AB318 - Revises provisions relating to captive insurers. (BDR 57-884)

A.B. 318 - *AB318* ASSEMBLY BILL NO. 318–ASSEMBLYMEMBER HARDY FEBRUARY 27, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions relating to captive insurers. (BDR 57-884) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to insurance; authorizing a captive insurer to directly provide workers’ compensation insurance; authorizing the Commissioner of Insurance to authorize or require certain captive insurers to join or contribute financially to an assigned risk pool or insurance insolvency guaranty fund; revising provisions setting forth certain prerequisites before a private carrier may provide industrial insurance; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides for the licensure and regulation of captive insurers by the 1 Commissioner of Insurance. (Chapter 694C of NRS) Existing law sets forth the 2 types of insurance that a captive insurer is authorized to or prohibited from 3 transacting. (NRS 694C.300) Section 1 of this bill authorizes a captive insurer to 4 directly provide workers’ compensation insurance. 5 Existing law prohibits a captive insurer from: (1) joining or contributing 6 financially to an assigned risk pool or insurance insolvency guaranty fund in this 7 State; or (2) receiving any benefit from such a pool or fund for claims arising out of 8 the operations of the captive insurer. (NRS 694C.380) Section 2 of this bill 9 authorizes the Commissioner to authorize or require a captive insurer that directly 10 provides workers’ compensation insurance to join or contribute financially to an 11 assigned risk pool or insurance insolvency guaranty fund in this State. Under 12 section 2, such a captive insurer may receive such benefits from the pool or fund as 13 the Commissioner may authorize. 14 Existing law sets forth various requirements and restrictions upon insurers, 15 including, without limitation, private carriers, concerning the provision of industrial 16 insurance. (Chapters 616A-617 of NRS) Existing law requires a private carrier, 17 before providing industrial insurance, to be authorized by the Commissioner as an 18 authorized insurer and maintain certain securities applicable to authorized insurers. 19 – 2 – - *AB318* (NRS 616B.463) Section 4 of this bill revises those requirements to allow a private 20 carrier that is a captive insurer that maintains certain securities required for a 21 captive insurer to provide industrial insurance. Section 3 of this bill revises the 22 definition of “private carrier” to reflect the authorization of a captive insurer to 23 provide industrial insurance. 24 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. NRS 694C.300 is hereby amended to read as 1 follows: 2 694C.300 1. Except as otherwise provided in this section, a 3 captive insurer licensed pursuant to this chapter may transact any 4 form of insurance described in NRS 681A.020 to 681A.080, 5 inclusive. 6 2. A captive insurer licensed pursuant to this chapter: 7 (a) Shall not directly provide personal motor vehicle or 8 homeowners’ insurance coverage, or any component thereof. 9 (b) Shall not accept or cede reinsurance, except as otherwise 10 provided in NRS 694C.350. 11 (c) May directly provide workers’ compensation insurance. 12 (d) May provide excess workers’ compensation insurance to its 13 parent and affiliated companies, unless otherwise prohibited by the 14 laws of the state in which the insurance is transacted. 15 [(d)] (e) May reinsure workers’ compensation insurance 16 provided pursuant to a program of self-funded insurance of its 17 parent and affiliated companies if: 18 (1) The parent or affiliated company which is providing the 19 self-funded insurance is certified as a self-insured employer by the 20 Commissioner, if the insurance is being transacted in this State; or 21 (2) The program of self-funded insurance is otherwise 22 qualified pursuant to, or in compliance with, the laws of the state in 23 which the insurance is transacted. 24 3. A pure captive insurer shall not insure any risks other than 25 those of its parent and affiliated companies or controlled unaffiliated 26 businesses. 27 4. An association captive insurer shall not insure any risks 28 other than those of the member organizations of its association and 29 the affiliated companies of the member organizations. 30 5. A state-chartered risk retention group shall not insure any 31 risks other than those of the members of its association. 32 6. An agency captive insurer shall not insure any risks other 33 than those of the policies that are placed by or through the insurance 34 agency or brokerage that owns the captive insurer. 35 – 3 – - *AB318* 7. A rental captive insurer shall not insure any risks other than 1 those of the policyholders or associations that have entered into 2 agreements with the rental captive insurer for the insurance of those 3 risks. Such agreements must be in a form which has been approved 4 by the Commissioner. 5 8. A sponsored captive insurer shall not insure any risks other 6 than those of its participants. 7 9. As used in this section, “excess workers’ compensation 8 insurance” means insurance in excess of the specified per-incident 9 or aggregate limit, if any, established by: 10 (a) The Commissioner, if the insurance is being transacted in 11 this State; or 12 (b) The chief regulatory officer for insurance in the state in 13 which the insurance is being transacted. 14 Sec. 2. NRS 694C.380 is hereby amended to read as follows: 15 694C.380 [A] 16 1. Except as otherwise provided in subsection 2, a captive 17 insurer shall not join or contribute financially to an assigned risk 18 pool or insurance insolvency guaranty fund in this state. A captive 19 insurer or its insured, its parent or an affiliated company, or any 20 member organization of its association shall not receive any benefit 21 from such a pool or fund for claims arising out of the operations of 22 the captive insurer. 23 2. The Commissioner may authorize or require a captive 24 insurer that directly provides workers’ compensation insurance to 25 join or contribute financially to an assigned risk pool or insurance 26 insolvency guaranty fund in this State. A captive insurer that joins 27 or contributes financially to an assigned risk pool or insurance 28 insolvency guaranty fund in this State may receive any benefit 29 from such a pool or fund for claims arising out of the operations 30 of the captive insurer relating to the provision of workers’ 31 compensation insurance as the Commissioner may authorize. 32 Sec. 3. NRS 616A.290 is hereby amended to read as follows: 33 616A.290 “Private carrier” means any insurer , including, 34 without limitation, a captive insurer, or the legal representative of 35 an insurer authorized to provide industrial insurance pursuant to 36 chapters 616A to 617, inclusive, of NRS. The term does not include 37 a self-insured employer or an association of self-insured public or 38 private employers. 39 Sec. 4. NRS 616B.463 is hereby amended to read as follows: 40 616B.463 1. Before a private carrier may provide industrial 41 insurance pursuant to chapters 616A to 617, inclusive, of NRS, the 42 private carrier must be authorized by the Commissioner pursuant to 43 [chapter] : 44 – 4 – - *AB318* (a) Chapter 680A of NRS and maintain such security of the 1 kind described in NRS 680A.120 and 680A.140 as may be required 2 [.] ; or 3 (b) Chapter 694C of NRS and maintain such security of the 4 kind described in NRS 694C.250 as may be required. 5 2. A private carrier shall not provide industrial insurance 6 pursuant to chapters 616A to 617, inclusive, of NRS as an 7 unauthorized insurer pursuant to subsection 9 of NRS 680A.070. 8 3. A private carrier that is authorized by the Commissioner to 9 provide industrial insurance pursuant to paragraph (a) of 10 subsection 1: 11 (a) Constitutes an authorized insurer, as that term is defined in 12 NRS 679A.030; and 13 (b) Is subject to the provisions of title 57 of NRS that govern 14 authorized insurers. 15 H