Michael Low explains why Arizona’s captive friendly, forward-thinking mindset makes it a great place to domicile a captive
Apart from having a great climate, with over 300 days of sunshine a year, Arizona also offers a pro-business, forward-thinking captive insurance jurisdiction. The benefits of owning an Arizona captive insurer are many.
Unlike most captive jurisdictions, no premium taxes are required to be paid by captive insurers. After licensing, the only fee charged is an annual renewal fee of $5,500 payable to the Arizona Department of Insurance.
There is an exemption from the annual audit and actuarial opinion requirements for small captive insurers. Essentially, captives with less than $1 million dollars in direct or assumed premium and less than $1 million dollars in loss reserves and loss expenses are exempt from providing annual actuarial opinions and independent financial audits.
There is no regularly scheduled statutory examination for pure captives. While the director of the department reserves the right to conduct financial examinations at any time, such examinations are rare and only triggered under extraordinary circumstances, such as a hazardous financial condition.
Arizona has one of the strongest confidentiality laws in the US, which protects the information filed with or made available to the Arizona Department of Insurance. By statute, the Arizona Director can only identify the name of the captive insurer, the date of its licensing, the type of captive insurer, including the business or industry of the owners or members.
By statute, the approval of an application for a captive insurance licence is expected within 30 days after the submission of a complete application. Based on recent conversations with department representatives, the average time for licence review and approval once a complete application is received is generally within a 25 to 30 day window.
Arizona’s captive programme has been in existence for 18 years, dating back to 2001, and there are currently 125 licensed Arizona captive insurers. As a mature captive programme, Arizona is ranked as the tenth largest captive jurisdiction in the US.
Captive division personnel are experienced, helpful and extremely supportive of the programme. Arizona is generally known as a business-friendly jurisdiction and that is certainly true of the Arizona Department of Insurance Captive Insurance Division.
