the words and terms defined in sections 3 to 16, inclusive, of this act have

the meanings ascribed to them in those sections.

corporate system as its parent or a member organization by virtue of

common ownership, control, operation or management.

owned by an insurance agency or brokerage and that only insures risks

of policies which are placed by or through the agency or brokerage.

corporations, partnerships, associations or other forms of business

organizations.

only insures risks of the member organizations of an association and the

affiliated companies of those members, including groups formed

pursuant to the Product Liability Risk Retention Act of 1981, as

amended, 15 U.S.C. §§ 3901 et seq.

association captive insurer, agency captive insurer and rental captive

insurer licensed pursuant to this chapter.

department of business and industry.

partnership, association or other form of business organization that

belongs to an association.

680A.030.

other form of business organization that directly or indirectly owns,

controls or holds with power to vote more than 50 percent of the

outstanding voting securities of a pure captive insurer.

insures risks of its parent and affiliated companies.

680A.040.

enter into contractual agreements with policyholders or associations to

offer some or all of the benefits of a program of captive insurance and

that only insures risks of such policyholders or associations.

680A.050.

association, articles of incorporation or charter, may apply to the

commissioner for a license to transact insurance.

2. A captive insurer shall not transact insurance in this state unless

the captive insurer first obtains a license from the commissioner.

3. A person who violates this section is subject to the provisions of,

and shall be punished pursuant to, the Unauthorized Insurers Act set

forth in NRS 685B.020 to 685B.080, inclusive.

insurer licensed pursuant to this chapter may transact any form of

insurance described in NRS 681A.020 to 681A.080, inclusive.

2. A captive insurer licensed pursuant to this chapter:

(a) Shall not directly provide personal motor vehicle or homeowners’

insurance coverage, or any component thereof.

(b) Shall not accept or cede reinsurance, except as otherwise provided

in section 34 of this act.

(c) May provide excess workers’ compensation insurance to its parent

and affiliated companies, unless otherwise prohibited by the laws of the

state in which the insurance is transacted.

(d) May reinsure workers’ compensation insurance provided pursuant

to a program of self-funded insurance of its parent and affiliated

companies if:

(1) The parent or affiliated company which is providing the self

-funded insurance is certified as a self-insured employer by the

commissioner, if the insurance is being transacted in this state; or

(2) The program of self-funded insurance is otherwise qualified

pursuant to, or in compliance with, the laws of the state in which the

insurance is transacted.

3. A pure captive insurer shall not insure any risks other than those

of its parent and affiliated companies.

4. An association captive insurer shall not insure any risks other

than those of the member organizations of its association and the

affiliated companies of the member organizations.

5. An agency captive insurer shall not insure any risks other than

those of the policies that are placed by or through the insurance agency

or brokerage that owns the captive insurer.

6. A rental captive insurer shall not insure any risks other than those

of the policyholders or associations that have entered into agreements

with the rental captive insurer for the insurance of those risks. Such

agreements must be in a form which has been approved by the

commissioner.

7. As used in this section, "excess workers’ compensation insurance"

means insurance in excess of the specified per-incident or aggregate

limit, if any, established by:

(a) The commissioner, if the insurance is being transacted in this

state; or

(b) The chief regulatory officer for insurance in the state in which the

insurance is being transacted.

least one time each year in this state. The captive insurer shall:

(a) Maintain its principal place of business in this state; and

(b) Appoint a resident of this state as a registered agent to accept

service of process and otherwise act on behalf of the captive insurer in

this state. If the registered agent cannot be located with reasonable

diligence for the purpose of serving a notice or demand on the captive

insurer, the notice or demand may be served on the secretary of state who

shall be deemed to be the agent for the captive insurer.

2. A captive insurer shall not transact insurance in this state unless:

(a) The captive insurer has made adequate arrangements with a bank

located in this state that is authorized pursuant to state or federal law to

transfer money;

(b) If the captive insurer employs or has entered into a contract with a

natural person or business organization to manage the affairs of the

captive insurer, the natural person or business organization meets the

standards of competence and experience satisfactory to the

commissioner;

(c) The captive insurer employs or has entered into a contract with a

qualified and experienced certified public accountant or a firm of

certified public accountants that is nationally recognized;

