Captive Insurance
Overview
Florida originally enacted legislation for captive insurance in 1982, which created provisions authorizing the creation of U.S. domiciled captive insurers by establishing operational criteria and standards.
In 2012, HB1101 was signed into law and augmented these provisions by further specifying criteria for the formation, incorporation, coverage, capital and surplus, reporting, licensure and reinsurance of captive insurers.
What is a Captive Insurance Company?
A Captive Insurance Company is a domestic insurer established under Chapter 628, which includes the three types of captive insurance companies available in Florida:
- Pure Captive Insurance Company - A company that insures risks of its parent, affiliated companies, controlled unaffiliated businesses, or a combination thereof.
- Industrial Insured Captive Insurance Company - A captive insurance company that provides insurance only to the industrial insureds that are its stockholders or members, and affiliates thereof, or to the stockholders, and affiliates thereof, of its parent corporation. They can also provide reinsurance to insurers only on risks written by such insurers for the industrial insureds that are the stockholders or members, and affiliates thereof, of the industrial insured captive insurer, or the stockholders, and affiliates thereof, of the parent corporation of the industrial insured captive insurer.
- Special Purpose Captive Insurance Company - A captive insurance company formed or licensed under Chapter 628 which does not meet the definition of any other type of captive insurance company. A special purpose captive insurance company may insure only the risk of its parent.
What is a Captive Reinsurance Company?
A Captive Reinsurance Company is a reinsurance company formed or licensed under Chapter 628 and is wholly owned by a qualifying reinsurance parent company.
A captive reinsurance company must be a stock corporation and may not directly insure risks.
Relevant Florida Statutes
- 628.901 - Definitions
- 628.905 - Licensing; authority
- 628.906 - Application requirements; restrictions on eligibility of officers & directors
- 628.907 - Minimum capital & net assets requirements; restriction on payment of dividends
- 628.908 - Surplus requirements; restriction on payment of dividends
- 628.909 - Applicability of other laws
- 628.910 - Incorporation options & requirements
- 628.911 - Reports & statements
- 628.912 - Discounting of loss & loss adjustment expense reserves
- 628.913 - Captive reinsurance companies
- 628.914 - Minimum capitalization or reserves for captive reinsurance companies
- 628.9141 - Incorporation of a captive reinsurance company
- 628.9142 - Reinsurance; effect on reserves
- 628.915 - Exemption from compulsory association
- 628.917 - Insolvency & liquidation
- 628.918 - Management of assets of captive reinsurance company
- 628.919 - Standards to ensure risk management control by parent company
- 628.920 - Eligibility of licensed captive insurance company for certificate of authority to act as insurer
Florida's Minimum Capitalization and/or Surplus Requirements for a Captive Insurance or Reinsurance Company
Type of Captive
Incorporation Requirements
Unimpaired Paid-In Capital
Unimpaired Surplus
Total Capital and/or Surplus Requirement
Captive Reinsurance Company Must incorporate as stock insurer N/A N/A In capital OR surplus, the greater of $300 million or 10 percent of reserves. OIR may prescribe additional capital or surplus based upon the type, volume, and nature of the insurance business transacted. Industrial Insured Captive Insurance Company Incorporate as either a mutual or stock insurer. There is no requirement to be incorporated in Florida if validly incorporated in another jurisdiction. - Mutual Insurer - N/A
- Stock Insurer - $100,000
- Mutual Insurer - $500,000
- Stock Insurer - $300,000
- Mutual Insurer - $500,000
- Stock Insurer - $500,000
Pure Captive Insurance Company Incorporate as either stock insurer or as a public benefit, mutual benefit, or religious nonprofit corporation. Must adhere to the Florida Not for Profit Corporation Act. - Mutual Insurer - N/A
- Stock Insurer - $100,000
- Mutual Insurer - $250,000
- Stock Insurer - $150,000
- Mutual Insurer - $250,000
- Stock Insurer - $250,000
Special Purpose Captive Insurance Company Corporation or nonprofit corporation N/A N/A To be determined by OIR given due consideration to the company’s business plan, feasibility study, and pro forma financial statements and projections, including the nature of the risks to be insured.
