EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. Title 57 of NRS is hereby amended by adding thereto a

1-3 inclusive, of this act.

1-4 Sec. 2. As used in this chapter, unless the context otherwise requires,

1-5 the words and terms defined in sections 3 to 16, inclusive, of this act have

1-6 the meanings ascribed to them in those sections.

1-7 Sec. 3. "Affiliated company" means a company in the same

1-8 corporate system as its parent or a member organization by virtue of

1-9 common ownership, control, operation or management.

1-10 Sec. 4. "Agency captive insurer" means a captive insurer that is

1-11 owned by an insurance agency or brokerage and that only insures risks

1-12 of policies which are placed by or through the agency or brokerage.

1-13 Sec. 5. "Association" means a legal entity consisting of two or more

1-14 corporations, partnerships, associations or other forms of business

1-15 organizations.

2-1 Sec. 6. "Association captive insurer" means a captive insurer that

2-2 only insures risks of the member organizations of an association and the

2-3 affiliated companies of those members, including groups formed

2-4 pursuant to the Product Liability Risk Retention Act of 1981, as

2-5 amended, 15 U.S.C. §§ 3901 et seq.

2-6 Sec. 7. "Captive insurer" means any pure captive insurer,

2-7 association captive insurer, agency captive insurer and rental captive

2-8 insurer licensed pursuant to this chapter.

2-9 Sec. 8. "Commissioner" means the commissioner of insurance.

2-10 Sec. 9. "Division" means the division of insurance of the

2-11 department of business and industry.

2-12 Sec. 10. "Member organization" means any corporation,

2-13 partnership, association or other form of business organization that

2-14 belongs to an association.

2-15 Sec. 11. "Mutual insurer" has the meaning ascribed to it in NRS

2-16 680A.030.

2-17 Sec. 12. "Parent" means a corporation, partnership, association or

2-18 other form of business organization that directly or indirectly owns,

2-19 controls or holds with power to vote more than 50 percent of the

2-20 outstanding voting securities of a pure captive insurer.

2-21 Sec. 13. "Pure captive insurer" means a captive insurer that only

2-22 insures risks of its parent and affiliated companies.

2-23 Sec. 14. "Reciprocal insurer" has the meaning ascribed to it in NRS

2-24 680A.040.

2-25 Sec. 15. "Rental captive insurer" means a captive insurer formed to

2-26 enter into contractual agreements with policyholders or associations to

2-27 offer some or all of the benefits of a program of captive insurance and

2-28 that only insures risks of such policyholders or associations.

2-29 Sec. 16. "Stock insurer" has the meaning ascribed to it in NRS

2-30 680A.050.

2-31 Sec. 17. 1. A captive insurer, when authorized by its articles of

2-32 association, articles of incorporation or charter, may apply to the

2-33 commissioner for a license to transact insurance.

2-34 2. A captive insurer shall not transact insurance in this state unless

2-35 the captive insurer first obtains a license from the commissioner.

2-36 3. A person who violates this section is subject to the provisions of,

2-37 and shall be punished pursuant to, the Unauthorized Insurers Act set

2-38 forth in NRS 685B.020 to 685B.080, inclusive.

2-39 Sec. 18. 1. Except as otherwise provided in this section, a captive

2-40 insurer licensed pursuant to this chapter may transact any form of

2-41 insurance described in NRS 681A.020 to 681A.080, inclusive.

3-1 2. A captive insurer licensed pursuant to this chapter:

3-2 (a) Shall not directly provide personal motor vehicle or homeowners’

3-3 insurance coverage, or any component thereof.

3-4 (b) Shall not accept or cede reinsurance, except as otherwise provided

3-5 in section 34 of this act.

3-6 (c) May provide excess workers’ compensation insurance to its parent

3-7 and affiliated companies, unless otherwise prohibited by the laws of the

3-8 state in which the insurance is transacted.

3-9 (d) May reinsure workers’ compensation insurance provided pursuant

3-10 to a program of self-funded insurance of its parent and affiliated

3-11 companies if:

3-12 (1) The parent or affiliated company which is providing the self-

3-13 funded insurance is certified as a self-insured employer by the

3-14 commissioner, if the insurance is being transacted in this state; or

3-15 (2) The program of self-funded insurance is otherwise qualified

3-16 pursuant to, or in compliance with, the laws of the state in which the

3-17 insurance is transacted.

