Costco captive insurer pays $3.6 million to state

NW Re Limited settled after voluntarily reporting their actions.

A insruance company covering Costco has been hit with more than $3 million in back taxes.

NW Re Limited agreed last week, to pay the state $3.6 million in unpaid back taxes, penalties and interest after they self-reported illegal business conduct in the state. Costco Wholesale Corp. of Issaquah is the parent company and sole insured by NW Re., a captive insurance company based in Phoenix, Ariz.

Captive insurers are companies that are wholly owned by its insured and in Washington, nonadmitted captive insurers must place their business through a surplus line broker licensed in the state. If not, they could potentially skip out on a mandated 2-percent tax on written premiums, funds used for government operations.

“Surplus lines brokers are our regulatory link to nonadmitted insurers, and we knew captives weren’t placing business though them,” said Steve Valandra, public affairs commissioner with the state office of the Insurance commissioner.

Of the fine NW Re paid, $2.4 million is in unpaid premium taxes and $1.2 million were paid in fines, tax penalties and interest, after reaching a settlement on March. 4, according to the Washington State Office of the Insurance Commissioner.

Starting in 2019, state Insurance Commissioner Mike Kreidler gave captive insurers until June 2020 to report any illegal conduct in exchange for reduced fines and penalties. After the deadline, captives will face maximum fines for their illegal state conduct.

“We don’t know how many captives insure risk in Washington state, which is why we undertook the project to have them self-report,” Valandra said. “Financially, it could be a big deal.”

So far, the state has collected about $4.4 million from captive insurers under the temporary agreement. In August last year, a settlement was reached with the captive insurer for Microsoft Corp, Cypress, for $876,820.

NW Re, based in Phoenix, provided deductible reimbursement for Costco’s liability and workers compensation from 2000 to 2019, without authorization. The company declined an opportunity to comment.

More in News

Richard Sanford publishes his fifth book, “The Soul Snatchers.” Courtesy photo
Issaquah author publishes new sci-fi novel

30-year Issaquah resident, Richard Sanford, publishes fifth novel.

Issaquah secures funding from state legislature

The city of Issaquah has received funding for three major projects from the state legislature.

Tasting room proposal could redefine alcohol production in King County

Pilot program would benefit wineries, breweries and distilleries. Several farmers are concerned.

In a 2015 report from the Washington State Department of Ecology, King County’s Cedar Hills Regional Landfill received 53,739 tons of of plastic bags and wrap from housing and commercial sources alone. File photo/Sound Publishing
No good solution to the plastics problem

Plastic is piling up everywhere from King County to ocean floors, and humans keep making more.

Community leaders remember Sally and Peter Jarvis

Community members shared their experiences with the Jarvis’ after they died in a collision on May 29.

Citizens recognized at 40th annual Community Awards

Students, volunteers, and business owners received awards for their dedication to the community.

Madison Miller / staff photo
                                Gibson Ek High School seniors Dana DeWhitt, Jaime Cao and Josh Feinsilber are three of the 18 inaugural graduating class.
Gibson Ek to graduate inaugural class

Gibson Ek is one of eight Big Picture schools in the state.

Courtesy photo
King County homelessness count shows 17 percent decrease overall

Decreases are not even among different demographics.

Sexual misconduct reports triple following ‘Report it to Stop it’ campaign

Joint effort to curb unwanted harassment proves successful.

Most Read