Regulator: N.Y. Has Super Service For Captives

Mr. Molinaro said, "Some of our critics in other states have told people we're too clumsy?that we may be a great admitted market regulator but we're not good as a captive regulator?but that's not true. The [Department of Insurance] group shows our commitment to regulating captives in a personal and flexible way."

The rest of the department functions, he said, as a resource with actuarial expertise and "vast capital markets expertise, the only capital markets bureau of its kind" in the nation.

"So in a sense," he added, "our size is our strength, and what sets us apart as a domicile in the U.S. and even the world."

New York's commitment to captives, Mr. Molinaro said, is demonstrated by a measure now in the works, SB 6591, sponsored by Sen. James Seward, R-Oneonta, who heads the Senate Insurance Committee. The bill would expand opportunities for New York businesses to get involved in captive insurance in New York.

He noted that the legislation is now a governor's program bill "and has the recommendation of the governor [George Pataki], himself."

He explained that the proposed bill significantly lowers the threshold of the formation of a pure captive to $25 million and lowers the threshold of the participation in group captives "to any business entity that pays $25,000 per year in aggregate premiums and has 25 full-time employees."

This is a "significant expansion of opportunities for captives," he said. "Obviously, we have put in a section for sponsored captives that is every bit as open and provides the same protections as does Vermont."

He said the bill also contains provisions for the formation of a New York City captive to handle risks that come out of the World Trade Center cleanup after Sept. 11, 2001. He added that an application for such a captive would not be submitted until after legislation is passed.

He described the proposed captive bill as a "bold initiative" that is the result of "our listening to the business community" in New York City as well as upstate "for relief from this market" for medical malpractice, terrorism and catastrophe coverages.

The state is "open to creating the techniques to allow our captives to write medical malpractice," Mr. Molinaro said. "We're also interested in moving forward with the employee benefits captive area, which is a very up and coming and hot part of the captive market right now."

Mr. Molinaro said New York currently has five captives as well as two captives "in the licensing process." He told National Underwriter those two organizations are in the finance and manufacturing industries.

He added "We fully expect that we will have at least 10 if not 12 captives by the end of this calendar year." However, if the bill is passed, he told NU, "I'm going to need more people in the captive department."

The department continues to work with companies to develop captive alternatives, he said. "The superintendent has formed a dedicated captive group inside the insurance department, which includes attorneys, examiners and capital market experts "that are solely devoted to the issue of the regulation, assistance and facilitation of captive insurance in New York."

He assured the audience, "When you call us about captives, you will get a person with the captive group only. You won't get transferred from one examiner to another in our very large department."

He noted, "You will deal with four people. We will develop an expertise with captives and we will develop a familiarity with your file and with your captive. That is our guarantee to you."

Another guarantee is that "we will have your license out the door within 30 days of submission of your complete application," he said.