What does it cost to run a captive insurance company each year?
The state fee is fixed and the service providers are where the range is
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.
The state's side is the simple half. Wegkamp describes a single annual license fee with no proration on formation, meaning a captive licensed late in the year pays the same as one licensed early. Renewal falls before July, which is the start of the state's fiscal year rather than an anniversary of the licence.
A sponsored programme adds a separate flat fee for each cell.
Key takeaways
Utah charges a flat annual license fee that is not prorated in the first year and renews before July, the start of the state's fiscal year.
The department does not collect what captives pay their providers, so the actuary, audit and management figures on its site are published estimates rather than filed data.
Wegkamp says the management fee varies most because firms sell different scopes, from full underwriting to compliance and bookkeeping only.
The provider side is where Wegkamp is careful about what he does and does not know. The department does not collect what captives pay their actuaries, auditors and managers, so what it publishes are estimates rather than filed figures, and he points to the department's own site for them.
He also scopes them. The estimates are drawn from captives in a band running from about a million dollars of annual premium up to the low tens of millions, which he says covers the overwhelming majority of what Utah licenses. A captive far outside that band should not read the estimates as its own.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“the license fee for a captive is $7,500 in total annually”
This answer begins at 14:27 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive, Utah Insurance Departmenthttps://insurance.utah.gov/captive
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