Type of Captive | Incorporation Requirements | Unimpaired Paid-In Capital | Unimpaired Surplus | Total Capital and/or Surplus Requirement |
| Captive Reinsurance Company | Must incorporate as stock insurer | N/A | N/A | In capital OR surplus, the greater of $300 million or 10 percent of reserves. OIR may prescribe additional capital or surplus based upon the type, volume, and nature of the insurance business transacted. |
| Industrial Insured Captive Insurance Company | Incorporate as either a mutual or stock insurer. There is no requirement to be incorporated in Florida if validly incorporated in another jurisdiction. |
|
|
|
| Pure Captive Insurance Company | Incorporate as either stock insurer or as a public benefit, mutual benefit, or religious nonprofit corporation. Must adhere to the Florida Not for Profit Corporation Act. |
|
|
|
| Special Purpose Captive Insurance Company | Corporation or nonprofit corporation | N/A | N/A | To be determined by OIR given due consideration to the company’s business plan, feasibility study, and pro forma financial statements and projections, including the nature of the risks to be insured. |
Other Requirements Necessary to Establish a Captive Insurance or Reinsurance Company in Florida
- A pure captive insurance company or industrial insured captive insurance company incorporated as a stock insurer is required to have its capital divided into shares and held by the stockholders pursuant to s. 628.910, F.S.
- An industrial insured captive insurance company may be incorporated as a mutual insurer without capital stock, the governing body of which is elected by its members.
- In the case of a captive insurance company formed as a corporation or a nonprofit corporation, before the articles of incorporation are transmitted to the Secretary of State, the incorporators shall file three copies of the articles of incorporation with OIR. If OIR finds they conform to law, it shall endorse its approval on each of the three original copies, retain one copy for its files and return the remaining copies to the incorporators for filing with the Florida Department of State. The articles of incorporation and the organization fees required by the Florida Business Corporation Act or the Florida Not for Profit Corporation Act, as applicable, must be transmitted to the Secretary of State, who must record the articles of incorporation.
- A captive insurance company may not have fewer than three incorporators of whom not fewer than two must be residents of this state pursuant to s. 628.910, F.S.
- The capital stock of a captive insurance company incorporated as a stock insurer must be issued at par value of not less than $1 or more than $100 per share pursuant to s. 628.910, F.S.
To apply, an applicant must complete the Captive Insurance Application Form, which also contains general instructions. Visit the Company Admissions page for more information about general instructions related to the application package and FAQ's.
Before receiving a license, a captive insurance company formed as a corporation or a nonprofit corporation must file with OIR:
- A certified copy of its articles of incorporation and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by OIR.
- The amount and liquidity of the proposed captive insurance company’s assets relative to the risks to be assumed.
- The adequacy of the expertise, experience, and character of the person or persons who will manage the company.
- The overall soundness of the company’s plan of operation.
- The adequacy of the loss prevention program’s of the company’s parent, member organizations, or industrial insureds, as applicable.
- Any other factors considered relevant by OIR in ascertaining whether the company will be able to meet its policy obligations.
To evidence competence and trustworthiness of its officers and directors, the application for a license to act as a captive insurance or captive reinsurance company shall include, but is not limited to:
- Background Investigations
- Biographical Affidavits
- Fingerprint Cards for all Officers and Directors – Fingerprints must be taken by a law enforcement agency or other entity approved by OIR, be accompanied by the fingerprint processing fee specified in s. 624.501, F.S. and processed in accordance with s. 624.34, F.S.
- Each year, prior to March 1, a captive insurance or captive reinsurance company is required to submit to OIR a report of its financial condition verified by oath of two of its executive officers and using generally accepted accounting principles, unless OIR approves the use of statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by OIR for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by OIR.
