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Washington State launches prisoner study



Washington State Insurance Commissioner Mike Kreidler on Wednesday sent a first survey to about 5,000 state companies asking if they use an insurance company in captivity.

The survey is part of a catch study requested by state lawmaker and governor Jay Inslee to determine how many organizations do not pay state tax on 2% insurance premiums by law.

The information collected helps "inform, evaluate and formulate a tax framework for captive insurance companies", according to the Office of the Insurance Commissioner

Organizations that fail to pay premium tax will not be identified in the study, but it will show a total calculated amount of debt, says the insurance commissioner's office in a statement.

Commissioner Kreidler has suspended enforcement action against prisoner insurers pending the results of the study.

Prison insurers are currently not authorized under Washington State law. Efforts to get captive owners to pay the state's premium tax of 2% have led to fines, settlements, legal challenges and proposed changes to state legislation.

The first owner in question who was questioned for not paying the tax was Redmond, Washington-based Microsoft Inc. In August 201

8, the company's Arizona-based captive, Cypress Insurance Co., paid $ 573,905 in unpaid taxes and $ 302,915 in penalties and interest to settle with the state.

Study results will be reported to the state legislature next year. The Office of the Insurance Commissioner and the State Department of Revenue have agreed with Seattle-based Milliman Inc. to conduct the investigation and study.

Sixteen prisoners self-reported and paid an initial payment of $ 4 million in previously unpaid premium taxes, fines and interest to the state as part of an initiative set up by Commissioner Kreidler in December 2018.


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