Washington Seeks To Expand Captive Insurance Access for Public Utility Districts

Washington House Bill 1842 (HB 1842), which would authorize public utility districts (PUDs) in the state to form, own, or use captive insurers, has progressed through the legislative process. The bill, introduced by Representative Mike Steele (R) and cosponsored by Representative Stephanie Barnard (R), seeks to expand risk management tools available to PUDs by permitting them to utilize captive insurance structures under Washington's existing regulatory framework.

Legislative Progress

HB 1842 was first introduced on February 5, 2025, and was referred to the House Committee on Environment and Energy. A public hearing was held on February 13, 2025, followed by an executive session on February 20, 2025, during which the committee issued a majority recommendation for a "do pass."

Key Provisions of HB 1842

The bill amends multiple sections of Washington's insurance statutes, including RCW 48.62.011, RCW 48.62.031, and RCW 48.201.020, specifically, as follows.

• Clarifies that local government entities, including PUDs, have the authority to self-insure, purchase reinsurance, and become captive owners
• Expands the definition of "captive owner" under RCW 48.201.020 to include municipal corporations organized under Title 54 RCW (which governs PUDs)
• Adds a new section to Chapter 54.04 RCW, explicitly stating that PUDs may be captive owners as defined in the state's captive insurance statute

Washington State Captive Insurance Law

Washington State formally enacted captive insurance laws in 2021 with the passage of Second Substitute Senate Bill 5315 (SSSB 5315), codified in RCW 48.201. Before this legislation, Washington did not recognize captive insurers as a distinct form of self-insurance, leading to enforcement actions against businesses utilizing captives without state authorization.

Key provisions of SSSB 5315 include the following.

• Registration requirement: captive insurers covering Washington-based risks must register with the state.
• Premium tax: a 2 percent premium tax applies to premiums that are paid to the captive insurer by its parent or affiliate.
• Retroactive application: the tax was applied retroactively to 2011 for eligible captive insurers.
• Regulatory oversight: the Washington State Office of the Insurance Commissioner (OIC) oversees compliance, including registration and taxation requirements.

Washington's captive insurance framework does not establish Washington as a captive domicile state. Instead, it creates a registration framework for captive insurers that insure Washington-based entities while being licensed in their domiciliary jurisdictions.

What's Next for HB 1842?

While the bill has received committee approval, it must still move through the full House and Senate before reaching the governor's desk for signature. The committee's majority recommendation for a "do pass" indicates support for the bill's advancement, but further legislative steps remain before its final approval.