As used in this chapter, unless the
context otherwise requires, the words and terms defined in NRS 694C.020
to 694C.150 , inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 1999, 3207 ; A 2005, 2151 )
“Affiliated company”
means a company in the same corporate system as its parent or a member
organization by virtue of common ownership, control, operation or
management.
(Added to NRS by 1999, 3207 )
“Agency captive
insurer” means a captive insurer that is owned or directly or indirectly
controlled by an insurance agency or brokerage and that only insures
risks of policies which are placed by or through the agency or brokerage.
(Added to NRS by 1999, 3207 ; A 2005, 2151 )
“Alien captive
insurer” means any insurer that is formed to write insurance business for
its parents and affiliates and is licensed pursuant to the laws of an
alien jurisdiction which imposes statutory or regulatory standards
acceptable to the Commissioner on companies transacting the business of
insurance in such jurisdiction.
(Added to NRS by 2005, 2147 )
“Association” means a legal
entity consisting of two or more corporations, limited-liability
companies, partnerships, associations or other forms of business
organizations.
(Added to NRS by 1999, 3207 ; A 2005, 2151 )
“Association
captive insurer” means a captive insurer that only insures risks of the
member organizations of an association and the affiliated companies of
those members, including groups formed pursuant to the Product Liability
Risk Retention Act of 1981, as amended, 15 U.S.C. §§ 3901 et seq., if:
1. The association or the member organizations of the association:
(a) Own, control or hold with the power to vote all the outstanding
voting securities of the association captive insurer, if the association
captive insurer is incorporated as a stock insurer; or
(b) Have complete voting control over the captive insurer, if the
captive insurer is formed as a mutual insurer; and
2. The member organizations of the association collectively
constitute all the subscribers of the captive insurer, if the captive
insurer is formed as a reciprocal insurer.
(Added to NRS by 1999, 3207 ; A 2003, 3331 )
“Branch business” means
any insurance business transacted by a branch captive insurer in this
State.
(Added to NRS by 2005, 2147 )
“Branch captive
insurer” means an alien captive insurer licensed pursuant to this chapter
to transact the business of insurance through a business unit with a
principal place of business in this State.
(Added to NRS by 2005, 2147 )
“Branch operations”
means any business operations of a branch captive insurer in this State.
(Added to NRS by 2005, 2147 )
“Captive insurer” means
any pure captive insurer, association captive insurer, agency captive
insurer, rental captive insurer and sponsored captive insurer licensed
pursuant to this chapter. The term includes a pure captive insurer who,
unless otherwise provided by the Commissioner, is a branch captive
insurer with respect to operations in this State.
(Added to NRS by 1999, 3208 ; A 2005, 2152 )
“Commissioner” means the
Commissioner of Insurance.
(Added to NRS by 1999, 3208 )
“Controlled unaffiliated business” means any company:
1. That is not in the corporate system of a parent and affiliated
companies;
2. That has an existing contractual relationship with a parent or
affiliated company; and
3. Whose risks are managed by a captive insurer pursuant to this
chapter.
(Added to NRS by 2005, 2147 )
“Division” means the Division of
Insurance of the Department of Business and Industry.
(Added to NRS by 1999, 3208 )
“Member organization”
means any individual or corporation, limited-liability company,
partnership, association or other form of business organization that
belongs to an association.
(Added to NRS by 1999, 3208 ; A 2005, 2152 )
“Mutual insurer” has the
meaning ascribed to it in NRS 680A.030 .
(Added to NRS by 1999, 3208 )
“Parent” means a corporation,
limited-liability company, partnership, association or other form of
business organization that directly or indirectly owns, controls or holds
with power to vote more than 50 percent of the outstanding voting
securities of:
1. A pure captive insurer organized as a stock corporation; or
2. The membership of a pure captive insurer organized as a
nonprofit corporation.
(Added to NRS by 1999, 3208 ; A 2005, 2152 )
“Participant” means a
corporation, association, limited-liability company, partnership, trust,
sponsor or other business organization, and any affiliate thereof, that
is insured by a sponsored captive insurer, where the losses of the
participant are limited by a participant contract to the participant’s
pro rata share of the assets of one or more protected cells identified in
such participant contract.
(Added to NRS by 2005, 2147 )
“Participant
contract” means a contract by which a sponsored captive insurer insures
the risks of a participant and limits the losses of each such participant
to its pro rata share of the assets of one or more protected cells
identified in the participant contract.
(Added to NRS by 2005, 2148 )
“Protected cell” means a
separate account established by a sponsored captive insurer in which
assets are maintained for one or more participants in accordance with the
terms of one or more participant contracts that fund the liability of the
sponsored captive insurer assumed on behalf of the participants as set
forth in the participant contracts.
(Added to NRS by 2005, 2148 )
“Pure captive
insurer” means a captive insurer that only insures risks of its parent
and affiliated companies or controlled unaffiliated businesses and,
unless otherwise provided by the Commissioner, includes a branch captive
insurer.