- A captive insurance company may submit a written application for filing the required report, using generally accepted accounting principles, on a fiscal year-end that is consistent with the parent company’s fiscal year. If the fiscal year-end reporting is granted, the annual report is due 60 days after the fiscal year-end.
- A captive insurance company must appoint a resident registered agent to accept service of process and to otherwise act on its behalf in Florida.
- If a captive insurance company is formed as a corporation or a nonprofit corporation and if the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the Chief Financial Officer of this state must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.
Captive Insurance Company
- May take credit for reserves on risks or portions of risks ceded to authorized insurers or reinsurers and unauthorized insurers or reinsurers complying with s. 624.610, F.S.
- May not take credit for reserves on risks or portions of risks ceded to an unauthorized insurer or reinsurer if the insurer or reinsurer is not in compliance with s. 624.610, F.S.
Captive Reinsurance Company
- Required to file an annual actuarial opinion on loss and loss adjustment expense reserves provided by an independent actuary. The actuary may not be an employee of the captive reinsurance company or its affiliates.
- May discount its loss and loss adjustment expense reserves at treasury rates applied to the applicable payments projected through the use of the expected payment pattern associated with the reserves per s. 628.912, F.S.
- See Chapter 624, Part IV, F.S., with respect to fees, taxes and funds.
- Premium Tax - In accordance with s. 624.509, F.S., an amount equal to 1.75% of the gross amount of such receipts; with provisions for allowable credits under subsection (4) and (5).
Approved Providers/Independent Directors
- There is no provision in Florida law to maintain an approved vendor list for services of captive managers, actuaries, independent directors, certified public accountants, etc.
Asset Management
- With respect to captive reinsurance companies only, at least 35% of their assets must be managed by an asset manager domiciled in Florida.
Board Meeting
- Required to hold at least one board of directors’ meeting each year in Florida.
Coverage
- A captive insurance company may apply to offer all insurance authorized in Florida, except for workers’ compensation and employer’s liability, life, health insurance, personal motor vehicle insurance, and personal residential property insurance.
- A captive reinsurance company may apply to offer reinsurance covering property and casualty insurance or reinsurance contracts.
Fees
- Initial License Application Fee (non-refundable) - $1,500
- Annual Renewal Fee - $1,000
Investment Restrictions
- There are investment restrictions as it applies to provisions of Chapter 625, Part II, F.S.
Principal Place of Business
- Required to maintain its principal place of business in Florida.
Residency Requirements
- At least one member of the Board of Directors must be a resident of Florida.
- At least two incorporators must be a resident of Florida.
- A pure captive insurance company or industrial insured captive insurance company incorporated as a stock insurer is required to have its capital divided into shares and held by the stockholders pursuant to s. 628.910, F.S.
- An industrial insured captive insurance company may be incorporated as a mutual insurer without capital stock, the governing body of which is elected by its members.
- In the case of a captive insurance company formed as a corporation or a nonprofit corporation, before the articles of incorporation are transmitted to the Secretary of State, the incorporators shall file three copies of the articles of incorporation with OIR. If OIR finds they conform to law, it shall endorse its approval on each of the three original copies, retain one copy for its files and return the remaining copies to the incorporators for filing with the Florida Department of State. The articles of incorporation and the organization fees required by the Florida Business Corporation Act or the Florida Not for Profit Corporation Act, as applicable, must be transmitted to the Secretary of State, who must record the articles of incorporation.
- A captive insurance company may not have fewer than three incorporators of whom not fewer than two must be residents of this state pursuant to s. 628.910, F.S.
- The capital stock of a captive insurance company incorporated as a stock insurer must be issued at par value of not less than $1 or more than $100 per share pursuant to s. 628.910, F.S.
To apply, an applicant must complete the Captive Insurance Application Form, which also contains general instructions. Visit the Company Admissions page for more information about general instructions related to the application package and FAQ's.
