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Northern Mariana IslandsSB 24-0924th Northern Mariana Islands Legislature (2025-2026)SenateWALLET
CNMI Captive Insurance Act of 2025
Sponsored By: Celina Roberto Babauta (Democratic)
Became Law
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Bill Overview
Analyzed Economic Effects
12 provisions identified: 4 benefits, 5 costs, 3 mixed.
Capital, surplus, and dividend limits
Minimum paid‑in capital: pure $50,000; group stock $100,000; industrial‑insured $150,000; rent‑a‑captive $150,000 for the first client plus $150,000 per extra client up to $750,000; risk retention group $500,000. Minimum free surplus: pure $100,000; group mutual $150,000; industrial‑insured $200,000; rent‑a‑captive $250,000. Surplus can be cash or an approved irrevocable letter of credit. Within 30 days of starting, file a sworn certification of unimpaired capital and surplus. Dividends or other distributions need the Commissioner’s prior approval and must leave required capital and surplus in place.
Reporting, audits, exams, and penalties
Pure captives file an audited GAAP statement within 6 months after year‑end. Other captives file an NAIC annual statement by March 1, an audit by June 1, and an RBC report by March 1. A qualified actuary must opine on reserves. Late filings can be fined up to $500 per day. The Commissioner examines each captive at least every 3 years, or up to every 5 years with satisfactory annual audits, and the company pays exam costs. The Commissioner can suspend or revoke a license for failures such as insolvency, not filing, or refusing exams.
2% tax on captive premiums
A captive pays a 2% CNMI tax on premiums and other insurance income. The tax equals 0.02 times your premium income each year.
Advisory group reviews license applications
A CNMI advisory committee of at least three people reviews captive license applications. It aims to include a CPA, a banker, and an insurance professional, and members with conflicts step aside. The committee recommends within 30 days after it gets required information. It may meet by phone, but meets in person in CNMI at least once a year. Its advice is not binding.
Broader investments and reinsurance options
Captives have broad investment choices. The Commissioner can limit risky holdings that threaten solvency or liquidity. Captives can cede and assume reinsurance and take reserve credit when reinsurers meet CNMI rules. The Commissioner can require proof of security and can limit credits. Insurance of a parent’s qualified workers’ comp self‑insured plan counts as reinsurance. If a captive becomes insolvent, reinsurers must pay amounts due in full to the cedent, the Commissioner, or the receiver.
Confidential filings for captive companies
Information filed by captive companies is confidential. The Commissioner may disclose it only if the public interest requires it or the parent company authorizes it.
Protected cell captives and safeguards
With written approval, a protected cell company can set up named “protected cells.” It must keep each cell’s assets in a separate account and follow the plan using cash or marketable securities. Only a cell’s assets pay that cell’s debts. Income and losses stay with the cell. If assets are mixed, the law allows tracing to restore them.
Application and annual fees for captives
A captive pays $500 to apply and $500 each year to renew. A special purpose financial insurance company pays $2,500 to apply and $2,500 to renew. Fees are not refundable. The Commissioner may also bill for outside legal, financial, or exam services.
How to form a captive company
Before licensing, you must file your charter, by‑laws, and sworn financials. Show liquidity, your coverage plan, and management experience and character. Tell the Commissioner about any material rate changes within 30 days. You need at least three incorporators, with one CNMI resident, and at least one CNMI‑resident director. Do not choose a name that matches or confuses with an existing CNMI business.
CNMI opens captive insurance market
The law lets captive insurers be licensed and based in the CNMI. A licensed captive keeps its main office in the CNMI and names a resident agent. Some non‑domestic companies that held a CNMI certificate for 5 years may continue if they keep a CNMI place of business and qualify. Any CNMI‑chartered captive that complies now qualifies for a license automatically. The Commissioner must issue rules within 180 days. Only this captive chapter applies unless it says otherwise.
No guaranty fund coverage for captives
Captives do not have to join rating groups or pay into guaranty or insolvency funds. Captives, their insureds, parents, and affiliates cannot claim from those funds for captive‑related losses.
Who your captive can insure
A pure captive only insures its parent and affiliates. A group captive insures its member organizations and their affiliates. An industrial‑insured captive insures its group, affiliates, and, as allowed, controlled unaffiliated business. The Commissioner sets control standards. Until rules exist, the Commissioner may approve this coverage case by case.
Sponsors & Cosponsors
Sponsor
Celina Roberto Babauta
Democratic • Senate
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
House vote • 5/15/2025
House Final Reading — Passed
Yes: 0 • No: 0
Senate vote • 4/25/2025
Senate Final Reading — Passed
Yes: 0 • No: 0
Actions Timeline
PL 24-03
6/12/2025SenateHouse Final Reading — Passed
5/15/2025HouseSenate Final Reading — Passed
4/25/2025SenateIntroduced
1/27/2025Senate
Bill Text
24-09
1/27/2025
PL 24-03
1/27/2025
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