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ENGROSSED HOUSE
BILL NO. 2955 By: Blair and Tedford of the
House
and
Reinhardt of the Senate
An Act relating to insurance; amending 36 O.S. 2021,
Sections 6470.2, as amended by Section 1, Chapter
127, O.S.L. 2022, 6470.3, as amended by Section 2,
Chapter 127, O.S.L. 2022, 6470.6, 6470.10, as amended
by Section 3, Chapter 127, O.S.L. 2022, 6470.14,
6470.19, 6470.24.1, 6470.29, and 6470.35 (36 O.S.
Supp. 2025, Sections 6470.2, 6470.3, 6470.10, and
6470.35), which relate to the Oklahoma Captive
Insurance Company Act; providing definitions; adding
language to clarify persons referenced; permitting
Insurance Commissioner disclose information to the
National Association of Insurance Commissioners if
conditions are met; requiring captive insurance
company respond to inquiries within timeframe;
requiring sponsored captive insurance companies to
maintain unimpaired paid-in capital; permitting
irrevocable letter of credit issued by financial
institutions approved by the Insurance Commissioner;
permitting the suspension or revocation of license
for failure to adequately respond to inquiry;
permitting fines; modifying fees and taxes to be
reported and disbursed by the Insurance Commissioner;
requiring Insurance Commissioner's approval of
mergers or acquisitions involving change in control
of a captive insurance company; requiring captive
insurance companies establish and maintain
administrative and accounting procedures; requiring
written approval for transfer of assets made with
respect to protected cell; requiring clear indication
in participant contact; requiring annual auditor
review; requiring contract identify protected cell;
authorizing the remedy of tracing; clarifying
creation of protected cell shall not create a legal
person; permitting conversion of one or more
protected cells; requiring written notice before
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conversion; directing that conversion shall be deemed
a continuation of protected cell's existence;
stipulating that conversion shall occur without any
transfer or assignment; clarifying conversion shall
not limit any rights or protections applicable;
referencing law to be followed for certain converting
protected cells; permitting conveyance of protected
cell; authorizing certain captive insurance companies
conversion into a protected cell; stipulating that
conversion shall be subject to a business plan;
permitting certain mergers of protected cells by a
sponsored captive insurance company; clarifying
creditors to whom assets and recourse are available;
establishing that establishment of one or more
protected cells does not alone constitute fraud;
providing information to be specified in legal
actions; clarifying that legal action that does not
specify protected cells shall be deemed against the
general assets only; clarifying that unnamed
protected cells shall not be party to legal action;
establishing no protected cell has duty to defend
rights and obligations of any other protected cell;
providing treatment and status of papers, documents,
or property in legal action; directing that assets
and liabilities kept separate in connection with
rehabilitation or liquidation; providing how receiver
shall manage assets and liabilities of protected cell
captive insurance company; prohibiting unapproved use
of assets to pay expenses or claims; providing
procedures for a captive insurance company dealing
with foreign currency or securities; permitting
public bodies to expend public funds; repealing 36
O.S. 2021, Section 6470.28, which relates to
conversion or merger and applicability of Article 16A
of the Insurance Code; providing for codification;
and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2021, Section 6470.2, as
amended by Section 1, Chapter 127, O.S.L. 2022 (36 O.S. Supp. 2025,
Section 6470.2), is amended to read as follows:
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Section 6470.2. As used in the Oklahoma Captive Insurance
Company Act:
1. "Alien company" means an insurance company formed and
licensed pursuant to the laws of a country or jurisdiction other
than the United States of America, or any of its states, districts,
commonwealths and possessions;
2. "Affiliated company" means a company in the same corporate
system as a parent, an industrial insured, or a member organization
by virtue of common ownership, control, operation, or management;
3. "Agency captive insurance company" means a captive insurance
company that is:
a. a captive insurance company that is owned or
controlled by an insurance agency, brokerage, or
reinsurance intermediary, or an affiliate thereof, or
under common ownership or control with such agency,
brokerage, or reinsurance intermediary, and that only
insures the risks of insurance or annuity contracts
placed by or through such agency, brokerage, or
reinsurance intermediary, or
b. a captive insurance company that is owned or
controlled by a seller or issuer of service contracts,
warranties, vehicle protection products, or financial
protection products, and that only insures or
reinsures the contract liability arising out of such
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contracts, warranties, or products of that seller or
issuer.
For the purposes of this paragraph, "common ownership or
control" shall mean ownership of ten percent (10%) or more of the
voting securities or such other form of ownership or control as the
Insurance Commissioner may approve.
4. "Association" means a legal association of individuals,
corporations, partnerships, or associations that has been in
continuous existence for at least one (1) year or such lesser period
of time approved by the Insurance Commissioner:
a. the member organizations of which, or which does
itself or either of them acting in concert directly or
indirectly own, control, or hold with power to vote
all of the outstanding voting securities or interests
of, or have complete voting control over an
association captive insurance company, or
b. the member organizations of which collectively
constitute all of the subscribers of an association
captive insurance company formed as a reciprocal
insurer;
4. 5. "Association captive insurance company" means a captive
insurance company that insures risks of the member organizations of
the association and their affiliated companies;
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5. 6. "Branch business" means any insurance business transacted
by a branch captive insurance company in this state;
6. 7. "Branch captive insurance company" means an alien captive
insurance company or foreign captive insurance company licensed by
the Insurance Commissioner to transact the business of insurance in
this state through a business unit with a principal place of
business in this state. A branch captive insurance company must be
a pure captive insurance company with respect to operations in this
state, unless otherwise permitted by the Insurance Commissioner;
7. 8. "Branch operations" means any business operations of a
branch captive insurance company in this state;
8. 9. "Capital and surplus" means the amount by which the value
of all of the assets of the captive insurance company exceeds all of
the liabilities of the captive insurance company, as determined
under the method of accounting utilized by the captive insurance
company in accordance with the applicable provisions of this act;
9. 10. "Captive insurance company" means a pure captive
insurance company, agency captive insurance company, association
captive insurance company, sponsored captive insurance company,
special purpose captive insurance company, industrial insured
captive insurance company, branch captive insurance company, or
series captive insurance company formed or licensed under the
Oklahoma Captive Insurance Company Act;
10. 11. "Controlled unaffiliated business" means a company:
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a. that is not in the corporate system of a parent and
affiliated companies,
b. that has an existing contractual relationship with a
parent or affiliated company, and
c. whose risks are managed by a pure captive insurance
company in accordance with Section 6470.27 of this
title;
11. 12. "Insurance Commissioner" or "Commissioner" means the
Insurance Commissioner of this state or designee of the Insurance
Commissioner;
12. 13. "Department" means the Insurance Department;
13. 14. "Dormant captive insurance company" means a captive
insurance company holding a valid and active certificate of dormancy
issued by the Insurance Commissioner pursuant to Section 6470.35 of
this title;
15. "GAAP" means generally accepted accounting principles;
14. 16. "Industrial insured" means an insured:
a. who procures the insurance of any risk or risks by use
of the services of a full-time employee acting as an
insurance manager or buyer,
b. whose aggregate annual premiums for insurance on all
risks total at least Twenty-five Thousand Dollars
($25,000.00), and
c. who has at least twenty-five full-time employees;
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15. 17. "Industrial insured captive insurance company" means a
company that insures risks of the industrial insureds that comprise
the industrial insured group and their affiliated companies;
16. 18. "Industrial insured group" means a group of industrial
insureds that collectively directly or indirectly owns, controls, or
holds with power to vote all of the outstanding voting securities or
other voting interests or has complete control over an industrial
insured captive insurance company;
17. 19. "Member organization" means any individual,
corporation, partnership, or association that belongs to an
association;
18. 20. "Parent" means any corporation, partnership, or
individual that directly or indirectly owns, controls, or holds with
power to vote more than fifty percent (50%) of the outstanding
voting securities of a pure captive insurance company;
19. 21. "Participant" means an entity as defined in Section
6470.31 of this title, and any affiliates of that entity, that are
insured by a sponsored captive insurance company, where the losses
of the participant are limited through a participant contract to the
participant's pro rata share of the assets of one or more protected
cells identified in the participant contract;
20. 22. "Participant contract" means a contract by which a
sponsored captive insurance company insures the risks of one or more
participants and limits the losses of each participant to its pro
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rata share of the assets of one or more protected cells identified
in the participant contract;
21. 23. "Protected cell" means a separate and distinct account
established and maintained by or on behalf of a sponsored captive
insurance company in which assets are accounted for and recorded for
one or more participants in accordance with the terms of one or more
participant contracts to fund the liability of the sponsored captive
insurance company assumed on behalf of the participants as set forth
in the participant contracts;
24. "Public body" means any state or local governmental body
formed pursuant to the laws of this state, including, but not
limited to, school districts, vocational education districts,
cities, counties, public trusts, public authorities, commissions or
other local governmental bodies;
22. 25. "Pure captive insurance company" means a company that
insures risks of its parent, affiliated companies of its parent, and
any controlled unaffiliated business, or a combination thereof. For
purposes of this paragraph, "controlled unaffiliated business" means
an entity insured by a pure captive insurance company:
a. that is not in the corporate system of a parent and
affiliated companies,
b. that has an existing contractual relationship with a
parent or affiliated company, and
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c. whose risks are managed by a pure captive insurance
company;
23. 26. "Reciprocal insurer" has the meaning given that term in
Article 29 of the Oklahoma Insurance Code;
24. 27. "Risk retention group" means a risk retention group
formed pursuant to the Liability Risk Retention Act of 1986 under
Section 3901 of Title 15 of the United States Code;
25. 28. "Series" means a series of members, managers,
membership interests or assets under the Oklahoma Limited Liability
Company Act pursuant to Section 2054.4 of Title 18 of the Oklahoma
Statutes, or the corresponding law of another state;
26. 29. "Series captive insurance company" means a series which
has received a certificate of authority pursuant to this act;
27. 30. "Special purpose captive insurance company" means a
captive insurance company that is formed or licensed under the
Oklahoma Captive Insurance Company Act that does not meet the
definition of any other type of captive insurance company defined in
this section and is designated as a special purpose captive
insurance company by the Insurance Commissioner;
28. 31. "Sponsor" means an entity that meets the requirements
of Section 6470.30 of this title and is approved by the Insurance
Commissioner to provide all or part of the capital and surplus
required by applicable law and to organize and operate a sponsored
captive insurance company;
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29. 32. "Sponsored captive insurance company" means a captive
insurance company:
a. in which the minimum capital and surplus required by
applicable law is provided by one or more sponsors,
b. that is formed or licensed under the Oklahoma Captive
Insurance Company Act,
c. that insures the risks of its participants only
through separate participant contracts, and
d. that funds its liability to each participant through
one or more protected cells and segregates the assets
of each protected cell from the assets of other
protected cells and from the assets of the sponsored
captive insurance company's general account assets;
and
30. 32. "Workers' compensation insurance" means insurance
provided in satisfaction of an employer's responsibility as set
forth in the Administrative Workers' Compensation Act and the
Oklahoma Employee Injury Benefit Act.
SECTION 2. AMENDATORY 36 O.S. 2021, Section 6470.3, as
amended by Section 2, Chapter 127, O.S.L. 2022 (36 O.S. Supp. 2025,
Section 6470.3), is amended to read as follows:
Section 6470.3. A. A captive insurance company, when permitted
by its articles of incorporation or charter, may apply to the
Insurance Commissioner, in the manner and form prescribed by the
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Commissioner, for a license to do any and all insurance authorized
by this title; however:
1. A pure captive insurance company may not insure any risks
other than those of its parent, affiliated companies of its parent,
or any controlled unaffiliated business, or a combination thereof;
2. An association captive insurance company may not insure any
risks other than those of the member organizations of its
association and their affiliated companies;
3. An industrial insured captive insurance company may not
insure any risks other than those of the industrial insureds that
comprise the industrial insured group and their affiliated
companies;
4. A special purpose captive insurance company may provide
insurance or reinsurance, or both, for risks as approved by the
Insurance Commissioner;
5. A captive insurance company may not provide personal motor
vehicle or homeowner's insurance coverage or any component of these
coverages;
6. Any captive insurance company may provide workers'
compensation insurance, insurance in the nature of workers'
compensation insurance, and reinsurance of such policies, unless
prohibited by federal law or laws of this state or any other state
having jurisdiction over the transaction; and
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7. A series captive insurance company may not insure any risks
other than those permitted in paragraphs 1 through 6 of this
subsection. A series may elect to apply for a certificate of
authority as an association captive insurance company, industrial
insured captive insurance company, a pure captive insurance company,
series captive insurance company, or a special purpose captive
insurance company.
B. To conduct insurance business in this state, a captive
insurance company shall:
1. Obtain from the Insurance Commissioner a license authorizing
it to conduct insurance business in this state;
2. Maintain a place of business in this state designated as its
registered office; and
3. Appoint a resident registered agent to accept service of
process and to otherwise act on its behalf in this state. Whenever
the registered agent cannot with reasonable diligence be found at
the registered office of the captive insurance company, the
Insurance Commissioner shall be deemed an agent of the captive
insurance company upon whom any process, notice, or demand, other
than a subpoena, may be served. Service upon the Insurance
Commissioner shall be in accordance with Section 622 of this title.
C. 1. Before receiving a license, a captive insurance company
shall file with the Insurance Commissioner a certified copy of its
organizational documents, a statement under oath of its president or
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other authorized person showing its financial condition, a
feasibility study, a business plan, and any other statements,
information or documents required by the Insurance Commissioner.
2. In addition to the information required by paragraph 1 of
this subsection, an applicant captive insurance company shall file
with the Insurance Commissioner evidence of:
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 business plan of
operation,
d. the adequacy of the loss prevention programs of its
insureds, and
e. such other factors considered relevant by the
Insurance Commissioner in ascertaining whether the
proposed captive insurance company will be able to
meet its obligations.
