Domiciles will have to learn to deal with the increased competition brought by the increasing number of US states with captive legislation, according to Travis Wegkamp, Utah director of captive insurance.
Speaking on the ‘Regulator Round-up’ panel at Western Region Captive Insurance Conference 2018, Wegkamp said the rise in competition would have both advantages and disadvantages.
He explained: “Competition can help each state become the best domicile it can be but there is also the threat that that competition could go too far with states cutting corners or relaxing their legislation too much, which may allow captives to go too far and show the captive industry in a negative light.”
“I think that is an important line to learn to walk.”
Another panellist, Oklahoma director of insurance James Mills, said an increased number of US states with captive legislation could bring industry-wide benefits.
He said: “As we add states to the list of domiciles, we add a lot of credibility to the captive industry.”
“That credibility expands into the exposure that we get, which may see us move into new areas. Rather than cutting up the same piece of the pie, we are going to give them another pie to add to the table and expand this in everybody's interest.”
“We think this is something that will benefit the nation as a whole.”
Mills said learning from other domiciles had helped Oklahoma shape their captive law and would be a key to the new domiciles’ success.
“The domiciles which take the captive industry seriously will take on those best ideas of their peers, which will mean we grow together and become a better captive industry together.”
“On the whole, I think we are going to see a lot of development from the states picking things up.”
The panel also included: John Talley, captive programme manager for the Missouri Department of Insurance; Vince Gosz, chief captive analyst at the Arizona Department of Insurance; and Steve Matthews, Montana’s chief financial examiner and captive insurance coordinator.