Gregory S. Katz previews the 1998 International Alternative Insurance Symposium being held 15-18 March at Hyatt Grand Champions, Indian Wells, California.

The symposium, whose primary sponsors are the Captive Insurance Companies Association and the National Risk Retention Association, comes at an exciting time for the alternative insurance market. For example, the State of New York can now be added to the list of captive domiciles. In 1997, New York passed legislation allowing the formation and operation of captive insurance companies. This legislation exempts captive insurers licensed in the state from compliance with provisions of state insurance and certain state tax laws.

A New York captive can be formed as either a stock insurer or as a mutual insurer. The minimum capital and surplus requirements for a stock or mutual pure captive are $250,000 and the minimum capital and surplus for a stock or mutual group captive are $500,000. Captives will be permitted to write, with certain exceptions, on either a direct or a reinsurance basis. However, New York captives will not be permitted to write, on a direct basis, workers' compensation, employer's liability or any other kind of insurance required to satisfy financial liability (such as auto liability insurance).

The New York state legislation will assist Fortune 500 companies and other large commercial enterprises in adopting more efficient and cost effective means of financing risk. Captives formed in other jurisdictions account for approximately $12 billion of the estimated $177 billion commercial lines market in the United States.

One of the symposium sponsors, the National Risk Retention Association, has had a busy year in safeguarding the rights of risk retention groups. In a closely watched case1, a federal court judge struck down a number of Louisiana state statutes aimed at making it nearly impossible for risk retention groups to operate outside of their domicile state. The decision was later affirmed by the United States Court of Appeals for the Fifth Circuit.

The case concerned statutes adopted by the State of Louisiana requiring non-domiciliary risk retention groups to possess minimum capital and surplus requirements of at least $5 million to post funds or a bond of $100,000, and to submit the group's plan of operation to the commissioner of insurance with an estimated fee of $1,000. Each risk retention group would also have been required to submit copies of its articles of incorporation and bylaws, biographical affidavits and fingerprint cards for each officer and director of the group.

The United States District Court of the Middle District of Louisiana ruled that Louisiana's statutes are pre-empted by the Federal Liability Risk Retention Act of 1986, an important decision which strengthened and reinforced the original intent of the Liability Risk Retention Act of 1986.2 A full discussion of the case and its importance is contained in the article Landmark Victory for Risk Retention Groups which was published in Global Risk Manager 1997.

Symposium events

The theme of the conference is "forging new alliances". It will feature presentations on the future of insurance regulations, a tax update for the alternative market, new reciprocal captive laws and sessions on developments affecting captives, risk retention groups and purchasing groups. The keynote speaker will be political satirist P. J. O'Rourke and the feature speaker will be Dr Claude C. Lilly. Dr Lilly will discuss the soft market and whether the underwriting cycle can be revived. He is highly regarded in the industry and has spoken at a number of insurance association conferences.

Twelve educational seminars are scheduled throughout the 31/2 day symposium with industry notables offering expertise and information about the latest trends and available tools for captives and risk retention groups. Members of the insurance community from across the globe are expected to attend.

Joining the two worldwide associations as sponsors are seven other alternative market groups: Barbados Exempt Insurance Management Association, Bermuda Insurance Management Association, Cayman Insurance Managers Association Ltd, Colorado Association of Captive Entities, Hawaii Captive Insurance Council, Illinois Captive and Alternative Risk Funding Insurance Association and the Vermont Captive Insurance Association.

Gregory S. Katz of Wilson, Elser, Moskowitz, Edelman & Dicker is the chair of the public relations committee of the National Risk Retention Association, and the firm is an associate member of the Captive Insurance Companies Association and the Vermont Captive Insurance Association.

For further information on the symposium, contact IAIS Conference Registration at 612-928-4665.

1. National Risk Retention Association, Association of Trial Lawyers Assurance, A Mutual Risk Retention Group, Non-Profits Mutual Risk Retention Group, Inc and American Association of Orthodontists Insurance Company v James H. ("Jim") Brown, in his official capacity as commissioner of insurance of the State of Louisiana.

2. 15 U.S.C. 3901-3906.