Arizona is considering changes to its legislation that would allow captives to register as dormant, in addition to reducing minimum capitalisation requirements for captives that are not single parent.
The Arizona Department of Insurance and Financial Institutions licensed 17 new captives in 2023, compared to 14 in 2022, taking its year-end total to 176.
“Our statute as well as our regulations have remained largely the same for many years,” Victoria Fimea, Arizona Department of Insurance and Financial Institutions, told Captive Intelligence.
“One of the issues we are looking at now that we’ve grown and have more captives domiciling here in Arizona, is whether to allow dormancy.
“We may also look at whether we should adjust the statutory minimum capitalisation for captives other than pure captives.”
Allan Smith, client service leader at Marsh Captive Solutions, said the State is trying to be proactive, recognising that captives can be a good alternative risk financing strategy, not just for very large companies.
“The goal is to update the statutes to help attract companies of different sizes to this tool,” he told Captive Intelligence.
Arizona is also exploring the possibility of changing the date when captive fees are due to be paid to the Department of Insurance and Financial Institutions.
“Right now, it’s due 90 days after the end of a captive fiscal year, but we may move that due date for all captives to a specific date in the Fall,” Fimea said.
“The reason for this potential change is the State’s fiscal year, and how long we must use the renewal fees to support the captive insurance division.”
Smith said the proposed changes to the collection date has a lot to do with when the fees are collected relative to a captive’s budget cycle.
“The ability to collect at a different time frees them from a budget process perspective,” he said.
“It was discussed with the Arizona Captive Insurance Association, and we are in support of their position to make that modification, and we think that it will pass.”
Captive Intelligence will publish a Long Read later this week analysing Arizona’s broader captive landscape.