, together
with any appropriate amendments adopted in accordance with the
laws of this state bringing those articles of association,
charter or other organizational document into compliance with the
laws of this state. After complying with these requirements, the
captive insurer is entitled to the necessary or appropriate
certificates and licenses to continue transacting insurance in
this state and is subject to the authority and jurisdiction of
this state. In connection with this redomestication, the director
may waive any requirements for public hearings. It is not
necessary for a captive insurer redomesticating into this state
to merge, consolidate, transfer assets or otherwise engage in any
other reorganization, other than as specified in this
section. + }
SECTION 7. { + A captive insurer may assume a business name
only if consistent with the provisions of ORS 731.430. + }
SECTION 8. { + (1) To qualify for authority to transact
insurance in this state, a captive insurer shall possess and
thereafter maintain capital or surplus, or any combination
thereof, of not less than:
(a) $250,000 for a pure captive insurer.
(b) $750,000 for an association captive insurer incorporated as
a stock insurer or as a mutual insurer.
(c) $300,000,000 for a captive reinsurer.
(2) In accordance with ORS 731.554 (6), for the protection of
the public, the Director of the Department of Consumer and
Business Services may require a captive insurer to possess and
maintain capital or surplus, or any combination thereof, in
excess of the amount otherwise required under this section.
(3) The capital and surplus required under subsections (1) and
(2) of this section may be in the form of:
(a) Cash or cash equivalent; or
(b) An irrevocable letter of credit issued by an insured
institution, as described in ORS 731.510, and approved by the
director.
(4)(a) Except as provided in paragraph (d) of this subsection,
a branch captive insurer, as security for the payment of
liabilities attributable to branch operations, must establish and
maintain, through its branch operations, a trust fund funded by
an irrevocable letter of credit or other asset approved by the
director.
(b) The trust fund established under this subsection shall be
for the benefit of United States policyholders and United States
ceding insurers under insurance policies issued or reinsurance
contracts issued or assumed.
(c) The amount of the security required under this subsection
must be equal to or greater than:
Enrolled Senate Bill 1547 (SB 1547-B) Page 5
(A) The capital and surplus required under this section
applicable to the line of business written by the captive
insurer; and
(B) The net reserves on the insurance policies or reinsurance
contracts described in this subsection, including:
(i) Case basis loss and allocated loss adjustment expense
reserves;
(ii) Losses and allocated loss adjustment expense amounts
incurred but not reported; and
(iii) Unearned premiums with regard to insurance transacted by
branch operations.
(d) In accordance with ORS 731.510, the director may permit a
branch captive insurer that is required to post security for loss
reserves on insurance transacted by its reinsurer to reduce the
funds in the trust fund established under this section by the
same amount as the security posted if the security remains posted
with the reinsurer.
(5) A captive insurer may pay dividends or make distributions
if all the following requirements are met:
(a) Submission of a report to the director listing all
dividends and distributions within five business days following
the declaration, and not less than 10 business days prior to
payment, of the dividends and distributions, commencing from the
date of receipt of the report by the director.
(b) The report required under paragraph (a) of this subsection
must demonstrate that the combined capital and surplus of the
captive insurer following any dividend or distribution is
reasonable in relation to the captive insurer's outstanding
liabilities and adequate to the captive insurer's financial
needs.
(c) A captive insurer may pay dividends or distributions only
from earned surplus unless the director gives prior approval for
payment from another source. + }
SECTION 9. { + (1) A pure captive insurer must be incorporated
as a stock insurer with the capital of the pure captive insurer
divided into shares and held by the shareholders of the pure
captive insurer.
(2) An association captive insurer may be:
(a) Incorporated as a stock insurer with the capital of the
association captive insurer divided into shares and held by the
shareholders of the association captive insurer; or
(b) Incorporated as a mutual insurer without capital stock,
with a governing body elected by the member organizations of the
association captive insurer.
(3) The requirements of ORS 732.085 apply to the incorporators
of a captive insurer.