3-18 3. A pure captive insurer shall not insure any risks other than those

3-19 of its parent and affiliated companies.

3-20 4. An association captive insurer shall not insure any risks other

3-21 than those of the member organizations of its association and the

3-22 affiliated companies of the member organizations.

3-23 5. An agency captive insurer shall not insure any risks other than

3-24 those of the policies that are placed by or through the insurance agency

3-25 or brokerage that owns the captive insurer.

3-26 6. A rental captive insurer shall not insure any risks other than those

3-27 of the policyholders or associations that have entered into agreements

3-28 with the rental captive insurer for the insurance of those risks. Such

3-29 agreements must be in a form which has been approved by the

3-30 commissioner.

3-31 7. As used in this section, "excess workers’ compensation insurance"

3-32 means insurance in excess of the specified per-incident or aggregate

3-33 limit, if any, established by:

3-34 (a) The commissioner, if the insurance is being transacted in this

3-35 state; or

3-36 (b) The chief regulatory officer for insurance in the state in which the

3-37 insurance is being transacted.

3-38 Sec. 19. 1. The board of directors of a captive insurer shall meet at

3-39 least one time each year in this state. The captive insurer shall:

3-40 (a) Maintain its principal place of business in this state; and

3-41 (b) Appoint a resident of this state as a registered agent to accept

3-42 service of process and otherwise act on behalf of the captive insurer in

3-43 this state. If the registered agent cannot be located with reasonable

4-1 diligence for the purpose of serving a notice or demand on the captive

4-2 insurer, the notice or demand may be served on the secretary of state who

4-3 shall be deemed to be the agent for the captive insurer.

4-4 2. A captive insurer shall not transact insurance in this state unless:

4-5 (a) The captive insurer has made adequate arrangements with a bank

4-6 located in this state that is authorized pursuant to state or federal law to

4-7 transfer money;

4-8 (b) If the captive insurer employs or has entered into a contract with a

4-9 natural person or business organization to manage the affairs of the

4-10 captive insurer, the natural person or business organization meets the

4-11 standards of competence and experience satisfactory to the

4-12 commissioner;

4-13 (c) The captive insurer employs or has entered into a contract with a

4-14 qualified and experienced certified public accountant or a firm of

4-15 certified public accountants that is nationally recognized;

4-16 (d) The captive insurer employs or has entered into a contract with

4-17 qualified, experienced actuaries to perform reviews and evaluations of

4-18 the operations of the captive insurer; and

4-19 (e) The captive insurer employs or has entered into a contract with an

4-20 attorney who is licensed to practice law in this state and who meets the

4-21 standards of competence and experience in matters concerning the

4-22 regulation of insurance in this state established by the commissioner by

4-23 regulation.

4-24 Sec. 20. A captive insurer must apply to the commissioner for a

4-25 license. The application must include:

4-26 1. A certified copy of the charter and bylaws of the captive insurer;

4-27 2. A pro forma financial statement for the captive insurer that has

4-28 been prepared by a certified public accountant;

4-29 3. Any other statements or documents that the commissioner requires

4-30 to be filed with the application;

4-31 4. Evidence of:

4-32 (a) The amount and liquidity of its assets relative to the risks to be

4-33 assumed by the captive insurer;

4-34 (b) The expertise, experience and character of the persons who will

4-35 manage the captive insurer;

4-36 (c) The overall soundness of the plan of operation of the captive

4-37 insurer; and

4-38 (d) The adequacy of the programs of the captive insurer providing for

4-39 loss prevention by its parent or member organizations, as applicable; and

4-40 5. Such other information deemed to be relevant by the

4-41 commissioner in ascertaining whether the proposed captive insurer will

4-42 be able to meet its policy obligations.

5-1 Sec. 21. An application by a captive insurer for licensure must

5-2 include a non-refundable application fee of $500. The commissioner

5-3 may retain legal, financial and examination services from outside the

5-4 division to review and make recommendations regarding the qualifying

5-5 examination of the applicant. The cost of those services must be paid by

5-6 the applicant. The provisions of NRS 679B.230 to 679B.287, inclusive,

5-7 apply to examinations, investigations and processing conducted pursuant

5-8 to this section.

5-9 Sec. 22. 1. If the commissioner determines that the documents and

5-10 statements filed by the captive insurer satisfy the requirements for

5-11 licensure, the commissioner shall issue a license to the captive insurer.

5-12 The license is valid for 1 year after the date on which it is issued. The

5-13 license may be renewed upon the satisfaction of all requirements

5-14 imposed by the commissioner and payment of the renewal fee.

5-15 2. A captive insurer must pay a fee of $300 for the issuance of a

5-16 license and an annual fee of $300 for the renewal of a license.

5-17 Sec. 23. A captive insurer shall include its business plan with its

5-18 application for the issuance and renewal of a license. If the captive

5-19 insurer makes any changes to the business plan, the captive insurer shall,

5-20 as soon as practicable, file a copy of the updated business plan with the

5-21 commissioner.

5-22 Sec. 24. A captive insurer shall not use or adopt a name that is the

5-23 same, deceptively similar or likely to be confused with or mistaken for

5-24 any other existing business name registered in this state.

5-25 Sec. 25. 1. A captive insurer must not be issued a license, and shall

5-26 not hold a license, unless the captive insurer has and maintains, in

5-27 addition to any other capital required to be maintained pursuant to

5-28 subsection 3, unimpaired paid-in capital of:

5-29 (a) For a pure captive insurer, not less than $100,000;

5-30 (b) For an association captive insurer incorporated as a stock insurer,

5-31 not less than $200,000;

5-32 (c) For an agency captive insurer, not less than $300,000; and

5-33 (d) For a rental captive insurer, not less than $400,000.

5-34 2. Except as otherwise provided by the commissioner pursuant to

5-35 subsection 3, the capital required to be maintained pursuant to this

5-36 section must be in the form of cash or an irrevocable letter of credit.

5-37 3. The commissioner may prescribe additional requirements relating

5-38 to capital based on the type, volume and nature of the insurance business

5-39 that is transacted by the captive insurer and requirements regarding

5-40 which capital, if any, may be in the form of an irrevocable letter of credit.

5-41 4. A letter of credit used by a captive insurer as evidence of capital

5-42 required pursuant to this section must:

6-1 (a) Be issued by a bank chartered by this state or a bank that is a

6-2 member of the United States Federal Reserve System and has been

6-3 approved by the commissioner; and

6-4 (b) Include a provision pursuant to which the letter of credit is

6-5 automatically renewable each year, unless the issuer gives written notice

6-6 to the commissioner and the captive insurer at least 90 days before the

6-7 expiration date.

6-8 Sec. 26. The commissioner may approve an ongoing plan for the

6-9 payment of dividends or other distributions by a captive insurer if, at the

6-10 time of each payment or distribution, the retention of capital by the

6-11 captive insurer is in excess of the amounts required by the commissioner.

6-12 The commissioner shall adopt by regulation:

6-13 1. A specific amount that a captive insurer must have in excess

6-14 capital for the approval of an ongoing plan for the payment of dividends

6-15 or other distributions; or

6-16 2. A formula pursuant to which the specific amount of required

6-17 excess capital may be calculated.

6-18 Sec. 27. 1. A captive insurer must not be issued a license, and shall

6-19 not hold a license, unless the captive insurer has and maintains, in

6-20 addition to any other surplus required to be maintained pursuant to

6-21 subsection 3, an unencumbered surplus of:

6-22 (a) For a pure captive insurer, not less than $150,000;

6-23 (b) For an association captive insurer incorporated as a stock insurer,

6-24 not less than $300,000;

6-25 (c) For an agency captive insurer, not less than $300,000;

6-26 (d) For a rental captive insurer, not less than $350,000; and

6-27 (e) For an association captive insurer incorporated as a mutual

6-28 insurer or reciprocal insurer, not less than $500,000.

6-29 2. Except as otherwise provided in subsection 3, the surplus required

6-30 to be maintained pursuant to this section must be in the form of cash or

6-31 an irrevocable letter of credit.

6-32 3. The commissioner may prescribe additional requirements relating

6-33 to surplus based on the type, volume and nature of the insurance

6-34 business that is transacted by the captive insurer and requirements

6-35 regarding which surplus, if any, may be in the form of an irrevocable

6-36 letter of credit.

6-37 4. A letter of credit used by a captive insurer as evidence of required

6-38 surplus pursuant to this section must:

6-39 (a) Be issued by a bank chartered by this state or a bank that is a

6-40 member of the United States Federal Reserve System and has been

6-41 approved by the commissioner; and

6-42 (b) Include a provision pursuant to which the letter of credit is

6-43 automatically renewable each year, unless the issuer gives written notice

7-1 to the commissioner and the captive insurer at least 90 days before the

7-2 expiration date.

7-3 Sec. 28. Except as otherwise provided in this section, a captive

7-4 insurer shall pay dividends out of, or make any other distributions from,

7-5 its capital or surplus, or both, in accordance with the provisions set forth

7-6 in NRS 693A.140, 693A.150 and 693A.160. A captive insurer shall not

7-7 pay dividends out of, or make any other distribution with respect to, its

7-8 capital or surplus, or both, in violation of this section unless the captive

7-9 insurer has obtained the prior approval of the commissioner to make

7-10 such a payment or distribution.

7-11 Sec. 29. 1. A pure captive insurer, an agency captive insurer or a

7-12 rental captive insurer shall be incorporated as a stock insurer.

7-13 2. An association captive insurer shall be formed as a:

7-14 (a) Stock insurer;

7-15 (b) Mutual insurer; or

7-16 (c) Reciprocal insurer, except that its attorney-in-fact must be a

7-17 corporation incorporated in this state.

7-18 3. A captive insurer shall have not less than three incorporators, at

7-19 least two of whom must be residents of this state.

7-20 4. Before the articles of incorporation of a captive insurer may be

7-21 filed with the secretary of state, the commissioner must approve the

7-22 articles of incorporation. In determining whether to grant such approval,

7-23 the commissioner shall consider:

7-24 (a) The character, reputation, financial standing and purposes of the

7-25 incorporators;

7-26 (b) The character, reputation, financial responsibility, experience

7-27 relating to insurance and business qualifications of the officers and

7-28 directors of the captive insurer;

7-29 (c) The competence of any person who, pursuant to a contract with

7-30 the captive insurer, will manage the affairs of the captive insurer;

7-31 (d) The competence, reputation and experience of the legal counsel of

7-32 the captive insurer relating to the regulation of insurance;

7-33 (e) If the captive insurer is a rental captive insurer, the competence,

7-34 reputation and experience of the underwriter of the captive insurer;

7-35 (f) The business plan of the captive insurer; and

7-36 (g) Such other aspects of the captive insurer as the commissioner

7-37 deems advisable.

7-38 5. The capital stock of a captive insurer incorporated as a stock

7-39 insurer must be issued at not less than par value.

7-40 6. At least one of member of the board of directors of a captive

7-41 insurer or of its attorney-in-fact must be a resident of this state.

7-42 7. A captive insurer formed pursuant to the provisions of this chapter

7-43 has the privileges of, and is subject to, the provisions of general

8-1 corporation law set forth in chapter 78 of NRS as well as the applicable

8-2 provisions contained in this chapter. If the provisions of this chapter

8-3 conflict with the general provisions in chapter 78 of NRS governing

8-4 corporations, the provisions of this chapter control. The provisions of

8-5 chapter 693A of NRS relating to mergers, consolidations, conversions,

8-6 mutualizations and transfers of domicile to this state apply to determine

8-7 the procedures to be followed by captive insurers in carrying out any of

8-8 those transactions in accordance with this chapter.

8-9 8. The articles of association, articles of incorporation, charter or

8-10 bylaws of a captive insurer must require that a quorum of the board of

8-11 directors consists of not less than one-third of the number of directors

8-12 prescribed by the articles of association, articles of incorporation, charter

8-13 or bylaws.

8-14 Sec. 30. 1. On or before March 1 of each year, a captive insurer

8-15 shall submit to the commissioner a report of its financial condition, as

8-16 prepared by a certified public accountant. A captive insurer shall use

8-17 generally accepted accounting principles and include any useful or

8-18 necessary modifications or adaptations thereof that have been approved

8-19 or accepted by the commissioner for the type of insurance and kinds of

8-20 insurers to be reported upon, and as supplemented by additional

8-21 information required by the commissioner. Except as otherwise provided

8-22 in this section, each association captive insurer, agency captive insurer

8-23 or rental captive insurer shall file its report in the form required by NRS

8-24 680A.265. The commissioner shall adopt regulations designating the

8-25 form in which pure captive insurers must report.

8-26 2. A pure captive insurer may apply, in writing, for authorization to

8-27 file its annual report based on a fiscal year that is consistent with the

8-28 fiscal year of the parent company of the pure captive insurer. If an

8-29 alternative date is granted:

8-30 (a) The annual report is due not later than 60 days after the end of

8-31 each such fiscal year; and

8-32 (b) The pure captive insurer shall file on or before March 1 of each

8-33 year such forms as required by the commissioner by regulation to provide

8-34 sufficient detail to support its premium tax return filed pursuant to

8-35 section 37 of this act.

8-36 Sec. 31. 1. Except as otherwise provided in this section, at least

8-37 once every 3 years, and at such other times as the commissioner

8-38 determines necessary, the commissioner, or his designee, shall visit each

8-39 captive insurer and thoroughly inspect and examine the affairs of the

8-40 captive insurer to ascertain:

8-41 (a) The financial condition of the captive insurer;

8-42 (b) The ability of the captive insurer to fulfill its obligations; and

9-1 (c) Whether the captive insurer has complied with the provisions of

9-2 this chapter and the regulations adopted pursuant thereto.

9-3 2. Upon the application of a captive insurer, the commissioner may

9-4 conduct the visits required pursuant to subsection 1 every 5 years if the

9-5 captive insurer conducts comprehensive annual audits:

9-6 (a) The scope of which is satisfactory to the commissioner; and

9-7 (b) Which are conducted by an independent auditor appointed by the

9-8 commissioner.

9-9 3. The commissioner may contract to obtain legal, financial and

9-10 examination services from outside the division to conduct the

9-11 examination and make recommendations to the commissioner. The cost

9-12 of the examination must be paid to the commissioner by the captive

9-13 insurer.

9-14 4. The provisions of NRS 679B.230 to 679B.287, inclusive, apply to

9-15 examinations conducted pursuant to this section.

9-16 Sec. 32. 1. The commissioner may suspend or revoke the license of

9-17 a captive insurer if, after an examination and hearing, the commissioner

9-18 determines that:

9-19 (a) The captive insurer:

9-20 (1) Is insolvent or has impaired its required capital or surplus;

9-21 (2) Has failed to meet the requirement of sections 25 to 28,

9-22 inclusive, of this act;

9-23 (3) Has refused or failed to submit an annual report, as required by

9-24 section 30 of this act, or any other report or statement required by law or

9-25 by order of the commissioner;

9-26 (4) Has failed to comply with the provisions of its charter or bylaws;

9-27 (5) Has failed to submit to an examination required pursuant to

9-28 section 31 of this act;

9-29 (6) Has refused or failed to pay the cost of an examination required

9-30 pursuant to section 31 of this act;

9-31 (7) Has used any method in transacting insurance pursuant to this

9-32 chapter which is detrimental to the operation of the captive insurer or

9-33 would make its condition unsound with respect to its policyholders or the

9-34 general public; or

9-35 (8) Has failed otherwise to comply with the laws of this state; and

9-36 (b) The suspension or revocation of the license of the captive insurer

9-37 is in the best interest of its policyholders or the general public.

9-38 2. The provisions of NRS 679B.310 to 679B.370, inclusive, apply to

9-39 hearings conducted pursuant to this section.

9-40 Sec. 33. 1. Except as otherwise provided in this section, an

9-41 association captive insurer, an agency captive insurer or a rental captive

9-42 insurer shall comply with the requirements relating to investments set

9-43 forth in chapter 682A of NRS. Upon the request of the association

10-1 captive insurer, agency captive insurer or rental captive insurer, the

10-2 commissioner may approve the use of reliable, alternative methods of

10-3 valuation and rating.

10-4 2. A pure captive insurer is not subject to any restrictions on

10-5 allowable investments, except that the commissioner may prohibit or

10-6 limit any investment that threatens the solvency or liquidity of the pure

10-7 captive insurer.

10-8 3. A pure captive insurer may make a loan to its parent or affiliated

10-9 company if the loan:

10-10 (a) Is first approved in writing by the commissioner;

10-11 (b) Is evidenced by a note that is in a form that is approved by the

10-12 commissioner; and

10-13 (c) Does not include any money that has been set aside as capital or

10-14 surplus as required by subsection 1 of section 25 of this act or subsection

10-15 1 of section 27 of this act.

