Utah’s Evolving Captive Insurance Landscape: Embracing Change and Cybersecurity Opportunities

Utah has updated its legislation concerning captive insurers in recent years, according to an article in Captive Insurance Times. It has amended its law to allow captives to reinsure third-party risk with the approval of the commissioner and reduced the total minimum capital required for a sponsored program from $1 million to $500,000. It also allows captives to insure punitive damages for a parent or affiliate if the award doesn’t arise out of a criminal act.

Travis Wegkamp, director of captive insurance at the Utah Insurance Department, says cybersecurity is a high-growth area, and that in general, Utah “continues to be an attractive and vibrant domicile for those exploring their captive insurance options.”

Some of the growth is due to the increasing frequency of ransomware and cyber attacks against companies. Cyber insurance is in heavy use in the tech, fintech, and retail sectors, but is becoming a more frequent area of concern for all companies looking to manage risk.

Wegkamp says that making companies aware that captive insurance is an option is a priority for him, and frets that a large percentage of the business community has never heard of captive insurance. He notes that “smaller companies may consider the pretty standard $250,000 minimum capital an insurmountable barrier to entry,” but Utah is trying to “give these companies a chance at entering and realizing the benefits of owning their own captive.”