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

The New Jersey Assembly approved the final version of a bill that can make New Jersey a captive insurance domicile, but also removed a portion of the bill that would allow risk retention groups to domicile in the state, according to the New Jersey Captive Insurance Association (NJCIA).

The bill A2360, which was approved by the full assembly with bipartisan support, now awaits action by the Senate, which could happen by the end of the year, Gregg Sgambati, founder and president of NJCIA, told NU Online News Service.

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

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

Mr. Sgambati said he is heartened by requests for information about the state from captive managers. He also noted that the Assembly has requested information on hiring costs for staff for the 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 the Assembly."

He was referring in part to a Senate bill introduced in May to revise New Jersey's taxicab laws–which could prevent cab owners from insuring through a risk retention group. The bill would require taxi cab owners to have an insurance policy of an admitted insurance company that is a member of the New Jersey Property-Liability Insurance Guaranty Association, a requirement that excludes RRGs.

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

There are at least three RRGs insuring New Jersey cab owners that are not members of the New Jersey Property-Liability Insurance Guaranty Association, NJCIA said.

Risk retention groups account for about 15 percent of captive insurance company formations. "Although not having RRGs in the legislation is not ideal, it should not be misconstrued as an indication of low enthusiasm for this legislation by state regulators, who are in fact very enthusiastic about captive insurance," Mr. Sgambati said.

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

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

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

Special Reports /

N.J. House OKs Captives, Says No To RRGs

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