FOR IMMEDIATE RELEASE
SUPERINTENDENT LEVIN ANNOUNCES LICENSING OF MTA SUBSIDIARY AS FIRST
CAPTIVE INSURANCE COMPANY IN NEW YORK STATE
New Captive Law Will Encourage Corporations to Form Self-Insurance Entities
In yet another sign of the improving economic and regulatory climate in New York State, Superintendent of Insurance Neil D. Levin and MTA Chairman E. Virgil Conway today announced that the State Insurance Department has licensed a subsidiary of the Metropolitan Transportation Authority as the states first captive insurance company.
Captives are traditionally used by large corporations as part of their risk management strategy to self-insure their own risks. The MTAs captive, First Mutual Transportation Assurance Company, will be insuring the risks of the MTA, its affiliates and subsidiaries.
The MTA is the first corporation to take advantage of legislation signed into law in August by Governor George E. Pataki that permits captives to become licensed in New York State. The law became effective December 5, 1997.
"I am pleased to announce that the MTA will be setting up its captive here in New York," said Superintendent Levin. "Governor Patakis continuing effort to cut red tape and create a business friendly regulatory climate in New York State has already created hundreds of thousands of new jobs in this state and has boosted our economy by $2.6 billion. In addition to the MTA, the Insurance Department has heard from several companies across the country who have expressed an interest in bringing their captives to New York."
"The MTA is proud to have been part of the creation of the first captive insurance company in the State of New York. First Mutual Transportation Assurance Company will give us greater flexibility and efficiency in managing and financing risk for all of our agencies, at the same time creating a brand new MTA cost-saving strategy of substantial proportions thus contributing to our growing self sufficiency," said MTA Chairman E. Virgil Conway.
Prior to the Governors action, captives were not permitted in New York and had been setting up headquarters in a select number of states or off-shore in jurisdictions such as Bermuda. These companies have avoided larger states like New York whose complex regulatory rules and lengthy approval procedures of the past stymied innovative alternative insurance programs such as captives. In fact, many of New York States Fortune 500 corporations have set up their captives elsewhere.
"By allowing corporations to set up their self-insurance programs here, we will be creating more jobs, while at the same time cutting costs for these corporations who in the past had to maintain separate staff and offices in another jurisdictions. This is a win for New York State as well as our business community," the Superintendent said.
"The number of captive insurers formed worldwide is estimated to be in excess of 3,500 and growing," continued Superintendent Levin. "I would encourage both long-time players in the captive market or companies just exploring the possibilities to take a look the exciting opportunities New York States captive law offers. Under the new law, firms gain all the advantages associated with New Yorks premier financial services marketplace, with none of the regulatory obstacles."
All the information necessary to become licensed is available by calling the Department or by visiting its website at www.ins.state.ny.us. The Department has created a separate section for captives, and companies can quickly download the licensing forms as well as a copy of the law from the site.
Empire State Development Chairman Charles Gargano said, "This is a great example of how Governor Pataki is making good on his promise to improve New Yorks business climate. This meaningful legislation will have a tremendous effect in the States financial sector, attracting offshore and out-of-state insurance businesses back to New York and creating at least 1,000 new jobs. Other professional services, including accounting, banking, investment and real estate, will also benefit greatly. With this legislation, Governor Pataki insures that New York stays on top as the financial capital of the world."
The approval process for licensing of a captive insurer is estimated to be only 30 days. Shortly after licensing the MTA captive, the Insurance Department met with Columbus-McKennon, Inc., a New York-based manufacturer that was considering moving its existing captive from Tennessee. The Department worked with the company, and convinced it to move its captive insurer to New York. Thus CM Insurance Company, Inc. became the second company to be licensed as a captive insurer in New York State.
New York States Captive Insurance Law:
The International Brokerage firm of Willis Coroon is managing the MTAs captive.
New York Captives Homepage