Captive insurers do not pay an insurance premium tax in Arizona.

1.  Responsible and Established Domicile

Arizona has been a captive domicile for over ten years.  Since July 2002, the Arizona domicile has grown to over 130 captives. These captives range in asset size from a few hundred thousand dollars to over $100 million.  Several of the Fortune 500 companies have made Arizona their captive domicile.  This growth consists of carefully approving captives that have long-term goals and strategies to achieve regulatory and financial success for their owners and members.  

2.  NO Premium Tax

Arizona captive insurers are not required to pay state premium taxes. This omission is crucial because comparison to captive insurance laws in other domiciles, U.S. and alien, plainly shows that when captive insurance premiums are taxed it is according to a schedule specific to that form of insurance rather than at the rates applicable to ordinary commercial insurance business. As evidenced by the legislative history, the Arizona legislature made a deliberate decision to not impose premium taxes on captive insurers.

3.  Location

The primary area of the captive infrastructure within Arizona resides in Phoenix which averages 85% of possible sunshine with an average of one day per year with below freezing temperatures!  Phoenix and the surrounding area have several cultural activities, including the performing arts, museums and events.  Phoenix is also home to several picturesque golf courses, a large number of parks and recreation areas as well as professional sports franchises.

Phoenix is served by Sky Harbor International Airport which is centrally located in the metro area near several major freeway interchanges east of downtown Phoenix.  Sky Harbor is the tenth-busiest airport in the U.S. and 24th in the world for passenger traffic.  The airport serves more than 100 cities with non-stop flights.

4.  Responsive Regulators

The Arizona Department of Insurance offers a responsive and cohesive team of insurance professionals who have the necessary expertise and experience to foster a competitive, sound, and market-responsive captive program.

5.  Administrative Cost Savings

A small company exemption of an annual Actuarial Opinion and a required Financial State Audit by an independent certified public accountant can be eliminated if certain requirements are met.  This could reduce annual operating costs that would otherwise be incurred each year within other domiciles.

6.  Regulatory Audits

A regulatory audit by the Department of Insurance for a pure captive within Arizona is at the discretion of the Department.  In other domiciles a periodic regulatory audit is required for pure captives.  The costs incurred related to these audits are charged to the captive.  Hence, these costs can be eliminated by a pure captive in Arizona.

7.  Experienced Service Providers

As an established captive domicile Arizona is home to several experienced service providers needed by a captive.  These include captive managers, insurance brokers and agents, banks, attorneys, accountants, actuaries and investment managers.  These professionals work in a cohesive manner with the Department of Insurance to ensure your captive meets regulatory requirements.  

8.  The Association

The Arizona Captive Insurance Association currently has approximately 80 members.  The Association’s Board of Directors is represented by captive owners, service providers and industry experts.  The Association has been established to support, promote, foster and market the position of the state of Arizona as an attractive, competitive, and vital captive insurance domicile, by providing education and networking opportunities for those who operate within the captive insurance industry.  It is an advocate to the Arizona captive industry and works in the best interest of its members. 

9.  Regional Conference

A unique aspect of the Arizona domicile is the partnership with other regional domiciles (currently Utah, Missouri and Neveda) to co-host an annual conference.  This partnership allows attendees to interact with others and share their experiences with other captive owners, state regulators and service providers. The Western Regional Captive Insurance Conference is hosted within each state on a rotation basis allowing for exciting travel opportunities to different venues.  Education is also a key aspect of the conference to provide insight on current industry topics to those in attendance.  The conference also includes interesting keynote speakers such as Fortune 500 CEO’s, Football Referees or Economists.   

10.  Continuing Education

The captive landscape is constantly evolving.  Laws and regulations are often changing and compliance becomes more of a challenge.  To ensure captive owners, governing boards and committees, as well as service providers are educated on the most current issues the Arizona Captive Insurance Association hosts periodic learning opportunities including breakfast meetings and lunch and learn sessions to present these topics by leading captive experts.