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Utah Captive Insurance Director Reports to UCIA on 2015 Changes

Utah-Map
May 12, 2015

Several captive-related legislative changes are on the horizon and will contribute to Utah's "business-friendly environment," members of the Utah Captive Insurance Association (UCIA) learned when they met Monday at the 2015 Western Region Captive Insurance Conference (WRCIC).

During their meeting, they asked David Snowball, Utah’s director of Captive Insurance, to discuss recent legislative and regulatory changes that will become effective July 1, 2015. The changes include the following.

  1. New legislative language specifically addressing the use of limited liability companies as a type of captive formation. Although LLCs were permitted, specific structure and direction were not present. Previous language only addressed stock company formations. (Code Section 31A-37-301 and throughout)

  2. An increase in the captive exam cycle from a 3-year to a 5-year period. (31A-37-502)

  3. The required minimum of $250,000 to be maintained as paid-in capital and free surplus may be accomplished through any combination of either. Previous legislative language specified a minimum requirement for each element separately, with a paid-in capital requirement of $100,000 and a free surplus requirement of $150,000. (31A-37-204)

  4. Capitalization of a cell captive sponsor remains $1 million. However, the new language indicates that only a minimum of $350,000 must be provided by the sponsor. The balance may be provided by the cell companies. (31A-37-204)

  5. Pooling can take place within the sponsor of a cell captive. (31A-37-401)

  6. Each sponsored cell captive will be required to pay an annual license renewal fee of $1,000 per cell. (R590-102-8)

Mr. Snow stated he feels "… the changes made will continue to contribute to a positive, business-friendly environment for all." Mr. Snow also indicated the Utah Captive Insurance Division is working to enable new captive applications and all documents of licensed captives to be submitted electronically.

Jon Soules, UCIA president, moderated the meeting. Members reviewed the Association bylaws; set a June 30, 2015, deadline for submitting possible nominations to the UCIA Board of Directors, and discussed possibly holding their annual meeting via teleconference.

Utah reportedly is the second-largest U.S. domicile. At the end of December 2014, Utah had 417 captives and 73 cells. More than 50 percent of its captives are 831(b) entities.

WRCIC 2015 began May 11 and will continue through May 13 in St. Louis. Hosts are the Arizona Captive Insurance Association (AzCIA), the UCIA, and the Missouri Captive Insurance Association (MOCIA).

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