Gas utility can use captive insurer to fund life and disability risks

Laclede Gas Co. Friday received final authorization from the U.S. Department of Labor to use its South Carolina captive insurer to fund life insurance and long-term disability risks.

Under the proposal by the St. Louis-based utility company, the life insurance will be underwritten by Minnesota Life Insurance Co., while the long-term risks will be written by Prudential Insurance Co. of America.

Those risks will be reinsured by Laclede's captive, Laclede Insurance Risk Services Inc., which already funds medical stop-loss risks and reported $1.2 million in 2014 in gross written premiums.

The captive benefits funding approach is appealing to employers for several reasons, including lower costs compared with buying coverage in the commercial market, as well as broadening a captive's book of business, captive experts say.

Well over two dozen employers have taken that approach since the Labor Department eased requirements about 15 years ago that employers need to be meet to win regulatory approval to fund benefit risks through their captives.

In 2015 alone, the Labor Department approved captive benefit funding proposals by three employers: Healthcare Services Group Inc., Hormel Foods Corp. and Sealed Air Corp.