Are real estate captives common in Utah?
Around sixty identified real estate captives, and property coverage almost everywhere else
Travis Wegkamp counted before answering. Utah has identified roughly sixty active captives as real estate related, and the majority of those are property management companies covering tenant liability rather than owners insuring buildings. The bigger movement he describes is not in real estate captives at all: during COVID era property renewals, companies with no real estate connection but with property on their books began placing property coverage into captives they already had, and Utah's written premium grew sharply as a result.
The number is worth taking at face value because of who is giving it. Wegkamp says he took a quick look and identified around sixty active captives as real estate related, which is a count from the division's own book rather than an industry estimate.
The composition is the more interesting half. The majority are property management companies, and what they are covering is tenant liability. That is a liability play rather than a building play, which matches where the habitational market has been hardest.
Key takeaways
Utah has identified roughly sixty active captives as real estate related, and Wegkamp says most of them are property management companies covering tenant liability.
During COVID era property renewals, companies outside real estate that owned property began placing property coverage into captives they already had.
Wegkamp says a majority of Utah captives now write some sort of property coverage, even though he would not call real estate one of the division's larger business types.
The larger shift he describes happened outside the real estate sector. During COVID, when property renewals were, in his word, crazy, companies that were not real estate businesses but owned property started moving property coverage into captives they already had.
That is the pattern worth noticing if you own real estate. The captive did not have to be built for property. It was built for something else, and property coverage moved into it when the commercial market made that the better option.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“went from about 2 billion in gross premiums in Utah captives to over four”
Transcript
Read the full transcript 6 turns
HostHave you guys seen some activity on the real estate side in Utah captives
Travis Wegkamp? We have, yeah, I took a quick look. We've gone around 60 or so active ones that we've specifically identified as kind of real estate related captives. But actually the majority of those are our property management companies getting coverage for tenant liability, things like that. But then, you know, during, the, COVID era and all the crazy renewals on property coverages that companies
Travis Wegkampwere getting, a lot of the companies, you know, non real estate related, but, own property, a lot of them started placing property coverage into their captive that they didn't have before. And, we saw nearly, kind of nearly a doubling of, gross premium that captives wrote during those couple of years there. You know, went from about 2 billion in gross premiums in Utah captives to over four. So we've seen a lot of growth there, at
Travis Wegkampleast in the property coverage, and, a few actual real estate related captives as well. Steph, did you have any that you noticed
Stephanie Liu? I think you've covered pretty well. So I wouldn't say it
Travis Wegkamp's, one of our, larger sort of business types that we have. But at this point, I would say probably a majority more of our captives we have are writing some sort of property coverage in their captive.
Citations
Sources
- Captive, Utah Insurance Departmenthttps://insurance.utah.gov/captive
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