Arkansas has amended its statutory regulation of captive insurance companies in two significant ways. First, following the lead of several other states and foreign jurisdictions, the amendment provides for the creation of "incorporated protected cells," which it defines as "a protected cell that is established as a corporation or other legal entity separate from the sponsored captive insurance company or producer reinsurance captive insurance company of which it is a part." Second, it provides for the designation of a captive insurance company as a "dormant captive insurance company."

Under the new regulation, the creation of an incorporated protected cell requires the prior written approval of the Arkansas insurance commissioner, and a protected cell may be converted into an incorporated protected cell "without affecting the protected cell's assets, rights, benefits, obligations, and liabilities." Once created, an incorporated protected cell may enter into its own contracts, and counterparties have no recourse against the sponsored captive insurance company and its assets "other than against assets properly attributable to the incorporated protected cell that is a party to the contract or obligation."

The law defines "dormant captive insurance company" as "a pure captive insurance company, sponsored captive insurance company, or industrial insured captive insurance company that has: (1) Ceased transacting the business of insurance, (2) No remaining liabilities associated with insurance business transactions, or insurance policies issued before the filing of its application." Such a company must apply for a certificate of dormancy, which is subject to renewal every five years. Once granted this certificate, a dormant captive insurance company must maintain unimpaired, paid-in capital and surplus of $25,000 and pay a periodic license renewal fee, but it is not subject to Arkansas' minimum premium tax. Before it may resume issuing insurance policies, it must get approval from the commissioner of insurance.

This amendment made two other changes. First, it removed restrictions on the corporate forms that captive insurance companies may take, which were previously limited to domestic stock insurers, stock insurers with their capital divided into shares and held by shareholders, mutual insurers without capital stock, and reciprocal stock insurers, depending on the type of captive. Under the new law, any "captive insurance company may be formed and operated in any form of business organization authorized under Arkansas law and approved by the Insurance Commissioner." Second, it gave the commissioner discretion to determine whether business written by a sponsored captive insurance company must be fronted by an insurance company, something that was previously mandatory. 2017 Arkansas Laws Act 370 (H.B. 1476)

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