(4) Any person desiring to organize a captive insurer must
first file an application with the Director of the Department of
Consumer and Business Services for a permit to organize the
captive insurer. The applicant shall pay the applicable fee to
the director at the time the application is filed. The
application shall be on forms provided by the director and shall
be signed by the applicants and verified. The form shall specify
information about the following:
(a) The character, reputation, financial responsibility and
purposes of the proposed incorporators;
(b) The character, reputation, financial responsibility,
insurance experience and business qualifications of the proposed
officers and directors and the proposed managers;
Enrolled Senate Bill 1547 (SB 1547-B) Page 6
(c) Any information provided to the Department of Consumer and
Business Services in the application for a certificate of
authority or that is maintained in the department's files; and
(d) Other aspects the director considers advisable.
(5) The director shall approve an application for a permit to
organize a captive insurer only if the director finds that:
(a) The application is complete;
(b) The documents filed with the application are in the proper
form;
(c) The proposed financial structure is adequate;
(d) The character, reputation, financial responsibility and
general fitness of the persons named in the application or
otherwise found to be associated with or have an interest in the
proposed insurer are such as to command the confidence of the
public;
(e) The proposed directors are collectively competent to assume
responsibility for the management and general policies and
procedures of the captive insurer;
(f) The proposed management, collectively, possess the
requisite general business ability and experience in the business
of insurance of the class or classes specified in the
application; and
(g) No fact is then known to the director that would prevent
the proposed insurer from completing its organization and
receiving a certificate of authority to transact insurance as a
captive insurer.
(6) To the extent not otherwise inconsistent with the
provisions of sections 2 to 22 of this 2012 Act, ORS 732.095,
732.105 and 732.115 apply for the filing of the articles of
incorporation of a captive insurer.
(7)(a) An alien captive insurer applying to the director for a
certificate of authority to act as a branch captive insurer shall
obtain from the director a certificate finding that:
(A) The nation of an alien captive insurer imposes statutory or
regulatory standards, in a form acceptable to the director, on
captive insurers transacting insurance in that nation; and
(B) After considering the character, reputation, financial
responsibility, insurance experience and business qualifications
of the officers and directors of the alien captive insurer, and
other relevant information, the establishment and maintenance of
the branch operations will promote the general good of this
state.
(b) After the director issues a certificate under paragraph (a)
of this subsection, the alien captive insurer may register with
the department to do business in this state as a branch captive
insurer.
(8) The capital stock of a captive insurer incorporated as a
stock insurer may not be issued at less than par value.
(9) At least one-quarter of the members of the board of
directors of a captive insurer formed as a corporation shall be
residents of this state.
(10)(a) A captive insurer formed as a corporation under
sections 2 to 22 of this 2012 Act has the privileges of and is
subject to ORS chapters 60 and 732 and sections 2 to 22 of this
2012 Act.
(b) If a conflict exists between a provision of ORS chapters 60
and 732 and a provision of sections 2 to 22 of this 2012 Act,
sections 2 to 22 of this 2012 Act shall control.
(c) Except as provided in paragraph (d) of this subsection, the
provisions of sections 2 to 22 of this 2012 Act pertaining to a
Enrolled Senate Bill 1547 (SB 1547-B) Page 7
merger, consolidation, conversion, mutualization and
redomestication apply in determining the procedures to be
followed by a captive insurer in carrying out any of the
transactions described in those provisions.
(d) The director may waive or modify the requirements of this
subsection.
(11) The articles of incorporation or bylaws of a captive
insurer may not authorize a quorum of a board of directors to
consist of less than one-third of the fixed or prescribed number
of directors as provided in rules adopted by the director. + }
SECTION 10. { + (1)(a) An association captive insurer must
comply with the investment requirements of ORS 733.510 to
733.780.
(b) Notwithstanding paragraph (a) of this subsection, the
Director of the Department of Consumer and Business Services may
by rule approve the use of alternative reliable methods of
valuation and rating for an association captive insurer.
(2)(a) A pure captive insurer is not subject to any
restrictions on allowable investments under ORS 733.510 to
733.780.
(b) The director may prohibit or limit an investment that
threatens the solvency or liquidity of a pure captive insurer.
(3) A captive insurer may not make loans to the parent of the
captive insurer or an affiliate of the captive insurer. + }
SECTION 11. { + (1) A captive insurer may provide reinsurance
on risks ceded by an affiliate of the insurer or a controlled
unaffiliated business.
