Missouri: the captive domicile closest to home

Missouri Missouri keeps setting a new mark in the number of captives licensed and the amount of captive premium written. Since its inception in 2007, the number of licensed captives in the Missouri Captive Insurance Program has grown to more than two dozen, proving that the captive insurance market in our state is robust. Changes to the captive law this year and the addition of new leadership and expertise will allow us to continue to meet the increasing needs of the captive industry in our state.

Last year, Missouri issued nine captive licences, eclipsing the previous record of eight set in 2011. Currently, the number of active captives in Missouri is 28, and all the companies licensed last year are based in the Midwest. This continues the trend in 2010 when companies began taking advantage of the benefits by keeping their captive business close to home.

Large national and international companies have some very substantial and complex captives in Missouri. However, more than two-thirds of the captives in our state are owned by companies in the mid-size to large range. The business plans of captives in our state can vary from single-line companies funding a deductible reimbursement programme, to those with more than 25 lines covering the property and casualty risks of their business all over the world. Missouri’s law, coupled with our experience in working with companies that use a variety of different methods to manage risk, is a benefit to captives of all shapes and sizes.

So far, this year is shaping up to be another successful one for captives. The Missouri Captive Insurance Association (MOCIA) led a successful effort during the legislative session to amend the captive law. In May, Governor Jay Nixon signed Senate Bill 287. The bill, which takes effect on August 28, 2013, calls for the addition of sponsored captive insurance companies with incorporated cells and the reduction in the minimum capital and surplus requirement for association captivemore mid-sized businesses the opportunity to take advantage of the benefits available through the state’s captive insurance programme. With an experienced leadership in the captive section, we expect to be able to incorporate these changes seamlessly into our processes and be ready for business the date the law comes into effect.

"All levels of state government are supportive of continued growth in captive insurance because of the benefits it brings to our state and our business."

While the law helps our state maintain its competitive edge in the captive insurance market, the most exciting thing happening this year at the department is the addition of our new captive programme manager, Maria Sheffield. Sheffield, who joined the department in July, comes to Missouri from a private law firm, but she brings a wealth of captive insurance, government relations and regulatory experience to her new position. She served as a regulator at Georgia’s Office of Insurance and Safety Fire Commissioner before working as an attorney with captive clients in various domiciles at Burr & Forman LLP. She was involved in the supervision of captives and commercial insurance companies regarding licensing, analysis, insolvency and litigation issues while working as a regulator.

Sheffield was also a state registered lobbyist and aided the legislative and policy efforts for the department. While working in the industry, she represented the interests of numerous onshore and offshore captives. She also developed and implemented comprehensive government relations strategies and policies to protect and promote her clients’ business interests. Her unique experience and knowledge of the issues from regulatory and business perspectives make her a welcome addition to our captive team, and we are excited about the future of captive insurance in Missouri under her direction.

With the amount of growth the captive programme has experienced over the past six years and in anticipation of future growth, the department added an additional financial analyst position in July. This allows the department to continue to be responsive to the needs of captives in our state. Missouri is a fee-based state, so the fees paid by captives pay for their regulation, and all fees collected remain in the department to ensure that adequate staff provide responsive and effective regulation.

One of the unique features of Missouri’s captive law is the credit allowed each year, which reduces premium taxes by the full amount of that fee. In essence, small captives that write less than $2 million per year in premium would only pay a fee and would not be subject to additional premium taxes. Large captives also enjoy a reduction in the premium tax and cap of $200,000 on those taxes and fees. This feature is a hybrid between pure fee states and tax-and-fee states, and it makes Missouri an attractive location for large and small captives.

MOCIA has been active in its support of the captive industry in our state. It has attracted membership from across the country and will continue to provide educational and networking opportunities for captive owners and service providers who are members. Its latest event, the Missouri Captive Forum, was held in April in cooperation with Lockton Companies in Kansas City. Some of the hottest topics currently affecting captives were discussed by panels that included some of the leading industry experts from around the country that do business in Missouri.

The event was attended by nearly 100 people from around the country. The association plans to continue to conduct these educational forums annually and pursue future legislative initiativesas needed. The association is also a joint sponsor of the Western Region Captive Insurance Conference, along with the Arizona and Utah associations. Combining the resources of these three associations ensures this is a well-attended and high quality captive event for captive owners in all three states.

There have been a lot of exciting changes this year, but some things will never change. Missouri will always offer an excellent domicile option because of our state’s location at the geographic and population centre of the US. Our captives can gain efficiency and reduce costs by keeping their captive close to home in Missouri. Our state provides a stable domicile with a solid captive law that offers many benefits to our owners. You’ll experience our Midwestern work ethic at its best while working with our regulators. All levels of state government are supportive of continued growth in captive insurance because of the benefits it brings to our state and our businesses. I encourage everyone to take a closer look to see whether Missouri may be the right place for your captive’s future.

Missouri has the long-term commitment necessary to continue to provide an attractive captive domicile. With additions in staff and continued enhancements in the law, we expect Missouri will be an even better option in the future.

John Rehagen is deputy division director of company regulation at the Missouri Department of Insurance, Financial Institutions & Professional Registration. If you are interested in learning more about Missouri as a captive domicile, please contact Maria Sheffield, captive programme manager at maria.sheffield@insurance.mo.gov You can al so visit insurance.mo.gov/captive.

For more information about MOCIA or to view upcoming events, visit the website at mocaptive.com. The department supports MOCIA’s goal of providing networking and educational opportunities for our captive owners to facilitate captive growth in Missouri.