- 8 - specified modifications permitted to take into account the loss experience of the particular employer. The insurance laws of some States provide for a category of limited purpose insurance companies, popularly called captive insurance companies or captive insurers. Captive insurance company statutes generally apply to companies that insure on a direct basis only the risks of companies related by ownership to the insurer. Because pure captive insurance companies typically are formed for the purpose of insuring the risks of related companies, the function of risk selection, in essence, is attained at the onset. The State of Colorado's Captive Insurance Company Act (Colorado captive insurance statute) allows the formation of pure captive insurance companies whose authority to write direct insurance business is limited to insuring the risks of related corporations. The Colorado captive insurance statute requires a pure captive insurance company licensed in that State to maintain and to deposit with the commissioner of insurance minimum actual capital of $300,000 and accumulated surplus of $200,000, which deposit may be in the form of an irrevocable letter of credit. The State of Tennessee's Captive Insurance Company Act (Tennessee captive insurance statute) requires a pure captive insurance company licensed in that State to maintain minimum capital and surplus of $750,000, with the surplus to be at leastPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011