Bill
HB 6104
Michigan limits and clarifies allowable activities for captive insurers, detailing governance, recordkeeping, and oversight requirements to operate in-state.
Status and timeline
- Introduced in the Michigan House: Nov 13, 2024 (Rep. Brenda Carter, et al.).
- Passed by the House: Dec 12, 2024 (Roll Call #459 — Yeas 96, Nays 13) with immediate effect.
- Referred to Committee on Government Operations: Dec 18, 2024.
- Later referred to Joint Committee on Human Services: Jan 22, 2025.
- Amends section 4603 of the Insurance Code of 1956 (MCL 500.4603).
Purpose
- To update and clarify formation, permitted activities, governance, recordkeeping, and application requirements for captive insurance companies domiciled or operating in Michigan, including special purpose captives and sponsored captives.
Key provisions and changes
- Permitted lines of business
- A captive may apply for a limited certificate to write any insurance authorized under Chapter 46 except: first-dollar worker’s compensation insurance, long-term care insurance, critical care insurance, personal automobile insurance, homeowners insurance, or any component of those coverages. (The bill explicitly prohibits "first-dollar" worker’s compensation coverage.)
- Limits by captive type
- Pure captive: may insure only risks of its parent, affiliated companies, and controlled unaffiliated businesses (or combinations).
- Association captive: may insure only risks of association members and their affiliates.
- Industrial insured captive: may insure only risks of the industrial insured group and affiliates.
- Special purpose captive: generally limited to insuring parent risks, but may insure or reinsure other risks if approved by the director.
- Reinsurance
- Captives may not accept or cede reinsurance except as provided in section 4641 of the code.
- Corporate and governance requirements (application and continued authority)
- Must obtain a limited certificate of authority from the director to conduct business in Michigan.
- Must maintain principal place of business in Michigan (branch captives must maintain branch principal in-state).
- Must file name/address of a resident registered agent.
- Organizational document requirements (examples): names/addresses of at least 3 organizers (2 Michigan residents), principal office, corporate purpose, number of directors/managers and quorum (not fewer than 1/3), capitalization details, term of existence.
- Permits charter provisions limiting director monetary liability except for loyalty breaches, bad-faith/intentional misconduct, or improper personal benefit.
- Requires at least one board (or managing board for LLC) meeting annually in Michigan.
- Attorney General review and fee
- Organizational documents must be submitted to the Attorney General for examination and certification; applicant pays the examination fee prescribed in section 240(2).
- Pre-issuance requirements / director review items
- Statement acknowledging financial records are available for inspection; original records may be maintained outside Michigan if the company adopts a plan approved by the director. Records may be photographed, stored, and reproduced electronically.
- Plan of operation/business plan (including protected cell accounting as applicable).
- Evidence of capitalization, liquidity, character/reputation and qualifications of organizers/officers/directors, biographical affidavits, loss-prevention evidence.
- For sponsored captives: contracts with participants and evidence of equitable expense allocation among protected cells.
- For LLC applicants: certificate of good standing under the Michigan LLC Act.
- Issuance standard
- Director shall issue a limited certificate if documents and information demonstrate compliance with the chapter and that the applicant meets statutory standards.
Who is affected
- Entities forming or operating captive insurers in Michigan: pure, association, industrial, sponsored, special-purpose captives, and branch captives.
- Captive owners/sponsors, captive managers, corporate directors/officers, affiliated business units, and the Department of Insurance and Financial Services (DIFS) and Attorney General offices responsible for review and oversight.
Potential impacts
- Clarifies allowable lines and captive-type limits, strengthens application documentation and oversight, and provides flexibility for electronic recordkeeping and out-of-state original record storage if approved by the director.
- Maintains an in-state governance touchpoint (annual board/manager meeting in Michigan) and preserves substantive director oversight and certification steps that could affect administrative processes and domicile decisions for captive operators.
Compiled from official sources — confirm details with the bill’s official record.
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