In 2003, Utah realized the potential benefits of attracting captive insurance companies and passed legislation providing the appropriate regulatory and taxation environment. The objective of the legislation was to establish a business-friendly climate for companies forming captive insurance operations in Utah.
Single parent, association and group captives permitted.
Reasonable capitalization requirements that may be met with a letter of credit.
Coverage includes nearly all commercial lines, including excess workers’ compensation, directors and officers liability plus property and casualty insurance.
No approval of rates and forms required.
No investment restrictions for pure captives and group captives.
Favorable premium tax structure.
Allows pure captives to insure controlled unaffiliated businesses.
Permits captives to be formed as reciprocal insurers.
Permit the licensing of branch offices of offshore captives, which underwrite and administer employee benefit programs of the parent and affiliates.
Allow the formation of sponsored captive insurance companies by insurers and re-insurers to provide insurance coverage to distinct and usually unrelated entities (protected cell companies). This enables the protected cell company, which may be too small to justify the expense of forming and operating an individual stand-alone captive company, to employ the sponsor’s capital rather than its own.