(Added to NRS by 1999, 3208 ; A 2005, 2152 )
“Reciprocal insurer”
has the meaning ascribed to it in NRS 680A.040 .
(Added to NRS by 1999, 3208 )
“Rental captive
insurer” means a captive insurer formed to enter into contractual
agreements with policyholders or associations to offer some or all of the
benefits of a program of captive insurance and that only insures risks of
such policyholders or associations.
(Added to NRS by 1999, 3208 )
“Sponsor” means an insurer
licensed pursuant to the laws of any state, a reinsurer authorized or
approved under the laws of any state, or a captive insurer formed or
licensed pursuant to this chapter that:
1. Meets the requirements of subsection 3 of NRS 694C.180 ; and
2. Is approved by the Commissioner to provide all or part of the
capital and surplus required by applicable law and to organize and
operate a sponsored captive insurer.
(Added to NRS by 2005, 2148 )
“Sponsored
captive insurer” means any captive insurer:
1. In which the minimum capital and surplus required by applicable
law is provided by one or more sponsors;
2. That is formed or licensed pursuant to this chapter;
3. That only insures the risks of its participants through
separate participant contracts; and
4. That funds the liability for each participant through one or
more protected cells where the assets of each protected cell are
segregated from the assets of other protected cells and the assets of the
general account of the sponsored captive insurer.
(Added to NRS by 2005, 2148 )
“Stock insurer” has the
meaning ascribed to it in NRS 680A.050 .
(Added to NRS by 1999, 3208 )
The
provisions of chapter 696B of NRS apply to
a sponsored captive insurer if:
1. The assets of a protected cell are not used to pay any expense
or claim other than those that are attributable to the protected cell; and
2. The capital and surplus of the sponsored captive insurer are
available at all times to pay any expenses of or claims against the
sponsored captive insurer.
(Added to NRS by 2005, 2150 )
1. The terms and conditions set forth in chapter 696B of NRS pertaining to insurance reorganization,
receiverships and injunctions apply to captive insurers incorporated
pursuant to this chapter.
2. An agency captive insurer, a rental captive insurer and an
association captive insurer are subject to those provisions of chapter
686A of NRS which are applicable to
insurers.
(Added to NRS by 1999, 3217 )
The Commissioner may establish such
regulations as are necessary to carry out the provisions of this chapter.
(Added to NRS by 1999, 3217 )
1. Unless otherwise approved by the Commissioner, a pure captive
insurer, an agency captive insurer, a rental captive insurer or a
sponsored captive insurer must be incorporated as a stock insurer.
2. An association captive insurer must be formed as a:
(a) Stock insurer;
(b) Mutual insurer; or
(c) Reciprocal insurer, except that its attorney-in-fact must be a
corporation incorporated in this State.
3. A captive insurer shall have not less than three incorporators
or organizers, at least one of whom must be a resident of this State.
4. Before the articles of incorporation of a captive insurer may
be filed with the Secretary of State, the Commissioner must approve the
articles of incorporation. In determining whether to grant that approval,
the Commissioner shall consider:
(a) The character, reputation, financial standing and purposes of
the incorporators or organizers;
(b) The character, reputation, financial responsibility, experience
relating to insurance and business qualifications of the officers and
directors of the captive insurer;
(c) The competence of any person who, pursuant to a contract with
the captive insurer, will manage the affairs of the captive insurer;
(d) The competence, reputation and experience of the legal counsel
of the captive insurer relating to the regulation of insurance;
(e) If the captive insurer is a rental captive insurer, the
competence, reputation and experience of the underwriter of the captive
insurer;
(f) The business plan of the captive insurer; and
(g) Such other aspects of the captive insurer as the Commissioner
deems advisable.
5. The capital stock of a captive insurer incorporated as a stock
insurer must be issued at not less than par value.
6. At least one member of the board of directors of a captive
insurer formed as a corporation, or one member of the subscribers
advisory committee or the attorney-in-fact of a captive insurer formed as
a reciprocal insurer, must be a resident of this State.
7. A captive insurer formed pursuant to the provisions of this
chapter has the privileges of, and is subject to, the provisions of
general corporation law set forth in chapter 78 of NRS and, if formed as a nonprofit corporation,
the provisions set forth in chapter 82 of
NRS, as well as the applicable provisions contained in this chapter. If
the provisions of this chapter conflict with the general provisions in
chapter 78 or 82
of NRS governing corporations, the provisions of this chapter control.
The provisions of chapter 693A of NRS
relating to mergers, consolidations, conversions, mutualizations and
transfers of domicile to this State apply to determine the procedures to
be followed by captive insurers in carrying out any of those transactions
in accordance with this chapter.
8. The articles of association, articles of incorporation, charter
or bylaws of a captive insurer formed as a corporation must require that
a quorum of the board of directors consists of not less than one-third of
the number of directors prescribed by the articles of association,
articles of incorporation, charter or bylaws.
9. The agreement of the subscribers or other organizing document
of a captive insurer formed as a reciprocal insurer must require that a
quorum of its subscribers advisory committee consists of not less than
one-third of the number of its members.
