State Senator Supports Captive Insurance In SD
A state senator says 2013 Legislative Session bills are now coming in fast, and some of them open doors for big business. Dan Lederman says one bill positions South Dakota to get in on the captive insurance industry, and another removes a requirement that keeps South Dakota’s ethanol out of certain foreign markets.
Lederman acknowledges that the topic of insurance is not universally scintillating. But he’s excited about House Bill 1061, which allows captive insurance companies to expand. That bill has passed through the House and is heading for the Senate.
Lederman explains captive insurance: it allows a corporation to self-insure, using its own revenues and setting up its own insurance company. It then pays premiums into that company.
He says captive insurance might be used by a large corporation that has difficulty finding an insurance company willing to insure for industry-specific factors.
“Over time the trend has been to put monies offshore. Well, there have been some different changes at the federal level that limit what offshore captive insurance companies can do,” Lederman says. “So what we’re seeing now is, over the last few years in response to that, a lot of those dollars are coming back to the United States. And when they’re coming back to the United States, what states are they going to go to?”
Lederman hopes those companies choose to locate in South Dakota. He says the bill allows multiple companies to pool together to come up with the required start-up money and yet protect each company from liability for the others in the group.
Lederman says if the bill passes, local banks will see an infusion of dollars and the state will add high-paying jobs: “With the management of these dollars comes a lot of responsibility for white-collar jobs in the range of accounting and in banking.”
Lederman also supports Senate Bill 85, to eliminate the state’s requirement for ethanol to be denatured. He says some foreign markets, such as Brazil and some European countries, don’t allow denatured ethanol across their borders.
That bill has passed through the Senate Commerce and Energy committee and is headed for the full Senate.