Arkansas Governor Signs Bill to Form State Property Insurance Captive

Arkansas Governor Sarah Huckabee Sanders has signed into law a measure creating a state-owned captive insurance company aimed at stabilizing property insurance for public schools, higher education institutions, and state-owned buildings. 

The governor signed the measure, HB1821, on April 14. The state said the act is intended to create a more sustainable system of property insurance for public schools, state-supported institutions of higher education, and state-owned property. 

The measure provides that the Arkansas Department of Transformation and Shared Services (DTSS) will oversee the state captive insurance program's operations. The DTSS secretary will have day-to-day responsibility for the captive. The secretary is authorized to assign duties and responsibilities to staff or private vendors and contractors and consult with professionals about the captive's administration as necessary. 

All Arkansas public schools, state agencies, and institutions of higher education that accept state funds for facilities will be required to participate in the captive insurance program. 

The act creates a state captive insurance program trust fund that shall consist of funds transferred from the captive and any other funds provided by law. The trust fund will manage capital, claims, reserves, and operating expenses. Funds in the trust fund may only be used for the benefit of the state captive and to meet its expenses. 

The new Arkansas law also amends the section of the state code pertaining to premium taxes levied on captive insurers to provide that the section does not apply to any captive established "to administer a public elementary and secondary school, state-supported institution of higher education, and state-owned property insurance program." 

The act notes that continual evaluation of the state captive insurance program by the Arkansas General Assembly is essential to maximizing the benefits to public schools, state-supported higher education institutions, and the state; maintaining the continued viability of the state captive insurance program; and providing the accountability and transparency into the captive program necessary to evaluate it successfully.