3. Information submitted pursuant to this subsection section is
confidential and may not be made public by the Insurance
Commissioner or an agent or employee of the Insurance Commissioner
without the written consent of the company, except that:
a. information may be discoverable by a party in a civil
action or contested case to which the captive
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insurance company that submitted the information is a
party, upon a showing by the party seeking to discover
the information that:
(1) the information sought is relevant to and
necessary for the furtherance of the action or
case,
(2) the information sought is unavailable from other
nonconfidential sources, and
(3) a subpoena issued by a judicial or administrative
officer of competent jurisdiction has been
submitted to the Insurance Commissioner; however,
the provisions of this paragraph do not apply to
an industrial insured captive insurance company
insuring the risks of an industrial insured
group, and
b. the Insurance Commissioner may disclose the
information to a public officer having jurisdiction
over the regulation of insurance in another state or
to the National Association of Insurance Commissioners
if:
(1) the public official receiving party agrees in
writing to maintain the confidentiality of the
information, and or
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(2) the laws of the state in which the public
official serves require the information to be
confidential captive insurance company to which
the information pertains gives written consent
for the disclosure.
D. Except for a special purpose captive insurance company, a
captive insurance company shall pay to the Department a
nonrefundable application fee of Two Hundred Dollars ($200.00) for
reviewing its application to determine whether it is complete and in
addition, the Insurance Commissioner may retain legal, financial,
and examination services from outside the Department, the reasonable
cost of which may be charged against the applicant. A special
purpose captive insurance company shall pay to the Department a
nonrefundable fee of Three Hundred Dollars ($300.00). Also, a
captive insurance company shall pay a license fee for the year of
registration and a renewal fee of Three Hundred Dollars ($300.00).
E. If the Insurance Commissioner is satisfied that the
documents and statements filed by the captive insurance company
comply with the provisions of the Oklahoma Captive Insurance Company
Act, the Insurance Commissioner may grant a license authorizing the
company to do insurance business in this state until the succeeding
March 1 at which time the license may be renewed.
F. 1. Notwithstanding any other provision of this act, the
Insurance Commissioner may issue a provisional license to any
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applicant captive insurance company if the Insurance Commissioner
deems that the public interest will be served by the issuance of
such license.
2. As a condition precedent to the issuance of a provisional
license under this section, the applicant shall have filed a
complete application containing all information required by this
section, paid all fees required for licensure and the Insurance
Commissioner shall have made a preliminary finding that the
expertise, experience and character of the person or persons who
will control and manage the applicant captive insurer are
acceptable.
3. The Insurance Commissioner may by order limit the authority
of any provisional licensee in any way deemed necessary to protect
insureds and the public. The Insurance Commissioner may by order
revoke a provisional license if the interests of insureds or the
public are endangered. If the applicant fails to complete the
regular licensure application process, the provisional license shall
terminate automatically.
G. A captive insurance company, upon receipt of any inquiry
from the Commissioner, shall, within twenty (20) calendar days from
the date of receipt of the inquiry, furnish the Commissioner with an
adequate response to the inquiry. The Commissioner may, upon good
cause shown and on a case-by-case basis, extend the time allowed for
a response for up to seven (7) additional calendar days. Any
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inquiry or response subject to this subsection shall be delivered
electronically.
SECTION 3. AMENDATORY 36 O.S. 2021, Section 6470.6, is
amended to read as follows:
Section 6470.6. A. The Insurance Commissioner may not issue or
renew the license of a captive insurance company unless the company
possesses and thereafter maintains unimpaired aggregate paid-in
capital and surplus of:
1. In the case of a pure captive insurance company, not less
than Two Hundred Fifty Thousand Dollars ($250,000.00), One Hundred
Fifty Thousand Dollars ($150,000.00) of which must be paid-in prior
to the issuance of a license, and an additional One Hundred Thousand
Dollars ($100,000.00) of which must be paid-in on or before the
first anniversary of the issuance of the initial license;
2. In the case of an association captive insurance company
incorporated as a stock insurer, not less than Seven Hundred Fifty
Thousand Dollars ($750,000.00) Five Hundred Thousand Dollars
($500,000.00);
3. In the case of an industrial insured captive insurance
company incorporated as a stock insurer, not less than Five Hundred
Thousand Dollars ($500,000.00);
4. In the case of a sponsored captive insurance company, not
less than Five Hundred Thousand Dollars ($500,000.00) One Hundred
Thousand Dollars ($100,000.00) or an amount determined by the
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Insurance Commissioner after giving due consideration to the
business plan of the company, feasibility study, and pro formas,
including the nature of the risks to be insured;
5. In the case of any captive insurance company doing business
as a risk retention group, not less than One Million Dollars
($1,000,000.00); and
6. In the case of a special purpose or branch captive insurance
company, not less than Two Hundred Fifty Thousand Dollars
($250,000.00) or an amount determined by the Insurance Commissioner
after giving due consideration to the business plan of the company,
feasibility study, and pro formas, including the nature of the risks
to be insured;
7. In the case of a series captive insurance company, the
minimum capital and surplus shall be in an amount specified by the
Insurance Commissioner; and
8. The unimpaired paid-in capital may be in the form of cash,
cash equivalent, or an irrevocable letter of credit issued by a bank
chartered by this state or a member bank of the Federal Reserve
System, or other financial institution approved by the Insurance
Commissioner. The issuing bank shall be approved by the Insurance
Commissioner.
B. The Insurance Commissioner may prescribe additional capital
and surplus based upon the type, volume, and nature of insurance
business transacted.
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C. In the case of a branch captive insurance company, as
security for the payment of liabilities attributable to branch
operations, the Insurance Commissioner may require that a trust
fund, funded by an irrevocable letter of credit or other acceptable
asset, be established and maintained in the United States for the
benefit of United States policyholders and United States ceding
insurers. The amount of the security may be no less than the
capital and surplus required by the Oklahoma Captive Insurance
Company Act and the reserves on these insurance policies or
reinsurance contracts.
D. A captive insurance company may not pay a dividend out of,
or other distribution with respect to, capital or surplus, without
the prior approval of the Insurance Commissioner. Approval of an
ongoing plan for the payment of dividends or other distributions
must be conditioned upon the retention, at the time of each payment,
of capital or surplus in excess of amounts specified by, or
determined in accordance with formulas approved by, the Insurance
Commissioner.
SECTION 4. AMENDATORY 36 O.S. 2021, Section 6470.10, as
amended by Section 3, Chapter 127, O.S.L. 2022 (36 O.S. Supp. 2025,
Section 6470.10), is amended to read as follows:
Section 6470.10. A. A captive insurance company may be
incorporated as a stock corporation or as a nonstock corporation, or
may be formed as a limited liability company, partnership, limited
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partnership, statutory trust or any lawful form approved by the
Insurance Commissioner.
B. An association captive insurance company, industrial insured
captive insurance company or special purpose captive insurance
company may be organized as a reciprocal insurer.
C. The Insurance Commissioner shall not issue the initial
license or review renew the license of any captive insurer insurance
company unless the Insurance Commissioner determines the following
matters serve the best interest of the prospective policyholders and
promote the general good of the state:
1. The character, reputation, financial standing, and purposes
of the principals, owners or other persons who will direct or
control the affairs of the captive insurer insurance company;
2. The character, reputation, financial responsibility,
insurance experience, and business qualifications of the officers
and directors; and
3. Other aspects as the Insurance Commissioner considers
advisable.
