Nevada speeds process to regain captive insurers
State regulators are doing what they can to recapture the captive insurance business.
The Nevada Division of Insurance says it will now approve applications for captive insurance companies in one day, far faster than the current month-long process, and is dropping the state application fee from $4,000 to $1,050.
“One of the first questions I am always asked is: how soon can I get approval?” says Michael Lynch, deputy commissioner in the division. “We were one of the fastest before and now we can do it in a single day. And we will be among the lowest in fees with $1,050. Montana is the lowest at $500.”
The changes could be done without statutory approval, says Lynch, and follow on the heels of Assembly Bill 74, passed by the 2011 Nevada Legislature, which reduced the number of audits and reports required by captive insurers.
“Since AB74, we did hold business, but it didn’t bring new business here,” says Lynch. “But we would have lost a lot of captives if we hadn’t made those changes.”
Captive insurers are created by companies to insure their own risk. The insurance division says the insurers create jobs by using local accountants, actuaries and lawyers, and boost the hotel business because owners of a captive insurance company are required to hold one meeting in the state annually. The state also levies a 0.4 percent tax on the premiums charged by the captive insurers in addition to collecting application fees.
Nevada established its captive insurance program in 1999 and for years was one of the top three states chosen as a domicile by insurers. The state’s popularity has dropped recently after an influx of other states jumped into the business of attracting captive insurers. Nevada currently has about 200 captive insurers and continually vies for sixth place in a three-way battle with South Carolina and the District of Columbia. Vermont, Utah, Montana, Hawaii and Arizona are the leaders.
Tiffiany Howard, a UNLV professor and recent Congressional Black Caucus Foundation senior research fellow, is the lead author of the study aimed at identifying ways banks can help support and invest in Black entrepreneurs.