Alabama Governor Signs New Captive Law That Could Help End DOI Moratorium

Alabama has a new law governing captive insurance companies, and supporters hope it will mean that state regulators will soon lift a moratorium on new captives in the state.

“The law takes effect in June, so we’re hoping that maybe by the end of summer the moratorium will be ended,” said Travis Bowden, president of Crossroads Risk Management, a captive management firm active in Alabama and Georgia.

A spokesperson for the Alabama Department of Insurance said Tuesday: “Now that the act has been signed into law by Governor Ivey, the department is working to determine the best timing for bringing the moratorium to an end.”

The law, the result of Alabama House Bill 415, was signed by Gov. Kay Ivey last week. It will raise the capital requirement for pure and protected cell captive companies from $100,000 to at least $250,000. It will require at least $1 million in capital for risk retention groups.

The state insurance commissioner will be authorized to require higher reserve funding levels, based on actuarial analysis, the bill explains.

“The law makes Alabama captive law congruent with most other states,” said Bowden, a former regulator who lobbied for the bill this spring.

The measure also updates 50-year-old statutory language on formation and renewal of captives and RRGs; it will require companies to have bank accounts in the state; it will give the commissioner more authority to require firms to terminate captive managers who fail to fulfill their duties; the law also will require firms to submit plans of operation that detail the types and limits of insurance to be provided, along with financial statements, underwriting policies, claims-handling procedures and ratemaking procedures, the bill reads.

Alabama’s DOI announced the captive moratorium in March 2025, then extended it in September until this summer. The department and Commissioner Mark Fowler gave no public explanation for the restriction, and it caught some in the industry by surprise.

Alabama had only about 80 domiciled captive firms as of 2024, according to the National Association of Insurance Commissioners. That compares to more than 680 in Vermont, about 300 in North Carolina and 184 in Tennessee. Those states in recent years have actively pursued captives and promoted their jurisdictions as domiciled.

The final version of HB 415 can be seen here.

Topics Alabama