The Georgia Legislature has passed a bill to make the state a more attractive and competitive captive domicile.

S.B. 173 was sent to Georgia Gov. Nathan Deal on Monday after being approved on a 51-0 vote in the Senate and a 164-2 vote in the House in March. The legislation, which is expected to be signed by the governor, would represent the third consecutive year that the state’s captive law has been amended to bring it more in line with leading captive domiciles, said Tony Roehl, a partner in the insurance transactional and corporate groups of Morris, Manning & Martin L.L.P. in Atlanta. 

“The point of that was to allow Georgia companies to have their captives in Georgia, as well as to make Georgia generally an attractive captive domicile, but the emphasis so far has been on pure captives and captives for Georgia companies,” he said. “This is continuing that by making sure we have an environment that is as easy to work with as we can make it in terms of the formation of captive insurance companies and also with respect to the general risks that captive insurance companies can insure.” 

The bill has three broad objectives: clarifying and updating the general definitions in the state’s captive law, streamlining the corporate formation of captive insurance companies and allowing captives to be limited liability companies, Mr. Roehl said. 

For example, the bill would strike a requirement that the name of the captive insurance company include the words captive insurance company, with the exception of risk retention group captives, and exempt captives from publishing and probate court certification requirements.  

“We got rid of a lot of anachronistic requirements that didn’t suit the captive industry as well as it may have worked for traditional insurance companies,” he said. “It’s now much quicker and easier to form captive insurance companies in Georgia.”

“We think (the L.L.C. change) will be very popular,” Mr. Roehl continued. “The forward-leaning jurisdictions permit L.L.C.s.”  

The legislation also clarifies the risks that can reinsured by an agency captive, such as the risk of insurance or annuity contracts and the contractual liability arising out of service contracts or warranties. 

Risk retention groups would only be subject to taxes on direct premiums collected for coverages within the state, according to the legislation. 

Georgia had 28 captives in 2016, up from 16 in 2015 and 13 in 2012, according to Business Insurance data. 

“The department has received tremendous support from both the Georgia legislature and the captive industry in its efforts to modernize our captive law,” Director of Captives Courtney Faust said in a statement. “Our goal is to provide a captive law that will allow us to regulate captives in a way that makes sense.”