Before receiving a license, a captive insurance company formed as a corporation or a nonprofit corporation must file with OIR:
- A certified copy of its articles of incorporation and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by OIR.
- The amount and liquidity of the proposed captive insurance company’s assets relative to the risks to be assumed.
- The adequacy of the expertise, experience, and character of the person or persons who will manage the company.
- The overall soundness of the company’s plan of operation.
- The adequacy of the loss prevention program’s of the company’s parent, member organizations, or industrial insureds, as applicable.
- Any other factors considered relevant by OIR in ascertaining whether the company will be able to meet its policy obligations.
To evidence competence and trustworthiness of its officers and directors, the application for a license to act as a captive insurance or captive reinsurance company shall include, but is not limited to:
- Background Investigations
- Biographical Affidavits
- Fingerprint Cards for all Officers and Directors – Fingerprints must be taken by a law enforcement agency or other entity approved by OIR, be accompanied by the fingerprint processing fee specified in s. 624.501, F.S. and processed in accordance with s. 624.34, F.S.
- Each year, prior to March 1, a captive insurance or captive reinsurance company is required to submit to OIR a report of its financial condition verified by oath of two of its executive officers and using generally accepted accounting principles, unless OIR approves the use of statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by OIR for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by OIR.
- A captive insurance company may submit a written application for filing the required report, using generally accepted accounting principles, on a fiscal year-end that is consistent with the parent company’s fiscal year. If the fiscal year-end reporting is granted, the annual report is due 60 days after the fiscal year-end.
- A captive insurance company must appoint a resident registered agent to accept service of process and to otherwise act on its behalf in Florida.
- If a captive insurance company is formed as a corporation or a nonprofit corporation and if the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the Chief Financial Officer of this state must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.
Captive Insurance Company
- May take credit for reserves on risks or portions of risks ceded to authorized insurers or reinsurers and unauthorized insurers or reinsurers complying with s. 624.610, F.S.
- May not take credit for reserves on risks or portions of risks ceded to an unauthorized insurer or reinsurer if the insurer or reinsurer is not in compliance with s. 624.610, F.S.
Captive Reinsurance Company
- Required to file an annual actuarial opinion on loss and loss adjustment expense reserves provided by an independent actuary. The actuary may not be an employee of the captive reinsurance company or its affiliates.
- May discount its loss and loss adjustment expense reserves at treasury rates applied to the applicable payments projected through the use of the expected payment pattern associated with the reserves per s. 628.912, F.S.
- See Chapter 624, Part IV, F.S., with respect to fees, taxes and funds.
- Premium Tax - In accordance with s. 624.509, F.S., an amount equal to 1.75% of the gross amount of such receipts; with provisions for allowable credits under subsection (4) and (5).
Approved Providers/Independent Directors
- There is no provision in Florida law to maintain an approved vendor list for services of captive managers, actuaries, independent directors, certified public accountants, etc.
Asset Management
- With respect to captive reinsurance companies only, at least 35% of their assets must be managed by an asset manager domiciled in Florida.
Board Meeting
- Required to hold at least one board of directors’ meeting each year in Florida.
Coverage
- A captive insurance company may apply to offer all insurance authorized in Florida, except for workers’ compensation and employer’s liability, life, health insurance, personal motor vehicle insurance, and personal residential property insurance.
- A captive reinsurance company may apply to offer reinsurance covering property and casualty insurance or reinsurance contracts.
Fees
- Initial License Application Fee (non-refundable) - $1,500
- Annual Renewal Fee - $1,000
Investment Restrictions
- There are investment restrictions as it applies to provisions of Chapter 625, Part II, F.S.
Principal Place of Business
- Required to maintain its principal place of business in Florida.
Residency Requirements
- At least one member of the Board of Directors must be a resident of Florida.
- At least two incorporators must be a resident of Florida.