Iowa became the latest state to allow captive insurers Friday after its captive legislation took effect.
The law, Senate File 549, authorizes the formation of pure or single parent, association, protected cell, special purpose and industrial insured captives.
Minimum capital and surplus requirements are not less than $250,000 for pure captives; not less than $500,000 for industrial insured captives, including risk retention groups; and not less than $500,000 for protected cell captive companies, the law states.
Captives will be assessed a 0.35% tax on the initial $20 million of direct premium and a 0.25% tax on each dollar of direct premium above $20 million.
Premium taxes will also be assessed on assumed reinsurance premiums as follows: 0.20% on assumed reinsurance premiums up to $20 million; 0.125% on assumed premiums between $20 million and $40 million, and 5% on assumed reinsurance premiums that exceed $40 million.
The Iowa Insurance Division is expected to establish a captive insurance bureau to carry out its obligations under the law, which will be staffed by three full-time employees.
Captives must submit an annual report to the insurance division by April 1 of each year and undergo regulatory exams at the discretion of the insurance commissioner, no less than every three years.
The insurance division has not yet licensed any captives as it works to draft necessary regulations and prepares to hire the positions provided for in the law, an insurance division spokeswoman wrote in an email.
Governor Kim Reynolds signed SF 549 into law on June 1, following its passage in the state senate and house in April.