NU Online News Service, Nov. 1, 3:51 p.m.EDT

The New Jersey Assembly approved the final version of a billthat can make New Jersey a captive insurance domicile, but alsoremoved a portion of the bill that would allow risk retentiongroups to domicile in the state, according to the New JerseyCaptive Insurance Association (NJCIA).

The bill A2360, which was approved by the full assembly withbipartisan support, now awaits action by the Senate, which couldhappen by the end of the year, Gregg Sgambati, founder andpresident of NJCIA, told NU Online News Service.

The bill was approved by a vote of 77-0.

Assemblyman Gary Schaer, D-Passaic, and Assemblywoman DeniseCoyle, R-Somerset are primary sponsors of the bill. AssemblymanSchaer said in a statement that this is "going to have a tremendouspositive development effect for the state."

Mr. Sgambati said he is heartened by requests for informationabout the state from captive managers. He also noted that theAssembly has requested information on hiring costs for staff forthe captive department.

He noted, however, that RRG formation was taken out of the bill."This comes from the comfort level of the regulatory agency and theAssembly."

He was referring in part to a Senate bill introduced in May torevise New Jersey's taxicab laws–which could prevent cab ownersfrom insuring through a risk retention group. The bill wouldrequire taxi cab owners to have an insurance policy of an admittedinsurance company that is a member of the New JerseyProperty-Liability Insurance Guaranty Association, a requirementthat excludes RRGs.

The bill was held back for amendments, Mr. Sgambati reported inearly October.

There are at least three RRGs insuring New Jersey cab ownersthat are not members of the New Jersey Property-Liability InsuranceGuaranty Association, NJCIA said.

Risk retention groups account for about 15 percent of captiveinsurance company formations. "Although not having RRGs in thelegislation is not ideal, it should not be misconstrued as anindication of low enthusiasm for this legislation by stateregulators, who are in fact very enthusiastic about captiveinsurance," Mr. Sgambati said.

The captive legislation passed in New Jersey is modeled afterthe Vermont captive insurance statutes. Over the years, Vermont hasdeveloped its captive insurance infrastructure to become theleading U.S. domicile and second to Bermuda worldwide.

The senate version of the bill (S168) remains with the SenateFinance Committee, which was originally sponsored solely by SenatorNia Gill, D-Essex, but now has the additional co-sponsorship ofSenator Thomas Kean Jr, R-Union.

Mr. Sgambati said that if the bill can move out of the Senatecommittee at one of the upcoming committee meetings, "we could seeNew Jersey become a captive domicile this year." He added that theaddition of Senator Kean as a co-sponsor will add momentum to thebill's progress.