Download as PDF
304.49-020 Certificate required for captive insurer -- Qualifications -Restrictions on doing business -- Required documentation -Confidentiality -- Fee.
(1)
(2)
(3)
Any captive insurer, when permitted by its articles of incorporation, charter, or
other organizational document, may apply to the commissioner for a certificate
of authority to engage in any and all kinds of insurance defined in Subtitle 5 of
this chapter; provided, however, that:
(a) No pure captive insurer may insure any risks other than those of its
parent and affiliated companies or controlled unaffiliated business;
(b) No consortium captive insurer may insure any risks other than those of
the member organizations of its consortium and their affiliated companies;
(c) No industrial insured captive insurer may insure any risks other than
those of the industrial insureds that comprise the industrial insured group
and their affiliated companies;
(d) No captive insurer may provide personal motor vehicle or homeowner's
insurance coverage or any component thereof;
(e) No captive insurer may accept or cede reinsurance except as provided in
KRS 304.49-110;
(f) No captive insurer that is issued an initial certificate of authority on or
after July 1, 2006, shall directly provide workers compensation
insurance; however, any captive insurer may provide excess workers'
compensation insurance to its parent and affiliated companies, unless
prohibited by the laws of the state having jurisdiction over the transaction.
Any captive insurer may reinsure workers' compensation of a qualified
self-insured plan of its parent and affiliated companies;
(g) Any captive insurer which insures risks described in KRS 304.5-020 and
304.5-040 shall comply with all applicable state laws;
(h) No branch captive insurer may write any business in Kentucky except
insurance or reinsurance of the employee benefit business of its parent
and affiliated companies which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended; and
(i) No sponsored captive insurer may insure any risks other than those of its
participants.
No captive insurer shall do any insurance business in Kentucky unless:
(a) It first obtains from the commissioner a certificate of authority authorizing
it to do insurance business in Kentucky;
(b) Its board of directors, or in the case of a reciprocal insurer, its
subscribers' advisory committee, holds at least one (1) meeting each year
in Kentucky; and
(c) It maintains its principal place of business in Kentucky or, in the case of a
branch captive insurer, maintains the principal place of business for its
branch operations in Kentucky.
Before receiving a certificate of authority, a captive insurer formed as a
corporation shall file with the commissioner a certified copy of its charter and
bylaws, a statement under oath of its president and secretary showing its
(4)
(5)
(6)
financial condition, and any other statements or documents required by the
commissioner;
Before receiving a certificate of authority, a captive insurer formed as a
reciprocal insurer shall:
(a) File with the commissioner a certified copy of the power of attorney of its
attorney-in-fact, a certified copy of its subscribers' agreement, a
statement under oath of its attorney-in-fact showing its financial condition,
and any other statements or documents required by the commissioner;
and
(b) Submit to the commissioner a sample of the coverages, deductibles,
coverage limits, and rates, together with any additional information
required by the commissioner. In the event of any subsequent material
change in any item in the samples, the reciprocal captive insurer shall
submit to the commissioner for approval an appropriate revision. The
reciprocal captive insurer shall not offer any coverage until the forms are
approved by the commissioner. The reciprocal captive insurer shall not
use any initial rate until it is approved by the commissioner and shall
inform the commissioner of any material change in rates within thirty (30)
days of the adoption of the change.
In addition to the information required by subsection (3) or (4) of this section,
each applicant captive insurer shall file with the commissioner evidence of the
following:
(a) The amount and liquidity of its assets relative to the risks to be assumed;
(b) The adequacy of the expertise, experience, and character of the person
or persons who will manage it;
(c) The overall soundness of its plan of operation;
(d) The adequacy of the loss prevention programs of its parent, member
organizations, or industrial insureds as applicable; and
(e) Any other factors deemed relevant by the commissioner in ascertaining
whether the proposed captive insurer will be able to meet its policy
obligations.
In addition to the information required by subsections (3), (4), and (5) of this
section, each applicant-sponsored captive insurer shall file with the
commissioner the following:
(a) A business plan demonstrating how the applicant will account for the loss
and expense experience of each protected cell at a level of detail found to
be sufficient by the commissioner and how it will report the experience to
the commissioner;
(b) A statement acknowledging that all financial records of the sponsored
captive insurer, including records pertaining to any protected cells, shall
be made available for inspection or examination by the commissioner;
(c) All contracts or sample contracts between the sponsored captive insurer
and any participants; and
(d) Evidence that expenses shall be allocated to each protected cell in a fair
and equitable manner.
(7)
(8)
All portions of license applications reasonably designated confidential by the
applicant, and all examination reports, preliminary examination reports, working
papers, recorded information, other documents, and any copies of any of the
foregoing, produced or obtained by or submitted or disclosed to the
commissioner related to an examination pursuant to this subtitle shall, unless
the prior written consent of the captive insurer to which it pertains has been
obtained, be given confidential treatment, and shall not be subject to civil
subpoena, made public by the commissioner, or provided or disclosed to any
other person at any time except to:
(a) The insurance department of any state, country, or alien jurisdiction; or
(b) To a law enforcement official or agency of the Commonwealth of
Kentucky, any other state, or alien jurisdiction, as long as the official or
agency agrees in writing to hold it confidential and in a manner consistent
with this section.
Each captive insurer shall pay to the commissioner a nonrefundable fee as
stated in KRS 304.4-010 for examining, investigating, and processing its
application for certificate of authority. The commissioner is authorized to retain
legal, financial, and examination services from outside the department to assist
in examining and investigating the applicant, the reasonable cost of which may
be charged against the applicant. In addition, each captive insurer shall pay a
certificate of authority fee for the year of registration and a renewal fee for each
year thereafter.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1607, effective July 15, 2010. -Amended 2006 Ky. Acts ch. 252, Pt. XXXIV, sec. 6, effective April 25, 2006. -Created 2000 Ky. Acts ch. 434, sec. 2, effective July 14, 2000.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.