(2) A captive insurer may take credit for reserves on risks or
portions of risks ceded to reinsurers if the credit is acceptable
to the Director of the Department of Consumer and Business
Services.
(3) Subject to the prior written approval of the director, a
captive insurer may participate in a pool for the purpose of risk
distribution sharing. However, a captive insurer may not join or
contribute financially to a plan, pool, association or guaranty
or insolvency fund in this state, and a captive insurer, or its
insured or its parent or any affiliated company or any member
organization of its association, may not receive a benefit from a
plan, pool, association or guaranty or insolvency fund for claims
arising out of the operations of the captive insurer.
(4) A captive reinsurer must annually file with the department
an actuarial opinion provided by a qualified actuary on loss and
loss adjustment expense reserves. The qualified actuary providing
the actuarial opinion must be independent and may not be an
employee of the captive reinsurer or an affiliate of the captive
reinsurer for which the actuarial opinion is filed.
(5) A captive reinsurer may discount its loss and loss
adjustment expense reserves only as allowed in rules adopted by
the director.
(6) The director may disallow the discounting of loss and loss
adjustment reserves of a captive reinsurer if the captive
reinsurer violates any provision of sections 2 to 22 of this 2012
Act. + }
SECTION 12. { + A captive insurer is not required to join a
rating organization. + }
SECTION 13. { + (1) A captive insurer is not required to make
a report except as specified in this section.
(2)(a) Before March 1 of each year, or in accordance with rules
adopted under subsection (6) of this section, a captive insurer
shall submit to the Director of the Department of Consumer and
Enrolled Senate Bill 1547 (SB 1547-B) Page 8
Business Services a report of the financial condition of the
captive insurer, verified by oath of two of the executive
officers of the captive insurer.
(b) A captive insurer shall report:
(A) Using generally accepted accounting principles, except to
the extent that the director requires, approves or accepts the
use of statutory accounting principles;
(B) Using a useful or necessary modification or adaptation to
an accounting principle that is required, approved or accepted by
the director for the type of insurance and kind of insurer to be
reported upon; and
(C) Supplemental or additional information required by the
director.
(c) Except as otherwise provided in sections 2 to 22 of this
2012 Act, an association captive insurer shall file the financial
statement required by ORS 731.574.
(d) For the purposes of this subsection, 'statutory accounting'
means a method of accounting using rules that insurance companies
must follow in filing an annual financial statement with the
Department of Consumer and Business Services.
(3)(a) A pure captive insurer may make a written request to
file the required report on a fiscal year end that is consistent
with the fiscal year of the parent company of the pure captive
insurer.
(b) If the director grants an alternative reporting date for a
pure captive insurer as described under paragraph (a) of this
subsection, the annual report is due 60 days after the fiscal
year end.
(4)(a) Not later than 60 days after the fiscal year end, an
alien captive insurer operating as a branch captive insurer in
this state shall file with the director a copy of all reports and
statements required to be filed under the laws of the
jurisdiction in which the alien captive insurer is formed,
verified by oath by two of the alien captive insurer's executive
officers.
(b) If the director is satisfied that the annual report filed
by the alien captive insurer in the jurisdiction in which the
alien captive insurer is formed provides adequate information
concerning the financial condition of the alien captive insurer,
the director may waive the requirement for completion of the
annual statement required for a captive insurer under this
section with respect to business written in the alien
jurisdiction.
(c) A waiver granted by the director under paragraph (b) of
this subsection shall be in writing and is subject to public
inspection.
(5) All captive insurers transacting insurance in this state
shall engage a qualified actuary with knowledge of this state for
purposes of determining and setting premiums to be charged by the
captive insurer.
(6) The director may establish by rule criteria to waive or
modify the requirements of this section relating to the frequency
of reporting and the contents of the report. + }
SECTION 14. { + (1)(a) The Director of the Department of
Consumer and Business Services shall examine the affairs of each
captive insurer once in each three-year period.
(b) The three-year period described in paragraph (a) of this
subsection is determined on the basis of three full annual
accounting periods of operation.
