Legislative Analysis
Phone: (517) 373-8080
CAPTIVE INSURANCE COMPANIES
http://www.house.mi.gov/hfa
House Bill 6099 as reported from committee Analysis available at
Sponsor: Rep. Penelope Tsernoglou http://www.legislature.mi.gov
House Bill 6100 as reported from committee
Sponsor: Rep. Helena Scott
House Bill 6101 as reported House Bills 6103 and 6104 as reported
Sponsor: Rep. Stephanie A. Young Sponsor: Rep. Brenda Carter
House Bill 6102 as reported House Bill 6106 as reported
Sponsor: Rep. Jerry Neyer Sponsor: Rep. Mai Xiong
Committee: Insurance and Financial Services
Complete to 12-7-24
SUMMARY:
House Bills 6099 to 6104 and 6106 would amend the Insurance Code to make various changes
to the regulation and requirements relating to captive insurance companies and special purpose
financial captives in Michigan.
House Bill 6099 would modify provisions related to the sponsors of captive insurance companies.
Currently, the code requires that any sponsor of a sponsored captive insurance company be one
of the following:
• An insurer authorized under the laws of any state or Washington, D.C.
• An insurance holding company that controls an insurer authorized under the laws of
any state or Washington, D.C. and is subject to registration pursuant to the insurer’s
state of domicile’s laws regarding insurance holding company systems.
• A reinsurer authorized under the laws of any state or Washington, D.C.
• A captive insurance company authorized under Chapter 46 of the code.
The code prohibits a risk retention group from being either a sponsor or a participant of a
sponsored captive insurance company.
The business written by a sponsored captive insurance company with respect to each protected
cell must meet at least one of the following:
• Be fronted by an insurance company authorized under the laws of any state or any
jurisdiction if the insurance company is a wholly owned subsidiary of an insurance
company authorized under the laws of any state or any jurisdiction.
• Be reinsured by a reinsurer authorized or approved by Michigan.
• Be secured by a trust fund in the United States for the benefit of policyholders and
claimants funded by an irrevocable letter of credit or other asset acceptable to the
director of the Department of Insurance and Financial Services (DIFS). The amount of
House Fiscal Agency Page 1 of 5
 security provided by the trust fund must not be less than the reserves associated with
those liabilities, including reserves for losses, allocated loss adjustment expenses,
incurred but not reported losses, and unearned premiums for business written through
the participant’s protected cell. The director can require the sponsored captive to
increase the funding of a trust. A trust and trust instrument maintained pursuant to this
required must be in a form and upon terms approved by the director.
The bill would remove each of these requirements and instead require that the sponsor of a
captive insurance company be a person approved by the DIFS director in the exercise of their
discretion, based on a determination that the approval of the sponsor is consistent with the
purposes of the code.
In evaluating the qualifications of a prospective sponsor, the director would have to consider
the proposed sponsor’s type and structure, experience in financial operations, financial stability
and strength, business reputation, and other relevant factors.
Under the bill, a risk retention group would still be prohibited from being a sponsor.
MCL 500.4665
House Bill 6100 would modify the definitions of the terms participant and participant
contract as they pertain to captive insurance companies.
Specifically, the bill would amend the definitions to specify that they can apply to multiple
entities or participants by replacing uses of the singular term participant with the plural
participants.
In addition, the bill would add that the definition of participant can apply to multiple entities.
MCL 500.4601
House Bill 6101 would modify certain dates regarding when a special purpose financial
captives (SPFC) 1 must file a statement of operations with the DIFS director.
Currently, the statement is required to be filed annually by March 1. In addition, the code
allows SPFCs to include certain calculations for the previous calendar year in the filing.
Under the bill, the statement would be required to be filed within 60 days of the end of the
SPFC’s fiscal year. In addition, the calculations allowed to be included in the filing would be
changed to a fiscal year basis, as opposed to the current calendar year format.
MCL 500.4731
1
An SPFC is a type of captive insurer that can only insure the risks of its counterparty, or the risk that its parent or
affiliated company does not fulfill its financial obligations.
House Fiscal Agency HBs 6099 to 6104 and 6106 as reported Page 2 of 5
 House Bill 6102 would modify certain procedures related to fees for SPFCs.
Currently, the code requires an applicant to for a limited certificate of authority for an SPFC
that is not a concurrent application with a sponsored captive insurer to pay a nonrefundable
application fee of $10,000. In addition, these entities must pay a renewal fee based on their
annual premiums annually by March 1.
The bill would lower the application fee to $5,000 and change the date by which a renewal fee
must be paid to within 90 days of the end of the SPFC’s fiscal year.
MCL 500.4705
House Bill 6103 would modify what can be insured by a participant through a captive
insurance company.
