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Member, Beacon International Group, Ltd.
TRENTON, N.J.—The New Jersey Assembly has approved legislation to allow captive insurance companies to be licensed in the state.
The measure, A. 2360, is modeled, in part, on Vermont’s pioneering statute. For example, the premium tax structure laid out in the New Jersey bill is identical to Vermont’s. On direct written premiums, the tax would be 0.38% on the first $20 million in premiums, 0.285% on the next $20 million, 0.19% on the next $20 million and 0.072% on premiums exceeding $60 million.
The minimum annual premium tax would be $7,500, while the maximum annual premium—regardless of how much business is funneled through a captive—would be $200,000.
Also identical to the Vermont law are the minimum capital and surplus requirements for single-parent captives and association captives, which would be $250,000 and $750,000, respectively.
While the New Jersey Assembly approved the bill on a 77-0 vote Monday, legislators earlier amended the measure to strip a provision that would have set up licensing requirements for risk retention groups.
The New Jersey Senate has not acted yet on a somewhat similar bill, S.168.
“We are interested in seeing this bill get some legs in the Senate and we will provide whatever assistance that we are asked to provide,” Gregg Sgambati, president of the New Jersey Captive Insurance Assn. in Mahwah, N.J., said in an e-mail.