10-16 Sec. 34. 1. A captive insurer may provide reinsurance on risks

10-17 ceded by any other insurer.

10-18 2. A captive insurer may take credit for reserves on risks or portions

10-19 of risks ceded to a reinsurer that is in compliance with NRS 681A.140 to

10-20 681A.240, inclusive. A captive insurer shall not take credit for reserves

10-21 on risks or portions of risks ceded to a reinsurer if the reinsurer is not in

10-22 compliance with NRS 681A.140 to 681A.240, inclusive.

10-23 3. The commissioner may authorize a captive insurer to take credit

10-24 for reserves on risks or portions of risks ceded to a pool, an exchange or

10-25 an association acting as a reinsurer. The commissioner may require such

10-26 documents, financial information or other evidence as he determines

10-27 necessary to show that the pool, exchange or association will be able to

10-28 provide adequate security for its financial obligations. The commissioner

10-29 may deny authorization or impose any limitations on the activities of a

10-30 reinsurance pool, exchange or association that, in his judgment, are

10-31 necessary and proper to provide adequate security for the ceding captive

10-32 insurer and for the protection and benefit of the general public.

10-33 4. For the purposes of this chapter, insurance provided by a captive

10-34 insurer of any plan for workers’ compensation of its parent and affiliated

10-35 companies which is certified or otherwise qualified in the state in which

10-36 the insurance is provided as a self-insurance plan shall be deemed to be

10-37 reinsurance.

10-38 Sec. 34.5. Insurance provided by a captive insurer in accordance

10-39 with this chapter may not be used to satisfy the requirements set forth in

10-40 chapter 706 of NRS relating to the insurance required to be maintained

10-41 by vehicles subject to the jurisdiction of the transportation services

10-42 authority or taxicab authority, unless the transportation services

11-1 authority or taxicab authority, as appropriate, specifically approves the

11-2 use of insurance provided by a captive insurer for that purpose.

11-3 Sec. 35. A captive insurer is not required to join a rating

11-4 organization.

11-5 Sec. 36. A captive insurer shall not join or contribute financially to

11-6 any risk-sharing plan, risk pool or insurance insolvency guaranty fund in

11-7 this state. A captive insurer or its insured, its parent or an affiliated

11-8 company, or any member organization of its association shall not receive

11-9 any benefit from such a plan, pool or fund for claims arising out of the

11-10 operations of the captive insurer.

11-11 Sec. 37. 1. Except as otherwise provided in this section, a captive

11-12 insurer shall pay to the division, not later than March 1 of each year, a

11-13 tax at the rate of:

11-14 (a) Two-fifths of 1 percent on the first $20,000,000 of its net direct

11-15 premiums;

11-16 (b) One-fifth of 1 percent on the next $20,000,000 of its net direct

11-17 premiums; and

11-18 (c) Seventy-five thousandths of 1 percent on each additional dollar of

11-19 its net direct premiums.

11-20 2. Except as otherwise provided in this section, a captive insurer

11-21 shall pay to the division, not later than March 1 of each year, a tax at a

11-22 rate of:

11-23 (a) Two hundred twenty-five thousandths of 1 percent on the first

11-24 $20,000,000 of revenue from assumed reinsurance premiums;

11-25 (b) One hundred fifty thousandths of 1 percent on the next

11-26 $20,000,000 of revenue from assumed reinsurance premiums; and

11-27 (c) Twenty-five thousandths of 1 percent on each additional dollar of

11-28 revenue from assumed reinsurance premiums.

11-29 The tax on reinsurance premiums pursuant to this subsection must not

11-30 be levied on premiums for risks or portions of risks which are subject to

11-31 taxation on a direct basis pursuant to subsection 1. A captive insurer is

11-32 not required to pay any reinsurance premium tax pursuant to this

11-33 subsection on revenue related to the receipt of assets by the captive

11-34 insurer in exchange for the assumption of loss reserves and other

11-35 liabilities of another insurer that is under common ownership and

11-36 control with the captive insurer, if the transaction is part of a plan to

11-37 discontinue the operation of the other insurer and the intent of the

11-38 parties to the transaction is to renew or maintain such business with the

11-39 captive insurer.

