The Utah Insurance Department has announced a 114.3 percent increase in the number of licensed captive insurers in 2006. As of Dec. 31, 2006, assets of Utah Captive Insurance Companies totaled approximately $41.4 million, capital and surplus of $9.6 million and total written premium of $14.2 million. An additional $26 million in written premium is projected for the 16 new captives domiciled in year 2006.
A captive insurance company is an insurance company organized to cover the insurable risks of the parent organization and/or its affiliates. Insured entities have the opportunity to control the operation and tailor the company to their own needs, the Department of Insurance said. As a result more states, including Utah, created a captive domicile.
The law making Utah a domicile for captive insurers went into effect July 1, 2003. By the end of the first year one captive had been licensed. In Feb. 2005, the legislature abolished the requirement that captives pay a premium tax. In place of the tax was an annual fee of $5002. Twelve captives were licensed in 2005 and 16 more were licensed by the end of the year 2006 bringing the total to 30 captives.
Utah’s captive law permits a captive to maintain a minimum capital and surplus for the following types of captives:
-Pure: $ 250,000
-Association: $ 750,000
-Industrial Insured: $ 500,000
-Sponsored: $ 1 million
-Reciprocal Captive: $ 1 million.
The captive program benefits the state, DOI said, with a captive being required to maintain the captives’ principle place of business within the state, and hold at least one Board of Director’s Meeting in Utah.