(Added to NRS by 1999, 3212 ; A 2005, 2152 )
A captive insurer shall not use or adopt a
name that is the same, deceptively similar or likely to be confused with
or mistaken for any other existing business name registered in this state.
(Added to NRS by 1999, 3210 )
1. One or more sponsors may form a sponsored captive insurer
pursuant to this chapter.
2. A sponsored captive insurer formed or licensed pursuant to this
chapter may establish and maintain one or more protected cells to insure
the risks of one or more participants, subject to the following
conditions:
(a) The shareholders of a sponsored captive insurer must be limited
to its participants and sponsors, provided that the sponsored captive
insurer may issue nonvoting securities to other persons on terms approved
by the Commissioner;
(b) Each protected cell must be accounted for separately on the
books and records of the sponsored captive insurer to reflect the
financial condition and results of operations of that protected cell,
including, but not limited to, the net income or loss, dividends, or
other distributions to participants, and such other factors as may be set
forth in the participant contract or required by the Commissioner;
(c) The assets of a protected cell must not be chargeable with
liabilities arising out of any other insurance business which the
sponsored captive insurer may conduct;
(d) A sponsored captive insurer shall not make a sale, exchange,
transfer of assets, dividend or distribution between or among any of its
protected cells without the consent of any participant for which the
protected cells are maintained;
(e) A sponsored captive insurer shall not make a sale, exchange,
transfer of assets, dividend or distribution from a protected cell to a
sponsor or participant without the prior written approval of the
Commissioner, and the Commissioner shall not give written approval if the
sale, exchange, transfer, dividend or distribution would result in the
insolvency or impairment of the protected cell;
(f) On or before March 1 of each year, a sponsored captive insurer
must file with the Commissioner a report of its financial condition,
including, but not limited to, accounting statements detailing the
financial experience of each protected cell and any other information
required by the Commissioner;
(g) A sponsored captive insurer must notify the Commissioner not
more than 10 business days after a protected cell becomes insolvent or
otherwise unable to meet its claims or expense obligations;
(h) A participant contract must not become effective without the
prior written approval of the Commissioner;
(i) The addition of each new protected cell, the withdrawal of any
participant of a protected cell or the termination of any existing
protected cell constitutes a change in the business plan and requires the
prior written approval of the Commissioner; and
(j) The business written by a sponsored captive insurer with
respect to each protected cell must be:
(1) Fronted by an insurer licensed pursuant to the laws of
any state;
(2) Reinsured by a reinsurer authorized or approved by the
Commissioner; or
(3) Secured by a trust fund in the United States for the
benefit of policyholders and claimants or funded by an irrevocable letter
of credit or other arrangement that is acceptable to the Commissioner.
The amount of security provided must not be less than the reserves
associated with those liabilities, which are not fronted or reinsured
pursuant to subparagraph (1) or (2), including reserves for losses,
allocated loss adjustment expenses, incurred but not reported losses and
unearned premiums for business written through the protected cell
maintained for the participant. The Commissioner may require the
sponsored captive insurer to increase the funding of any security
arrangement established under this subsection. If the form of security is
a letter of credit, the letter of credit must be established, issued or
confirmed by a bank chartered in this State, a member of the Federal
Reserve System or a bank chartered in another state if the bank is deemed
acceptable by the Commissioner. A trust maintained pursuant to this
subparagraph must be established in a form and under such terms that are
approved by the Commissioner.
3. A sponsor of a sponsored captive insurer must:
(a) Be an insurer licensed pursuant to the laws of any state, a
reinsurer authorized or approved under the laws of any state or a captive
insurer formed or licensed pursuant to this chapter; and
(b) Not be a risk retention group.
4. A participant in a sponsored captive insurer need not be a
shareholder of the sponsored captive insurer or an affiliate of the
sponsored captive insurer and:
(a) May be an association, corporation, limited-liability company,
partnership, trust or other form of business organization;
(b) May be a sponsor of the sponsored captive insurer; and
(c) Must not be a risk retention group.
5. A participant in a sponsored captive insurer shall insure only
its own risks through a sponsored captive insurer.
(Added to NRS by 2005, 2148 )
LICENSING
1. A captive insurer, when authorized by its articles of
association, articles of incorporation or charter, may apply to the
Commissioner for a license to transact insurance.
2. A captive insurer shall not transact insurance in this State
unless the captive insurer first obtains a license from the Commissioner.
3. A person who violates this section is subject to the provisions
of, and shall be punished pursuant to, the Unauthorized Insurers Act set
forth in NRS 685B.020 to 685B.087
, inclusive.
(Added to NRS by 1999, 3208 )
A captive
insurer must apply to the Commissioner for a license. The application
must include:
1. A certified copy of the charter and bylaws of the captive
insurer;
2. A pro forma financial statement for the captive insurer that
has been prepared by a certified public accountant;
3. Any other statements or documents that the Commissioner
requires to be filed with the application;
4. Evidence of:
(a) The amount and liquidity of its assets relative to the risks to
be assumed by the captive insurer;
(b) The expertise, experience and character of the persons who will
manage the captive insurer;
(c) The overall soundness of the plan of operation of the captive
insurer; and
(d) The adequacy of the programs of the captive insurer providing
for loss prevention by its parent or member organizations, as applicable;
and
5. Such other information deemed to be relevant by the
Commissioner in ascertaining whether the proposed captive insurer will be
able to meet its policy obligations.
