Are all state captive insurance domiciles the same?
The codes are similar in outline and different in the details each state chose
Travis Wegkamp describes friendly competition between the states rather than uniformity. He contrasts captives with the traditional side of insurance, where the National Association of Insurance Commissioners sets accreditation standards that make domiciles look alike. Captive codes have no equivalent, so each jurisdiction keeps a few features of its own. He then names what Utah chose: no premium tax, a flat annual license fee, and a division that answers quickly.
The comparison Wegkamp reaches for is the traditional insurance market, where accreditation standards produce real uniformity across almost every domicile. Captive divisions have nothing like that. He describes the codes as broadly similar in some areas and slightly different across essentially all the jurisdictions, with each one keeping a handful of distinctive features.
That is the useful frame for anyone choosing where to sit. The question is not whether a state has a captive law, since more than thirty do. It is which of the details that state chose to compete on, and whether those details matter to the captive you are building.
Key takeaways
Wegkamp says captive codes have no accreditation standard equivalent to the one that makes traditional insurance domiciles uniform, so each state keeps its own features.
Utah's choice is a flat annual license fee with no state premium tax, which he calls one of the more unique features of the domicile.
He frames regulator turnaround on business plan changes, loans, investments and dividends as the thing that actually differentiates a division.
For Utah, Wegkamp names cost and responsiveness. There is no state premium tax on captives, only a flat annual license fee, which he presents as one of the more unusual features of the domicile. Cell programmes carry their own flat per cell fee.
He is candid that most other domiciles do charge a premium tax of some percentage, and he does not claim the flat fee makes Utah better for every captive. It makes the cost of the state predictable, which is a different claim.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“There's a lot of similarity in some areas, but each one kind of has a few unique things to kind of make them special and hopefully increase their competitiveness in the market.”
This answer begins at 1:08 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive, Utah Insurance Departmenthttps://insurance.utah.gov/captive
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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