D. In the case of a captive insurance company licensed as a
branch captive insurance company, the findings required in
subsection C above shall be in respect to the alien captive
insurance company.
E. 1. A captive insurance company formed under the laws of
this state or under the laws of another jurisdiction that is
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licensed under the provisions of this title shall have the
privileges and be subject to the provisions of the laws of this
state or the laws of such other jurisdiction, as applicable, under
which such captive insurance company is organized as well as the
applicable provisions contained in this title. In the event of
conflict between the provisions of the laws of this state or the
laws of such other jurisdiction, as applicable, under which such
captive insurance company is organized, and the provisions of this
title, the latter shall control.
2. A captive insurance company, formed or licensed under the
Oklahoma Captive Insurance Company Act, has the privileges and is
subject to the provisions of Oklahoma law as well as the applicable
provisions contained in the Oklahoma Captive Insurance Company Act.
If a conflict occurs between a provision of the general law of
Oklahoma and a provision of the Oklahoma Captive Insurance Company
Act, the latter controls. No provision of the Oklahoma Insurance
Code, other than those contained in this act or otherwise
specifically referencing such companies, shall apply to captive
insurance companies.
3. In addition to the applicability of law provided in this
section, a captive insurance company operating as a risk retention
group shall be subject to the provisions of the Oklahoma Risk
Retention Act under Sections 6451 through 6468 of this title.
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4. All preliminary reports or results, working papers, recorded
information, orders, documents and copies of documents produced by,
obtained by or disclosed to the Insurance Commissioner or any other
person in the course of any merger, consolidation, conversion,
mutualization and change of control made under this section are
confidential and are not subject to subpoena and may not be made
public by the Insurance Commissioner or any employee or agent of the
Insurance Commissioner without the written consent of the company,
except to the extent provided in this subsection. Nothing in this
subsection prevents the Insurance Commissioner from using this
information in furtherance of the regulatory authority of the
Insurance Commissioner under the Oklahoma Captive Insurance Company
Act. The Insurance Commissioner may grant access to this
information to public officers having jurisdiction over the
regulation of insurance in any other state or country, or to law
enforcement officers of this state or any other state or agency of
the federal government at any time, so long as the officers
receiving the information agree in writing to use and retain it in
any manner consistent with this section.
5. The terms and conditions set forth in Articles 18 and 19 of
the Oklahoma Insurance Code pertaining to insurance supervision,
conservatorship, rehabilitation, and receiverships apply in full to
captive insurance companies including for this purpose individual
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protected cells of sponsored captive insurance companies as provided
in Section 6470.29 of this title.
6. Any insurer which holds a current license to transact the
business of insurance under the laws of any other jurisdiction may
become an Oklahoma domiciled captive insurer insurance company by
complying with all of the requirements of Oklahoma law relative to
the organization and licensing of a captive insurer insurance
company and obtaining the approval of the insurer's application for
redomestication by the chief insurance regulatory official of the
company's current and proposed domiciles.
SECTION 5. AMENDATORY 36 O.S. 2021, Section 6470.14, is
amended to read as follows:
Section 6470.14. A. The license of a captive insurance company
to conduct an insurance business in this state may be suspended or
revoked by the Insurance Commissioner for:
1. Insolvency or impairment of capital and surplus;
2. Failure to meet the requirements of Section 6470.6 of this
title;
3. Refusal or failure to submit an annual report, as required
by Section 6470.11 of this title, or any other report or statement
required by law or by lawful order of the Insurance Commissioner;
4. Failure to comply with its own charter, bylaws, business
plan, or other organizational document;
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5. Failure to pay any tax or fee, or submit to examination or
any legal obligation relative to an examination, as required by this
section;
6. Refusal or failure to pay the cost of examination;
7. Failure to timely and adequately respond to an inquiry from
the Insurance Commissioner in accordance with Section 6470.3 of this
title;
8. Use of methods that, although not otherwise specifically
prohibited by law, nevertheless render its operation detrimental or
its condition unsound with respect to the public or to its
policyholders; or
8. 9. Failure otherwise to comply with laws of this state.
B. If the Insurance Commissioner finds, upon examination,
hearing, or other evidence, that a captive insurance company has
committed any of the acts specified in subsection A of this section,
the Insurance Commissioner may suspend or revoke such license if the
Insurance Commissioner considers it in the best interest of the
public and the policyholders of the captive insurance company.
C. In addition to or in lieu of any applicable revocation or
suspension of the license of a captive insurer insurance company,
the Insurance Commissioner may fine any captive insurer insurance
company who violates any provision of the Oklahoma Insurance Code a
civil penalty of not more than Five Thousand Dollars ($5,000.00) for
each occurrence, except as provided in subsection D of this section.
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D. In addition to or in lieu of any applicable revocation or
suspension of the license, the Insurance Commissioner may fine any
captive insurance company that fails to timely file an annual
financial statement, audit, actuarial opinion, or premium tax return
in an amount of not more than One Hundred Dollars ($100.00) per each
day of delay. The maximum penalty under this subsection shall be
One Hundred Thousand Dollars ($100,000.00).
SECTION 6. AMENDATORY 36 O.S. 2021, Section 6470.19, is
amended to read as follows:
Section 6470.19. A. Each captive insurance company, other than
a sponsored captive insurance company, and each protected cell of a
sponsored captive insurance company, shall pay to the Insurance
Department, by March 1 of each year, a tax at the rate of two-tenths
of one percent (0.2%) on the direct premiums collected or contracted
for on policies or contracts of insurance written by the captive
insurance company during the year ending December 31 next preceding,
after deducting from the direct premiums subject to the tax the
amounts paid to policyholders as return premiums which shall include
dividends on unabsorbed premiums or premium deposits returned or
credited to policyholders up to a maximum tax for such year of One
Hundred Thousand Dollars ($100,000.00); provided however, that no
tax shall be due or payable as to consideration received for annuity
contracts.
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B. A captive insurance company, other than a sponsored captive
insurance company, and each protected cell of a sponsored captive
insurance company, shall pay to the Department, by March 1 of each
year, a tax at the rate of one-tenth of one percent (0.1%) of
assumed reinsurance premium. However, no reinsurance tax applies to
premiums for risks or portions of risks which are subject to
taxation on a direct basis pursuant to subsection A of this section.
A premium tax is not payable in connection with the receipt of
assets in exchange for the assumption of loss reserves and other
liabilities of another insurer under common ownership and control if
the transaction is part of a plan to discontinue the operations of
the other insurer and if the intent of the parties to the
transaction is to renew or maintain business with the captive
insurance company.
C. A sponsored captive insurance company shall pay to the
Department, by March 1 of each year, a tax on direct and assumed
premiums equal, in the aggregate, to the minimum tax provided in
subsection D of this section.
D. Except as provided in this section for a series captive
insurance company, if the aggregate taxes to be paid by a captive
insurance company or a protected cell of a sponsored captive
insurance company calculated under subsections A and B of this
section amount to less than Five Thousand Dollars ($5,000.00) in any
year, the captive insurance company or protected cell shall pay a
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minimum tax of Five Thousand Dollars ($5,000.00) for that year.
