HB220 Alabama 2020 Session

Summary

Primary Sponsor

David FaulknerRepresentative

Republican

Session

Regular Session 2020

Title

Captive Insurance Companies, insurance in alien jurisdictions auth., requirements for an Alabama Coastal Captive Insurance Company revised, certificate of dormancy provided for, Secs. 27-31B-26, 27-31C-3.1 added; Sec. 27-31C-4 repealed; Secs. 27-31B-2, 27-31B-3, 37-31B-6, 27-31C-3 am'd.

Summary

HB 220 updates Alabama captive insurance laws to broaden where captives can insure, add a dormancy option, update coastal captive rules, and tighten security and reporting for branch operations.

What This Bill Does

The bill allows insurance for risks in alien jurisdictions under certain conditions and requires commissioner approval. It revises security and capital requirements for branch captives and introduces a certificate of dormancy for captives that cease operations, with ongoing reporting and a five-year renewal cycle. It strengthens and clarifies rules governing Alabama Coastal Captive Insurance Companies and adds a new provision (27-31C-3.1) applying certain capital and reporting standards to them, while repealing a prior coastal-specific section (27-31C-4).

Who It Affects

• Captive insurance companies in Alabama (including pure captives, association captives, industrial insured captives, protected cell captives, incorporated cell captives, and branch captives) and their parent/affiliated entities—changes affect licensing, ability to place risk in alien jurisdictions, branch security requirements, and potential use of a dormancy option.
• Alabama Coastal Captive Insurance Company, its sponsors, and its insureds (including homeowners risk in designated gulf front/beach/seacoast areas)—new coastal-specific rules, exemptions, risk limits, and reporting requirements.

Key Provisions

• Defines and expands terms related to captives, including alien captives and branch captives, and clarifies relationship with parent/affiliates and associated groups.
• Authorizes captive insurers to place insurance on risks in alien jurisdictions with commissioner approval and allows branch business to pool with alien/foreign business under commissioner oversight.
• Creates a certificate of dormancy for dormant captive companies, requiring minimum capital/surplus of $25,000, annual financial reports, renewal every five years, and freedom from certain taxes; allows surrender of the certificate and revocation if criteria are not met.
• Requires Alabama Coastal Captive Insurance Company to follow applicable sections (27-31B-6/7) for capitalization, operations, and reporting; repeals existing coastal-specific section 27-31C-4 and adds 27-31C-3.1 applying standard captive rules to coastal captives.
• Authorizes Alabama Coastal Captive Insurance Company to write homeowners insurance in designated coastal areas, with specific limits and exemptions from some fronting rules, and imposes risk, reserve, and reporting limits for policies written directly to the public.
• Imposes general licensure, in-state governance requirements (annual meetings, principal place of business, registered agent), and financial condition standards for all captive types, with confidentiality rules for information submitted to the commissioner.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance