The bill amends the regulations surrounding captive insurers in Arkansas, notably redefining "association" to eliminate the requirement for continuous existence for at least one year. It also repeals the definitions for "Commissioner" and "Department." A significant addition is the provision allowing the Insurance Commissioner to issue provisional licenses to captive insurance companies when it serves the public interest, along with specific conditions for these licenses. Additionally, the capital and surplus requirements for various types of captive insurance companies are adjusted, reducing the minimum amounts for certain categories. The bill also mandates prior approval from the commissioner for dividends and distributions exceeding specified limits and clarifies operational requirements for captive insurance companies, including provisions for foreign or alien insurers wishing to redomesticate in Arkansas.

Further, the bill establishes specific requirements for pure captive insurance companies, such as maintaining a minimum net equity of $100 million and obtaining a financial strength rating of "BBB" or better. It introduces a new premium tax structure, allowing tax credits for noncommissioned salaries and wages of Arkansas employees, with a cap on total tax payments at $100,000 per year. The bill also details grounds for suspension or revocation of a captive insurance company's certificate of authority, empowering the Insurance Commissioner to act against companies in unsound conditions or those that refuse examination or violate the Arkansas Insurance Code. Overall, the bill aims to strengthen the regulatory framework for captive insurance companies, promoting their financial stability and compliance with state laws.

Statutes affected:
SB 237: 23-63-1601(3), 23-63-1601(9), 23-63-1601(11), 23-63-1602, 23-63-1604(a), 23-63-1604(d), 23-63-1605(a), 23-63-1606, 23-63-1608, 23-63-1614, 23-70-101, 23-63-1607(b), 23-63-1608(a), 23-63-1624(c)