Kane Jurisdictions: Washington DC

Washington DC - District Background

The Residence Bill of July 16, 1790, established a site along the Potomac River to be the capital of the United States. This federal district was first called the Territory of Columbia and the federal city the City of Washington. The name changed to the District of Columbia in 1793. The District is home to some of the most popular museums on the planet, and has 715 libraries.

Interested in Setting Up a Captive in Washington DC? Call Liz Frederick+1 345 914 2258 or email liz.frederick@kane-group.com   For more information visit: Regulatory Body - Government of the District of Columbia - Department of Insurance, Securities and Banking

Application Legislation

The Captive Insurance Company Act was initially passed in 2000, establishing the District as a captive domicile. Further refinements of the DC captive legislation were made with the Captive Insurance Company Act of 2004, the Captive Insurance Company Amendment Act 2006 and SPFC Authorization Amendment Act 2006.

Regulatory Environment

All insurance companies in the District of Columbia are regulated by the Department of Insurance, Securities and Banking.

General Requirements

• District examination every five years;
• Retain qualified manager, attorney, CPA and actuary;
• No local director required;
• Captive annual report (non-RRGs) or NAIC Property & Casualty annual and quarterly statements (RRGs) required;
• Annual audit by CPA firm;
• Annual actuarial certification;
• Annual Board of Directors' meeting held in Washington, DC;
• Annual Certificate of Authority Renewal $300;

Types of captives that can be formed in the District of Columbia:

• Pure captive - a captive insuring only the risks of its parent and affiliated companies;
• Association captive - a captive that insures the risks of the member organizations of an association and the affiliated companies of those members (this category includes Risk Retention Groups "RRG");
• Agency captive - a captive that is owned by an insurance agency or brokerage and that only insures risks of policies that are placed by or through the agency or brokerage;
• Branch captive - an alien (i.e., foreign) captive licensed to transact insurance in the District through a business unit with a principal place of business in the District;
• Rental captive - a cell captive formed to contract with policyholders or associations to insure the risks of such policyholders or associations where the cells are not segregated;
• Segregated accounts - any type of captive may form one or more segregated accounts to insure risks of participants through the use of "protected cells." Each segregated account is capitalized separately, and the assets in the segregated accounts are legally separate from the assets in the other segregated accounts.

Annual Requirements

Premium tax on Direct Premium Written (non-RRGs)

250/1000 of 1%	0 - $25,000,000
150/1000 of 1%	$25,000,000 - $50,000,000
50/1000 of 1%	$50,000,000 and over

Premium tax on Direct Premium Written (RRGs)

380/1000 of 1%	0 - $20,000,000
250/1000 of 1%	$20,000,000 - $40,000,000
180/1000 of 1%	$40,000,000 and over

Premium tax on Assumed Reinsurance Premium (RRGs and non-RRGs)

255/1000 of 1%	0 - $25,000,000
150/1000 of 1%	$25,000,000 - $50,000,000
25/1000 of 1%	$50,000,000 and over

The annual minimum aggregate premium tax is $15,000 for RRGs and $7,500 for non-RRGs. The maximum aggregate premium tax is $100,000.

Minimum Capitalization and Surplus

(Letters of credit acceptable.)

Pure Captive	$250,000
Association Captive – Stock (includes RRGs)	$400,000
Association Captive – Mutual (includes RRGs)	$600,000
Agency or Rental Captive	$400,000

Captive Costs (Estimate)

Range	Low	High
Application Costs (non recurring regulatory and Legal)	US$800	Dependent on type of captive
Annual Government Fee	US$300	US$300
Premium Taxes	Please see general information above

In addition to the costs specified above, there will be annual management fees, directors' fees, annual auditors' charges as well as investment management and consultants' fees.

The information in this document is intended as a general overview of jurisdictional requirements at the time of publication. It is not to be construed as legal advice or opinion and persons reading this publication are advised to obtain independent legal, accounting or tax advice on this regard.