(Added to NRS by 1999, 3210 )
In addition to the information required
pursuant to NRS 694C.210 , each
sponsored captive insurer shall file with the Commissioner:
1. Information demonstrating the manner in which the applicant
will account for the loss and expense experience of each protected cell,
at a level of detail deemed sufficient by the Commissioner, and the
method of reporting such information;
2. A written acknowledgment that all financial records of the
sponsored captive insurer, including, but not limited to, records
pertaining to any protected cells, must be made available for inspection
or examination by the Commissioner or his designee;
3. All contracts entered into between the sponsored captive
insurer and any participant, including, but not limited to, participant
contracts; and
4. Evidence satisfactory to the Commissioner indicating that
expenses will be allocated to each protected cell in a fair and equitable
manner.
(Added to NRS by 2005, 2151 )
An application by a
captive insurer for licensure must include a nonrefundable application
fee of $500. The Commissioner may retain legal, financial and examination
services from outside the Division to review and make recommendations
regarding the qualifying examination of the applicant. The cost of those
services must be paid by the applicant. The provisions of NRS 679B.230
to 679B.287 , inclusive, apply to examinations,
investigations and processing conducted pursuant to this section.
(Added to NRS by 1999, 3210 )
1. If the Commissioner determines that the documents and
statements filed by the captive insurer satisfy the requirements for
licensure, the Commissioner shall issue a license to the captive insurer.
The license may be renewed annually upon the satisfaction of all
requirements imposed by the Commissioner and payment of the renewal fee.
2. A captive insurer must pay a fee of $300 for the issuance of a
license and, on or before March 1 of each year, an annual fee of $300 for
the renewal of a license.
(Added to NRS by 1999, 3210 ; A 2005, 2153 )
A captive
insurer shall include its business plan with its application for the
issuance and renewal of a license. If the captive insurer makes any
changes to the business plan, the captive insurer shall, as soon as
practicable, file a copy of the updated business plan with the
Commissioner.
(Added to NRS by 1999, 3210 )
1. A captive insurer must not be issued a license, and shall not
hold a license, unless the captive insurer has and maintains, in addition
to any other capital required to be maintained pursuant to subsection 3,
unimpaired paid-in capital of:
(a) For a pure captive insurer, not less than $100,000;
(b) For an association captive insurer incorporated as a stock
insurer, not less than $200,000;
(c) For an agency captive insurer, not less than $300,000;
(d) For a rental captive insurer, not less than $400,000; and
(e) For a sponsored captive insurer, not less than $200,000.
2. Except as otherwise provided by the Commissioner pursuant to
subsection 3, the capital required to be maintained pursuant to this
section must be in the form of cash or an irrevocable letter of credit.
3. The Commissioner may prescribe additional requirements relating
to capital based on the type, volume and nature of the insurance business
that is transacted by the captive insurer and requirements regarding
which capital, if any, may be in the form of an irrevocable letter of
credit.
4. A letter of credit used by a captive insurer as evidence of
capital required pursuant to this section must:
(a) Be issued by a bank chartered by this State or a bank that is a
member of the United States Federal Reserve System and has been approved
by the Commissioner; and
(b) Include a provision pursuant to which the letter of credit is
automatically renewable each year, unless the issuer gives written notice
to the Commissioner and the captive insurer at least 90 days before the
expiration date.
(Added to NRS by 1999, 3211 ; A 2005, 2153 )
1. A captive insurer must not be issued a license, and shall not
hold a license, unless the captive insurer has and maintains, in addition
to any other surplus required to be maintained pursuant to subsection 3,
an unencumbered surplus of:
(a) For a pure captive insurer, not less than $100,000;
(b) For an association captive insurer incorporated as a stock
insurer, not less than $300,000;
(c) For an agency captive insurer, not less than $300,000;
(d) For a rental captive insurer, not less than $400,000;
(e) For an association captive insurer incorporated as a mutual
insurer or reciprocal insurer, not less than $500,000; and
(f) For a sponsored captive insurer, not less than $300,000.
2. Except as otherwise provided in subsection 3, the surplus
required to be maintained pursuant to this section must be in the form of
cash or an irrevocable letter of credit.
3. The Commissioner may prescribe additional requirements relating
to surplus based on the type, volume and nature of the insurance business
that is transacted by the captive insurer and requirements regarding
which surplus, if any, may be in the form of an irrevocable letter of
credit.
4. A letter of credit used by a captive insurer as evidence of
required surplus pursuant to this section must:
(a) Be issued by a bank chartered by this State or a bank that is a
member of the United States Federal Reserve System and has been approved
by the Commissioner; and
(b) Include a provision pursuant to which the letter of credit is
automatically renewable each year, unless the issuer gives written notice
to the Commissioner and the captive insurer at least 90 days before the
expiration date.
