Commissioner Considine said the department plans to establish a separate captive unit and that they plan to bring in someone, hopefully with captive experience, to run it. He added that as yet a separate budget has not been established.

The reinsurance bill, to be introduced by Senate Minority Leader Tom Kean (R-11), Chairman Schaer and Assemblywoman Coyle, would promote job creation by providing incentives to the most financially sound reinsurers to do business in New Jersey.

"These two bills represent a smart, bi-partisan effort that would make some common-sense changes to regulation and allow captive insurers and carriers of reinsurance and surplus lines to operate more expansively in New Jersey," Commissioner Tom Considine said in a statement.

By establishing a captive market, he noted that the bill would promote growth in the state's insurance market, create jobs, generate tax revenue, provide more choices for consumers and advance Gov. Chris Christie's "NJ: Open for Business" agenda.

The legislation would allow captive insurers to do business in the lines of life insurance, health insurance, annuities, indemnity, property and casualty, fidelity, guaranty and title insurance, and reinsurance. The legislation is intended to encourage the growth of an industry that in some states has brought in billions of investment and new high paying jobs.

Currently, the law does not allow captive insurers in New Jersey.

The proposed reinsurance bill would afford reinsurers more flexibility in how they deploy their capital, which should also put downward pressure on the rates charged by reinsurers to New Jersey domestic insurers.

"We think this is a wonderful economic growth opportunity, especially when paired with the reinsurance initiative that we expect to see introduced in the legislature within the next couple of weeks," Commissioner Considine said. "So often you see that captives are captive reinsurers, so it goes hand-in-glove in my view."

He said he expects more jobs and economic growth in the insurance industry here and more choices for consumers.

"Our goal is to make the western shores of the Hudson River into the Silicon Valley of reinsurance," Commissioner Considine said in a statement.

The new legislation would also expand business opportunities and economic growth in the New Jersey insurance market by amending current New Jersey law, which prohibits surplus lines insurers domiciled in New Jersey from writing in the New Jersey surplus lines market.

This legislation should attract surplus lines companies to re-domesticate in New Jersey as New Jersey would be only the second state in the U.S. to allow its surplus domestic companies to write in the New Jersey surplus lines market, the department said.

"The legislation will pave the way for certain types of insurance lines to operate more freely and effectively in New Jersey and not diminish the state's protection of consumers one iota," Sen. Schaer said. "This is a common-sense approach to expanding the state's insurance market. It is win-win."

Assemblywoman Coyle noted the legislation serves two purposes. "It will send the signal that insurance companies of all types should be able to set up in New Jersey; and it will create jobs and allow captive insurers, reinsurers and surplus lines firms to serve as engines of economic growth as they have in other states."

According to the department, the captive bill is based on Vermont's law. Vermont is viewed as the state model with the best design for the captive insurance market so far, with more than $13 billion in gross written premiums in 2007. Currently, 25 states and the District of Columbia permit captive insurers.

"This is the kind of regulatory reform that will provide a boost to our financial services industry, maintain consumer protections and ultimately create well-paying private sector jobs," Sen. Kean said.

"We appreciate Senator Nia Gill's leadership on the captive issue in the Senate and look forward to her bill advancing there," Commissioner Considine added.