Emerging Midwest Captive Domiciles Offer Many Businesses Options Close to Home

For captive insurance company owners in the Midwest—or those considering forming a captive—travel time and the expenses associated with a far-off captive domicile no longer need to be part of the equation. Increasingly, there are domicile options closer to home.

A number of midwestern states have gotten active in the captive space in recent years, some with new captive laws and others by rejuvenating existing statutes. States like Iowa, Michigan, and Missouri are among those emerging as viable alternatives to domiciles like Vermont, Bermuda, and others that long have been at the forefront of many prospective captive parents' considerations.

The emergence of the midwestern domicile alternatives comes as many prospective captive parents are refining their approach to domicile selection, some experts suggest. And it also comes as the captive industry continues to grow, flying in the face of the now long-dismissed myth that captives are strictly the province of the largest corporations.

Faced with insurance market volatility, increased retentions, emerging or more complicated exposures, or simply a desire to better manage their risk financing programs, businesses continue to recognize the benefits of captive insurance.

"As the traditional insurance market changes and prices seem to keep going up as the market hardens, certainly clients are looking for ways that they can self-insure and manage some of that risk internally at a cheaper cost of capital," said Ian Osler, partner at Springline Advisory.

In addition, "The midmarket has been a little bit untapped. As the cost of setting up a captive has become a little bit easier to bear, those middle-market companies are saying 'This is a potential option,'" Mr. Osler said.

And, as captive insurance continues to grow, businesses in the center of the US are increasingly recognizing the opportunities to form captives close to home, along with the benefits that come with those options.

"What we've seen over the past several years is that companies are approaching domicile selection much more strategically than they used to," said Melissa Huenefeldt, consulting actuary at Milliman. "Rather than defaulting to one of the traditional captive domiciles, they're evaluating which jurisdiction best aligns with their business, governance, and long-term goals."

"I think a lot of that is companies realizing we have a captive law and wondering why do we need to go somewhere else to domicile if there's a captive law here," said Sam Komo, captive manager in the Missouri Department of Commerce and Insurance. "I think it's harder to justify to a board that we're going to go to Bermuda if we can actually do it here in Missouri or Iowa or Michigan or someplace like that."

"I think what we offer is the evidence that you don't need to travel anywhere to do a captive," said David Piner, director of the captive program in the Michigan Department of Insurance and Financial Services. "That seems very antiquated to me.

"The idea of traveling every year to have a meeting or two when you can stay in your current office and do it right there, use your current auditors...." Mr. Piner said. "Why do you feel the need to go to another state to get this done?"

"There are many outstanding captive domiciles out there. We've actively worked to learn from them and emulate their best practices," said Jeff Wilson, captive insurance director for the Iowa Department of Insurance. "We aren't necessarily trying to reinvent the wheel but rather adopt those proven standards so Iowa earns serious consideration. When new captives are forming and weighing their options, we want to be in that mix, which wasn't always the case in the Midwest."

Among the various factors captive parents consider in domicile selection, though it might not rank at the top of the list, "convenience is nice," said Jesse Olsen, president at GuideFire. "Getting to Vermont from a midwestern city is a much heavier lift than parking your captive in your home state and having your captive board meetings there, possibly at your corporate headquarters."

Among the midwestern domiciles, Missouri enacted its captive legislation in 2007 with a focus on attracting captives with clear business purposes, appropriate capitalization, and strong governance, according to Mr. Komo. Missouri captives wrote $6.1 billion in gross written premium in 2025. The state could license 10 new captive insurance companies this year, Mr. Komo said.

Mr. Komo noted that over time Missouri regulators have revised statutes, expanded the department's internal expertise, and adapted oversight practices that address the increased complexity of the captives licensed in the state.

While early Missouri captive programs tended to be straightforward ones focused on traditional property and casualty risks, today's Missouri captives often support complex, multiline programs designed to support their parents' enterprise risk strategies.

Michigan first enacted its captive law in 2008. Michigan captives wrote $3.3 billion in premium in 2025 with this year's premium expected to be near $4 billion, according to Mr. Piner.

"What I'm seeing more of—which really isn't unusual for the state of Michigan—is a lot of the prospective new captives or the [redomestications] have something to do with the auto industry," Mr. Piner said. "Some of these organizations have existing captives in other domiciles—especially offshore—because Michigan didn't have captive laws at the time those captives were created.

