All Roll Calls
Yes: 129 • No: 0
ArkansasSB2372025 Regular SessionSenate
TO AMEND THE LAW CONCERNING THE LICENSING AND REGULATION OF CAPTIVE INSURERS.
Sponsored By: Justin Boyd (Republican), Trey Steimel (Republican)
Enacted
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Bill Overview
Analyzed Economic Effects
9 provisions identified: 5 benefits, 2 costs, 2 mixed.
Captive insurers can move to Arkansas
Insurers based in another state or country can move their legal home to Arkansas as captives of the same type. They must meet Arkansas formation and licensing rules and stop being domestic entities in their former jurisdictions. Their former regulators must have no objection, and the Arkansas commissioner must approve the move. Insurers must file compliant organizational documents with the Secretary of State and send its acknowledgment to the commissioner. After moving, they follow Arkansas captive rules and keep their original formation dates.
Easier licensing paths for captive insurers
Associations no longer need a full year of existence to qualify for a captive insurer. They must still meet ownership, voting-control, or subscriber requirements for their captive type. The commissioner can issue temporary licenses when doing so serves the public's best interest. Applicants must submit complete applications, pay license fees, and pass a preliminary review of management's experience, expertise, and character. The commissioner can limit or revoke temporary licenses; they automatically end if applicants fail to complete regular licensing.
Easier ordinary dividends for pure captives
Pure captive insurers can pay ordinary dividends without getting the commissioner's approval first. Extraordinary dividends and distributions still need prior approval. Captives remain subject to legal distribution limits and approved capital and surplus requirements for ongoing dividend programs.
Lower capital minimums for some captives
Association stock captives need $250,000 in paid-in capital for licensing, down from $400,000. Sponsored captives need $100,000, down from $250,000. Special-purpose captives need at least $125,000, down from $300,000. The commissioner can require more for special-purpose captives after reviewing their business plans, feasibility studies, financial projections, and risks.
Captive tax credit rewards Arkansas payroll
Captive insurers can apply for a premium-tax credit tied to noncommissioned salaries and wages paid for captive operations. Eligible employees must have at least six months of employment, primarily live in Arkansas, and pay Arkansas income taxes. The credit cannot reduce the insurer's premium tax by more than 50%. This is an insurer tax break, not a tax credit paid directly to workers.
Captive insurers face license enforcement penalties
After notice and a hearing, the commissioner must suspend or revoke a captive insurer's license for listed serious violations. Grounds include unsound finances, hazardous practices, refusing examinations or required records, and failing to pay final judgments within 30 days. Knowing or reckless violations of insurance law or lawful commissioner rules or orders also qualify. Instead of suspension, the commissioner can impose a $5,000 penalty; instead of revocation, a $10,000 penalty.
Higher capital minimum for industrial captives
Industrial insured captives organized as stock insurers need at least $250,000 in paid-in capital to obtain an Arkansas license. The previous minimum was $200,000, so applicants need $50,000 more.
Audit relief and checks for pure captives
The commissioner can waive a pure captive's audit or actuarial-opinion requirement, but relief is not automatic. Its parent must have a consolidated audit, guarantee the captive's liabilities, and hold at least $100 million in net equity. The parent also needs a financial-strength rating of BBB or better from an agency the commissioner accepts. Pure captives must undergo an examination at least once every seven years. The commissioner can order examinations sooner when prudent.
Captive relocation tax relief carries penalties
Captives moving their legal home to Arkansas owe Arkansas premium taxes only on premiums paid after the move. They must report all taxes due but can elect to skip payment in their first or second Arkansas year, not both. Surrendering their license or moving away within five years triggers immediate payment of that tax plus 10% annual interest. Interest runs from the original tax due date. Insurers moving after July 1 face half the normal $5,000 minimum premium tax, or $2,500, in their first year.
Sponsors & Cosponsors
Sponsors
Justin Boyd
Republican • Senate
Trey Steimel
Republican • House
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
House vote • 4/7/2025
House Vote - Monday, April 7, 2025 8:52:54 PM
Yes: 95 • No: 0
Senate vote • 3/3/2025
Senate Vote - Monday, March 3, 2025 2:16:14 PM
Yes: 34 • No: 0
Actions Timeline
Notification that SB237 is now Act 554
4/14/2025SenateDELIVERED TO GOVERNOR.
4/9/2025SenateReported correctly enrolled and ordered delivered to the Governor.
4/9/2025SenateORDERED ENROLLED
4/8/2025SenateReturned from the House as passed.
4/8/2025SenateReturned to the Senate as passed.
4/8/2025HouseRead the third time and passed and ordered transmitted to the Senate.
4/7/2025HouseReturned by the Committee Do Pass
4/2/2025HouseRead the first time, rules suspended, read the second time and referred to the Committee on INSURANCE & COMMERCE- HOUSE
3/3/2025HouseRECEIVED FROM THE SENATE
3/3/2025HouseOrdered immediately transmitted to the House.
3/3/2025SenateRead the third time and passed.
3/3/2025SenateReturned by the Committee, with the recommendation that it Do Pass
2/20/2025SenateRead first time, rules suspended, read second time, referred to INSURANCE & COMMERCE - SENATE
2/17/2025SenateFiled
2/14/2025Senate
Bill Text
SB237 - Introduced
2/14/2025
Act Version
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