However, in the calendar year in which a captive insurance company
is first licensed, or the protected cell is approved by the
Insurance Commissioner, the minimum tax will be prorated on a
quarterly basis. For those licensed in the first quarter, the
prorated minimum tax is Five Thousand Dollars ($5,000.00). For
those licensed in the second quarter, the prorated minimum tax is
Three Thousand Seven Hundred Fifty Dollars ($3,750.00). For those
licensed in the third quarter, the prorated minimum tax is Two
Thousand Five Hundred Dollars ($2,500.00). For those licensed in
the fourth quarter, the prorated minimum tax is One Thousand Two
Hundred Fifty Dollars ($1,250.00). In the calendar year in which a
captive insurance company is first licensed or the protected cell is
first approved by the Insurance Commissioner, if the aggregate taxes
to be paid calculated under subsections A and B of this section
amount to less than the minimum tax prorated on a quarterly basis,
the captive insurance company or protected cell shall pay the
prorated minimum tax for that calendar year. Each series captive
insurance company shall pay an annual minimum aggregate tax of Three
Thousand Five Hundred Dollars ($3,500.00). The aggregation of the
tax paid by more than one series captive insurance company formed
within a limited liability company or statutory trust or the
corresponding law of another state shall not be restricted by the
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annual maximum premium tax limitations specified in subsections A
and B of this section.
E. Subject to subsections F, G and H of this section, if the
aggregate taxes on direct and assumed premiums to be paid by a
captive insurance company or a protected cell of a sponsored captive
insurance company calculated under subsections A and B of this
section amount to more than One Hundred Thousand Dollars
($100,000.00) in any year, the captive insurance company, protected
cell of a sponsored captive insurance company or a series captive
insurance company shall pay a maximum tax of One Hundred Thousand
Dollars ($100,000.00) for that year.
F. Two or more captive insurance companies under common
ownership and control must be taxed as though they were a single
captive insurance company. Two or more protected cells of a
sponsored captive insurance company that are related by common
ownership and control must be taxed as though they were a single
protected cell.
G. As used in this section, "common ownership and control"
means the direct or indirect ownership of eighty percent (80%) or
more of the outstanding voting stock or other voting interests of
two or more captive insurance companies or protected cells of a
sponsored captive insurance company by the same person or persons.
H. A captive insurance company that has employed twenty-five or
more separate qualified individuals throughout a given tax year and
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that otherwise would be liable under this section for tax for such
year in an amount exceeding Fifty Thousand Dollars ($50,000.00)
shall pay to the Insurance Commissioner under this section a tax for
such year in the amount of Fifty Thousand Dollars ($50,000.00). For
purposes of this subsection, "qualified individual" means a natural
person employed in this state on a regular basis of thirty-five (35)
or more hours per week either by such captive insurance company, or
by a wholly-owned subsidiary of such captive insurance company that
provides captive insurance company management, operating, investment
or related services exclusively to such captive insurance company.
I. The tax provided for in this section constitutes all taxes
collectible under the laws of this state from a captive insurance
company or a protected cell of a sponsored captive insurance
company, and no other occupation tax or other taxes may be levied or
collected from a captive insurance company by the state or a county,
city, or municipality within this state, except ad valorem taxes on
real and personal property used in the production of income.
J. For the fiscal year beginning July 1, 2020, and for each
fiscal year thereafter, the Insurance Commissioner shall report and
disburse all fees and taxes collected pursuant to this section as
follows:
1. Of the first Five Hundred Thousand Dollars ($500,000.00):
a. thirty-six percent (36%) to the Oklahoma Firefighters
Pension and Retirement Fund,
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b. fourteen percent (14%) to the Oklahoma Police Pension
and Retirement System,
c. five percent (5%) to the Law Enforcement Retirement
Fund, and
d. forty-five percent (45%) to the State Treasury to the
credit of the General Revenue Fund of the state;
2. Of the next Two Hundred Fifty Thousand Dollars ($250,000.00)
Five Hundred Thousand Dollars ($500,000.00), one hundred percent
(100%) to the State Insurance Commissioner Revolving Fund to be used
by the Department for the purposes of implementing and administering
the Oklahoma Captive Insurance Company Act and any accompanying
regulations; and
3. Of all amounts in excess of Seven Hundred Fifty Thousand
Dollars ($750,000.00) One Million Dollars ($1,000,000.00):
a. thirty-six percent (36%) to the Oklahoma Firefighters
Pension and Retirement Fund,
b. fourteen percent (14%) to the Oklahoma Police Pension
and Retirement System,
c. five percent (5%) to the Law Enforcement Retirement
Fund,
d. fifteen percent (15%) to the State Treasury to the
credit of the General Revenue Fund of the state, and
e. thirty percent (30%) to the State Insurance
Commissioner Revolving Fund to be used by the
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Department for the purposes of implementing and
administering the Oklahoma Captive Insurance Company
Act and any accompanying regulations.
SECTION 7. AMENDATORY 36 O.S. 2021, Section 6470.24.1,
is amended to read as follows:
Section 6470.24.1. A. No captive insurance company shall
voluntarily take any of the following actions without providing the
Insurance Commissioner at least thirty (30) days prior written
notice and receiving the Insurance Commissioner's approval of any
such action:
1. The dissolution of the captive insurance company;
2. A sale, exchange, lease, mortgage, assignment, pledge or
other transfer of or granting of a security interest in, all or
substantially all of the assets of the captive insurance company;
3. Incurring a material indebtedness by the captive insurance
company;
4. Any making of a material loan or other material extension of
credit by the captive insurance company;
5. Any material payment out of capital and surplus;
6. Any merger or consolidation to which the captive insurance
company is a constituent party;
7. Any conversion of the captive insurance company to another
business form;
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8. Any transfer to or domestication in any jurisdiction by the
captive insurance company; or
9. Any amendment of the business plan or other organizational
documents of the captive insurance company; or
10. Any merger or acquisition in which there is a change in
control of a captive insurance company.
B. For purposes of this section,:
1. "material" "Material", in relation to financial matters,
means any transaction or series of related transactions involving
more than the lesser of five percent (5%) of the captive insurance
company's assets or twenty-five percent (25%) of its capital and
surplus.;
2. "Assets" and "capital and surplus" shall be measured as of
the most recent filed report required by Section 6470.11 of Title 36
of the Oklahoma Statutes this title;
3. "Acquisition" shall have the same meaning as set forth in
Section 1634 of this title; and
4. "Control" shall have the same meaning as set forth in
Section 1631 of this title.
SECTION 8. AMENDATORY 36 O.S. 2021, Section 6470.29, is
amended to read as follows:
Section 6470.29. A. In addition to the provisions of Sections
6470.1 through 6470.28 of this title and the provisions of Sections
6470.29 through 6470.31 of this title shall apply to sponsored
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captive insurance companies, and the provisions of Section 6470.24.1
of this title shall apply to each protected cell of a sponsored
captive insurance company.