(Added to NRS by 1999, 3211 ; A 2005, 2154 )
1. The Commissioner may suspend or revoke the license of a captive
insurer if, after an examination and hearing, the Commissioner determines
that:
(a) The captive insurer:
(1) Is insolvent or has impaired its required capital or
surplus;
(2) Has failed to meet a requirement of NRS 694C.250 , 694C.260 , 694C.320 or 694C.330 ;
(3) Has refused or failed to submit an annual report, as
required by NRS 694C.400 , or any
other report or statement required by law or by order of the Commissioner;
(4) Has failed to comply with the provisions of its charter
or bylaws;
(5) Has failed to submit to an examination required pursuant
to NRS 694C.410 ;
(6) Has refused or failed to pay the cost of an examination
required pursuant to NRS 694C.410 ;
(7) Has used any method in transacting insurance pursuant to
this chapter which is detrimental to the operation of the captive insurer
or would make its condition unsound with respect to its policyholders or
the general public; or
(8) Has failed otherwise to comply with the laws of this
state; and
(b) The suspension or revocation of the license of the captive
insurer is in the best interest of its policyholders or the general
public.
2. The provisions of NRS 679B.310 to 679B.370 , inclusive, apply to hearings conducted
pursuant to this section.
(Added to NRS by 1999, 3214 )
MISCELLANEOUS PROVISIONS
1. Except as otherwise provided in this section, a captive insurer
licensed pursuant to this chapter may transact any form of insurance
described in NRS 681A.020 to 681A.080
, inclusive.
2. A captive insurer licensed pursuant to this chapter:
(a) Shall not directly provide personal motor vehicle or
homeowners’ insurance coverage, or any component thereof.
(b) Shall not accept or cede reinsurance, except as otherwise
provided in NRS 694C.350 .
(c) May provide excess workers’ compensation insurance to its
parent and affiliated companies, unless otherwise prohibited by the laws
of the state in which the insurance is transacted.
(d) May reinsure workers’ compensation insurance provided pursuant
to a program of self-funded insurance of its parent and affiliated
companies if:
(1) The parent or affiliated company which is providing the
self-funded insurance is certified as a self-insured employer by the
Commissioner, if the insurance is being transacted in this State; or
(2) The program of self-funded insurance is otherwise
qualified pursuant to, or in compliance with, the laws of the state in
which the insurance is transacted.
3. A pure captive insurer shall not insure any risks other than
those of its parent and affiliated companies or controlled unaffiliated
businesses.
4. An association captive insurer shall not insure any risks other
than those of the member organizations of its association and the
affiliated companies of the member organizations.
5. An agency captive insurer shall not insure any risks other than
those of the policies that are placed by or through the insurance agency
or brokerage that owns the captive insurer.
6. A rental captive insurer shall not insure any risks other than
those of the policyholders or associations that have entered into
agreements with the rental captive insurer for the insurance of those
risks. Such agreements must be in a form which has been approved by the
Commissioner.
7. A sponsored captive insurer shall not insure any risks other
than those of its participants.
8. As used in this section, “excess workers’ compensation
insurance” means insurance in excess of the specified per-incident or
aggregate limit, if any, established by:
(a) The Commissioner, if the insurance is being transacted in this
State; or
(b) The chief regulatory officer for insurance in the state in
which the insurance is being transacted.
(Added to NRS by 1999, 3208 ; A 2005, 2154 )
1. The board of directors of a captive insurer shall meet at least
once each year in this State. The captive insurer shall:
(a) Maintain its principal place of business in this State; and
(b) Appoint a resident of this State as a registered agent to
accept service of process and otherwise act on behalf of the captive
insurer in this State. If the registered agent cannot be located with
reasonable diligence for the purpose of serving a notice or demand on the
captive insurer, the notice or demand may be served on the Secretary of
State who shall be deemed to be the agent for the captive insurer.
2. A captive insurer shall not transact insurance in this State
unless:
(a) The captive insurer has made adequate arrangements with a bank
located in this State that is authorized pursuant to state or federal law
to transfer money;
(b) If the captive insurer employs or has entered into a contract
with a natural person or business organization to manage the affairs of
the captive insurer, the natural person or business organization meets
the standards of competence and experience satisfactory to the
Commissioner;
(c) The captive insurer employs or has entered into a contract with
a qualified and experienced certified public accountant who is approved
by the Commissioner or a firm of certified public accountants that is
nationally recognized;
(d) The captive insurer employs or has entered into a contract with
qualified, experienced actuaries who are approved by the Commissioner to
perform reviews and evaluations of the operations of the captive insurer;
and
(e) The captive insurer employs or has entered into a contract with
an attorney who is licensed to practice law in this State and who meets
the standards of competence and experience in matters concerning the
regulation of insurance in this State established by the Commissioner by
regulation.
(Added to NRS by 1999, 3209 ; A 2005, 2155 )
The
Commissioner may approve an ongoing plan for the payment of dividends or
other distributions by a captive insurer if, at the time of each payment
or distribution, the retention of capital by the captive insurer is in
excess of the amounts required by the Commissioner. The Commissioner
shall adopt by regulation:
1. A specific amount that a captive insurer must have in excess
capital for the approval of an ongoing plan for the payment of dividends
or other distributions; or
2. A formula pursuant to which the specific amount of required
excess capital may be calculated.
(Added to NRS by 1999, 3211 )
Except as otherwise provided
in this section, a captive insurer shall pay dividends out of, or make
any other distributions from, its capital or surplus, or both, in
accordance with the provisions set forth in NRS 693A.140 , 693A.150 and 693A.160 . A captive insurer shall not pay dividends
out of, or make any other distribution with respect to, its capital or
surplus, or both, in violation of this section unless the captive insurer
has obtained the prior approval of the Commissioner to make such a
payment or distribution.
(Added to NRS by 1999, 3212 )
1. Except as otherwise provided in this section and NRS 694C.382
, an association captive insurer, an
agency captive insurer, a rental captive insurer or a sponsored captive
insurer shall comply with the requirements relating to investments set
forth in chapter 682A of NRS. Upon the
request of the association captive insurer, agency captive insurer,
rental captive insurer or sponsored captive insurer, the Commissioner may
approve the use of reliable, alternative methods of valuation and rating.
2. A pure captive insurer is not subject to any restrictions on
allowable investments, except that the Commissioner may prohibit or limit
any investment that threatens the solvency or liquidity of the pure
captive insurer.
3. A pure captive insurer may make a loan to its parent or
affiliated company if the loan:
(a) Is first approved in writing by the Commissioner;
(b) Is evidenced by a note that is in a form that is approved by
the Commissioner; and
(c) Does not include any money that has been set aside as capital
or surplus as required by subsection 1 of NRS 694C.250 or subsection 1 of NRS 694C.260 .
(Added to NRS by 1999, 3214 ; A 2005, 2156 )
1. A captive insurer may provide reinsurance on risks ceded by any
other insurer.
2. A captive insurer may take credit for reserves on risks or
portions of risks ceded to a reinsurer that is in compliance with NRS
681A.140 to 681A.240 , inclusive. A captive insurer shall not take
credit for reserves on risks or portions of risks ceded to a reinsurer if
the reinsurer is not in compliance with NRS 681A.140 to 681A.240 , inclusive.
3. The Commissioner may authorize a captive insurer to take credit
for reserves on risks or portions of risks ceded to a pool, an exchange
or an association acting as a reinsurer. The Commissioner may require
such documents, financial information or other evidence as he determines
necessary to show that the pool, exchange or association will be able to
provide adequate security for its financial obligations. The Commissioner
may deny authorization or impose any limitations on the activities of a
reinsurance pool, exchange or association that, in his judgment, are
necessary and proper to provide adequate security for the ceding captive
insurer and for the protection and benefit of the general public.
4. For the purposes of this chapter, insurance provided by a
captive insurer of any plan for workers’ compensation of its parent and
affiliated companies which is certified or otherwise qualified in the
state in which the insurance is provided as a self-insurance plan shall
be deemed to be reinsurance.
(Added to NRS by 1999, 3215 )
Insurance
provided by a captive insurer in accordance with this chapter may not be
used to satisfy the requirements set forth in chapter 706 of NRS relating to the insurance required to be
maintained by vehicles subject to the jurisdiction of the Transportation
Services Authority or Taxicab Authority, unless the Transportation
Services Authority or Taxicab Authority, as appropriate, specifically
approves the use of insurance provided by a captive insurer for that
purpose.
(Added to NRS by 1999, 3215 )
A
captive insurer is not required to join a rating organization.
(Added to NRS by 1999, 3215 )
A
captive insurer shall not join or contribute financially to any
risk-sharing plan, risk pool or insurance insolvency guaranty fund in
this state. A captive insurer or its insured, its parent or an affiliated
company, or any member organization of its association shall not receive
any benefit from such a plan, pool or fund for claims arising out of the
operations of the captive insurer.
(Added to NRS by 1999, 3215 )
Notwithstanding the
provisions of this chapter, the assets of two or more protected cells may
be combined for the purpose of investment, and such combination must not
be construed as defeating the separation of the assets for accounting or
other purposes. Sponsored captive insurers shall comply with the
investment requirements set forth in NRS 694C.340 , if applicable, except to the extent that
credit for reinsurance ceded to reinsurers is allowed pursuant to NRS
694C.350 or to the extent otherwise
deemed reasonable and appropriate by the Commissioner. Notwithstanding
the provisions of this chapter, the Commissioner may approve the use of
alternative reliable methods of valuation and rating.
(Added to NRS by 2005, 2150 )
1. As security for the payment of liabilities attributable to the
branch operations of a branch captive insurer, the Commissioner shall
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 ceding United
States insurers under insurance policies or reinsurance contracts issued
or assumed by the branch captive insurer through its branch operations.
2. The amount of the security must be not less than the total
amount required by NRS 694C.250 and
694C.260 , and any reserves on such
insurance policies or reinsurance contracts, including reserves for
losses, allocated loss adjustment expenses, incurred but not reported
losses and unearned premiums with regard to business written through the
branch operations. The Commissioner may authorize a branch captive
insurer that is required to post security for loss reserves on branch
business by its reinsurer to reduce the funds in the trust account
required by this section by that same amount as long as the security
remains posted with the reinsurer.
3. If the form of the security is a letter of credit, the letter
of credit must be established, issued or confirmed by a bank chartered in
this State or a bank that is a member of the Federal Reserve System.
(Added to NRS by 2005, 2150 )
An alien captive insurer licensed as a branch captive
insurer shall petition the Commissioner to issue a certificate setting
forth the finding of the Commissioner that, after considering the
character, reputation, financial responsibility, insurance experience and
business qualifications of the officers and directors of the alien
captive insurer, the licensing and maintenance of the branch operations
will promote the general welfare of the State. The alien captive insurer
may register to do business in this State after the certificate is issued
by the Commissioner.
(Added to NRS by 2005, 2150 )
Before March 1 of each year or, if approved by the Commissioner, not
more than 60 days after the expiration of the fiscal year of the branch
captive insurer, the branch captive insurer shall file with the
Commissioner a copy of all reports and statements required to be filed
under the laws of the jurisdiction in which the alien captive insurer is
domiciled. The reports and statements must be verified by oath of two of
the executive officers of the alien captive insurer. If the Commissioner
is satisfied that the annual report filed by the alien captive insurer in
the jurisdiction in which it is domiciled provides adequate information
concerning the financial condition of the alien captive insurer, the
Commissioner may waive the requirement for completion of the captive
annual statement for business written in the alien jurisdiction.
(Added to NRS by 2005, 2150 )
ADMINISTRATION
1. On or before March 1 of each year, a captive insurer shall
submit to the Commissioner a report of its financial condition, as
prepared by a certified public accountant. A captive insurer shall use
generally accepted accounting principles and include any useful or
necessary modifications or adaptations thereof that have been approved or
accepted by the Commissioner for the type of insurance and kinds of
insurers to be reported upon, and as supplemented by additional
information required by the Commissioner. Except as otherwise provided in
this section, each association captive insurer, agency captive insurer or
rental captive insurer shall file its report in the form required by NRS
680A.265 . The Commissioner shall
adopt regulations designating the form in which pure captive insurers
must report.
2. A pure captive insurer may apply, in writing, for authorization
to file its annual report based on a fiscal year that is consistent with
the fiscal year of the parent company of the pure captive insurer. If an
alternative date is granted:
(a) The annual report is due not later than 60 days after the end
of each such fiscal year; and
(b) The pure captive insurer shall file on or before March 1 of
each year such forms as required by the Commissioner by regulation to
provide sufficient detail to support its premium tax return filed
pursuant to NRS 694C.450 .
(Added to NRS by 1999, 3213 )
1. Except as otherwise provided in this section, at least once
every 3 years, and at such other times as the Commissioner determines
necessary, the Commissioner, or his designee, shall visit each captive
insurer and thoroughly inspect and examine the affairs of the captive
insurer to ascertain:
(a) The financial condition of the captive insurer;
(b) The ability of the captive insurer to fulfill its obligations;
and
(c) Whether the captive insurer has complied with the provisions of
this chapter and the regulations adopted pursuant thereto.
2. Upon the application of a captive insurer, the Commissioner may
conduct the visits required pursuant to subsection 1 every 5 years if the
captive insurer conducts comprehensive annual audits:
(a) The scope of which is satisfactory to the Commissioner; and
(b) Which are conducted by an independent auditor appointed by the
Commissioner.
3. The Commissioner may contract to obtain legal, financial and
examination services from outside the Division to conduct the examination
and make recommendations to the Commissioner. The cost of the examination
must be paid to the Commissioner by the captive insurer.
4. The provisions of NRS 679B.230 to 679B.287 , inclusive, apply to examinations conducted
pursuant to this section.
(Added to NRS by 1999, 3213 )
1. The examination of a branch captive insurer pursuant to NRS
694C.410 must be of branch business
and branch operations only, so long as the branch captive insurer
provides to the Commissioner on an annual basis a certificate of
compliance, or equivalent documentation, issued by or filed with the
licensing authority of the jurisdiction in which the branch captive
insurer is formed, and demonstrates to the satisfaction of the
Commissioner that it is operating in a sound financial condition and in
accordance with all applicable laws and regulations of that jurisdiction.
2. As a condition of licensure, the alien captive insurer must
authorize the Commissioner to examine the affairs of the alien captive
insurer in the jurisdiction in which the alien captive insurer is formed.
(Added to NRS by 2005, 2151 )
TAXATION, REGULATION AND SUPERVISION
1. Except as otherwise provided in this section, a captive insurer
shall pay to the Division, not later than March 1 of each year, a tax at
the rate of:
(a) Two-fifths of 1 percent on the first $20,000,000 of its net
direct premiums;
(b) One-fifth of 1 percent on the next $20,000,000 of its net
direct premiums; and
(c) Seventy-five thousandths of 1 percent on each additional dollar
of its net direct premiums.
