Utah governor Gary Herbert has signed an insurance amendment bill into law, which includes amendments for captive insurance companies within the state.
House bill (HB) 37 was introduced late 2019 and was signed into law by Governor Herbert late last month. The bill contained an amendment which permits a captive insurance company to provide reinsurance by another insurer with prior approval of the commissioner.
“HB 37 allows Utah captive insurance companies to reinsure pure third-party risk with prior approval of the commissioner (DOI),” stated Travis Wegkamp, captive insurance director, Utah Department of Insurance.
He explained: “The key advantage to this is that it provides another avenue for captives to achieve adequate risk distribution. Additionally, it's a fantastic opportunity for captive owners whose parent company, or related insureds, provided a quality product or service to their customers to also sell them insurance or warranty coverage of that product or service.”
“While a captive could typically never provide this type of coverage directly to their customers, the captive may now partner with a front to provide this coverage and then cede it to the captive insurer,” he continued.
He suggested that this bill will allow captives in Utah to remain competitive with the other domiciles. He adds that this bill provided additional opportunities for generating revenue and achieving risk distributions through other methods than pooling.
The DOI is very pleased with the additional opportunities granted to Utah captive insurers with the passage of the HB 37, according to Wegkamp.
Utah licensed 42 risk bearing entities in 2019, 11 of which were cell captives, according to statistics from the Utah Department of Insurance.