Currently, the code limits participants to only insuring their own risks through captive
insurance companies, unless otherwise approved by the DIFS director.
The bill would add that participants are allowed to insure risks of their affiliates or controlled
unaffiliated businesses.
MCL 500.4667
House Bill 6104 would modify several requirements for forming and maintaining a captive
insurance company in Michigan.
Offering worker’s compensation insurance
Currently, the code prohibits captive insurers from offering several types of instance, including
worker’s compensation insurance.
The bill would specify that captive insurers are prohibited from offering first-dollar worker’s
compensation insurance.
Access to financial records
The code requires that all financial records of a captive insurance company are required to be
available for inspection by the DIFS director.
The bill would provide that the original financial record could be kept and maintained outside
of Michigan if, according to a plan adopted by the company and approved by the director,
suitable records are maintained. In addition, the bill would allow the original financial records
to be photographed, reproduced on film, or stored and reproduced electronically.
Application fee and renewal of certificate
The code currently imposes a nonrefundable application fee of $10,000 on applicants for
limited certificate of authority to operate a captive insurer in Michigan. A certificate of
authority is valid until March 1 annually, at which time the director can renew it.
The bill would lower the application fee to $5,000 and provide that each certificate of authority
is valid until 90 days after the captive insurer’s fiscal year ends. In addition, the bill would
House Fiscal Agency HBs 6099 to 6104 and 6106 as reported Page 3 of 5
 require the DIFS director to renew the certificate for any captive insurer upon receiving all
required fees, so long as the insurer remains in good standing.
Board meeting requirement
The bill would eliminate a requirement that a captive insurance company hold at least one
board of directors meeting, or a managing board meeting for limited liability companies, in
Michigan each year.
MCL 500.4603
House Bill 6106 would add a requirement that captive insurance companies file audited
financial statements prepared by an independent public accountant with the DIFS director
within five months of the end of the company’s fiscal year. The accountant would be required
to be an independent certified public accountant or accounting firm in good standing with the
American Institute of Certified Public Accountants and in good standing in each state in which
they are licensed to practice.
In addition, the bill would change the date by which captive insurance companies are required
to pay renewal fees form March 1 annually to within 90 days of the end of the company’s fiscal
year.
MCL 500.4621 and 500.4625
BACKGROUND AND DISCUSSION:
Generally speaking, a captive insurance company is an insurance company that is wholly
owned and controlled by those it insures. This allows those that form captive insurance
companies to obtain coverage for their unique risks, have greater control over the terms of their
policy, and maintain stability in pricing, among other benefits. 2
Michigan began regulating captive insurance companies in 2008 after the creation of chapters
46, 47, and 48 of the Insurance Code. 3 According to committee testimony, there are currently
27 captive insurers domiciled (based) in Michigan. 4
Supporters of the bills argue that they are intended to modernize and update Michigan’s laws
relating to captive insurers, and these updates will make Michigan more competitive in drawing
new insurers to be domiciled in Michigan, while maintaining sufficient regulation and
oversight.
FISCAL IMPACT:
House Bill 6099 would have an indeterminate, but likely minimal, fiscal impact on the
Department of Insurance and Financial Services. The bill would expand the definition of
sponsor, which would likely increase the number of captive insurance companies that DIFS
would be required to review. Any additional activities required of DIFS would likely be
2
https://www.captive.com/captives-101/what-is-captive-insurance
3
https://www.legislature.mi.gov/documents/2007-2008/billanalysis/Senate/pdf/2007-SFA-1061-N.pdf
4
https://www.michigan.gov/difs/forms/insurance/captive/michigan-domestic-captive-insurance-companies
House Fiscal Agency HBs 6099 to 6104 and 6106 as reported Page 4 of 5
 absorbed by existing department resources. The bill would have no fiscal impact on any other
units of state or local government.
House Bill 6102 would reduce the application processing fee for special purpose financial
captives (SPFCs) from $10,000 to $5,000. Currently, no SPFCs exist in Michigan, so this bill
would have minimal to no fiscal impact on DIFS.
House Bill 6104 would reduce the application processing fee for captive insurance companies
from $10,000 to $5,000. DIFS would likely experience a decrease in revenue, but the amount
of revenue would depend on the number of applications.
House Bills 6100, 6101, 6103, and 6106 would have no fiscal impact on any units of state or
local government.
POSITIONS:
A representative of the Department of Insurance and Financial Services testified in support of
the bills. (11-14-24)
Legislative Analyst: Alex Stegbauer
Fiscal Analyst: Una Jakupovic
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HBs 6099 to 6104 and 6106 as reported Page 5 of 5


Statutes affected:
House Introduced Bill: 500.4731
As Passed by the House: 500.4731