Enrolled Senate Bill 1547 (SB 1547-B) Page 9
(c) The examination is to be made as of December 31 of the full
three-year period or as of the last day of the month of an annual
accounting period authorized for a captive insurer under this
section.
(d) In addition to an examination required under this
subsection, the director may examine a captive insurer whenever
the director determines it to be prudent.
(2) During an examination under this section, the director
shall thoroughly examine the affairs of the captive insurer to
ascertain:
(a) The financial condition of the captive insurer;
(b) The ability of the captive insurer to fulfill the
obligations of the captive insurer; and
(c) Whether the captive insurer meets the requirements of
sections 2 to 22 of this 2012 Act.
(3) The director may expand the three-year period described in
subsection (1) of this section to five years if during that
period a captive insurer is subject to a comprehensive annual
audit:
(a) Of a scope satisfactory to the director; and
(b) Performed by independent auditors approved by the director.
(4) The director may accept a comprehensive annual independent
audit in lieu of an examination if the scope of the examination
is satisfactory to the director and the examination is performed
by a qualified independent auditor.
(5) A captive insurer that is examined under this section shall
pay the expenses and charges of the examination. + }
SECTION 15. { + Notwithstanding the limits of risk set forth
in ORS 731.504, any captive insurer for which the Director of the
Department of Consumer and Business Services issues a certificate
of authority under sections 2 to 22 of this 2012 Act must comply
with sound actuarial principles as determined by the director and
must submit reports demonstrating such compliance to the
director. + }
SECTION 16. { + (1) The Director of the Department of Consumer
and Business Services may suspend or revoke the certificate of
authority issued to a captive insurer to transact insurance in
this state if the captive insurer:
(a) Is insolvent or impaired as defined in ORS 734.014;
(b) Fails to meet the requirements of sections 2 to 22 of this
2012 Act;
(c) Refuses or fails to submit an annual report required by
section 13 of this 2012 Act or any other report or statement
required by law or by order of the director;
(d) Fails to comply with the charter, bylaws or other
organizational document of the captive insurer;
(e) Fails to submit to an examination under section 14 or 18 of
this 2012 Act or any legal obligation relative to an examination
under section 14 or 18 of this 2012 Act;
(f) Refuses or fails to pay the cost of examination under
section 14 or 18 of this 2012 Act;
(g) Uses methods that, although not otherwise specifically
prohibited by law, render:
(A) The operation of the captive insurer detrimental to the
public or the policyholders of the captive insurer according to
standards adopted by the director by rule; or
(B) The condition of the captive insurer unsound with respect
to the public or to the policyholders of the captive insurer; or
(h) Otherwise fails to comply with laws of this state.
Enrolled Senate Bill 1547 (SB 1547-B) Page 10
(2) If the director finds, upon examination, hearing or other
evidence that a captive insurer has committed any of the acts
specified in subsection (1) of this section, the director may
suspend or revoke the certificate of authority issued to the
captive insurer if the director considers it in the best interest
of the public and the policyholders of the captive insurer. + }
{ +
BRANCH CAPTIVE INSURERS + }
SECTION 17. { + Except as otherwise provided in sections 2 to
22 of this 2012 Act, a branch captive insurer must be a pure
captive insurer with respect to business operations in this
state, unless otherwise permitted by rule of the Director of the
Department of Consumer and Business Services. + }
SECTION 18. { + (1) The Director of the Department of Consumer
and Business Services shall examine only the branch operations
of, and the insurance transacted by, a branch captive insurer in
this state if the branch captive insurer:
(a) Provides annually to the director a certificate of
compliance, or an equivalent, issued by or filed with the
licensing authority of the jurisdiction in which the branch
captive insurer is formed; and
(b) Demonstrates to the satisfaction of the director that the
branch captive insurer is operating in sound financial condition
in accordance with sections 2 to 22 of this 2012 Act and all
applicable laws and regulations of the jurisdiction in which the
branch captive insurer is formed.
(2) As a condition of its authority as a branch captive
insurer, an alien captive insurer must authorize the director to
examine the affairs of the alien captive insurer in the
jurisdiction in which the alien captive insurer is formed.
