Florida has amended its captive law pursuant to H.B. 1101, reducing minimum capital and surplus requirements for industrial insured captives, expanding the lines of insurance that may be written by captives, and recognizing pure and special purpose captive insurance companies as distinct from traditional Florida domestic insurers. Florida now also expressly recognizes these entities as distinct forms of insurers when validly domiciled outside of Florida, and recognizes captive reinsurance companies as reinsurers worthy of distinct regulatory treatment. Left intact is the qualified exception to licensure for captives transacting only hospital professional, hospital liability, and hospital general liability insurance issued to residents of Florida.
As amended, the minimum capital and surplus requirements under part V of chapter 628, F.S., are as follows: (1) for pure captives, $100,000 in capital and $150,000 in surplus; (2) for industrial insured captives, $200,000 in capital, and $300,000 in surplus for stock insurers or $500,000 in surplus for mutual insurers; (3) for special purpose captives, amounts to be determined by the Florida Office of Insurance Regulation based upon the company’s business plan, feasibility study, pro forma financial statements, and nature of the risks to be insured; and, (4) for captive reinsurance companies, capital or surplus equal to the greater of $300 million or 10% of reserves. Some of these figures are tweaked for captives incorporated as nonprofit corporations.
Florida’s captive law now consists of a fairly self-contained licensure and regulatory scheme, set apart from the complement of the Code with few exceptions. The state’s joinder with the many other states which recognize captives as alternative insuring vehicles will remove an express deterrent to various would-be market participants. Time will tell whether Florida’s captive overhaul will be significant enough to establish the state as a jurisdiction ripe for consideration as a domicile for captives against those states with an established and predictable regulatory infrastructure tailored for captives.
To view H.B. 1101, which took effect April 24, 2012, click here.