Oklahoma AG Opinion Clarifies Use of Captive Insurance by Public Entities

Oklahoma Attorney General (AG) Gentner Drummond has issued a formal opinion concluding that Oklahoma law does not prohibit the state or its political subdivisions from forming and owning captive insurance companies to insure their own risks.

In Attorney General Opinion 2025–18, Mr. Drummond determined that Article X, Sections 15 and 17 of the Oklahoma Constitution—provisions that restrict public ownership or investment in private companies—are intended to prevent public funds from being used to benefit private interests. A captive insurer wholly owned by a public entity and used solely to cover that entity's own risk exposure does not raise those constitutional concerns.

The opinion notes that Oklahoma already licenses and regulates captive insurers under the Oklahoma Captive Insurance Company Act and emphasizes that any public entity captive must be carefully structured to avoid private participation or financial entanglements that could implicate constitutional restrictions.

According to earlier reporting from Business Insurance, Oklahoma Insurance Commissioner Glen Mulready said interest from public entities—particularly school districts—has increased amid hard market conditions. Mr. Mulready also indicated that captive applications from public entities will follow the same statutory process and capital and surplus requirements as other captive insurers, though such applications may receive more conservative review.