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HB 5386

Insurance: other; captive insurance company reports and inquiries; modify. Amends secs. 4621 & 4625 of 1956 PA 218 (MCL 500.4621 & 600.4624a)

2025-2026 Regular Session Introduced by Mike Harris and 1 co-sponsor

HB 5386 tightens MI captive rules: 60-day annual report, 5-month audited statements, director inquiry with 30-day responses, higher penalties, renewal fees tied to fiscal year.

bill electronically reproduced 12/16/2025
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Bill Summary · HB 5386

HB 5386 — Summary: Captive Insurance Company Reporting and Director Inquiries (2025)

Status: Introduced 12/16/2025 (read 1st time; referred to Committee on Insurance)
Sponsor: Rep. Bill G. Schuette
Related: SB 1072 (companion)

Purpose and intent

HB 5386 amends Michigan’s Insurance Code (1956 PA 218) to modify financial reporting, audit, fee, confidentiality, and examination-related provisions that apply specifically to captive insurance companies. The bill aims to (1) standardize and tighten timing for filings, (2) require audited financial statements, (3) clarify director inquiry and interim reporting powers, and (4) revise fee timing and administrative authorities.

Key provisions and changes

  • Annual report timing

    • Requires captive insurers to submit an annual report of financial condition no later than 60 days after the captive’s fiscal year end (verified by oath of two executive officers).
    • Allows reporting under GAAP, IFRS (with director approval), or statutory accounting principles, with director-prescribed form/content. Reports are confidential as provided in section 4609.

  • Audited financial statements

    • Adds requirement that captive insurers file audited financial statements prepared by an independent public accountant within 5 months after fiscal year end. Accountant must be a CPA or firm in good standing with AICPA and in states where licensed.

  • Director inquiries and interim reporting

    • Explicitly authorizes the director to address inquiries about a captive’s activities/conditions; captives must respond in writing within 30 days.
    • Director may require interim reports on any aspect of a captive’s business and prescribe format/content.

  • Civil penalties and enforcement

    • Failure to file required reports or to respond within 30 days exposes a captive to civil penalties of $1,000–$5,000 per occurrence plus $50 per day until cured, and possible proceedings under section 4637.

  • Filing for certain types of captives (branches, pure captives)

    • Branch captives must file within 60 days after fiscal year end copies of domiciliary reports (verified by two executives); director may waive if domiciliary filings are adequate.
    • Pure captives may apply to align the captive’s fiscal year with parent company fiscal year for annual reporting.

  • Fee timing and schedule (Sec. 4625)

    • Changes due date for annual renewal fee from March 1 to not later than 90 days after the captive’s fiscal year end.
    • Renewal fee schedule preserved: $5,000 for < $5M premiums up to $100,000 for ≥ $75M (bracketed tiers listed in bill).

  • Administrative authorities and charges

    • Clarifies director’s ability to exempt special purpose captives case-by-case.
    • Authorizes department to collect certification fees ($15) and attorney general review fees ($25) for organizational amendments.
    • Directs that examination expenses be paid by the captive and deposited into the captive insurance regulatory and supervision fund.
    • Confidentiality carve-out retained for final exam reports on captives formed as risk retention groups.

Who is affected

  • All captive insurance companies licensed or operating under Michigan’s captive chapter, including pure, branch, and special purpose captives.
  • Independent auditors/accounting firms performing captive audits.
  • Department of Insurance and Financial Services (DIFS) — expanded reporting oversight and enforcement actions.
  • Captive owners/sponsors (administrative/financial compliance impacts).

Procedural / timeline notes

  • Introduced 12/16/2025; read first time same day and referred to Insurance Committee.
  • Companion Senate bill: SB 1072.
  • Significant compliance timeline changes: annual reports due 60 days after fiscal year; audited statements due 5 months after fiscal year; renewal fee due within 90 days after fiscal year.

Potential impact

  • Increases regulatory oversight and timeliness of financial transparency for captives (audited statements and quicker reporting).
  • Creates stricter penalties for noncompliance and clarifies director inquiry powers, likely increasing administrative burden and compliance costs for captives.
  • Aligns fee collection timing with captive fiscal years, potentially changing cash-flow timing for licensees.

Compiled from official sources — confirm details with the bill’s official record.

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