B. Supplemental license application materials.
In addition to the information required by subsection C of
Section 6470.3 of this title, each applicant sponsored captive
insurance company shall file with the Insurance Commissioner the
following:
1. Materials demonstrating to the satisfaction of the Insurance
Commissioner how the applicant will report to the Insurance
Commissioner on, and account for, the loss and expense experience of
each protected cell;
2. A statement acknowledging that all financial records of the
sponsored captive insurance company, including records pertaining to
any protected cells, shall be made available for inspection or
examination by the Insurance Commissioner or the Insurance
Commissioner's designated agent;
3. All contracts or sample contracts between the sponsored
captive insurance company and any participants; and
4. Evidence that expenses shall be allocated to each protected
cell in a fair and equitable manner.
C. Captive insurance companies shall establish and maintain
administrative and accounting procedures necessary to properly
identify the one or more protected cells of the sponsored captive
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insurance company and the protected cell assets and protected cell
liabilities attributable to the protected cells. The governing
persons of a sponsored captive insurance company shall keep
protected cell assets and protected cell liabilities separate by
adopting administrative and accounting procedures so they:
1. Are separate and separately identifiable from the assets and
liabilities of the sponsored captive insurance company's general
assets; and
2. Are attributable to one protected cell and are separately
identifiable from protected cell assets and protected cell
liabilities attributable to other protected cells.
D. One or more sponsors may form a sponsored captive insurance
company under the Oklahoma Captive Insurance Company Act.
D. E. A sponsored captive insurance company formed or licensed
under the Oklahoma Captive Insurance Company Act may establish and
maintain one or more protected cells to insure risks of one or more
participants, subject to the following conditions:
1. The persons holding the voting interests of a sponsored
captive insurance company must be limited to its participants and
sponsors; provided, that a sponsored captive insurance company may
issue nonvoting securities or interests to other persons on terms
approved by the Insurance Commissioner;
2. Each protected cell must be accounted for separately on the
books and records of the sponsored captive insurance company to
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reflect the financial condition and results of operations of the
protected cell, net income or loss, dividends or other distributions
to participants, and other factors may be provided in the
participant contract or required by the Insurance Commissioner.
Records maintained for a protected cell shall reasonably identify
its assets and liabilities, including by specific listing, category,
type, quantity, computational or allocational formula or procedure
(including a percentage or share of any asset or assets), or by any
other method where the identity of such assets is objectively
determinable. Such records will be deemed to account for the assets
and liabilities associated with such cell separately and distinct
from the other assets and liabilities of the sponsored captive
insurance company or any other cell;
3. The assets of a protected cell must not be chargeable with
liabilities of any other protected cell or, unless otherwise agreed
in the applicable participant contract, of the sponsored captive
insurance company;
4. No sale, exchange, or other transfer of assets, or dividend
or other distribution, may be made with respect to a protected cell
by the sponsored captive insurance company without the consent of
the participants of each affected protected cell and the written
approval of the Insurance Commissioner;
5. No sale, exchange, transfer of assets, dividend, or
distribution, other than a payment to a sponsor in accordance with
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the applicable participant contract, may be made from a protected
cell to a sponsor or participant without the written approval of the
Insurance Commissioner and in no event may the approval be given if
the sale, exchange, transfer, dividend, or distribution would result
in insolvency or impairment with respect to a protected cell;
6. A sponsored captive insurance company annually shall file
with the Insurance Commissioner financial reports the Insurance
Commissioner requires, which shall include, but are not limited to,
accounting statements detailing the financial experience of each
protected cell;
7. A sponsored captive insurance company shall notify the
Insurance Commissioner in writing within ten (10) business days of a
protected cell that is insolvent or otherwise unable to meet its
claim or expense obligations; and
8. No participant contract shall take effect without the prior
written approval of the Insurance Commissioner, and the addition of
each new protected cell and withdrawal of any participant or
termination of any existing protected cell constitutes a change in
the business plan of the sponsored captive insurance company
requiring the prior written approval of the Insurance Commissioner;
9. A participant contract shall clearly indicate that only the
protected cell assets are available for the satisfaction of
protected cell liabilities;
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10. A participant contract shall identify a protected cell by
its own distinct name or designation that includes the words
"protected cell"; and
11. All contracts executed by a sponsored captive insurance
company of which a protected cell is a part shall identify the
protected cell as "protected cell".
F. The remedy of tracing is applicable to protected cell assets
when commingled with protected cell assets of other protected cells
or the assets of the sponsored captive insurance company's general
assets. The remedy of tracing shall not be construed as an
exclusive remedy.
G. The creation of a protected cell shall not create, with
respect to that protected cell, a legal person separate from the
sponsored captive insurance company unless the protected cell is an
entity-protected cell. For clarity, an entity-protected cell is a
protected cell and remains a part of the sponsored captive insurance
company.
SECTION 9. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.1 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. Subject to the prior written approval of the Insurance
Commissioner, upon application of the sponsor and with the prior
consent of each participant of the affected protected cells or as
otherwise permitted pursuant to a participant contract, a sponsored
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captive insurance company may convert one or more protected cells
into a:
1. Single protected cell or entity-protected cell;
2. New sponsored captive insurance company;
3. New pure captive insurance company;
4. New risk retention group;
5. New agency captive insurance company;
6. New industrial insured captive insurance company;
7. New association captive insurance company;
8. Captive insurance company organized as a reciprocal insurer;
or
9. Series captive insurance company.
B. Any such conversion requires providing the Insurance
Commissioner at least thirty (30) days' prior written notice, as
well as submitting a business plan to be approved by the Insurance
Commissioner, without affecting any protected cell's assets, rights,
benefits, obligations, and liabilities.
C. Any such conversion shall be deemed for all purposes to be a
continuation of each such protected cell's existence together with
all of its assets, rights, benefits, obligations, and liabilities,
as a new protected cell, a sponsored captive insurance company, a
pure captive insurance company, a risk retention group, an
industrial insured captive insurance company, an association captive
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insurance company, or captive insurance company formed as a
reciprocal insurer.
D. Any such conversion shall be deemed to occur without any
transfer or assignment of any such assets, rights, benefits,
obligations, or liabilities and without the creation of any
reversionary interest in, or impairment of, any such assets, rights,
benefits, obligations, and liabilities.
E. Any such conversion shall not be construed to limit any
rights or protections applicable to any converted protected cell and
such sponsored captive insurance company that existed immediately
prior to the date of any such conversion.
F. Any protected cell converting into an entity-protected cell
pursuant to this act, or converting into a new captive insurance
company or risk retention group pursuant to this section, shall
perform such conversion in accordance with:
1. The provisions of the Oklahoma General Corporation Act,
Section 1001 et seq. of Title 18 of the Oklahoma Statutes, if the
converted captive insurance company is to be a corporation;
2. The provisions of the Oklahoma Limited Liability Company
Act, Section 2000 et seq. of Title 18 of the Oklahoma Statutes, if
the converted captive insurance company is to be a limited liability
company; or
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3. The provisions applicable to any other type of entity
permissible under Oklahoma law if the converted captive insurance
company is to be such an entity.
