Ariz. Has New Law To Lure Captives

By Caroline McDonald

NU Online News Service, June 25, 9:15 a.m. EDT?Newly enacted legislation will make it easier for captives located elsewhere to redomicile in Arizona, a state official said.

Richard Marshall, captive insurance administrator for the Arizona Department of Insurance, based in Phoenix, who outlined the effects of the new measure for National Underwriter, also explained that under Arizona's unique legislative process the law won't go into effect immediately.

The bill, signed into law by Democratic Gov. Janet Napolitano in late May, will allow risk retention groups, agency captives and protected cell captives to be part of the captive law, Mr. Marshall said.

It is not effective yet, however, he said, because, "there is a quirk in the Arizona law that says bills that are passed during a session do not go into effect until 90 days after the legislature adjourns," Mr. Marshall said. "It has yet to adjourn, and they have to adjourn before July 1."

He said that the legislation "more than likely" will be in effect by Oct. 1.

Highlights of H.B. 2152 include as part of the captive law: risk retention groups, insurance agency captives and protected cell captive insurers.

Also permitted will be direct writing of workers' compensation, if it is approved by the regulatory authority in the appropriate jurisdiction, and the reinsurance of mortgage insurance and title insurance, he said.

"We will also write personal lines?you may have agents forming a captive to do personal lines and finding a fronting company," Mr. Marshall explained.

He said that another highlight is that captives, either offshore or onshore, will be allowed to redomicile to Arizona without having to set up a new captive, similar to the law recently passed in Vermont. "You don't have to wind down your Bermuda captive and then start from scratch," he said.

Mr. Marshall said the new legislation passed unanimously "and the governor signed it readily. They were very receptive to it and they see the benefits it could bring to Arizona. They realize that it creates jobs and it's a clean industry."

Arizona's captive legislation went into effect July 2002 and the state licensed six captives last year. It was similar to Vermont's law except there is no premium tax in Arizona and the domicile doesn't need branch captives for life and benefits coverage because they can be formed under the captive law.

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Ariz. Has New Law To Lure Captives

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