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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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Utah Continues as a "Strong Player" in Captive Insurance Industry

A green road sign in front of a cloudy blue sky with the words Utah and straight ahead written on it.
February 07, 2020

Captive insurance company growth continues to be strong in Utah with 42 new captives licensed in 2019, up from 38 the prior year.

"It was a good year as Utah continues to be a strong player in the captive industry," said Utah Captive Insurance Director Travis Wegkamp in Salt Lake City.

Indeed, with 435 captives at the end of 2019, Utah is one of the largest domestic domiciles.

Mr. Wegkamp attributes the high number of captive formations to several factors, including accessible regulators and a business-friendly environment.

At the same time, Utah's captive statute has many appealing provisions. For example, unlike many other domiciles, Utah exempts captives from insurance premium taxes.

In addition, Utah's lawmakers are doing their part to keep the state's captive statute up to date.

For example, last year, Utah lawmakers approved legislation that allows captives to move into dormancy. By moving into dormancy, captives are required to meet much smaller capital and surplus requirements. To give an example, a single-parent captive only has to maintain $25,000 in capital and surplus, just 10 percent of the $250,000 that is normally required under Utah's captive statute.

And more positive legislative changes are currently being considered by state lawmakers. Under that proposal, captives, with regulatory approval, would be allowed to reinsure pure third-party risks.

Looking ahead, more captive growth is likely amid tightening conditions in the traditional commercial market, Mr. Wegkamp said.

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