(A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to do any and all insurance, except workers' compensation insurance, authorized by this title; however:

1. (1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, or a combination of them;
2. (2) an association captive insurance company may not insure any risks other than those of the member organizations of its association and their affiliated companies;
3. (3) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;
4. (4) in general, a special purpose captive insurance company only may insure the risks of its parent. Notwithstanding any other provisions of this chapter, a special purpose captive insurance company may provide insurance or reinsurance, or both, for risks as approved by the director;
5. (5) a captive insurance company may not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages;
6. (6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110.

(B) To conduct insurance business in this State a captive insurance company shall:

1. (1) obtain from the director a license authorizing it to conduct insurance business in this State;
2. (2) hold at least one board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, or in the case of a limited liability company a meeting of the managing board, each year in this State;
3. (3) maintain its principal place of business in this State, or in the case of a branch captive insurance company, maintain the principal place of business for its branch operations in this State; and

4. (4) appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this State. In the case of a captive insurance company:

   1. (a) formed as a corporation or a limited liability company, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served;
   2. (b) formed as a reciprocal insurer, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.

(C)

1. (1) Before receiving a license, a captive insurance company:

   1. (a) formed as a corporation, shall file with the director a certified copy of its charter and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the director;
   2. (b) formed as a limited liability company, shall file with the director a certified copy of its articles of organization and operating agreement, a statement under oath by its managers showing its financial condition, and any other statements or documents required by the director;

   3. (c) formed as a reciprocal shall:

      1. (i) file with the director a certified copy of the power of attorney of its attorney-in-fact, a certified copy of its subscribers' agreement, a statement under oath of its attorney-in-fact showing its financial condition, and any other statements or documents required by the director; and
      2. (ii) submit to the director for approval a description of the coverages, deductibles, coverage limits, and rates and any other information the director may reasonably require. If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the director for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the director. The reciprocal captive insurance company shall inform the director of any material change in rates within thirty days of the adoption of the change.

2. (2) In addition to the information required by (C)(1), an applicant captive insurance company shall file with the director evidence of:

   1. (a) the amount and liquidity of its assets relative to the risks to be assumed;
   2. (b) the adequacy of the expertise, experience, and character of the person or persons who will manage it;
   3. (c) the overall soundness of its plan of operation;
   4. (d) the adequacy of the loss prevention programs of its parent, member organizations, or industrial insureds as applicable; and
   5. (e) such other factors considered relevant by the director in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.

3. (3) In addition to the information required by (C)(1) and (C)(2) an applicant sponsored captive insurance company shall file with the director:

   1. (a) a business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the director, and how it will report the experience to the director;
   2. (b) a statement acknowledging that all financial records of the sponsored captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the director;
   3. (c) all contracts or sample contracts between the sponsored captive insurance company and any participants; and
   4. (d) evidence that expenses will be allocated to each protected cell in an equitable manner.

4. (4) Information submitted pursuant to this subsection is confidential and may not be made public by the director or an agent or employee of the director without the written consent of the company, except that:

   1. (a) information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that:

      1. (i) the information sought is relevant to and necessary for the furtherance of the action or case;
      2. (ii) the information sought is unavailable from other nonconfidential sources; and
      3. (iii) a subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the director; however, the provisions of subsection (C)(4) do not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and

   2. (b) the director may disclose the information to a public officer having jurisdiction over the regulation of insurance in another state if:

      1. (i) the public official agrees in writing to maintain the confidentiality of the information; and
      2. (ii) the laws of the state in which the public official serves require the information to be confidential.

(D)

1. (1) A captive insurance company shall pay to the department a nonrefundable fee of two hundred dollars for processing its application for license. In addition, the director may retain legal, financial, and examination services from outside the department to examine and investigate the application, the reasonable cost of which may be charged against the applicant or the director may use internal resources to examine and investigate the application for a fee of two thousand four hundred dollars.
2. (2) Section 38-13-60 applies to examinations, investigations, and processing conducted pursuant to the authority of this section.
3. (3) In addition, a captive insurance company shall pay a license fee for the year of registration of three hundred dollars and an annual renewal fee of five hundred dollars.
4. (4) The department may charge a fifteen-dollar fee for any document requiring certification of authenticity or the signature of the director or his designee.