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Alaska Air, Starbucks captives ordered to cease insuring risk in Washington

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Alaska Air, Starbucks captives ordered to cease insuring risk in Washington

Washington Insurance Commissioner Mike Kreidler has ordered the captive insurers for Alaska Air Group Inc. and Starbucks Corp. to stop insuring risk in the state for those companies.

Captive insurers are not authorized under Washington law. Instead, companies have to purchase insurance from an admitted insurer or through a surplus line broker and pay a 2% premium tax.

Kriedler in September 2019 ordered ASA Assurance Inc., Alaska Air Group's captive insurer, to pay more than $2.5 million in unpaid premium tax and penalties. He also ordered Starbucks captive Olympic Casualty Insurance Co. to pay $22.8 million in unpaid premium taxes, interest and penalties, as well as a $1.1 million fine in December 2019.

ASA issued four policies for Alaska Air Group and units Alaska Airlines Inc., Horizon Air Industries Inc. and McGee Air Services Inc., amounting to $91 million in premiums. Meanwhile, Olympic amassed $633.4 million in premiums after it issued 44 policies in Washington between 2008 and 2019.

Both ASA and Olympic have requested hearings on the matter.