NU Online News Service, Feb. 14, 10:17 a.m. EST
Organizations from a number of states representing various industries formed 69 captive insurance companies in Utah in 2011, according to the state’s captive insurance director.
The domicile licensed 54 captives in 2010. The state adopted captive legislation in 2003 and has steadily added captives.
In 2008 there were 123 active captives, 148 in 2009 and 188 in 2010. The state’s second-biggest year was 2007 with 63 formations, followed by 54 in 2010, according to Utah Insurance Department.
Ross C. Elliott tells NU Online News Service that he has been “intrigued” by the diverse industries that have formed captives in Utah. They include a hazardous waste disposal company, a company developing surfacing on optical disks, a latex glove company, a corrugated steel step manufacturing company and a manufacturer of plastic bottles.
“What a fascinating group of companies,” he notes.
Ross explains that most of the Fortune-500 companies have already established captives, but that the market is wide open to mid-sized and smaller companies.
“The middle-market has become more exposed to the advantages of captives,” he adds.
Of the state’s 69 new formations, all were pure captives with one sponsored captive, he adds.
“Most were micro-captives” formed for a variety of coverages including supply chain, cyber liability, legal defense and large deductible, Elliott says.
The largest growth was in the healthcare industry and mostly in the Midwest, he says. Captives were mostly formed for liability coverage, including hospitals and doctors’ groups.
The majority of companies that formed captives are located in California as well as the Midwest, with a few from the East, he says. Several captives were re-domestications—two or three from other states and three to four from offshore domiciles.
Elliott adds that Utah also saw 18 captives dissolve in 2011. Ten of those, however, were due to mergers—with seven turned into one captive in one case and three into one in another case. Three were lost to another state, leaving Utah with 239 active captives.
To keep up with the work from this large addition of new captives, he says, the department will be hiring two new examiners within the year.
He notes the department’s staff of six also has been working to improve credentials for examinations, as well as obtaining accreditations from the International Center for Captive Insurance (ICCIE) and from the National Association of Insurance Commissioners (NAIC).