Insurance Commissioner John Morrison touts a type of company self-insurance as economic stimulant

By the AP, 03/03/02

BILLINGS (AP) — The state insurance commissioner is trying to build support for an insurance arrangement that he hopes will bring
new money to Montana.
John Morrison was here Friday to explain “captive insurance” to representatives of a dozen or so businesses. Morrison was joined by
W. Allen Taft, of The Taft Cos., which is based in Washington, D.C., and has plans to open a Billings office.
Captive insurance is a process through which companies, groups of companies or associations may provide their own insurance.
“Captive” is part of the name because the company must form a wholly owned subsidiary that receives the premiums and handles
claims.
Premiums paid to captive insurers are tax-deductible.
Captives do not have authority to provide health, disability or life coverage, nor worker’s compensation insurance. But Morrison,
who has the titles of both state auditor and insurance commissioner, said he is prepared to introduce legislation next year that
would add worker’s compensation insurance to the list allowed under captive insurance.
The industry would come under regulation by Morrison’s office.
Among the requirements: the captive company must be based in Montana, pay Montana taxes and have an annual meeting in
Montana.
“I began this project as part of a desire to contribute to economic development in Montana,” Morrison said.
“I’m committed to it because it presents an opportunity to create good, clean, high-paying jobs in the state and help diversify the
economy and introduce a financial services sector to the economy.”
Morrison hopes to recruit national companies to form captives in the state.
“They have to have their board meetings here, and that has an economic impact and introduces national leaders to Montana,” he
said.
For many years, most captive insurance companies were located offshore.
Seventeen states now have captive-insurance laws, but in the West such laws are on the books only in Colorado and Arizona, said
Amy Minto of Big Sky Captive Management in Missoula.

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