New Arizona Captive Market Already Looking To Amend Law

Brand new captive legislation, a dedicated captive administrator, a central location, and the right climate–both literally and figuratively–add up to make Arizona a domicile that could sizzle in the alternative market.

Richard Marshall, appointed captive insurance administrator for the Arizona Department of Insurance in February, said he is already working to improve the states captive legislation, which goes into effect July 1.

“Were looking at expanding two other forms of captives–protected-cell agency captives and group captives, non-association,” he noted.

He said interest in the domicile is high because of the existing and proposed legislation and the hard insurance market, but the states location is also proving to be a benefit.

“We get a lot of people from the upper Midwest–the Minnesota, Chicago, Detroit crowd,” he explained.

One interested broker who called has a client–two partners–with homes in Scottsdale. “Were not going to compete with Vermont in August, but Vermont sure isnt going to compete with Arizona in the winter time,” he said.

The domicile is also drawing interest from West Coast states as an alternative to Hawaii. He explained that Californians and others on the West Coast can take a one-hour flight into Phoenix rather than a four-hour flight to Hawaii.

Mr. Marshall, who previously worked in the private sector as senior vice president of Frontier Insurance Companys alternative risk division, said he was impressed with the domiciles commitment to captives.

The department, he said, is one of the few with a dedicated captive manager.

“Now the balls in my court to build a division, attract the business, and once it comes in, monitor and regulate it,” he said. The department plans to add staff as needed, he said.

Mr. Marshall explained that Arizonas legislation is similar to Vermonts except for two points–there will be no premium tax in Arizona; and the domicile doesnt require branch captives for life and benefits coverage.

(He said that Vermont initiated its branch captive law for Columbia Energy, so that Columbias Bermuda captive could form a branch onshore.)

Mr. Marshall said he has drafted changes but will finalize them with Chuck Cohen, the state insurance commissioner. The legislature will most likely consider any changes in the fall, he said.

Mr. Marshall said he represented the Arizona domicile at the Captive Insurance Companies Association conference in March, but wont attend the Vermont Captive Insurance Association conference in August.

“I think its inappropriate that one domicile go to another domiciles conference and try to attract business,” he said.

He said he also plans to attend the World Captive Conference in Florida this year.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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New Arizona Captive Market Already Looking To Amend Law

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