"So we're seeing some folks come home, let's say, or at least considering coming home, or they're deciding to add to their captive portfolio by keeping the existing offshore captives and maybe creating one in their home state," Mr. Piner said.

Sometimes it's easier for a company with an existing captive insurance company elsewhere to add an additional captive in Michigan, Mr. Piner said.

"Many times, even the most seasoned risk manager is going to have a doubt or two about a newer domicile so, versus putting all their eggs in one basket by saying we're going to move everyone from Cayman or Bermuda or Dublin here, they'll create something and put their newer product in the newest captive and then see how things go and maybe move other existing business into that newer captive as the years go on."

Iowa is newer to the captive insurance mix, passing its captive statute in 2023 and officially becoming a captive domicile in 2025. Iowa's captive industry builds off the state's considerable experience in the traditional insurance industry.

The state has about 200 traditional insurance companies, and 11 percent of Iowa's gross domestic product comes from the insurance industry, so Iowa has considerable insurance expertise, Mr. Wilson noted, with the state adding dedicated captive regulators to the mix.

Iowa licensed its fifth captive earlier this year, and Mr. Wilson said he anticipates the state having a strong finish to 2026. He noted that while Iowa is taking a broad approach to attracting captives, regional industry strengths remain a priority.

"We're taking a broad approach to growth, but agriculture is where we have a distinct advantage," Mr. Wilson said. "Historically, ag businesses in Iowa and across the Midwest felt forced to look offshore or turn to long-established domiciles. We bring a deep, genuine understanding of agriculture, and we want those companies to know they have a strong option right here."

High-quality, responsive regulation is seen as a key to success for the midwestern domiciles.

"Missouri has established itself as a leading Midwestern captive domicile through experienced regulatory oversight and a collaborative, business-friendly approach," Milliman's Ms. Huenefeldt said. "Missouri's success has helped raise the profile of the region as a whole, and we're now seeing states like Iowa and Michigan continue to invest in their captive frameworks and increasingly be included as viable options during the domicile selection process."

To stand out in a competitive market, Iowa focuses on high-touch regulatory relationships.

"Our main goal is to stand out through service," Mr. Wilson said. "We want to be known for responsiveness, innovation, and direct collaboration, all while maintaining solid governance and regulatory standards."

Michigan, meanwhile, has a history of a strong insurance regulatory infrastructure—notably in commercial lines and auto. It's expanded on that expertise to form the basis of its captive insurance regulatory structure.

"Companies value regulators who understand their industry, are accessible, collaborative, and willing to engage early in the process," Ms. Huenefeldt said. "In many cases, those qualities matter more than relatively small differences in premium taxes or fees. As more Midwestern states build that reputation, we're seeing them become part of the domicile discussion much earlier in the decision-making process than they would have even 5 or 10 years ago."

Among the midwestern domiciles, another feature—often seen in the captive insurance space more broadly—is the sense of collaboration among competitors.

"If I can speak in broad generalities, the Midwest has a well-earned reputation of hospitality," said Mr. Olsen.

"I think all of our philosophies are pretty aligned," Missouri's Mr. Komo said. "We're not really competing against each other. We want to complement each other.

"I think that's our philosophy—how do we support one another, maintain our business communities within our states," he said.

Mr. Wilson added that stepping into the role shifted his perspective on how domiciles interact with one another.

"When I took this role, I expected intense competition between states, especially with close neighbors like Missouri. I couldn't have been more wrong," Mr. Wilson said. "The adage that a rising tide lifts all boats really holds true among regulators. It is a healthy dynamic with a surprising amount of collaboration, and we want to bring that same supportive spirit to our peer jurisdictions."

For the Midwest captive insurance domiciles, their rise comes at a time captive parents are taking an even closer look at where they're placing their captives.

"For many companies, domicile selection isn't a one-size-fits-all decision anymore," Ms. Huenefeldt said. "The right choice depends on the company's industry, risk profile, and overall objectives.

"Ultimately, the best domicile is the one that aligns with a company's long-term goals and provides the right regulatory partnership as the captive evolves," she said.

And for the Midwest domiciles, while they're open to business from elsewhere, often the first consideration is taking care of those captive parents close to home.

"We're not trying to be the next Vermont. That's not our goal," Mr. Komo said. "We were all put in place with the idea of how do we support our states' industries, and I think that's our primary goal.

"We're interested in how we can help the business down the road," Mr. Komo said. "I think that's what makes us unique."