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SCHAER BILL TO CREATE JOBS & ECONOMIC DEVELOPMENT BY MODERNIZING INSURANCE LAW GETS FINAL LEGISLATIVE APPROVAL
Schaer Bill Would Bring Captive Insurers to New Jersey
(36th LEGISLATIVE DISTRICT) – Legislation sponsored by Assemblyman Gary S. Schaer that would help create additional jobs in the insurance industry in New Jersey by bringing captive insurance companies to the state continues is going to the governor.
The bill (A-2360) would permit a captive insurance company to be licensed by the Department of Banking and Insurance to do business in lines of insurance such as life, health, annuities, indemnity, property and casualty, fidelity, guaranty and title and reinsurance, provided the captive meets certain requirements. It was approved 39-0 by the Senate and 74-0 by the Assembly on Thursday as part of the Back to Work NJ job creation and economic development initiative.
“This bill would be helpful for businesses and workers alike,” said Schaer (D-Passaic/Bergen/Essex), the bill’s prime sponsor. “It would allow for and also encourage large New Jersey companies with captive insurance subsidiaries to move their captives to New Jersey, creating additional jobs in the insurance industry in New Jersey when every job counts. This bill, quite simply, is a job creation bill that also promotes a good business environment.”
A captive insurance company is a closely held insurance company whose insurance business is primarily supplied by and controlled by its owners, and in which the original insureds are the principal beneficiaries. A captive insurance company’s insureds have direct involvement and influence over the company’s major operations, including underwriting, claims management policy and investment.
Captive insurance companies are established with the specific objective of financing risks emanating from their parent group or groups, but they sometimes also insure risks of the group's customers too.
“Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent,” Schaer said. “Companies are doing this already, so with this change with both modernizing our laws to stay competitive with other states while also making our state more business friendly. It’s a smart approach as we look to promote economic growth and create jobs.”
The bill provides that a captive insurance company must meet certain requirements, including those relating to formation, capital and surplus, examination, local office presence, ability to meet policy obligations, payment of certain fees and taxes and annual reporting.
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"When you're asked to cast a vote on a bill and it seems innocuous, and it's got a hidden land mine that perhaps only an expert would see, it would sort of behoove those experts to tell us in advance rather than make us look, shall we say, a little bit indecisive later on." - Assemblyman Michael Patrick Carroll (R-25).- NJTV
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