Expertise, Expertise, Expertise

Why Hawaii is a popular captive domicile for both U.S. and Pacific Rim companies.

Hawaii, one of the oldest captive domiciles in the United States, is also one of the most progressive in keeping regulations modern, said Hawaii Insurance Commissioner J.P. Schmidt. He said the state is focused on continually improving laws to foster a friendly environment for captives, while maintaining prudent regulatory practices. Hawaii is in this business for the long haul.

BEST’S REVIEW: What has Hawaii done to provide prudent oversight and regulation for captives?

SCHMIDT: For over 20 years, Hawaii has had continuing and very stable support for insuring that we have expertise in the captive branch to properly regulate and work with captive owners, and also in keeping our laws up to date in this rapidly changing area.

BR: How has Hawaii fostered an environment that allows for innovation in risk financing and captive insurance?

SCHMIDT: Just in the past two years, we amended our investment law to provide for more modern investments to be allowed as accredited investments, and allowed the Limited Liability Company structure. We capped the tax on captives so those that want to do a greater amount of business in their captive can do so without any additional tax. We updated our sponsored captive legislation--the statutes governing the sponsored captives allowing for segregated cell or sometimes they are called leased capital facilities--so that smaller companies can take advantage of the alternative market. And the governor just the other day signed a law for special purpose financial vehicle captives. This SPFVC law provides a clear efficient process for doing securitizations.

BR: What makes Hawaii an optimal location to conduct captive business?

SCHMIDT: I’m going to steal a line from real estate brokers here and say that there are three things and they are: expertise, expertise and expertise. What that expertise does is enable a captive owner to fully realize the benefits that a captive program offers. That allows us to alter programs when necessary, provide loan backs when appropriate, and even help get a captive set up and licensed when we get a phone call on December 18, saying it has to be done by year end.

We also in Hawaii have a lower premium tax structure than other domiciles, and that is always something of interest to captive owners. Also, Hawaii is a good location and has a long cultural history and social relationship with countries around the Pacific Rim, so that they find it easier to do business with us and communicate in order to achieve their goals. That is why we see significant growth in the number of Japanese companies coming to the state of Hawaii.

BR: Is there anything else that you think we should know about the captive industry in Hawaii?

SCHMIDT: We [regularly] meet with captive owners and consultants and organizers. It is very appreciated by them, because we aren’t just laying down the law for them, we are helping them comply with the law but also set up their programs so it will really benefit their company. I think that accessibility is really, really critical. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13