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As Utah Captive Numbers Grow, 2015 Legislative Proposals and Regulations Previewed

Utah-Map
October 16, 2014

With the current 351 captives and 46 cells licensed, Utah will have well over 400 after license approvals expected to be completed next week, the Utah captive insurance director said during a recent webinar.

David Snowball's report was made when the Utah Captive Insurance Association (UCIA) and the Utah Insurance Department previewed their 2015 legislative proposals and captive regulations during the first of what are expected to be semiannual webinars.

Travis Wegkamp, audit manager, discussed the prospective legislative proposals described as captive statute "cleanup." Among the changes are the following.

  • Reducing the Utah resident incorporator requirement from two to one
  • Permitting sponsorship to be a fronting insurer or a pooling insurance company
  • Extending a captive exam schedule from 3 to 5 years
  • Requiring a $1,000 annual license fee and other fee changes
  • Permitting capital from a sponsored captive to be $350,000 and $650,000 from cells

Ben Harris, audit manager, focused his comments on proposed captive rule changes that will be scheduled for hearing prior to 2014 year end, some of which will become effective in January 2015. Most of his comments were directed toward a prospective service organization control audit, SOC 1 Type 2 report. This regulation will require larger captive managers, those with 10 or more captives or cells domiciled in Utah, to have this type of audit performed on their operations not later than for the 2016 financial year end. The cost estimate provided for such an audit ranged from $5,000 to $50,000, depending on the scope of the captive manager operation. Mr. Harris indicated there were several benefits to this type of audit, including improved financial controls and improved quality of financial reporting. It was indicated this SOC 1 Type 2 report would be an annual requirement.

Jon Soules, webinar moderator and UCIA president, facilitated webinar attendee questions and said the webinar slides and an audio recording would be made available later at the Utah Captive Association website.

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