Utah Insurance Department
Travis Wegkamp provides CIT with an overview of Utah’s progress in the captive market, highlighting key regulatory changes and his future aspirations
What was the overall percentage growth in total written premiums for Utah captive insurers in 2023 compared to 2022?
The premium numbers for 2023 should be confirmed in April, in line with annual statement submission dates. However, I can say that in 2022 our total written premiums increased by 4 per cent over 2021.
Based on observing similar growth for 2023, I expect to see a comparable increase in premiums of 4 to 5 per cent. In any case, my expectation is that we will surpass the US$2.3 billion mark for total written premiums last year.
Which lines of insurance saw the highest premium growth for Utah captives in 2023? Were there any notable new trends in the industries or types of companies forming captives in Utah last year?
Looking at current trends, and in light of the continued hard market, I expect to see a decent increase in property and general liability premiums. I am also expecting to see an increase in cyber security.
New captives for professional services type companies far outpaced any other sector. All other sectors saw a similar number of new formations, continuing the trend from 2022.
What regulatory or legislative changes impacted Utah’s captive insurance industry in 2023, and are any further changes planned for 2024?
There were two key changes to captive legislation in 2023. One was the possibility for a pure captive to form with a reduced minimum capitalisation amount.
Based on analysis of the captive’s total annual exposure from its policy, it’s possible they may form with a minimum capital amount of US$50,000.
During these hard market times we saw a need for smaller companies to also have access to the benefits of their own standalone captive, and not just the sole option of a cell. Additionally, we made it easier to form an association type captive by removing the one year of existence requirement for the parent association.
For 2024, we have several proposals currently before the Utah legislature that we believe will considerably increase our competitiveness and continue our cost-effectiveness as a domicile. We have proposed to lower the minimum capitalisation requirement for a sponsored cell structure from its current amount of US$500,000 in total, with a minimum of US$200,000 from the sponsor or core at all times, down to minimums of US$250,000 and US$50,000 respectively.
In addition to this, we have proposed to remove the mandatory five-year examination period for captives. Instead, examinations will be called as needed under the discretion of the commissioner. With the mandatory five-year period we did have the opportunity to accept an audit in lieu of the examination, but with this new revised language we won’t have to go through that process.
The current legislative session concludes on 1 March, so we’ll know by that time whether the Bill (SB0031) passes or not. We expect it will, and assuming it passes in its current form, the changes will become effective 1 May 2024.
How would you assess the overall health and competitiveness of Utah’s captive insurance market compared to other leading domiciles as we enter 2024?
We are exceptionally proud of our success as a captive domicile. In 2023 we concluded our 20th year since the passage of captive legislation in the state. In that time, we grew to see Utah become the second largest domicile in the nation and fourth in the world for licensed risk-bearing entities.
We are consistently seeing over US$2 billion in premiums and close to US$10 billion in assets under management. All signs point to continued success for Utah!
During the upcoming year, what do you perceive as Utah’s top opportunities and challenges? Does Utah have any major initiatives planned in 2024 to attract more captive business to the state?
Our key goal going forward is to increase our international presence. We wish to let companies around the world know of the beauty and opportunities that abound in Utah, and that it’s the best choice for them to place their captive.
We recently announced that Utah is open to cannabis-related captives. In line with Utah’s current laws on the use of cannabis, captives will be restricted to those that operate in the medical use space. Coverages for recreational use operations will not be permitted at this time.
