Georgia House Bill 348 Expands Captive Insurance Framework

House Bill (HB) 348, introduced in the Georgia General Assembly, proposes amendments to Georgia's captive insurance laws, modifying key definitions and expanding the scope of permissible activities for captive insurance entities. The bill revises Chapters 14 and 41 of Title 33 of the Official Code of Georgia Annotated, focusing on limited purpose subsidiaries (LPSs) and captive insurance companies.

One of the primary changes in the bill is the introduction of the term "sponsor" as it relates to LPSs. Under the new definition, a sponsor is any entity that sponsors or cosponsors the formation of a LPS, issues securities for an LPS, invests in an LPS, or assists in raising equity or debt for such entities. This addition formally acknowledges the role of sponsors in captive insurance structures and clarifies their ability to support captive formations and financing.

The bill also expands the authorization for LPSs. Previously, an LPS was required to be wholly owned by the organizing domestic reinsurer and could only reinsure that reinsurer's risks. HB 348 removes these restrictions, allowing an LPS to be owned by one or more sponsors and to reinsure risks not only from the organizing reinsurer but also from its sponsors. Additionally, the legislation removes the restriction that previously limited LPSs to reinsuring only the risks of their organizing reinsurer. These changes increase flexibility in captive reinsurance structures and could broaden the range of businesses eligible to utilize an LPS.

Further modifications to Georgia's captive insurance laws include a revised definition of "controlled unaffiliated business." The bill eliminates the requirement that such businesses must have an "existing" reinsurance, risk-sharing, or contractual relationship with a captive's parent or affiliate. It also expands eligibility to include direct or indirect investors in a pure captive insurance company. Additionally, the legislation clarifies that risks associated with a controlled unaffiliated business may be directly or indirectly ceded to a captive insurance company, provided they are approved by the commissioner. These updates provide greater flexibility in structuring captive insurance arrangements.

Another significant change in HB 348 is the removal of restrictions on the types of insurance a captive insurance company can provide. Previously, captives in Georgia were limited to specific lines of business such as casualty, property, surety, and marine and transportation. The bill removes these predefined categories and permits captives to engage in any insurance or reinsurance activity that the commissioner deems reasonable. By eliminating these limitations, the legislation broadens the potential applications of captive insurance companies in Georgia.

As of February 26, 2025, HB 348 has passed the Georgia House of Representatives and is now under review in the Senate. If approved, it will move to the governor for final approval and signing into law.