Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR H.B. 2193
captive insurers; certificate of dormancy
Purpose
Establishes certification requirements for dormant captive insurers who may not transact
insurance business or issue insurance policies while dormant. Modifies administrative
requirements for captive insurers.
Background
Captive insurance is a form of self-insurance where the captive insurer is wholly owned by
the insured. A captive insurer is any pure captive insurer, agency captive insurer, group captive
insurer or protected cell captive insurer that is formed, licensed and domiciled in Arizona. A
captive insurer may only insure commercial property and casualty, surety and life and disability
risks. An applicant for a captive insurer license must submit a nonrefundable fee to the Department
of Insurance and Financial Institutions (DIFI) and submit a license renewal fee when the captive
insurer files an annual report with the Director of DIFI (Director) detailing the insurer's financial
condition. The Director may not issue a captive insurance license unless the insurer possesses and
maintains prescribed minimum capital and surplus (A.R.S. ยงยง 20-1098.03 and 20-1098.07).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Allows a captive insurer domiciled in Arizona that meets the definition of dormant captive
insurer to apply for a certificate of dormancy by submitting an application to the Director of
DIFI on a Director-prescribed form.
2. Defines dormant captive insurer as a captive insurer, excluding a captive risk retention group,
that has both ceased transacting insurance business, including issuing insurance policies, and
has no outstanding liabilities associated with the insurance business or has not issued any
insurance policy before applying for a dormancy certificate.
3. Subjects the dormancy certificate to renewal every five years and specifies that the certificate
expires unless renewed.
4. Requires a certificated dormant captive insurer to:
a) possess and thereafter maintain unimpaired, paid-in capital and surplus of at least
$125,000;
b) within 90 days after fiscal year end, submit to the Director of DIFI a report of its financial
condition that is verified by oath of two executive officers; and
c) pay a statutorily required certificate renewal fee. FACT SHEET
H.B. 2193
Page 2
5. Allows a dormant captive insurer to surrender its dormancy certificate by submitting an
application to surrender to the Director of DIFI.
6. Prohibits a dormant captive insurer from issuing insurance policies or conducting insurance
business until the Director of DIFI approves the application to surrender.
7. Requires the Director of DIFI to revoke a dormancy certificate if a dormant captive insurer no
longer meets the definition of dormant captive insurer.
8. Allows the Director of DIFI to adopt guidelines, procedures and rules to implement the
dormant captive insurer certification requirements.
9. Decreases, from $500,000 to $250,000, the minimal capital and surplus amount for protected
cell captive insurer licensure.
10. Requires a captive insurer that is formed as a limited liability company to have at least one
member of its board of managers who is an Arizona resident.
11. Requires each captive insurer to pay its license renewal fee between July 1 and September 1
each year, rather than when the insurer filed its annual report.
12. Makes technical and conforming changes.
13. Becomes effective on the general effective date.
House Action
COM 1/28/25 DP 10-0-0-0
3
rd
Read 2/13/25 51-2-7
Prepared by Senate Research
February 27, 2025
MG/ci