(3) An alien captive insurer that is examined under this
section shall pay the expenses and charges of the
examination. + }
{ +
FOREIGN CAPTIVE INSURERS + }
SECTION 19. { + Notwithstanding ORS 731.022, a foreign captive
insurer may provide insurance in this state if the foreign
captive insurer meets both of the following conditions:
(1) The foreign captive insurer is domiciled in a state that
regulates the foreign captive insurer as a captive insurer and
the captive insurer is in good standing in that state.
(2) All activities related to the placement of the insurance
occurs in the domicile state and the insurance otherwise complies
with the laws of the domicile state, including the proposal to
make an insurance contract, taking or receiving an application
for insurance, collecting a premium or other consideration for
the insurance and issuing or delivering policies of
insurance. + }
{ +
CAPTIVE REINSURERS + }
SECTION 20. { + At least 35 percent of the assets of a captive
reinsurer must be managed by an asset manager domiciled in this
state. + }
Enrolled Senate Bill 1547 (SB 1547-B) Page 11
SECTION 21. { + If permitted by its articles of incorporation
or charter, and in accordance with sections 6 and 22 of this 2012
Act, a captive reinsurer may apply to the Director of the
Department of Consumer and Business Services for a certificate of
authority to transact reinsurance. + }
SECTION 22. { + (1) A captive reinsurer must be incorporated
as a stock insurer with its capital divided into shares and held
by the captive reinsurer's shareholders. In incorporating, a
captive reinsurer must comply with the requirements of section 9
of this 2012 Act.
(2) The capital stock of a captive reinsurer must be issued at
par value or greater.
(3) At least one member of the board of directors of a captive
reinsurer incorporated in this state must be a resident of this
state. + }
{ +
TAX PROVISIONS + }
SECTION 23. { + Section 24 of this 2012 Act is added to and
made a part of ORS chapter 317. + }
SECTION 24. { + A captive insurer, as defined in section 2 of
this 2012 Act, making a valid election under section 831(b) of
the Internal Revenue Code of 1986, as amended, shall be afforded
the same tax treatment on receipt of premiums and tax on
investment earnings for state income tax purposes as exists for
federal income tax purposes except that the income tax rates on
taxable income of the captive insurer shall be those identified
under state law rather than federal law. + }
{ +
EXPENDITURE LIMITATION + }
SECTION 24a. { + Notwithstanding any other law limiting
expenditures, the maximum limit for payment of expenses from
fees, moneys or other revenues, including Miscellaneous Receipts
and including federal funds for occupational safety, manufactured
home inspections and senior health insurance benefit programs,
but excluding lottery funds and other federal funds, collected or
received by the Department of Consumer and Business Services
established by section 1, chapter 617, Oregon Laws 2011, for the
biennium beginning July 1, 2011, is increased by $100,326. + }
{ +
UNIT CAPTIONS + }
SECTION 25. { + The unit captions used in this 2012 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2012 Act. + }
{ +
OPERATIVE DATE + }
SECTION 26. { + Except as provided in section 27 of this 2012
Act, this 2012 Act becomes operative on July 1, 2012. + }
SECTION 27. { + The Director of the Department of Consumer and
Business Services may take any action before the operative date
of this 2012 Act that is necessary to enable the director to
exercise, on and after the operative date of this 2012 Act, all
Enrolled Senate Bill 1547 (SB 1547-B) Page 12
the duties, functions and powers conferred on the director by
this 2012 Act. + }
{ +
EMERGENCY CLAUSE + }
SECTION 28. { + This 2012 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2012 Act takes effect on
its passage. + }
----------
Passed by Senate February 27, 2012
.............................................................
Robert Taylor, Secretary of Senate
.............................................................
Peter Courtney, President of Senate
Passed by House February 28, 2012
.............................................................
Bruce Hanna, Speaker of House
.............................................................
Arnie Roblan, Speaker of House
Enrolled Senate Bill 1547 (SB 1547-B) Page 13
Received by Governor:
......M.,............., 2012
Approved:
......M.,............., 2012
.............................................................
John Kitzhaber, Governor
Filed in Office of Secretary of State:
......M.,............., 2012
.............................................................
Kate Brown, Secretary of State
Enrolled Senate Bill 1547 (SB 1547-B) Page 14
