The Corporation for Enterprise-Development ranked Utah among the top eight states in terms of economic performance, business vitality, and development capacity. Utah has established itself as a business-friendly jurisdiction and since 2004 has provided the best legislation, best tax treatment and regulatory environment for Captive Insurance Companies in the United States.
Favorable Tax Treatment: Utah’s sole state tax on captives is $5,000 per year, including premium taxes, and all other state taxes. If you compare a captive with $4,000,000 of premium per year formed in Utah with some other jurisdictions, the differences in state tax is substantial: Hawaii $10,000; Nevada $16,000; Vermont $15,200; District of Columbia $10,000 and South Carolina $16,000.
Favorable Regulatory Environment: The State of Utah has announced that it intends to be the most responsive captive domicile in the world. Many non-captive insurance companies have recently redomiciled to Utah because of its friendly and pro business environment. The Utah Captive Law is the most favorable in the United States. Click here for Utah Statute
Favorable Investment Restrictions: For pure captives, Utah has no restrictions on the investment of the reserves. This compares very favorably with other captive jurisdictions such as Hawaii that limit the investment of reserves to cash or cash equivalents and limit investment in real estate or mortgages. Click here to see Utah legislation re: investment of reserves.
Best Snow in the World: Located within less than an hour’s drive are ten resorts with the best snow in the world. Since all jurisdictions require a yearly board meeting, why not enjoy the slopes on your trip and stop in on the Sundance film festival?
Easy Access: Salt Lake City has an international airport (Delta hub), relatively inexpensive hotels and is centrally located within the United States.
Other Advantages: Utah realized the potential benefits of attracting captive insurance companies and passed legislation providing the appropriate regulatory and taxation environment. The objective of the legislation was to establish a business-friendly climate for companies forming captive insurance operations in Utah.
Single parent, association and group captives permitted
Reasonable capitalization requirements that may be met with a letter of credit
Coverage includes nearly all commercial lines, including excess workers’ compensation, directors and officers liability plus property and casualty insurance
No approval of rates and forms required
No investment restrictions for pure captives and group captives
Allows pure captives to insure controlled, unaffiliated businesses
Permits captives to be formed as reciprocal insurers
Permits the licensing of branch offices of offshore captives, which underwrite and administer employee benefit programs of the parent and affiliates
Allows the formation of sponsored captive insurance companies by insurers and reinsurers to provide insurance coverage to distinct and usually unrelated entities (protected cell companies). This enables the protected cell company, which may be too small to justify the expense of forming and operating an individual stand-alone captive company, to employ the sponsor’s capital rather than its own.
The Corporation for Enterprise-Development ranked Utah among the top eight states in terms of economic performance, business vitality, and development capacity. Utah has established itself as a business-friendly jurisdiction and since 2004 has provided the best legislation, best tax treatment and regulatory environment for Captive Insurance Companies in the United States.