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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Captive Insurance Updates Topic of Utah Webinar

September 08, 2015

The Utah Captive Insurance Association (UCIA) recently held its Summer 2015 Webinar, where numerous topics were discussed, including the following.

  • Results of the 2015 changes in captive legislation

  • New and upcoming innovations in technology for Utah captives

  • Trending exam/analysis issues

  • National Association of Insurance Commissioners (NAIC) proposals

  • UCIA board nominees and future officer roster

New captive rules and regulations that are now in effect include the following.

1. The revised captive code now includes language specifically addressing the use of limited liability companies for captive formation.

2. The captive exam cycle has increased 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 is now required to pay an annual license renewal fee of $1,000 per cell. (R590-102-8)

The discussion reviewed several proposed changes to captive-related administrative rule R590-238. The most significant change is the definition of what constitutes a captive manager, as follows

"Captive Insurance Manager" means a person that: (a) is on the Utah Approved Captive Management Firms list; (b) pursuant to a written contract with a captive insurance company, provides and coordinates services including but not limited to: (i) accounting; (ii) statutory filings; (iii) signed annual statements; and (iv) coordination of related services; (c) acts as an intermediary that facilitates and assists the captive in meeting its statutory requirements under Title 31A.

Among the other changes is a clarification that:

All captive insurance companies are to use the "Captive Insurance Company Annual Statement Form" except Risk Retention Group (RRG) insurers and special purpose financial captives which shall use the NAIC’s Annual and Quarterly Statements.

Utah has moved forward with several technology innovations, as follows.

  • All captive documents can now be submitted electronically.

  • Annual statements and the Statement of Economic Benefit to the State of Utah can now be filled out and submitted through the portal.

  • All payments can be processed through the “Captive Renewal” portal.

  • Online new captive applications, much like service provider applications, are expected to be available in mid-November 2015.

The webinar also discussed maintenance of minimum cash/cash equivalent, preapproval of loans, differences on annual statement and annual audit variance, timely payment of premiums to the captive, breakout of coverage lines on the annual statement, online annual statement automatically populating the prior year column, and the NAIC “multi-state reinsurer” definition issue.

See the complete UCIA presentation.

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