Iowa Enacts Captive Insurance Law with Redomestication Tax Provisions

Iowa Governor Kim Reynolds has signed House File 2766 into law, enacting updates to the state's captive insurance framework and establishing a new regulatory structure for life captive reinsurance companies. 

Among the provisions in the new law are measures addressing the redomestication of captive insurance companies into Iowa. Under the legislation, a foreign or alien captive company that redomesticates to Iowa is only liable for premium taxes on premiums paid after the company's redomestication into the state.  

The law also permits a foreign or alien captive company that redomesticates to Iowa to elect to forgo premium tax payments either during the calendar year in which the company redomesticates or during the immediately succeeding calendar year. However, the legislation includes a five-year repayment provision requiring payment of the foregone premium tax, plus 10 percent annual interest, if the captive later surrenders its Iowa license or redomesticates to another jurisdiction within 5 years of moving to the state. The provision does not apply to tax years beginning on or after January 1, 2030.  

The legislation also includes provisions related to the use of parametric contracts by captive companies for risk transfer arrangements.  

In addition to the redomestication provisions, the law creates a new Subchapter II of Iowa Code Chapter 521J governing life captive reinsurance companies. The legislation defines a life captive reinsurance company as a captive insurer authorized in Iowa that reinsures risks ceded by a life insurance company.  

Under the law, life captive reinsurance companies must maintain a minimum of $5 million in unimpaired paid-in capital and surplus, maintain a principal place of business in Iowa, and hold at least one annual board meeting in the state. At least one member of the board of directors must also be an Iowa resident.  

The legislation establishes operational, reporting, and investment requirements for life captive reinsurance companies, including actuarial certifications, annual and quarterly financial reporting, and risk-based capital requirements tied to National Association of Insurance Commissioners formulas. The law also addresses insurance securitization transactions and permits life captive reinsurance companies to engage in related financing and reinsurance activities, subject to commissioner approval.  

The measure further includes confidentiality provisions related to captive insurance filings. Tax returns filed under specified sections of the statute are not subject to public inspection, and documents submitted under the life captive reinsurance provisions are designated confidential, subject to limited exceptions outlined in the law.  

Additional provisions in the legislation address captive company reporting requirements, commissioner oversight authority, protected cell captive company provisions, examinations, dormancy provisions, and investment standards. The law also establishes dormancy provisions for life captive reinsurance companies, including minimum capital requirements and annual dormancy taxes for inactive entities. The law takes effect July 1, 2026.