Washington State’s Insurance Commissioner Mike Kreidler has fined Drico Insurance Company, a Utah-domiciled captive, $1,000 for transacting unauthorised insurance in his state.
Captive Intelligence reported in May that Airbnb had been fined $20,000 by Commisioner Kreidler for a similar offence.
Drico Insurance is owned by Diamond Parking Services and was licensed by the Utah Insurance Department in January 2018.
The captive has been providing property, liability, and auto insurance to Washington consumers since 2018.
“The Office of the Insurance Commissioner (“OIC”) opened an investigation upon receipt of an internal referral alleging the Company does not qualify for registration as a captive insurer and is acting as an unauthorized insurer,” Kreidler’s office stated in a consent order.
Drico applied to register with the OIC in September 2021, but it failed as the Commissioner required it demonstrate its assets exceeded its liabilities by at least one million dollars.
The OIC deemed the captive owed $33,698 in premium taxes corresponding to the years 2018 to 2021, which the company paid in full on February 15, 2022.
Kreidler’s office said Washington was the insured’s home state after documents provided by the captive showed Washington had the largest percentage of premium attributed to it.
“Hence, Washington is the insured’s home state pursuant to RCW 48.15.010(5)(b) and the company is required to obtain a certificate of authorization from the Insurance Commissioner to transact the business of insurance in the state of Washington,” the OIC added.
As part of the consent order, agreed and signed by both the OIC and Drico Insurance Company, the captive will pay the $1,000 fine and pay premium taxes of $14,016 owed for 2022.
Drico will need to obtain a captive insurer registration from the Insurance Commissioner.
“Throughout the application review process, the Company shall comply with all regulatory requirements related to a captive insurer,” the order states.
“If the Company is unable to obtain a captive insurer registration from the Insurance Commissioner, existing policies cannot be renewed.”
Kreidler became well known to the captive insurance industry in 2018 when he began targeting self-insurance subsidiaries owned by Washington-headquartered businesses, accusing them of being unauthorised thus insuring risk in the state illegally.
Microsoft, Costco, Alaska Airlines and Starbucks were among those corporates caught up in enforcement action before a legislative fix was landed upon in 2021.