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MONTGOMERY, Ala.The first captive insurance company formed under Alabama's 2006 captive statute is now writing business.
The new captive, Chantilly Risk Management Inc., owned by Automotive Aftermarket Assn. Southeast, is writing reinsurance for a self-insured health insurance trust and workers compensation fund that is sponsored by the association and offers coverage to its members.
"Our objective in establishing the captive was to take some of the volatility out of the reinsurance market and to recapture some of the dollars being spent for this coverage," said Randal Ward, president of Montgomery, Ala.-based AAAS, which has about 650 members, including auto parts makers, distributors and auto repair facilities.
Alabama passed captive legislation last year in the wake of Hurricane Ivan, which in 2004 devastated the state and significantly drove up property insurance rates for coastal businesses.
While Chantilly is not currently funding property risks, property "is something we will look at down the road," Mr. Ward said.
"We want to start small and get comfortable as we gain more experience," Mr. Ward said.
Mr. Ward said Alabama was appealing as a captive domicile because the association is based there and because of the good cooperation it received from the Alabama Department of Insurance during the captive review and licensing process.
Alabama Insurance Commissioner Walter Bell said the department expects to license several more captives this year, noting that several condominium associations are in the research and planning phase of forming captives.