STATE AUDITOR ADDS TWO NEW COMPANIES TO EMERGING INDUSTRY IN MONTANA
Montana's Captive Insurance Industry Expanding
Helena, Mont., October 20, 2005 -Montana State Auditor John Morrison announced the formation of two new Montana companies approved to provide insurance in a specialized niche known as the captive insurance market. The State Insurance Department has licensed MHA Worker's Compensation Reciprocal Insurance Company and Eadonton Insurance Company as captive insurance companies in Montana. The new captives will insure the risks of a number of Montana hospitals and a California construction company. Captive insurance companies are traditionally used by corporations to insure part of their own risk as a component of their risk management strategy.
"Captive insurance programs are truly 'win-win' situations in the states that have them," said Morrison. "In addition to the many benefits provided to participating companies, there can be a huge economic benefit to the state. The captive insurance industry requires a highly paid infrastructure to support it and brings national and international companies to the state that otherwise might never have any contact with the region."
Montana is one of a number of states in the nation aggressively pursuing captive insurance business. A captive may be used to provide for some or all of its parent company's insurance. Benefits of forming a captive include stabilizing insurance costs, providing greater access to reinsurance and tailoring coverage for special insurance needs.
The 2001 Legislature passed a law at Morrison's request allowing captive insurance companies to operate in Montana. Currently, there are twelve captive insurance companies formed in the state to insure rural hospitals, nursing homes, fuel stations, commercial trucking firms, investment firms, medical professional firms, construction companies and attorneys. In addition, three captive management companies and the Rocky Mountain Captive Insurance Association have formed in Montana. Presently in Vermont, the first state to allow captives, it is a $1 billion-a-year industry. Morrison's goal is to make Montana the leading captive domicile in the West. Morrison requested additional legislation in the 2005 session further streamlining the captive insurance process in the state.
"The captive insurance industry is the type of business I have been working to encourage in Montana to help diversify our economic base," Morrison said. "I am confident Montana's infrastructure and laws will attract other businesses wishing to take advantage of this opportunity."
"The Montana State Auditor's Office has made the captive registration process streamlined and straightforward," said Dick Brown, Senior Vice President of the Montana Hospital Association. "In a competitive insurance market, this opportunity gives us even greater control and flexibility over our risk management process while supporting Montana at the same time. The decision to form our captive in Montana was easy, and the support of the Auditor's Office confirmed our decision."