11-40 3. If the sum of the taxes to be paid by a captive insurer calculated

11-41 pursuant to subsections 1 and 2 is less than $5,000 in any given year, the

11-42 captive insurer shall pay a tax of $5,000 for that year.

12-1 4. Two or more captive insurers under common ownership and

12-2 control must be taxed as if they were a single captive insurer.

12-3 5. Notwithstanding any specific statute to the contrary and except as

12-4 otherwise provided in this subsection, the tax provided for by this section

12-5 constitutes all the taxes collectible pursuant to the laws of this state from

12-6 a captive insurer, and no occupation tax or other taxes may be levied or

12-7 collected from a captive insurer by this state or by any county, city or

12-8 municipality within this state, except for ad valorem taxes on real or

12-9 personal property located in this state used in the production of income

12-10 by the captive insurer.

12-11 6. Ten percent of the revenues collected from the tax imposed

12-12 pursuant to this section must be deposited with the state treasurer for

12-13 credit to the account for the regulation and supervision of captive

12-14 insurers created pursuant to section 38 of this act. The remaining 90

12-15 percent of the revenues collected must be deposited with the state

12-16 treasurer for credit to the state general fund.

12-17 7. As used in this section, unless the context otherwise requires:

12-18 (a) "Common ownership and control" means:

12-19 (1) In the case of a stock insurer, the direct or indirect ownership of

12-20 80 percent or more of the outstanding voting stock of two or more

12-21 corporations by the same member or members.

12-22 (2) In the case of a mutual insurer, the direct or indirect ownership

12-23 of 80 percent or more of the surplus and the voting power of two or more

12-24 corporations by the same member or members.

12-25 (b) "Net direct premiums" means the direct premiums collected or

12-26 contracted for on policies or contracts of insurance written by a captive

12-27 insurer during the preceding calendar year, less the amounts paid to

12-28 policyholders as return premiums, including dividends on unabsorbed

12-29 premiums or premium deposits returned or credited to policyholders.

12-30 Sec. 38. 1. There is hereby created in the state general fund an

12-31 account for the regulation and supervision of captive insurers. Money in

12-32 the account must be used only to carry out the provisions of this chapter.

12-33 Except as otherwise provided in section 37 of this act, all fees and

12-34 assessments received by the commissioner or division pursuant to this

12-35 chapter must be credited to the account. Not more than 2 percent of the

12-36 tax collected and deposited in the account pursuant to section 37 of this

12-37 act, may, upon application by the division or an agency for economic

12-38 development to, and with the approval of, the interim finance committee,

12-39 be transferred to an agency for economic development to be used by that

12-40 agency to promote the industry of captive insurance in this state.

12-41 2. Except as otherwise provided in this section, all payments from the

12-42 account for the maintenance of staff and associated expenses, including

12-43 contractual services, as necessary, must be disbursed from the state

13-1 treasury only upon warrants issued by the state controller, after receipt of

13-2 proper documentation of the services rendered and expenses incurred.

13-3 3. At the end of each fiscal year, that portion of the balance in the

13-4 account which exceeds $100,000 must be transferred to the state general

13-5 fund.

13-6 4. The state controller may anticipate receipts to the account and

13-7 issue warrants based thereon.

13-8 Sec. 39. 1. The terms and conditions set forth in chapter 696B of

13-9 NRS pertaining to insurance reorganization, receiverships and

13-10 injunctions apply to captive insurers incorporated pursuant to this

13-11 chapter.

13-12 2. An agency captive insurer, a rental captive insurer and an

13-13 association captive insurer are subject to those provisions of chapter

13-14 686A of NRS which are applicable to insurers.

13-15 Sec. 40. The commissioner may establish such regulations as are

13-16 necessary to carry out the provisions of the chapter.

13-17 Sec. 41. NRS 679A.160 is hereby amended to read as follows:

13-18 679A.160 Except as otherwise provided by specific statute, no

13-36 the fund is financially sound.

13-37 Sec. 42. The amendatory provisions of this act do not apply to

13-38 offenses committed before October 1, 1999.

13-39 Sec. 43. This act becomes effective upon passage and approval for the

13-40 purpose of adopting regulations to carry out the provisions of this act, and

13-41 on October 1, 1999, for all other purposes.