SECTION 10. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.2 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. Subject to the prior written approval of the Insurance
Commissioner, upon application of the sponsor and with the prior
consent of each participant of the affected protected cell or as
otherwise permitted pursuant to a participant contract, a sponsored
captive insurance company may sell, transfer, assign, and otherwise
convey a protected cell together with all of the protected cell's
assets, rights, benefits, obligations, and liabilities to a new or
existing sponsored captive insurance company, pursuant to a business
plan approved by the Insurance Commissioner.
B. Any such sale, transfer, assignment, or conveyance shall be
deemed for all purposes to be a continuation of the protected cell's
existence together with all its assets, rights, benefits,
obligations, and liabilities, as a protected cell of the transferee.
C. Any such sale, transfer, assignment, or conveyance shall not
be construed to limit any rights or protections applicable to the
transferred protected cell and the transferor sponsored captive
insurance company, that existed immediately prior to any such sale,
transfer, assignment, or conveyance.
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D. Any such sale, transfer, assignment, or conveyance requires
providing the Commissioner at least thirty (30) days' prior written
notice.
SECTION 11. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.3 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. Subject to the prior written approval of the Insurance
Commissioner, a captive insurance company domiciled in this state
and organized as an agency captive insurance company, association
captive insurance company, industrial insured captive insurance
company, pure captive insurance company, risk retention group,
series captive insurance company, or captive insurance company
formed as a reciprocal insurer may be converted into a protected
cell.
B. Any such conversion shall be subject to a business plan
approved by the Insurance Commissioner, without affecting the
converted captive insurance company's assets, rights, benefits,
obligations, or liabilities.
C. Any such conversion shall be deemed for all purposes to be a
continuation of such converted captive insurance company's existence
together with all of its assets, rights, benefits, obligations, and
liabilities as a new protected cell.
D. Any such conversion shall be deemed to occur without any
transfer or assignment of any such assets, rights, benefits,
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obligations, or liabilities and without the creation of any
reversionary interest in, or impairment of, any such assets, rights,
benefits, obligations, and liabilities.
E. Any such conversion shall not be construed to limit any
rights or protections applicable to any converted captive insurance
company under this act that existed immediately prior to the date of
such conversion.
F. Any captive insurance company converting into a protected
cell pursuant to this section shall perform such conversion in
accordance with:
1. The provisions of the Oklahoma General Corporation Act,
Section 1001 et seq. of Title 18 of the Oklahoma Statutes, if the
converted captive insurance company was a corporation;
2. The provisions of the Oklahoma Limited Liability Company
Act, Section 2000 et seq. of Title 18 of the Oklahoma Statutes, if
the converted captive insurance company was a limited liability
company; or
3. The provisions applicable to any other type of entity
permissible under Oklahoma law if the converted entity was such an
entity.
SECTION 12. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.4 of Title 36, unless
there is created a duplication in numbering, reads as follows:
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A. Subject to the prior written approval of the Insurance
Commissioner, on application of the sponsor and with the prior
consent of each participant of the affected protected cells or as
otherwise permitted pursuant to a participant contract, a sponsored
captive insurance company may merge one or more protected cells into
a:
1. Single protected cell or entity-protected cell;
2. New sponsored captive insurance company;
3. New pure captive insurance company;
4. New risk retention group;
5. New agency captive insurance company;
6. New industrial insured captive insurance company;
7. New association captive insurance company;
8. Captive insurance company organized as a reciprocal insurer;
or
9. Series captive insurance company.
B. Any such merger requires providing the Insurance
Commissioner at least thirty (30) days' prior written notice, as
well as submitting a business plan to be approved by the Insurance
Commissioner, without affecting any protected cell's assets, rights,
benefits, obligations, and liabilities.
C. Any such merger shall be deemed for all purposes to be a
continuation of each such protected cell's existence together with
all of its assets, rights, benefits, obligations, and liabilities,
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as a new protected cell, a sponsored captive insurance company, a
pure captive insurance company, a risk retention group, an
industrial insured captive insurance company, an association captive
insurance company, or captive insurance company formed as a
reciprocal insurer.
D. Any such merger shall be deemed to occur without any
transfer or assignment of any such assets, rights, benefits,
obligations, or liabilities and without the creation of any
reversionary interest in, or impairment of, any such assets, rights,
benefits, obligations, and liabilities.
E. Any such merger shall not be construed to limit any rights
or protections applicable to any merged protected cell and such
sponsored captive insurance company, that existed immediately prior
to the date of any such merger.
F. Any protected cell merging into an entity-protected cell
pursuant to this act, or merging into a captive insurance company or
risk retention group pursuant to this section, shall perform such
merger in accordance with:
1. The provisions of the Oklahoma General Corporation Act,
Section 1001 et seq. of Title 18 of the Oklahoma Statutes, if the
merged captive insurance company is to be a corporation;
2. The provisions of the Oklahoma Limited Liability Company
Act, Section 2000 et seq. of Title 18 of the Oklahoma Statutes, if
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the merged captive insurance company is to be a limited liability
company; or
3. The provisions applicable to any other type of entity
permissible under Oklahoma law if the merged captive insurance
company is to be such an entity.
SECTION 13. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.5 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. Protected cell assets are available only to the creditors of
the sponsored captive insurance company who are creditors in respect
of that protected cell and entitled, in conformity with the
provisions of this act, to have recourse to the protected cell
assets attributable to that protected cell.
B. Protected cell assets shall be absolutely protected from the
creditors of the sponsored captive insurance company who are not
creditors in respect of that protected cell and who, accordingly,
are not entitled to have recourse to the protected cell assets
attributable to that protected cell.
C. Creditors with respect to a protected cell shall not be
entitled to have recourse against the protected cell assets of other
protected cells or the assets of the sponsored captive insurance
company's general assets.
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D. When an obligation of a sponsored captive insurance company
to a person arises from a transaction, or is otherwise imposed, in
respect of a protected cell:
1. That obligation of the sponsored captive insurance company
shall extend only to the protected cell assets attributable to that
protected cell, and the person shall, in respect of that obligation,
be entitled to have recourse only to the protected cell assets
attributable to that protected cell; and
2. That obligation of the sponsored captive insurance company
shall not extend to the protected cell assets of any other protected
cell or the assets of the company's general assets, and that person
shall not, in respect of that obligation, be entitled to have
recourse to the protected cell assets of any other protected cell or
the assets of the company's general assets.
E. When an obligation of a sponsored captive insurance company
relates solely to the general assets, the obligation of the
sponsored captive insurance company shall extend only to, and that
creditor shall, in respect of that obligation, be entitled to have
recourse only to, the assets of the sponsored captive insurance
company's general assets.
F. In no event shall the establishment of one or more protected
cells alone constitute or be deemed to be a fraudulent conveyance,
an intent by the sponsored captive insurance company to defraud
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creditors, or the carrying out of business by the sponsored captive
insurance company for any other fraudulent purpose.
SECTION 14. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.6 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. The pleadings in any legal action brought by or against a
sponsored captive insurance company shall specify which protected
cell or cells are or should be named a party to the suit. If the
general assets are identified in the pleading, it likewise shall be
separately identified in the pleadings as if it were a protected
cell.
B. A legal action brought against a sponsored captive insurance
company that does not specify one or more protected cells shall be
deemed to have been brought against the general assets only.
C. Any protected cell that is not named in the pleadings of the
legal action shall not be deemed to be a party to the legal action.
Any protected cell that is erroneously named as a party or named
without proper cause shall be entitled to prompt dismissal from the
legal action.
D. No protected cell has a duty to defend the rights and
obligations of any other protected cell.
E. In any legal action involving a sponsored captive insurance
company or a protected cell, any papers, documents, or property of a
nonparty protected cell shall be afforded the same status during
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discovery as the documents or property of any other unrelated third
party. A nonparty protected cell shall have standing to appear and
petition for any appropriate relief to protect the confidentiality
of its papers or documents.
SECTION 15. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.29.7 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. In connection with the rehabilitation or liquidation of a
sponsored captive insurance company, the assets and liabilities of a
protected cell shall, to the extent the receiver determines they are
separable, at all times be kept separate from, and shall not be
commingled with, those of other protected cells and the sponsored
captive insurance company.
B. Upon any order of rehabilitation or liquidation of a
sponsored captive insurance company, the receiver shall manage the
assets and liabilities of the protected cell captive insurance
company pursuant to this section:
1. The assets of a protected cell may not be used to pay any
expenses or claims other than those attributable to such protected
cell;
2. A sponsored captive insurance company's capital and surplus
shall at all times be available to pay any expenses of or claims
against the sponsored captive insurance company;
3. In the event of an insolvency of a sponsored captive
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insurance company where the receiver determines that one or more
protected cells remain solvent, the receiver may separate such cells
from the sponsored captive insurance company, and may allow, on
application of the sponsor, for the conversion of such protected
cells into one or more new or existing sponsored captive insurance
companies with a sponsor or sponsors, or one or more other captive
insurance companies, pursuant to such plan or plans of operation as
the Insurance Commissioner deems acceptable; and
4. In the event of an insolvency of one or more protected cells
of a sponsored captive insurance company, the receiver may separate
such cell or cells from the sponsored captive insurance company and
may allow for the conversion of such protected cell or cells into
one or more new or existing sponsored captive insurance companies,
or one or more other captive insurance companies, pursuant to a plan
or plans of operation approved by the Insurance Commissioner.
C. Unless the sponsor consents and the Insurance Commissioner
has granted prior written approval, the assets of the sponsored
captive insurance company's general assets shall not be used to pay
any expenses or claims attributable solely to a protected cell or
protected cells of the sponsored captive insurance company. In the
event that the assets of the sponsored captive insurance company's
general assets are used to pay expenses or claims attributable
solely to a protected cell or protected cells of the sponsored
captive insurance company, the sponsor is not required to contribute
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additional capital and surplus to the sponsored captive insurance
company's general assets, notwithstanding the provisions of Section
6470.6 of Title 36 of the Oklahoma Statutes.
SECTION 16. AMENDATORY 36 O.S. 2021, Section 6470.35, as
amended by Section 10, Chapter 154, O.S.L. 2022 (36 O.S. Supp. 2025,
Section 6470.35), is amended to read as follows:
Section 6470.35. A. As used in this section act, "dormant
captive insurance company" means a captive insurance company that
has:
1. Ceased transacting the business of insurance including the
issuance of insurance policies; and
2. No remaining liabilities associated with insurance business
transactions or insurance policies issued prior to the filing of its
application for a certificate of dormancy under this section.
B. A dormant captive insurance company domiciled in this state
that meets the criteria of subsection A of this section may apply to
the Insurance Commissioner for a certificate of dormancy. The
certificate of dormancy shall be subject to renewal every five (5)
years and shall be forfeited if not renewed within such time.
C. A dormant captive insurance company that has been issued a
certificate of dormancy shall:
1. Possess and thereafter maintain unimpaired, paid-in capital
and surplus, in a form approved by the Commissioner, of not less
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than Twenty-five Thousand Dollars ($25,000.00) Ten Thousand Dollars
($10,000.00);
2. Submit on or before March 1 of each year to the Insurance
Commissioner a report of its financial condition, verified by an
oath of two of its executive officers, in a the manner and form
prescribed by the Insurance Commissioner; and
3. Pay a nonrefundable annual fee of Five Hundred Dollars
($500.00) Three Hundred Dollars ($300.00).
D. A dormant captive insurance company shall not be subject to
or liable for the payment of any tax under Section 6470 6470.19 of
this title for the initial five-year dormancy.
E. A dormant captive insurance company shall apply to the
Insurance Commissioner, in the manner and form prescribed by the
Commissioner, for approval to surrender its certificate of dormancy
and resume conducting the business of insurance prior to issuing any
insurance policies.
F. A certificate of dormancy shall be revoked if a dormant
captive insurance company no longer meets the criteria of subsection
A of this section.
G. A dormant captive insurance company may be subject to
examination under Section 6470.13 of this title for any year when it
did not qualify as a dormant captive insurance company. The
Insurance Commissioner may examine a dormant captive insurance
company pursuant to Section 6470.13 of this title.
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H. The Insurance Commissioner may promulgate and adopt rules
and regulations implementing the provisions of this section.
SECTION 17. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.36 of Title 36, unless
there is created a duplication in numbering, reads as follows:
A. For purposes of this section:
1. "Foreign" means outside the United States, its territories,
or possessions;
2. "Foreign currency" means currency issued by a government
outside the United States that is recognized by the United States as
a legitimate government-issued currency and freely exchangeable with
United States currency; and
3. "Foreign securities" means securities that are ordinarily
traded on an exchange outside the United States.
B. A captive insurance company or an individual cell of a
captive insurance company may, with the approval of the Insurance
Commissioner, include within its business plan that the company
will:
1. Receive payments of premium in a specified foreign currency
or foreign securities and will pay claims on insured losses in a
specified currency or foreign securities;
2. Authorize the payment of claims in a specified foreign
currency or foreign securities; and
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3. Hold foreign currency or foreign securities as surplus for
the payment of future claims.
C. In determining the exchange rate between United States
currency and the foreign currency or foreign securities, the captive
insurance company shall identify in its approved business plan a
publicly available and reliable exchange rate index. If the
exchange rate index identified in the business plan is not
available, then the Insurance Commissioner shall determine the
appropriate exchange rate for the purpose of calculating the amount
of premium tax due.
D. For the purpose of calculating the amount of premium tax due
under this act, a policy issued by a captive insurance company
payable in foreign currency or foreign securities is deemed to be of
an equivalent value in United States currency as of the date that
coverage is bound and is payable in United States currency when due
under this act.
E. For captive insurance companies and protected cells that
have received permission pursuant to subsection B of this section,
all reports required to be filed with captive premium tax payments
shall be converted to United States currency for the reporting
period covered by the annual report.
SECTION 18. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.37 of Title 36, unless
there is created a duplication in numbering, reads as follows:
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Any public body may expend public funds to capitalize a captive
insurance company or to provide guaranty capital in a mutual captive
insurance company for the purpose of forming and operating a captive
insurance company for the benefit of the public body.
SECTION 19. REPEALER 36 O.S. 2021, Section 6470.28, is
hereby repealed.
SECTION 20. This act shall become effective November 1, 2026.
Passed the House of Representatives the 24th day of March, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2026.
Presiding Officer of the Senate