(d) The captive insurer employs or has entered into a contract with

qualified, experienced actuaries to perform reviews and evaluations of

the operations of the captive insurer; and

(e) The captive insurer employs or has entered into a contract with an

attorney who is licensed to practice law in this state and who meets the

standards of competence and experience in matters concerning the

regulation of insurance in this state established by the commissioner by

regulation.

license. The application must include:

1. A certified copy of the charter and bylaws of the captive insurer;

2. A pro forma financial statement for the captive insurer that has

been prepared by a certified public accountant;

3. Any other statements or documents that the commissioner requires

to be filed with the application;

4. Evidence of:

(a) The amount and liquidity of its assets relative to the risks to be

assumed by the captive insurer;

(b) The expertise, experience and character of the persons who will

manage the captive insurer;

(c) The overall soundness of the plan of operation of the captive

insurer; and

(d) The adequacy of the programs of the captive insurer providing for

loss prevention by its parent or member organizations, as applicable; and

5. Such other information deemed to be relevant by the

commissioner in ascertaining whether the proposed captive insurer will

be able to meet its policy obligations.

include a non-refundable application fee of $500. The commissioner

may retain legal, financial and examination services from outside the

division to review and make recommendations regarding the qualifying

examination of the applicant. The cost of those services must be paid by

the applicant. The provisions of NRS 679B.230 to 679B.287, inclusive,

apply to examinations, investigations and processing conducted pursuant

to this section.

statements filed by the captive insurer satisfy the requirements for

licensure, the commissioner shall issue a license to the captive insurer.

The license is valid for 1 year after the date on which it is issued. The

license may be renewed upon the satisfaction of all requirements

imposed by the commissioner and payment of the renewal fee.

2. A captive insurer must pay a fee of $300 for the issuance of a

license and an annual fee of $300 for the renewal of a license.

application for the issuance and renewal of a license. If the captive

insurer makes any changes to the business plan, the captive insurer shall,

as soon as practicable, file a copy of the updated business plan with the

commissioner.

same, deceptively similar or likely to be confused with or mistaken for

any other existing business name registered in this state.

not hold a license, unless the captive insurer has and maintains, in

addition to any other capital required to be maintained pursuant to

subsection 3, unimpaired paid-in capital of:

(a) For a pure captive insurer, not less than $100,000;

(b) For an association captive insurer incorporated as a stock insurer,

not less than $200,000;

(c) For an agency captive insurer, not less than $300,000; and

(d) For a rental captive insurer, not less than $400,000.

2. Except as otherwise provided by the commissioner pursuant to

subsection 3, the capital required to be maintained pursuant to this

section must be in the form of cash or an irrevocable letter of credit.

3. The commissioner may prescribe additional requirements relating

to capital based on the type, volume and nature of the insurance business

that is transacted by the captive insurer and requirements regarding

which capital, if any, may be in the form of an irrevocable letter of credit.

4. A letter of credit used by a captive insurer as evidence of capital

required pursuant to this section must:

(a) Be issued by a bank chartered by this state or a bank that is a

member of the United States Federal Reserve System and has been

approved by the commissioner; and

(b) Include a provision pursuant to which the letter of credit is

automatically renewable each year, unless the issuer gives written notice

to the commissioner and the captive insurer at least 90 days before the

expiration date.

payment of dividends or other distributions by a captive insurer if, at the

time of each payment or distribution, the retention of capital by the

captive insurer is in excess of the amounts required by the commissioner.

The commissioner shall adopt by regulation:

1. A specific amount that a captive insurer must have in excess

capital for the approval of an ongoing plan for the payment of dividends

or other distributions; or

2. A formula pursuant to which the specific amount of required

excess capital may be calculated.

not hold a license, unless the captive insurer has and maintains, in

addition to any other surplus required to be maintained pursuant to

subsection 3, an unencumbered surplus of:

(a) For a pure captive insurer, not less than $150,000;

(b) For an association captive insurer incorporated as a stock insurer,

not less than $300,000;

(c) For an agency captive insurer, not less than $300,000;

(d) For a rental captive insurer, not less than $350,000; and

(e) For an association captive insurer incorporated as a mutual

insurer or reciprocal insurer, not less than $500,000.

2. Except as otherwise provided in subsection 3, the surplus required

to be maintained pursuant to this section must be in the form of cash or

an irrevocable letter of credit.

3. The commissioner may prescribe additional requirements relating

to surplus based on the type, volume and nature of the insurance

business that is transacted by the captive insurer and requirements

regarding which surplus, if any, may be in the form of an irrevocable

letter of credit.

4. A letter of credit used by a captive insurer as evidence of required

surplus pursuant to this section must:

(a) Be issued by a bank chartered by this state or a bank that is a

member of the United States Federal Reserve System and has been

approved by the commissioner; and

(b) Include a provision pursuant to which the letter of credit is

automatically renewable each year, unless the issuer gives written notice

to the commissioner and the captive insurer at least 90 days before the

expiration date.

insurer shall pay dividends out of, or make any other distributions from,

its capital or surplus, or both, in accordance with the provisions set forth

in NRS 693A.140, 693A.150 and 693A.160. A captive insurer shall not

pay dividends out of, or make any other distribution with respect to, its

capital or surplus, or both, in violation of this section unless the captive

insurer has obtained the prior approval of the commissioner to make

such a payment or distribution.

rental captive insurer shall be incorporated as a stock insurer.

2. An association captive insurer shall be formed as a:

(a) Stock insurer;

(b) Mutual insurer; or

(c) Reciprocal insurer, except that its attorney-in-fact must be a

corporation incorporated in this state.

3. A captive insurer shall have not less than three incorporators, at

least two of whom must be residents of this state.

4. Before the articles of incorporation of a captive insurer may be

filed with the secretary of state, the commissioner must approve the

articles of incorporation. In determining whether to grant such approval,

the commissioner shall consider:

(a) The character, reputation, financial standing and purposes of the

incorporators;

(b) The character, reputation, financial responsibility, experience

relating to insurance and business qualifications of the officers and

directors of the captive insurer;

(c) The competence of any person who, pursuant to a contract with

the captive insurer, will manage the affairs of the captive insurer;

(d) The competence, reputation and experience of the legal counsel of

the captive insurer relating to the regulation of insurance;

(e) If the captive insurer is a rental captive insurer, the competence,

reputation and experience of the underwriter of the captive insurer;

(f) The business plan of the captive insurer; and

(g) Such other aspects of the captive insurer as the commissioner

deems advisable.

5. The capital stock of a captive insurer incorporated as a stock

insurer must be issued at not less than par value.

6. At least one of member of the board of directors of a captive

insurer or of its attorney-in-fact must be a resident of this state.

7. A captive insurer formed pursuant to the provisions of this chapter

has the privileges of, and is subject to, the provisions of general

corporation law set forth in chapter 78 of NRS as well as the applicable

provisions contained in this chapter. If the provisions of this chapter

conflict with the general provisions in chapter 78 of NRS governing

corporations, the provisions of this chapter control. The provisions of

chapter 693A of NRS relating to mergers, consolidations, conversions,

mutualizations and transfers of domicile to this state apply to determine

the procedures to be followed by captive insurers in carrying out any of

those transactions in accordance with this chapter.

8. The articles of association, articles of incorporation, charter or

bylaws of a captive insurer must require that a quorum of the board of

directors consists of not less than one-third of the number of directors

prescribed by the articles of association, articles of incorporation, charter

or bylaws.

shall submit to the commissioner a report of its financial condition, as

prepared by a certified public accountant. A captive insurer shall use

generally accepted accounting principles and include any useful or

necessary modifications or adaptations thereof that have been approved

or accepted by the commissioner for the type of insurance and kinds of

insurers to be reported upon, and as supplemented by additional

information required by the commissioner. Except as otherwise provided

in this section, each association captive insurer, agency captive insurer

or rental captive insurer shall file its report in the form required by NRS

680A.265. The commissioner shall adopt regulations designating the

form in which pure captive insurers must report.

2. A pure captive insurer may apply, in writing, for authorization to

file its annual report based on a fiscal year that is consistent with the

fiscal year of the parent company of the pure captive insurer. If an

alternative date is granted:

(a) The annual report is due not later than 60 days after the end of

each such fiscal year; and

(b) The pure captive insurer shall file on or before March 1 of each

year such forms as required by the commissioner by regulation to provide

sufficient detail to support its premium tax return filed pursuant to

section 37 of this act.

once every 3 years, and at such other times as the commissioner

determines necessary, the commissioner, or his designee, shall visit each

captive insurer and thoroughly inspect and examine the affairs of the

captive insurer to ascertain:

(a) The financial condition of the captive insurer;

(b) The ability of the captive insurer to fulfill its obligations; and

(c) Whether the captive insurer has complied with the provisions of

this chapter and the regulations adopted pursuant thereto.

2. Upon the application of a captive insurer, the commissioner may

conduct the visits required pursuant to subsection 1 every 5 years if the

captive insurer conducts comprehensive annual audits:

(a) The scope of which is satisfactory to the commissioner; and

(b) Which are conducted by an independent auditor appointed by the

commissioner.

3. The commissioner may contract to obtain legal, financial and

examination services from outside the division to conduct the

examination and make recommendations to the commissioner. The cost

of the examination must be paid to the commissioner by the captive

insurer.

4. The provisions of NRS 679B.230 to 679B.287, inclusive, apply to

examinations conducted pursuant to this section.

a captive insurer if, after an examination and hearing, the commissioner

determines that:

(a) The captive insurer:

(1) Is insolvent or has impaired its required capital or surplus;

(2) Has failed to meet the requirement of sections 25 to 28,

inclusive, of this act;

(3) Has refused or failed to submit an annual report, as required by

section 30 of this act, or any other report or statement required by law or

by order of the commissioner;

(4) Has failed to comply with the provisions of its charter or bylaws;

(5) Has failed to submit to an examination required pursuant to

section 31 of this act;

(6) Has refused or failed to pay the cost of an examination required

pursuant to section 31 of this act;

(7) Has used any method in transacting insurance pursuant to this

chapter which is detrimental to the operation of the captive insurer or

would make its condition unsound with respect to its policyholders or the

general public; or

(8) Has failed otherwise to comply with the laws of this state; and

(b) The suspension or revocation of the license of the captive insurer

is in the best interest of its policyholders or the general public.

2. The provisions of NRS 679B.310 to 679B.370, inclusive, apply to

hearings conducted pursuant to this section.

association captive insurer, an agency captive insurer or a rental captive

insurer shall comply with the requirements relating to investments set

forth in chapter 682A of NRS. Upon the request of the association

captive insurer, agency captive insurer or rental captive insurer, the

commissioner may approve the use of reliable, alternative methods of

valuation and rating.

2. A pure captive insurer is not subject to any restrictions on

allowable investments, except that the commissioner may prohibit or

limit any investment that threatens the solvency or liquidity of the pure

captive insurer.

3. A pure captive insurer may make a loan to its parent or affiliated

company if the loan:

(a) Is first approved in writing by the commissioner;

(b) Is evidenced by a note that is in a form that is approved by the

commissioner; and

(c) Does not include any money that has been set aside as capital or

surplus as required by subsection 1 of section 25 of this act or subsection

1 of section 27 of this act.

ceded by any other insurer.

2. A captive insurer may take credit for reserves on risks or portions

of risks ceded to a reinsurer that is in compliance with NRS 681A.140 to

681A.240, inclusive. A captive insurer shall not take credit for reserves

on risks or portions of risks ceded to a reinsurer if the reinsurer is not in

compliance with NRS 681A.140 to 681A.240, inclusive.

3. The commissioner may authorize a captive insurer to take credit

for reserves on risks or portions of risks ceded to a pool, an exchange or

an association acting as a reinsurer. The commissioner may require such

documents, financial information or other evidence as he determines

necessary to show that the pool, exchange or association will be able to

provide adequate security for its financial obligations. The commissioner

may deny authorization or impose any limitations on the activities of a

reinsurance pool, exchange or association that, in his judgment, are

necessary and proper to provide adequate security for the ceding captive

insurer and for the protection and benefit of the general public.

4. For the purposes of this chapter, insurance provided by a captive

insurer of any plan for workers’ compensation of its parent and affiliated

companies which is certified or otherwise qualified in the state in which

the insurance is provided as a self-insurance plan shall be deemed to be

reinsurance.

with this chapter may not be used to satisfy the requirements set forth in

chapter 706 of NRS relating to the insurance required to be maintained

by vehicles subject to the jurisdiction of the transportation services

authority or taxicab authority, unless the transportation services

authority or taxicab authority, as appropriate, specifically approves the

use of insurance provided by a captive insurer for that purpose.

organization.

any risk-sharing plan, risk pool or insurance insolvency guaranty fund in

this state. A captive insurer or its insured, its parent or an affiliated

company, or any member organization of its association shall not receive

any benefit from such a plan, pool or fund for claims arising out of the

operations of the captive insurer.

insurer shall pay to the division, not later than March 1 of each year, a

tax at the rate of:

(a) Two-fifths of 1 percent on the first $20,000,000 of its net direct

premiums;

(b) One-fifth of 1 percent on the next $20,000,000 of its net direct

premiums; and

(c) Seventy-five thousandths of 1 percent on each additional dollar of

its net direct premiums.

2. Except as otherwise provided in this section, a captive insurer

shall pay to the division, not later than March 1 of each year, a tax at a

rate of:

(a) Two hundred twenty-five thousandths of 1 percent on the first

$20,000,000 of revenue from assumed reinsurance premiums;

(b) One hundred fifty thousandths of 1 percent on the next

$20,000,000 of revenue from assumed reinsurance premiums; and

(c) Twenty-five thousandths of 1 percent on each additional dollar of

revenue from assumed reinsurance premiums.

The tax on reinsurance premiums pursuant to this subsection must not

be levied on premiums for risks or portions of risks which are subject to

taxation on a direct basis pursuant to subsection 1. A captive insurer is

not required to pay any reinsurance premium tax pursuant to this

subsection on revenue related to the receipt of assets by the captive

insurer in exchange for the assumption of loss reserves and other

liabilities of another insurer that is under common ownership and

control with the captive insurer, if the transaction is part of a plan to

discontinue the operation of the other insurer and the intent of the

parties to the transaction is to renew or maintain such business with the

captive insurer.

3. If the sum of the taxes to be paid by a captive insurer calculated

pursuant to subsections 1 and 2 is less than $5,000 in any given year, the

captive insurer shall pay a tax of $5,000 for that year.

4. Two or more captive insurers under common ownership and

control must be taxed as if they were a single captive insurer.

5. Notwithstanding any specific statute to the contrary and except as

otherwise provided in this subsection, the tax provided for by this section

constitutes all the taxes collectible pursuant to the laws of this state from

a captive insurer, and no occupation tax or other taxes may be levied or

collected from a captive insurer by this state or by any county, city or

municipality within this state, except for ad valorem taxes on real or

personal property located in this state used in the production of income

by the captive insurer.

6. Ten percent of the revenues collected from the tax imposed

pursuant to this section must be deposited with the state treasurer for

credit to the account for the regulation and supervision of captive

insurers created pursuant to section 38 of this act. The remaining 90

percent of the revenues collected must be deposited with the state

treasurer for credit to the state general fund.

7. As used in this section, unless the context otherwise requires:

(a) "Common ownership and control" means:

(1) In the case of a stock insurer, the direct or indirect ownership of

80 percent or more of the outstanding voting stock of two or more

corporations by the same member or members.

(2) In the case of a mutual insurer, the direct or indirect ownership

of 80 percent or more of the surplus and the voting power of two or more

corporations by the same member or members.

(b) "Net direct premiums" means the direct premiums collected or

contracted for on policies or contracts of insurance written by a captive

insurer during the preceding calendar year, less the amounts paid to

policyholders as return premiums, including dividends on unabsorbed

premiums or premium deposits returned or credited to policyholders.

account for the regulation and supervision of captive insurers. Money in

the account must be used only to carry out the provisions of this chapter.

Except as otherwise provided in section 37 of this act, all fees and

assessments received by the commissioner or division pursuant to this

chapter must be credited to the account. Not more than 2 percent of the

tax collected and deposited in the account pursuant to section 37 of this

act, may, upon application by the division or an agency for economic

development to, and with the approval of, the interim finance committee,

be transferred to an agency for economic development to be used by that

agency to promote the industry of captive insurance in this state.

2. Except as otherwise provided in this section, all payments from the

account for the maintenance of staff and associated expenses, including

contractual services, as necessary, must be disbursed from the state

treasury only upon warrants issued by the state controller, after receipt of

proper documentation of the services rendered and expenses incurred.

3. At the end of each fiscal year, that portion of the balance in the

account which exceeds $100,000 must be transferred to the state general

fund.

4. The state controller may anticipate receipts to the account and

issue warrants based thereon.

NRS pertaining to insurance reorganization, receiverships and

injunctions apply to captive insurers incorporated pursuant to this

chapter.

2. An agency captive insurer, a rental captive insurer and an

association captive insurer are subject to those provisions of chapter

686A of NRS which are applicable to insurers.

necessary to carry out the provisions of the chapter.