Two captive insurance laws passed by the District of Columbia Council went into effect there March 14, officials said.
The "Captive Insurance Company Amendment Act of 2006″ and the "Special Purpose Financial Captive Authorization Amendment Act of 2006″ were signed into law at the end of last year.
Thomas E. Hampton, D.C commissioner of Insurance, Securities and Banking, predicted in a statement: "The establishment of a regulatory scheme for securitizing insurance risks in a captive and the amendments to our protected cell statute will put the District ahead of other jurisdictions in our captive insurance regulation and attract more captive insurance companies to the District."
He said his department is pleased with the council's efforts to make the District of Columbia's financial regulatory environment more responsive to market changes and the District more competitive as a captive domicile."
The Captive Insurance Amendment Act updates and expands the Captive Insurance Company Act of 2004 on the formation and structure of protected cell captive insurers, providing greater flexibility to captive owners, managers and regulators regarding the status and actions of protected cell companies.
The Special Purpose Financial Captive Act provides securitization of risk and allows access to capital markets through special purpose captives, which the District said will make its captive laws more compact and easy to use.
According to the department, Washington has licensed more than 70 captive operations since 2001 including those owned by such organizations as the American Society of Association Executives, General Motors and the Port Authority of New York and New Jersey.
"The District is uniquely positioned to leverage its status as the nation's political capital into making the city more of an international financial center," said Councilmember Mary Cheh, chair of the Council's Committee on Public Services and Consumer Affairs.
Larry Smith, chairman of Captive Insurance Council of the District of Columbia (CIC-DC), said, "These new laws should make the District an even more attractive location for the formation of new captive insurance companies. Now our captive regulations will be the most advanced in the United States in terms of access to capital investment and flexibility in forming protected cell insurance companies."
Mr. Smith added that each captive insurance company that locates in the District has a "multiplier economic effect through its business presence, its capital deposits and the use of local professional service providers."
CIC-DC offers quarterly breakfast seminars on captive insurance in partnership with DISB. More information on the District's captive insurance or the new captive laws is available online at www.disb.dc.gov or through Dana Sheppard, DISB Risk Finance Bureau director, at 202-727-5074.
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