Kansas Governor Laura Kelly approved legislation permitting one or more sponsors to establish a protected cell captive insurance company, defining the application process and related conditions.
House Bill 2334 permits these captives to incorporate as stock insurers and structure as a mutual, nonprofit corporation, or limited liability company, as outlined in the bill summary.
To apply, potential captives must give the insurance commissioner materials that demonstrate how they will account for losses and expenses and acknowledge that financial records will be made available at the commissioner’s request, according to the bill.
Prospective captives must also submit all contracts or sample contracts and provide evidence expenses will be distributed in an equitable way to each protected cell.
The legislation also updates Kansas regulations, requiring protected cell captives to maintain a minimum of $100,000 in unimpaired capital and surplus.
Pure captives must hold $250,000, and association captives incorporated as stock insurers must meet a $500,000 capital threshold.
The bill allows two or more protected cells to pool assets for investment purposes. This pooling does not compromise the separation of assets for accounting or other uses, according to the bill summary.
The commissioner must approve each participant’s contract in writing before a policy becomes effective.
Adding, withdrawing, or terminating a protected cell constitutes a plan change, which also requires the commissioner’s approval.
Protected cells are subject to the Kansas Insurers Supervision, Rehabilitation and Liquidation Act. The legislation includes a process for converting protected cells into any captive insurer format permitted under Kansas law.
The Kansas Department of Insurance and the Captive Insurance Companies Association did not provide comments.
