Arizona's Captive Insurance Leadership: A Q&A with Victoria Fimea

To mark Arizona's 25th anniversary as a captive insurance domicile, Captive.com spoke with Victoria Fimea, chief captive analyst at the Arizona Department of Insurance and Financial Institutions. In this Q&A, she discusses what has contributed to Arizona's growth, the state's regulatory philosophy, current formation trends, and the opportunities and challenges shaping the future of captive insurance.

Arizona recently marked 25 years as a captive insurance domicile. What do you believe has been the foundation of Arizona's success, and what differentiates the state's approach to captive regulation and oversight?

Arizona has experience. We have been a domicile for 25 years. In fact, 2026 is our silver anniversary, so we are celebrating our quarter century of captive regulation. Arizona has skilled and experienced regulatory staff—and not just in the Captive Insurance Division—but throughout the Arizona Department that understands the business of insurance. We appreciate the many ways a captive may be deployed to manage risk for an organization. Arizona allows captives to be formed as a stock company or as a limited liability company. Additionally, Arizona has an active private sector captive association—the Arizona Captive Insurance Association (AzCIA). The AzCIA is also celebrating its 25th year in 2026. The Arizona Department is able to leverage our good relationship with the AzCIA to ensure the attractiveness of Arizona as a domicile. Uniquely, Arizona is one of only a few states with a concentration of all of the various captive service providers with brick-and-mortar offices in the Phoenix/Scottsdale metroplex (also referred to as the Valley of the Sun). These service providers are not just the captive managers, but also auditors/accountants, actuaries, attorneys, investment/portfolio managers, banks, third-party administrators/claims management, captive consultants, and underwriters. Arizona is open to feedback from industry, whether it be on the statutes or regulations or on the promotion of the captive industry generally in Arizona. And, Arizona has low operating costs. It is a great balance—experience, efficiency, and low cost.

What types of organizations, industries, or risks are currently driving new captive insurance formations in Arizona?

Overall, we see that most formations are for pure captives. These can be for companies, public sector entities, nonprofit entities, and other entities. We experience how the ebb and flow of the commercial market affects the captive industry. For example, a hard market in certain lines or in certain lines for particular industries will drive an increase in forming captives. Under Arizona's statutes, risk retention groups are captives. In the past 18 months, we have seen a substantial increase in the interest of risk retention groups (RRGs) for the transportation industry. The interest resulted in the formation of two new RRGs in 2026 in the industry writing commercial automobile liability. Arizona has also seen captives increasingly writing general liability and professional liability. In the last several months, there has been a steady increase in the use of captives for employee benefits and medical stop loss. But, as stated above, it is an ebb and flow. Two years ago, the hard commercial market for property coverage drove a common reason for forming captives. With the commercial property market substantially increasing its capacity in the last year, property coverage is no longer the driving force for forming a captive.

For organizations considering a captive insurance company for the first time, what are the most important factors they should understand before beginning the formation process?

Captives are a terrific tool to manage risk. However, forming a captive insurer may not benefit all organizations. First and foremost, it is absolutely essential for an organization to work with experienced service providers. By that, I mean service providers with captive insurance experience and not just insurance experience. Captives are a niche in the insurance space; use service providers who know what they are doing. Make sure a captive will benefit your organization. Second, a captive is an insurance company; it is regulated and must be run as an insurance company. Take corporate governance seriously to run the captive and ensure the fiduciaries of the captive (i.e., the members of the board and the officers) understand and execute their important roles in the running of the captive. Your experienced service providers will help you—particularly the captive manager. After all, that is what you are paying them to do! Third, and final, do not underestimate the amount of capital it will take to keep a captive healthy and solvent. Capital becomes particularly critical for an RRG. There can be a real misunderstanding of the amount of capital required to maintain an RRG or a group captive.

How does the Arizona Captive Insurance Division work with prospective captive owners, managers, and service providers throughout the licensing and application process?