2. Except as otherwise provided in this section, a captive insurer
shall pay to the Division, not later than March 1 of each year, a tax at
a rate of:
(a) Two hundred twenty-five thousandths of 1 percent on the first
$20,000,000 of revenue from assumed reinsurance premiums;
(b) One hundred fifty thousandths of 1 percent on the next
$20,000,000 of revenue from assumed reinsurance premiums; and
(c) Twenty-five thousandths of 1 percent on each additional dollar
of revenue from assumed reinsurance premiums.
Ê The tax on reinsurance premiums pursuant to this subsection must not be
levied on premiums for risks or portions of risks which are subject to
taxation on a direct basis pursuant to subsection 1. A captive insurer is
not required to pay any reinsurance premium tax pursuant to this
subsection on revenue related to the receipt of assets by the captive
insurer in exchange for the assumption of loss reserves and other
liabilities of another insurer that is under common ownership and control
with the captive insurer, if the transaction is part of a plan to
discontinue the operation of the other insurer and the intent of the
parties to the transaction is to renew or maintain such business with the
captive insurer.
3. If the sum of the taxes to be paid by a captive insurer
calculated pursuant to subsections 1 and 2 is less than $5,000 in any
given year, the captive insurer shall pay a tax of $5,000 for that year.
The maximum aggregate tax for any year must not exceed $175,000. The
maximum aggregate tax to be paid by a sponsored captive insurer applies
only to each protected cell and does not apply to the sponsored captive
insurer as a whole.
4. Two or more captive insurers under common ownership and control
must be taxed as if they were a single captive insurer.
5. Notwithstanding any specific statute to the contrary and except
as otherwise provided in this subsection, the tax provided for by this
section constitutes all the taxes collectible pursuant to the laws of
this State from a captive insurer, and no occupation tax or other taxes
may be levied or collected from a captive insurer by this State or by any
county, city or municipality within this State, except for taxes imposed
pursuant to chapter 363A or 363B of NRS and ad valorem taxes on real or personal
property located in this State used in the production of income by the
captive insurer.
6. Twenty-five percent of the revenues collected from the tax
imposed pursuant to this section must be deposited with the State
Treasurer for credit to the Account for the Regulation and Supervision of
Captive Insurers created pursuant to NRS 694C.460 . The remaining 75 percent of the revenues
collected must be deposited with the State Treasurer for credit to the
State General Fund.
7. A captive insurer that is issued a license pursuant to this
chapter after July 1, 2003, is entitled to receive a nonrefundable credit
of $5,000 applied against the aggregate taxes owed by the captive insurer
for the first year in which the captive insurer incurs any liability for
the payment of taxes pursuant to this section. A captive insurer is
entitled to a nonrefundable credit pursuant to this section not more than
once after the captive insurer is initially licensed pursuant to this
chapter.
8. As used in this section, unless the context otherwise requires:
(a) “Common ownership and control” means:
(1) In the case of a stock insurer, the direct or indirect
ownership of 80 percent or more of the outstanding voting stock of two or
more corporations by the same member or members.
(2) In the case of a mutual insurer, the direct or indirect
ownership of 80 percent or more of the surplus and the voting power of
two or more corporations by the same member or members.
(b) “Net direct premiums” means the direct premiums collected or
contracted for on policies or contracts of insurance written by a captive
insurer during the preceding calendar year, less the amounts paid to
policyholders as return premiums, including dividends on unabsorbed
premiums or premium deposits returned or credited to policyholders.
(Added to NRS by 1999, 3215 ; A 2003, 3332 ; 2003, 20th Special Session, 228 ; 2005, 2156 )
The tax
required pursuant to NRS 694C.450
applies only to the branch business of the branch captive insurer.
(Added to NRS by 2005, 2151 )
1. There is hereby created in the State General Fund an Account
for the Regulation and Supervision of Captive Insurers. Money in the
Account must be used only to carry out the provisions of this chapter.
Except as otherwise provided in NRS 694C.450 , all fees and assessments received by the
Commissioner or Division pursuant to this chapter must be credited to the
Account. Not more than 2 percent of the tax collected and deposited in
the Account pursuant to NRS 694C.450 ,
may, upon application by the Division or an agency for economic
development to, and with the approval of, the Interim Finance Committee,
be transferred to an agency for economic development to be used by that
agency to promote the industry of captive insurance in this State.
2. Except as otherwise provided in this section, all payments from
the Account for the maintenance of staff and associated expenses,
including contractual services, as necessary, must be disbursed from the
State Treasury only upon warrants issued by the State Controller, after
receipt of proper documentation of the services rendered and expenses
incurred.
3. At the end of each fiscal year, that portion of the balance in
the Account which exceeds $500,000 must be transferred to the State
General Fund.
4. The State Controller may anticipate receipts to the Account and
issue warrants based thereon.
(Added to NRS by 1999, 3217 ; A 2005, 2158 )
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