Commissioner Thomas E. Hampton of the District of Columbia Department of Insurance, Securities and Banking (DISB) and District of Columbia Councilmember Mary M. Cheh (Ward 3) announced that two captive insurance laws passed by the Council of the District of Columbia are officially in effect as of March 14, 2007. The “Captive Insurance Company Amendment Act of 2006” and the “Special Purpose Financial Captive Authorization Amendment Act of 2006,” introduced by Councilmember Jim Graham (Ward 1), were passed at the end of 2006 and signed into law by outgoing Mayor Anthony A. Williams.
“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,” said Commissioner Hampton. “DISB 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.”
A captive insurance company is a form of self-insurance that has been gaining popularity over the past decade both in the United States and in the international financial market. Since 2001, when the District enacted its captive insurance law, DISB’s Risk Finance Bureau has licensed more than 70 companies, including those owned by such iconic organizations as the American Society of Association Executives, General Motors and the Port Authority of New York and New Jersey.
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 will make the District’s captive laws more compact and easy to use.
“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 Cheh, chair of the Council’s Committee on Public Services and Consumer Affairs, which has oversight of DISB and captive insurance services.
The Captive Insurance Council of the District of Columbia (CIC-DC), whose mission is promoting the District as a captive insurance domicile, has been working with DISB in ensuring the passage of the new laws. Larry Smith, chair of CIC-DC, said he is confident that “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. Each captive insurance company 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. For more information on the District’s captive insurance or the new captive laws, please visit disb.dc.gov or contact DISB’s Risk Finance Bureau director Dana Sheppard at (202) 727-5074.
CIC-DC Networking Breakfast Meeting
The Captive Insurance Council of the District of Columbia (CIC-DC) will host a networking breakfast meeting for May 22 at the University Club in Washington, DC
Tom Jones, a captive taxation expert, will review key cell captive tax and legal issues, including criteria for achieving insurance tax treatment, summary of 2005 taxpayer comments to the Internal Revenue Service on cells, structuring to maximize efficacy of protected cell captives cell ‘walls’ in the event of an insolvency and tax and legal comparison of protected cell captives versus ICCs.
- Basics of cell captive taxation
- Use of shares versus contract rights
- PCCs versus ICCs – legal and tax aspects
Date: May 22, 2007
Time: 8 am–9:30 am
Location: The University Club, 1135 16th Street, NW, Washington, DC
Telephone: (202) 463-8163
E-mail: Erica Massey, emassey@dccaptives.org