Domicile of the Year—Highly Commended
The State of Alabama
“It is important to examine whether the domicile is forward-thinking in its initiatives to support the industry.”
How much of your growth comes from captives redomiciling from offshore or from other US states, and how much is new captives?
Alabama’s captive insurance industry is rapidly growing. The state’s regulators continue to respond quickly and fairly to captive insurer requests.
The domicile is recognised for its ability to find innovative solutions to complex and ever-evolving problems. For the fourth consecutive year, Alabama placed in the top five nationally in net captives formations and continues to push the industry forward with industry-leading updates to the Alabama Captive Act. The state has established itself as a respected jurisdiction with a willingness to work with prospective and licensed captive insurance companies.
A large majority of our growth is a result of captives emerging and re-domiciling domestically. Our initial capitalisation fee is premised upon the actuarial feasibility study. We have had captive initiation start at a fee as low as $75,000.
What should captives be thinking about in order to make the right choice of domicile?
There are a number of factors that captives should consider when selecting the ideal domicile for their business. It is essential to understand the regulatory system within the domicile.
A domicile that possesses a supportive regulatory and compliance body, such as the Alabama Department of Insurance, makes that process of forming and operating a captive simpler and more efficient. Furthermore, captives should understand the legislative body and their disposition toward the industry, as they are largely responsible for the regulations by which the captives will abide.
Last, depending on the captive, it is important to examine whether the domicile is forward-thinking in its initiatives to support the industry.
Do you see any scope for domiciles to compete on price and/or regulation?
Yes. Domiciles that promote the best regulatory environment while also bolstering legislation that outlines fair startup costs will become the more attractive domiciles for those seeking to start new captives.
What benefits does the captive insurance industry bring to the state?
The captive insurance industry plays a multi-faceted role in the economic development of Alabama. The industry attracts and creates high-paying financial services jobs, aids in the recruitment of new businesses to Alabama, and helps fund the Alabama General Fund through premium tax payments.
Have you seen any evidence of increased interest in captives due to the COVID-19 pandemic?
We have seen increased interest in using captives as alternative risk management solutions to ensure non-traditional risk. Many organisations are seeking to find new vehicles to insure their risk as we navigate these uncertain times.
