Sam Komo, insurance manager at the Missouri Department of Commerce and Insurance, reflects on progress and challenges for the state’s captive insurance programme in 2023
The year of 2022 was a great one for the Missouri captive insurance programme as we matched our active, licensed captive high of 54 set in 2018.
That momentum continued into the first quarter of 2023, with another captive being licensed within the first two weeks of the year and multiple discussions on potential new applications.
As we entered the second quarter of the year, the IRS published a proposed rule on 831(b)s, and with the concern of an economic recession, most applications were put on hold. However, this didn’t stop the ongoing discussions around the hard market and how to utilise captives as a solution.
We found ourselves talking directly with the business community as they worked to understand the captive realm, shopping for service providers or domiciles and expanding current lines of business within their portfolio.
In the last two quarters of the year, it became evident that the industry was looking for creative solutions to complex risk issues. Primary concerns surrounded the 831(b) ruling, the need for expansion within the captive market and how to support the traditional market with captive solutions.
Missouri confronted these challenges by working with industry experts and stakeholders to find answers to these challenging questions. The results of this collaboration included an expedited licensing process for the 831(b)s looking to modify their IRS designation to an 831(a).
Opening investment opportunities and reducing the review time for business plan change allowed companies to change or expand coverage to address market fluctuations quickly.
It also meant that traditional providers, who were directly affected by catastrophic events, could be educated on the benefits of utilising captives to manage future risk in their industry.
These partnerships, creative ideas and use of the flexibility within our laws ensured the captive industry in Missouri had ample opportunity to grow.
After a productive year, Missouri saw 55 active licensed captive companies at the year-end of 2023. Critics may say it was a flat year for the state, but we know the number of active captives in a state is open to local interpretation: the reality lies behind the initial number of captives being reported.
In Missouri, we value a strong team that can perform everything from application to examination in-house, which translates into quality services while minimising the overall cost of doing business for our licensed captive companies.
This is accomplished by supporting captive growth and protecting its success. In return, premiums increase and the programme continues to offer great value to the industry.
While the final 2023 numbers do show overall industry growth, we believe it was the year of existing captive expansion and a push to find creative solutions in an ever changing industry.
Since Missouri quickly confronted these challenges and prevailed, we believe the programme is in a positive position for 2024.
Despite the future economic outlook being still uncertain, conversations have resumed with last year’s captive applicants who are ready to proceed while new relationships are quickly being developed with the same level of energy seen this time last year.
The rise in gross written premium of 142 per cent year-on- year in 2023 continues to confirm our commitment to captive growth.
