SENATOR Celina R. Babauta will introduce on Friday Senate Bill 23-43, which proposes to permit novel captive insurance in the CNMI.
According to the bill, captive insurance refers to a subsidiary corporation that provides insurance solely to the parent company and its affiliates. A captive insurance company is a wholly owned subsidiary whose primary function is to insure all or part of the risks of its parent company.
Captive insurance “represents an option for many organizations that want to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third party insurers.”
S.B. 23-43 states that the utilization and growth of captive insurance in the CNMI "is in the best interest of the Commonwealth."
The bill will require a captive insurance company to first obtain a license from the commissioner of insurance; maintain principal place of business in the CNMI; and appoint a resident registered agent.
In a statement, Babauta said captive insurance will “expand and diversify the economy of the CNMI.”
In 2006, the Federated States of Micronesia passed the Captive Insurance Act, and has, since then, become one of the world’s leading locations for the establishment of captive insurance companies.
Guam also has a captive insurance law, but the industry hasn’t thrived in the U.S. territory.
