Sunday, April 21, 2024

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Nevada “back on the map” as captive domicile – Commissioner Kipper

Nevada Insurance Commissioner Scott Kipper is “awfully bullish” on the future of captives in the State and believes it has an opportunity to put Nevada “back on map” as a top three or four domicile for US captives.

At the end of 2022, there was 155 captives licenced in Nevada.

Kipper was appointed Insurance Commissioner for Nevada in February this year following the resignation of Barbara Richardson, who had served in the role since March 2016.

Deputy Nevada insurance commissioner Nick Stosic believes one key factor hampering the State’s recent efforts to drive captive growth was the lack of an active captive Association.

“We now have an active Association and they’re working with us to help make sure we can have booths at various events and have some additional resources to promote what Nevada has to offer,” he said.

Stosic said the State is always trying to evaluate how it can provide an adequate regulatory environment, while also making sure they are not an impediment to captives.

“We’re looking at that balance all the time of what we need to properly regulate, but also make sure that we’re being reasonable in our requests,” he said.

Recent regulatory changes

Stosic told Captive Intelligence that the state recently changed the annual reporting requirements for captives.

Instead of reporting on 1 March, captives are now required to provide their annual reports by the end of July, the same period that audited financial statements and actuarial reports are due.

“We think that is going to be one area that will add additional simplicity, as instead of using estimated numbers, they are now going to have audited numbers and they are only going to have to file the one time instead of doing the two filings with us,” Stosic said.

Currently, any material business plan change must be filed with the division for preapproval, but the regulators are working with the captive industry to introduce new materiality standards.

This will mean that a change up to a certain level in premium or coverage would be allowed to be performed by the captive without requiring preapproval.

“Obviously, they’ll have to report to us later that they have it included in their annual report,” Stosic said.

“Very often they’re making just minor tweaks and coverages every year, and it seems like both overuse of our staff and unnecessary burden to having to always get approval before they can make those changes.”

Stosic believes Nevada has an “incredible” tax environment, while the state also has other statutes including D&O protection that make it “unique”.

Cannabis

Nevada was one of the first states in the US to approve cannabis risk.

“Since it’s a legal business in our state we feel it is important to try and make insurance coverage available for those business,” Stosic said.

“We have welcomed that as a risk, and even changed some of our statutes to make the banking a little bit easier.”

Despite state approval for cannabis risk, Kipper said Nevada has not had too much interest in cannabis captives.

“But we are welcoming those opportunities where entrepreneurs might want to dip their toes in,” he said.

“We’re happy to assist where we can provide, not only a technical guidance, but also all the other items that regulators can provide.”

Assembly Bill 398

Recent Nevada legislation, which disallows liability insurers from using eroding policy limits, which reduce policy limits by defence fees and costs for all insurance companies in the state, had previously been criticised by the National Risk Retention Association (NRRA).

Stosic said that one important caveat of the regulation is that it specifically states risk retention groups are not subject to Assembly Bill 398.

He also highlighted that Nevada currently has emergency regulation in effect while the permanent regulation gets through the legislature.

“The emergency regulation also specifically excludes risk retention groups, and the permanent regulation that the legislature pre-approved yesterday also specifically says that that Bill does not apply to risk retention groups and non-admitted lines,” Stosic said.