§ 27-43-2. Incorporation of captive insurance companies in this state. (a) A subsidiary captive insurance company shall be incorporated as a stock insurance company with its capital divided into shares and held by the stockholders.

(b) An association captive insurance company or an industrial insured captive insurance company may be:

(1) Incorporated as a stock insurance company with its capital divided into shares and held by the stockholders; or

(2) Incorporated as a mutual insurance company without capital stock, the governing body of which is elected by the member organizations of its association; or

(3) Organized as a reciprocal insurer in accordance with chapter 17 of this title.

(c) A captive insurance company which is formed as a corporation shall have not less than three (3) incorporators of whom not less than two (2) shall be residents of this state.

(d)(1) In the case of a captive insurance company formed as a corporation, before the articles of association are transmitted to the secretary of state, the incorporators shall petition the commissioner to issue a certificate setting forth his or her finding that the establishment and maintenance of the proposed corporation will promote the general good of the state. In arriving at the finding, the commissioner shall consider:

(i) The character, reputation, financial responsibility, insurance experience, and business qualifications of the incorporators and the proposed officers and directors;

(ii) The sources and availability of its capital; and

(iii) Other financial and business matters that the commissioner deems advisable.

(2) In the case of a captive insurance company formed as a reciprocal insurer, the organizers shall petition the commissioner to issue a certificate setting forth the commissioner's finding that the establishment and maintenance of the proposed association will promote the general good of the state. In arriving at that finding the commissioner shall consider:

(i) The character, reputation, financial responsibility, insurance experience, and business qualifications of the organizers and the attorney in fact;

(ii) The sources and availability of its capital; and

(iii) Other financial and business matters that the commissioner shall deem advisable.

(e) The articles of association, the certificate, and the organization fee shall be transmitted to the secretary of state, who shall then record both the articles of incorporation and the certificate.

(f) The capital stock of a captive insurance company incorporated as a stock insurance company shall be issued at not less than par value, and all capital insurance companies shall have the minimum capital provided in § 27-43-4.

(g)(1) In the case of a captive insurance company formed as a corporation in this state, at least one of the members of the board of directors of a captive insurance company incorporated in this state shall be a resident of this state.

(2) In the case of a captive insurance company formed as a reciprocal insurer in this state, at least one of the members of the subscribers' advisory committee shall be a resident of this state.

(h) Every captive insurance company referenced within this subsection has the powers contained in this chapter, and is subject to the provisions of this chapter, chapter 1 of this title, and chapter 1.2 of title 7; provided, that insofar as the provisions of this chapter are inconsistent with the provisions of chapter 1 of this title or chapter 1.2 of title 7, the provisions of this chapter are controlling.

(i) Captive insurance companies formed as corporations under the provisions of this chapter have the privileges and are subject to the provisions of the general corporation law and the applicable provisions contained in this chapter. In the event of conflict between the provisions of the general corporation law and the provisions of this chapter, this chapter controls.

(j) Captive insurance companies formed as reciprocal insurers under the provisions of this chapter have all the privileges and are subject to all the obligations imposed by chapter 17 of this title in addition to the applicable provisions of this chapter. In the event of a conflict between the provisions of chapter 17 and the provisions of this chapter, this chapter controls. To the extent that chapter 17 also subjects a reciprocal insurer to the other provisions of this title, these other provisions are not applicable to a reciprocal insurer formed under this chapter unless these provisions are expressly made applicable to these captive insurance companies by this chapter.

(k) The articles of incorporation or bylaws of a captive insurance company formed as a corporation may authorize a quorum of a board of directors to consist of no fewer than one third (1/3) of the fixed or a majority of the prescribed number of directors as determined by the charter or the bylaws of the corporation or by § 7-1.2-802.

(l) The subscribers' agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of a subscriber's advisory committee to consist of no less than one third (1/3) of the number of its members.

History of Section. (P.L. 1988, ch. 76, § 1; P.L. 1999, ch. 22, § 12; P.L. 2002, ch. 292, § 87; P.L. 2005, ch. 36, § 22; P.L. 2005, ch. 72, § 22.)