HB270 Alabama 2016 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: David FaulknerRepresentative
Republican
Session: Regular Session 2016
Title: Captive insurance companies, licensure and taxing of revised, Sec. 27-31B-25 added; Sec. 27-31B-23 repealed; Secs. 27-31B-2, 27-31B-3, 27-31B-6, 27-31B-8, 27-31B-9, 27-31B-12, 27-31B-16, 27-31B-19, 27-31B-20, 27-31B-22, 27-31B-24 am'd.
Summary: HB270 updates Alabama's captive insurance laws to broaden formation options, revise licensure and capital rules, and modernize governance and taxation for protected cell captives.
What This Bill Does
It revises licensure requirements to allow risk retention groups to operate as captives and permits formation as a series LLC, including a provisional license up to 60 days in certain circumstances. It changes initial capital requirements and caps the premium tax at $100,000, with no premium tax due until the captive is licensed for 12 months. It provides governance and taxation rules for protected cell captive insurance companies and introduces incorporated cells. It also repeals a sponsor-qualification provision and updates capital, surplus, reporting, and investment rules across various captive types.

Who It Affects
Captive insurance companies and their parent/affiliate entities in Alabama, through revised licensure, capital, and tax rules.
Risk retention groups and sponsors/participants in protected cell captives, who gain new formation options and regulatory requirements.

Key Provisions
Revise licensure to allow risk retention groups to operate as captives and permit formation as a series limited liability company; create a 60-day provisional license under certain conditions.
Cap the captive premium tax at $100,000 and defer premium tax until a captive has been licensed for 12 months; update initial capital/surplus requirements by type (e.g., pure captives, association captives, risk retention groups, industrial insureds, sponsored protected cell captives).
Provide governance and taxation rules for protected cell captive insurance companies; require protection of cell assets and outline how cell liabilities are handled.
Add Section 27-31B-25 to authorize incorporated protected cells and allow them to contract and incur obligations in their own name, with limited recourse to the parent cell’s assets; attach prior approvals to formation documents.
Repeal Section 27-31B-23 (sponsor qualifications) and adjust related regulations; expand rules for branch captives, investment, and security requirements (including trust funds and letters of credit) and allow new structures for protected cells and incorporated cells.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Insurance Companies