Montana Governor Steve Bullock has signed legislation removing the requirement that a captive organized similarly to a mutual insurance company have at least 25 members registered in Montana, and allowing captive insurance companies to enter dormancy.

       According to a May 9 statement by the Montana Captive Insurance Association, the new law will allow captives to go dormant. A captive may apply for a dormancy certificate of up to five years, paying a US$1,000 dormancy tax before March 1 each year, while each company must maintain paid-in capital and surplus of no less than US$25,000. Under the previous law, a captive wishing to cease operations had to surrender its license and stop paying premium taxes.

        According to the announcement, the Montana State Auditor's office estimates that three captives will apply for dormancy status; 95% of the dormancy taxes they pay—or US$2,850—will go into the state's general fund in 2018, with the remaining US$150 going into the state's captive special revenue fund. In 2019-2020, this tax revenue is expected to increase to US$5,700 and US$8,550 respectively.

        As of 2016, Montana had 184 captive insurance companies, down from 196 in 2015 but still above the 177 recorded in 2014.

Source: Business Insurance