Louisiana’s CHOICES Law Clears Path for Captive Insurance Growth
Louisiana has enacted significant legislation transforming its captive insurance landscape. The “Creating Holistic Options in Coverage for Enterprise and Self-Insurance Law” (CHOICES Law), signed as Act 313, aims to establish the state as a competitive captive insurance domicile by reducing regulatory barriers and enhancing flexibility.
The new law introduces a tiered licensing system, sets premium tax limits, and grants broad discretion to state regulators. These changes create a streamlined framework for brokers and risk managers to advise clients on alternative risk solutions. State Rep. Bubba Chaney, a key supporter of the legislation, stated, “This is about building a captive domicile that is competitive, attractive and business-friendly.”
Key provisions of the CHOICES Law include:
- Lowering capital requirements to $250,000 for pure captives
- Increasing flexibility in governance structures
- Introducing a dormancy path for inactive captives
- Formal recognition of risk retention groups and association captives
- Streamlined redomestication procedures for new entrants
- Exemption from Louisiana’s insurance guaranty fund contributions
The law also expands the state insurance commissioner’s authority to approve captives, set capital thresholds, and authorize investments and reinsurance arrangements. Captives writing non-traditional lines or excess workers’ compensation will face fewer regulatory hurdles while adhering to new governance and solvency standards.
Premium tax rates are structured on a tiered system, capped at $200,000 annually with a minimum of $7,500. This framework benefits both large enterprises and startups exploring captive insurance options.
A regulatory consultant noted, “This law puts Louisiana on the radar for businesses looking to take control of their risk. It gives captives room to move without tying them up in bureaucracy.”
The CHOICES Law is now in effect, and industry stakeholders anticipate it could significantly shift the competitive landscape among US captive insurance domiciles.
