Questions Submitted by: The Honorable Glen Mulready and the Honorable Jason Blair

Summary

This Oklahoma Attorney General Opinion addresses whether Article X, sections 15 and 17 of the Oklahoma Constitution prohibit the State or its political subdivisions from creating and owning captive insurance companies. The Opinion concludes that neither provision prohibits such ownership when the captive insurer is wholly owned by the public entity and used solely to manage that entity’s risks, while cautioning that private participation or entanglement must be avoided. It does not address other statutory or constitutional provisions or the appropriate organizational form for such a captive insurer.

Holdings

1. Article X, section 15 of the Oklahoma Constitution does not prohibit the State of Oklahoma from creating and owning a captive insurance company, provided the captive is structured to manage the State's own risks and does not involve public funds being used to benefit private interests.
2. Article X, section 17 of the Oklahoma Constitution does not prohibit the Legislature from enacting laws permitting an Oklahoma political subdivision to create and own a captive insurance company, provided the captive is structured to avoid participation by or entanglement with private interests and is used to manage the political subdivision's own risks.

Questions Presented

1. Whether article X, section 15 of the Oklahoma Constitution prohibits the State of Oklahoma from creating and owning a captive insurance company under the Oklahoma Captive Insurance Company Act.
2. Whether article X, section 17 of the Oklahoma Constitution prohibits the Legislature from authorizing a political subdivision of Oklahoma to create and own a captive insurance company under the Oklahoma Captive Insurance Company Act.

Disposition

other