House Bill 415 Alabama 2026 Session

Summary

Primary Sponsor

Corley EllisRepresentative

Republican

Session

2026 Regular Session

Title

Department of Insurance; additional requirements for captive insurers specified

Summary

This bill tightens Alabama’s regulation of captive insurers by raising capital needs, expanding reporting and governance requirements, and adding new review standards for licenses and operations.

What This Bill Does

It adds extra requirements for captive insurers, including notice of any material changes to submitted information and mandatory annual audited financial statements with actuarial certification of loss reserves. It sets minimum capital and surplus by captive type (ranging from $10,000 up to $1,000,000 or more as determined by the commissioner). It requires in-state governance (board meetings in Alabama, resident directors, registered agents, and a principal place of business in Alabama) and ongoing oversight by qualified managers, attorneys, and accountants. It also directs the Department of Insurance to consider the manager’s competence and the company’s business plan when evaluating whether the captive will promote the general good of the state, and expands confidentiality for sensitive files while allowing limited sharing with other states’ regulators.

Who It Affects

• Captive insurers in Alabama, across pure, agency, association, industrial insured, reinsurance, protected cell, branch, and risk retention group forms, which face higher capital needs and new reporting rules
• Captive managers, attorneys, CPAs, and actuaries who will have additional qualification, disclosure, and monitoring requirements
• Policyholders and insured groups under captives, who gain stronger financial oversight and reserve requirements
• The Alabama Department of Insurance and state regulators, which gain enhanced licensing, supervision, and information-sharing authority

Key Provisions

• Imposes additional capital and surplus requirements by captive type (pure, agency, association, risk retention group, industrial insured, reinsurance, protected cell, branch).
• Reciprocal captives must maintain a minimum free surplus of $1,000,000 and comply with enhanced capital standards.
• Adds notice requirements for subsequent material changes to submitted information and requires annual audited financial statements and actuarial certifications of loss reserves.
• Revises licensing and governance rules: mandatory in-state board meetings, principal place of business in Alabama, registered agent, and background/plan-of-operation materials; requires examining, accounting, and actuarial controls approved by the commissioner.
• Specifies business plan and operating descriptions that must be submitted, including insurance types, reinsurance programs, underwriting policies, claims handling, investment policies, and rate-making procedures; feasibility studies required.
• Imposes detailed reporting requirements, including annual financial condition reports, GAAP or statutory accounting methods (with commissioner-approved deviations), and annual audited statements with actuarial loss reserve certifications.
• Outlines allowable forms of capital (cash, securities, surplus notes, letters of credit) and conditions for capital structure without encumbrance of assets; sets additional security for branch captives.
• Defines various restrictions on lines of business (e.g., no personal motor vehicle coverage; homeowners limited to certain Gulf-area zones) and alien/foreign jurisdiction involvement with commissioner approval.
• Provides confidentiality protections for submitted information, with limited disclosure to public officers in other states under confidentiality agreements.
• Authorizes provisional licenses for up to 60 days and outlines licensing conditions, renewals, and potential revocation to protect insureds and the public.
• Prescribes licensing and filing fees, and allows the commissioner to engage outside services with costs charged to the applicant.
• Effective date is June 1, 2026, with licenses typically valid until April 1 of the following year and provisional licenses available for up to 60 days.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Mar 10, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance