New Nevada Law Eases Burden for New Insurance Companies
CARSON CITY – A new Nevada law may spur more captive insurance companies to make Nevada home.
Nevada Insurance Commissioner Brett Barratt today credited Gov. Brian Sandoval with making Nevada a more attractive place to do business when he signed Assembly Bill 74 into law.
The bill was submitted by the Nevada Division of Insurance and contains provisions that reduce compliance expenses, lower application costs and simplify financial reporting.
A captive can typically incorporate in Nevada within 24 hours.
Captive insurance companies typically finance risks emanating from their parent group or groups. Using a captive insurer is essentially a risk management tactic by which a business forms its own insurance company subsidiary in order to finance its retained losses in a formal structure.
An example would be a car dealership forming a captive insurance company to provide hail insurance for the cars on its lot.
Sandoval said the changes to the laws governing captives are in line with his goals to make Nevada a more business friendly state.
“These changes are closely aligned with Nevada’s business friendly attitude. Captive insurers are also an excellent mechanism for businesses to capitalize on their successful risk management,” said Sandoval.
In addition to the changes enabled by AB 74, Barratt said Nevada is appealing to captive insurers because it has no corporate income tax and business friendly corporate laws.
“I’m very pleased that the Nevada was able to make these changes to enhance our competitiveness as a ‘pure’ captive insurance domicile,” said Commissioner Barratt.
Barratt said the measure will further help Nevada diversify its economy by creating more non-tourism, white collar jobs.
In the last 20 to 30 years there has been tremendous growth in the number of captive insurance companies worldwide.
There are well over 5,000 captive insurance companies across the globe writing more than $20 billion in premiums. These companies have capital and surplus estimated at over $50 billion.
The total premium dollar amount of all lines of insurance in Nevada for 2010 was approximately $11 billion.