Iowa Updates Captive Insurance Law to Expand Market

Iowa has enacted legislation that updates its captive insurance framework, establishing new provisions for life captive reinsurance companies and introducing measures designed to attract additional captive business to the state.

Gov. Kim Reynolds signed H.F. 2766 into law on May 15. The legislation takes effect July 1, 2026, and builds on Iowa Code Chapter 521J, which was enacted in 2023 to govern captive insurance companies.

Captive insurance is a form of self-insurance in which a parent company, group of businesses, or other organizations create their own insurance company to manage risk. The use of captive insurance as a risk management tool has continued to grow in both the US and global markets.

The new law establishes a dedicated subchapter for life captive reinsurance companies formed under Chapter 521J. According to the Iowa Insurance Division, the framework is based on Iowa Code Section 508.33A, which governs limited purpose subsidiary life insurance companies and related regulations. Companies organizing a life captive reinsurance company will not be required to be domiciled in Iowa.

"This legislation ensures our captive statute remains cutting-edge and consistent with the most established captive jurisdictions, while also drawing on Iowa's existing expertise in life insurance regulation," Iowa Insurance Commissioner Doug Ommen said.

The legislation also creates a temporary premium tax waiver designed to encourage non-life captive insurance companies to redomesticate to Iowa. Additional changes allow special purpose captives to be formed as reciprocal insurers, reduce the minimum capital and surplus requirement for protected cell captive companies to $100,000, and permit protected cells to be organized as limited liability companies (LLCs) or series LLCs.

The law further clarifies that captive insurers may utilize parametric insurance and confirms the confidentiality of tax returns filed by captives.

"Iowa is seeking to widen its footprint as an onshore US captive domicile by focusing on quality and discipline," Jeff Wilson, captive director for the Iowa Insurance Division, said. "By creating a dedicated framework for life captive reinsurance and reducing capital requirements for protected cells, we are providing the flexibility businesses need to manage risk while maintaining the nonnegotiable standards of solvency and governance that Iowa is known for."

State officials said the revisions are intended to keep Iowa competitive with leading captive insurance domiciles while providing a clearer regulatory structure for companies seeking to establish or relocate captive operations in the state.