3 CCR 702-2-3-1-5 - Plan of Operation

A. The plan of operation filed with the Commissioner for review and approval shall provide the basis and limitations for the captive insurance company's operations. Any licensed captive insurance company shall operate within its approved plan of operation. Each plan of operation shall contain the details of the captive insurance company's proposed operations, including but not limited to the following:

1. An organizational chart which includes the proposed captive insurance company and affiliated companies or group members as defined in § 10-6-103, C.R.S.;

2. The identity of all officers and directors and owners of ten percent (10%) or more of the outstanding voting securities, or other means of direct or indirect control, of the captive insurance company, accompanied by biographical affidavits on the form prescribed by the Commissioner. The Commissioner may require a fingerprint set from any officer, director or owner;

3. Proposed contractual agreements with, and identification of, managers, administrators, claims service providers, investment advisors, custodian, or others who will furnish services or insurance expertise to the captive. Any agreement concerning essential insurance services to the captive insurance company must provide for ninety (90) days advance notice to the Commissioner prior to termination and that the captive insurance company retains full ownership of all original records. Where services are routinely provided by a parent, affiliated company, or group member, a service agreement must be executed;

4. The location(s) of all books, records and offices, including description of the functions to be performed at each office and how compliance with § 10-6-107(5), C.R.S. is achieved;

5. For pure captives, the identification of the fiscal year of the parent company and the captive (this may be the calendar year or the same fiscal year as the parent);

6. The method, plan, timing, source and amount of the proposed initial capitalization. All risk retention group captives shall maintain capital levels in compliance with Colorado Insurance Regulation 3-1-11 (3 CCR 702-3). Group captives shall maintain capital levels at such amounts as the Commissioner deems appropriate considering the risks to be insured, the amount of risk retained and other relevant factors;

7. For a pure captive, whether or not loans to the parent are anticipated. Any loan shall conform to Section 7 of this regulation;

8. Information on how the captive funds are protected;

9. A description of the type and form of risks to be written;

10. Copies of all insurance contract forms;

11. Copies of any advertising or marketing material intended for use;

12. A description of pricing or funding methods to be employed if not provided elsewhere;

13. For group captives, a description of the proposed underwriting standards and claims handling procedures;

14. Disclosure of the maximum limits proposed to be written on any one risk, including any other solvency safeguards provided, in the event of adverse experience; and

15. The identification of proposed reinsurers and a summary of the reinsurance program structure and arrangements. Draft copies of all reinsurance agreements anticipated to be used, including facultative contracts, shall be filed. Captive insurance companies, including risk retention groups, may take credit for reinsurance without prior written approval of the Commissioner if the reinsurer is authorized to transact reinsurance business in Colorado and the reinsurance agreement complies with § 10-3-701 et. seq., C.R.S. and Colorado Insurance Regulation 3-3-3 (3 CCR 702-3). Captive insurance companies, with the exception of risk retention groups, may take credit for non-complying reinsurance with approval by the Commissioner.

B. A captive insurance company may modify the approved plan of operation with prior written approval of the Commissioner. A new feasibility study may be required. If the change results in an amendment to the certificate of authority, the previously issued certificate must be returned with a completed UCAA corporate amendments application for an amended certificate of authority.

Notes

3 CCR 702-2-3-1-5

38 CR 03, February 10, 2015, effective 3/15/2015 39 CR 01, January 10, 2016, effective 2/1/2016 39 CR 22, November 25, 2016, effective 1/1/2017 39 CR 23, December 10, 2016, effective 1/1/2017 40 CR 05, March 10, 2017, effective 4/1/2017 40 CR 09, May 10, 2017, effective 6/1/2017 40 CR 17, September 10, 2017, effective 10/1/2017 45 CR 09, May 10, 2022, effective 5/30/2022 46 CR 04, February 25, 2023, effective 3/17/2023