Texas Regulators Propose Increased Opportunities for Domestic Captives

The Texas Department of Insurance (TDI) has proposed a new rule and certain amendments to existing rules intended to implement provisions of the Texas Insurance Code that apply to captive insurance companies.

The proposed rule and amendments follow 2015 and 2017 legislative amendments to the Insurance Code, which enacted certain provisions that: (i) allow a captive insurance company to be formed as a captive exchange; (ii) authorize the Secretary of State to form a captive insurance company prior to receiving TDI approval of the captive insurance company’s formation documents; (iii) allow the TDI Commissioner to waive the actuarial opinion required with the annual report for a captive insurance company that meets certain requirements; (iv) allow TDI to approve dividends and distributions to a captive insurance company’s policyholders and its equity interest holders; and (v)  providing a procedure for determining acceptable qualified jurisdictions and rating agencies for reinsurance transactions under the Insurance Code.

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