Our approach is simple—to be easy. Outreach to the department is simply a telephone call or an email away. Sometimes a potential captive owner will call directly, but usually it is the captive manager or captive consultant who will reach out. Sometimes the outreach is to ask questions about a potential captive or a captive structure. Sometimes the outreach is to let us know that an application is forthcoming. Arizona also puts in our captive licensing application a request that a "pre-application call" occur. This allows the Captive Insurance Division to have a discussion with the captive manager and with representatives of the captive owner. It's a beneficial process, allowing the future captive owner to meet the regulator and ask questions of us. Communication is a two-way street; captive owners spend a lot of time and money to create a captive, so they should be able to meet and ask questions of their future regulator. Then, during the application review process, the captive manager is the "quarterback"; this is explained to the future captive owner during the pre-application call. Communications are facilitated when there is one point of contact from us as the regulator to the applicant, and that point of contact is the captive manager. It makes sense and works well. Additionally, in Arizona's statutes, the captive manager is the key service provider, and we have expectations that the captive manager will be responsive and manage the captive competently and in accordance with our regulatory expectations.

After a captive is formed, what governance or operational challenges do you see organizations encounter most frequently, and how can they avoid them?

A key challenge is when the captive does not follow its own procedures: the business plan, the articles, the bylaws or operating agreement (the former if the captive is a stock company, the latter if the captive is a limited liability company). These procedural documents are the roadmap for the captive. Use them, revise them when needed, and you will have a better experience operating your captive insurer. A captive is not a "set-it-and-forget-it" entity. At minimum, review your captive annually to ensure you are using it to its full potential for your organization. Another issue arises when the captive owner does not keep their captive manager informed. Use your captive manager. They are there to help you use and deploy your captive as a beneficial risk management tool. A final challenge is when the captive owner does not give the captive a "seat" at the table internally for critical organizational discussions, such as, "Is there an executive responsible for the captive so it is discussed at C-Suite meetings? Is the captive considered when the organization is planning its business operations, planning new businesses, or launching new initiatives? Is the captive considered one of the items in the organization's toolbox for capital planning?" I like to say one needs to open the aperture when it comes to owning a captive—look at it as providing myriad opportunities for the organization. And, if you are not certain how the captive may be used, well, that is why you want service providers experienced with captive insurance. They can help you see the possibilities.

As organizations face evolving risks—from cyber exposures and emerging technologies to broader economic pressures—how does Arizona encourage innovation while maintaining strong regulatory standards?

Because Arizona has a straightforward statute construct for captives, the regulatory guardrails are clear but also allow flexibility. This is because Arizona's regulators understand the business of insurance and the business of risk. We are able to look at the creative approaches taken to risk, determine if the approaches are within our guardrails, and respond accordingly. Similarly, Arizona is active in the captive community, attending and speaking at conferences. We are able to keep apprised of risk and business developments, anticipating that we may soon receive that call from a captive manager inquiring about forming an Arizona captive for an evolving risk and the bespoke risk solution to be placed in a captive insurer. And, finally, as I noted above, Arizona wants to ensure the fiduciaries of the captive—the board and the officers—have the level of business acumen necessary for a successful captive; that is why the biographical affidavits submitted by the fiduciaries for a captive are so important.

Looking ahead, what trends or opportunities do you believe will shape captive insurance growth in Arizona over the next several years?

Broadly, the captive industry will continue to grow. The creation of new industries (particularly in the tech sector) and, at times, the inability of the commercial insurance market to respond to those industries will provide opportunities for captives to respond. For Arizona, I see continued, steady growth. I anticipate further growth in my staff in the Captive Insurance Division in the next year. Arizona presents the stability and credibility that a US domicile offers. The Valley of the Sun continues to enhance its footprint on the national economy, with Arizona quickly becoming one of the largest chip manufacturers in the United States. Following that, the manufacturing increase is the suppliers and others supporting that sector. Phoenix is also a major metropolitan area. It is the fifth largest city in the United States. Phoenix Sky Harbor International Airport has multiple daily nonstop flights from all over the United States and from several countries in the Americas, Asia, and Europe. Arizona has three large public universities—one in the Valley and the other two within a 2-hour drive of the Valley—which are nationally and internationally recognized in various disciplines. That tremendous base of knowledge and innovation generates a steady stream of graduates ready to meet the needs of organizations. When all of these factors are combined with the brick-and-mortar offices of the many types of captive service providers I mentioned above, it is clear that Arizona has the ecosystem to support business growth, the ease of doing business in Arizona, and building on the many US and multinational businesses with their captives in Arizona, all make for Arizona as the domicile of choice for captives.