Getting Started

Procedures for Forming a Montana Captive Insurance Company

In 2001, the Montana Legislature passed legislation allowing captive insurance companies to do business in the state. This law is found in Montana Code Annotated (MCA) Title 33, Chapter 28. The procedures listed below should be followed to form a captive insurer in Montana and to apply for a Certificate of Authority from the Montana Commissioner of Securities and Insurance:

• Prepare the documents needed for the application for a Certificate of Authority. See the captive application form on the Commissioner’s website for a list of all required documents.
• Submit the application to the Commissioner for review. Include a $200 application fee and a $300 license fee.
• Submit drafts of the business organizational documents with the captive insurer’s application for a Certificate of Authority. In drafting the organizational documents, the services of a local attorney may be desirable. Draft forms are available upon request from the CSI.
• Business organizational documents to be approved by the Montana Secretary of State’s office must also be delivered to the Commissioner with the respective filing fees made out to the Montana Secretary of State’s office.
• Provide information concerning the adequacy of the expertise, experience, and character of the person or persons who will own and manage the captive insurer. Biographical Affidavits are required on directors, officers, and controlling beneficial owner(s). Attested financial statements on the owner(s) and insured operating entity(s) are also required.
• If not already authorized, have your desired CPA complete the Application Authorization form to perform audits as required for captives.
• If not already authorized, have your desired actuary complete the Application form for authorization to render the opinion on loss reserves for captive accounts.
• If a Letter of Credit (LOC) will be used for Capital & Surplus, obtain the required LOC format from the Commissioner’s website. The issuing bank must be a State of Montana chartered bank, or a bank chartered by another state if approved by the Commissioner.
• The Montana Insurance Code authorizes the Commissioner to contract with an actuarial firm to review a captive applicant’s feasibility study, at the applicant’s expense. If the Commissioner determines that the services of an actuarial contractor are needed, you will be required to submit an additional copy of the application materials to the actuarial contractor and you will be notified of the cost of the review.

MONTANA CAPTIVE INSURER REQUIREMENTS

CPA Audit Requirement

Montana administrative rules require that an independent certified public accountant, approved by the Commissioner, audit the captive annually. The applicant must select an accountant who meets the requirements of the administrative rule. You may ask the Department if your CPA is currently approved. See 6.6.6801 through 6.6.6821 ARM.

Certification of Reserves

Montana administrative rules require that loss reserves and loss expense reserves be certified by a Fellow of the Casualty Actuarial Society, a member in good standing of the American Academy of Actuaries, or an individual who has demonstrated his competence in loss reserve evaluation to the Commissioner. The Commissioner must approve the actuary. The applicant must select an actuary that meets the requirements of the administrative rule. See 6.6.6816 ARM.

Annual Statement Form

Pursuant to Section 33-28-107(2)(a), MCA, each captive insurance company shall submit to the commissioner a report of its financial condition in a form and manner as required by the commissioner, verified by oath of two of its executive officers.

As required by Section 33-28-107(2)(c), MCA, each captive insurance company shall report using generally accepted accounting principles, unless the commissioner requires the use of statutory accounting principles.

Captive Risk Retention Groups must file an annual statement on or before March 1 using the annual statement blank adopted by the National Association of Insurance Commissioners (NAIC) for property-casualty insurance companies. This form must also be filed with the NAIC. All captive insurers other than risk retention groups may file the Montana Short Form Annual Statement on or before April 1.

Regulatory Contact

The regulatory contact for captive insurance applications is Dakota Terry. Dakota can be reached by phone at 406-444-3721 or via email at dakota.terry@mt.gov.