The Business and Labour Committee for the State of Utah has unanimously approved a motion to introduce a bill that will allow the state to operate its own captive insurance company.
Brian Nelson, the state risk manager for Utah, told the committee he would like the authority to create a captive due to the hardening market and to give the state access to reinsurance coverage. He requested a bill be presented and passed in time to allow Utah to form a captive ahead of its July 2021 renewals.
Nelson noted the market for property and casualty insurance has hardened considerably in the last three or four years to levels not seen since the 1980s.
The state risk fund has a $39 billion property portfolio. When renewing coverage for these properties this year the state’s premium bill increased by 40.6 percent, Nelson said.
Utah saw losses of $82 million in the last fiscal year, including a $60 million loss related to an earthquake and $22 million in connection with fires.
To maintain the state’s coverage and limits Utah took out excess liability reinsurance coverage for the first time, for $1.65 million, Nelson noted.
It means overall Utah’s coverage has increased from $574,000 to more than $2 million, he said. The hardening market shows no signs of slowing, meaning commercial insurance bills are likely to rise further in coming years, he warned.
Travis Wegkamp, director of captive insurance at the Utah Insurance Department, said the state already works with state-sponsored captives, and said he was happy to work with Nelson and the committee on the formation of a state captive for Utah.
Utah, Brian Nelson, Travis Wegkamp, Utah Insurance Department