In conversation
Captive Insurance in Utah
How to Set Up a Captive Insurance Company in Utah
Travis Wegkamp runs the Captive Insurance Division at the Utah Insurance Department, joined by Stephanie Liu, the division's Assistant Director. In this conversation they walk through what a regulator actually does: how a captive gets formed in Utah, what makes an application get rejected, what capital is required, what it costs to run each year, what the annual report is read for, and what happens when an owner wants to take a dividend, go dormant, sell the captive or shut it down.
Questions answered
Are all state captive insurance domiciles the same?
Travis Wegkamp describes friendly competition between the states rather than uniformity. He contrasts captives with the traditional side of insurance, where the National Association of Insurance Commissioners sets accreditation standards that make domiciles look alike. Captive codes have no equivalent, so each jurisdiction keeps a few features of its own. He then names what Utah chose: no premium tax, a flat annual license fee, and a division that answers quickly.
Watch from 1:08How do you start a captive insurance company in Utah?
Travis Wegkamp puts the first step outside the department. Before anything is filed, a captive manager looks at the business, its risk profile, and where a captive could cover gaps or better serve coverage the business already buys. The manager builds the feasibility study and the business plan, those go into Utah's online licensing application with the supporting documents, and the department reviews the coverage lines against the code before issuing the certificate of public good that lets the company be formed.
Watch from 6:23What makes a captive insurance application get rejected?
Travis Wegkamp says outright rejection is not something the division deals with often, because the department talks to prospects before they file and most issues get ironed out then. What does stop an application comes down to three checks: whether the proposed lines of coverage are permissible under Utah's code, whether the people and entities being insured are ones a captive is allowed to insure, and whether the parent and the beneficial owners can actually support the captive financially.
Watch from 10:15What are the minimum capital requirements for a captive in Utah?
Travis Wegkamp gives the minimum capital by captive type, and says the pure captive minimum covers the majority of what Utah licenses. Then he adds the part that matters more in practice: the statutory floor is not always the operative number. If the feasibility study's actuary concludes the programme needs more capital to be feasible given the lines and limits proposed, the department wants to see that higher amount confirmed at the bank before it issues the certificate of authority.
Watch from 12:07What does it cost to run a captive insurance company each year?
Travis Wegkamp separates the two halves of the annual bill. What the state charges is a flat license fee, not prorated in the first year and renewable before the start of Utah's fiscal year, with a separate flat fee per cell in a sponsored programme. What the service providers charge is not something the department collects, but it publishes estimates: a range for the annual reserve opinion, a range for the independent audit, and a wider range for the captive manager, which he says varies most because management firms do very different amounts of work.
Watch from 14:27Do a captive's service providers have to be located in Utah?
Travis Wegkamp says Utah does not require a captive's service providers to have a physical presence in the state, which he notes distinguishes it from some other domiciles. Three provider types do need authorization from the department and must come from its approved listings: the management firm, the actuary and the independent CPA. The one genuine local requirement is different in kind: Utah's code requires the captive itself to have a director who is a resident of the state.
Watch from 16:53What does a regulator look at in a captive's annual report?
Travis Wegkamp describes an annual report due at the start of March containing two documents. The annual statement is an officer signed, non independent financial picture: assets, liabilities, income, changes to officers, directors and ownership, general interrogatories, the lines and limits written, and the loss triangles. Reading it, the department checks that minimum capital has been maintained and looks for related party loans or dividends that should have had prior approval and did not. The second filing, the statement of economic benefit, is not about solvency at all.
Watch from 18:22How does a regulator decide whether a captive can pay a dividend?
Travis Wegkamp starts from a philosophy rather than a rule: a captive exists to serve a purpose, not to become a massive corporation, so recapturing surplus built from good underwriting results makes sense to him. Dividends need prior approval, and the review checks two things. The minimum capital has to stay in the captive, and the reserves have to stay liquid enough to pay claims if they come to fruition. He says the review is usually quick, and that a captive is not limited to one dividend a year.
Watch from 22:35What happens to a captive when the business shuts it down?
Travis Wegkamp says the department's side of a wind up is not difficult, while being clear that the corporate side involves a lot of legal filings. The captive submits a plan of orderly withdrawal saying what it intends: full dissolution, surrendering the licence and restructuring, or a merger. It completes a final annual statement and statement of economic benefit for the current year. Once articles of dissolution are filed, the certificate of authority is returned, and claims and policies are satisfied, the department releases the company from regulation.
Watch from 25:09Can you sell a captive insurance company along with the business?
Travis Wegkamp says a captive can be sold, through a Form A that tells the insurance department about a proposed acquisition of control, merger or ultimate change in control. It needs prior approval and review by the attorney general's office. The department checks the new owner the way it checked the original one, including whether any statute bars them from participating in insurance, and confirms that whatever changes in the business plan is still permissible. His emphasis lands hardest on sequence: the approval has to come first.
Watch from 27:30What do first time captive owners get wrong about being regulated?
Travis Wegkamp volunteers the thing he watches new owners struggle with, unprompted. The people and companies that own captives are usually not used to operating inside a regulated industry. In their own business an opportunity appears and they take it, change course, move. A captive does not work that way, and he says making owners aware of that is one of the biggest issues regulators face. His advice to prospective owners is to hold the distinction between the company they run daily and the regulated entity they now also own.
Watch from 30:38Can a captive go dormant instead of shutting down?
The Utah Insurance Department amended its code to let a captive go dormant rather than shut down, for exactly the situation where the commercial market softens and an owner would rather buy coverage outside for a while. Dormancy is an application: the department confirms there are no live policies, that claims are extinguished or otherwise handled, and that the captive is compliant, then issues a certificate of dormancy. The captive keeps a manager and two annual filings, drops the audit and actuarial opinion, and pays a reduced fee against a reduced capital floor.
Watch from 32:06Are real estate captives common in Utah?
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.
Watch from 36:41The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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