Sunday, April 21, 2024

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Washington State fines second Utah captive for unauthorised insurance

Mike Kreidler, Insurance Commissioner for Washington State, has fined Geoduck Insurance Group, Inc $10,000 for transacting insurance business in the State without being registered with the Office of the Insurance Commissioner (OIC).

Geoduck is a Utah-domiciled captive, licensed in 2014, that has also been writing insurance in Washington State since 2014.

Captive Intelligence reported in July that Kreidler had fined Utah captive Drico Insurance Company $1,000 for transacting insurance while unauthorised, and in May Airbnb was fined $20,000 for a similar offence.

In the case of Geoduck, the captive originally applied to register with the OIC in November 2021, only to be rejected because its ownership structure did not meet WA’s criteria.

Geoduck was owned by two trusts, while the State requires a captive to be owned by a single entity.

In July 2022, Geoduck informed the OIC it would re-apply once it had reorganised, and it was ultimately registered in April 2023.

The captive, however, informed the OIC that total premiums collected for Washington State risk between 2014 and 2021 amounted to $8,038,375.72.

In September 2023, Geoduck paid $181,797.00 in premium taxes, interest, and penalties associated with the 2014 to 2021 period.

Commissioner Kreidler started aggressively targeting captive insurers doing business in Washington between 2018 and 2021, accusing them of being unauthorised thus insuring risk in the State illegally.

He first targeted large multinational captive owners that were headquartered in Washington or with large operations in the State, such as Microsoft, Alaska Airlines, Starbucks and CostCo until a legal fix was agreed upon by the regulator and corporate community.

Captive Intelligence published a long read on the dispute and background in April 2021. Read it here.