OKLAHOMA CITY – As one of the fastest-growing domiciles in the country for “captives,” the Oklahoma Insurance Department is attracting more such companies to do business here, state Insurance Commissioner Glen Mulready said.
A captive insurance company “provides great flexibility to business owners who want to take control of their insurance programs,” he said. Captives exist to underwrite the risk of their owner(s) and affiliates.
Between 2017 and 2021, Oklahoma’s captive premium volume increased significantly, rising to $214.4 million in 2021, up from $147.3 million in 2017, Mulready said.
Oklahoma now has 40 licensed captives, and more than one-third of those were issued during his first two years in office. In 2019 and 2020, captives domiciled in Oklahoma generated more than $1 million in premium taxes to help fund public safety pensions and the state’s General Revenue Fund, the commissioner said. “With OID’s supportive, efficient regulatory platform, companies of various industries around the country recognize Oklahoma as a highly competitive jurisdiction,” he said.
To help Oklahoma continue to be the hub of innovation and technology, OID will host its first Oklahoma Captive & Insurance Business Transfer Conference on Aug. 24-25 at the Omni Oklahoma City Hotel.
This two-day conference will address new and emerging risks facing companies and organizations worldwide. “We’ll bring together subject matter experts to share insights on captive insurance and IBTs and educate stakeholders on the benefits of these cutting-edge mechanisms,” Mulready said. “This conference will demonstrate how captives can offer solutions that may not be available in the traditional insurance marketplace.”
He said he looks forward to showcasing “Oklahoma’s endless possibilities to risk managers, business owners, regulators, financial executives and insurance professionals.”
Registration is required to attend the event and seating will be limited. For more information about the event, visit www.oid.ok.gov/CIBTC/ and follow OID on Facebook, Twitter, Instagram and LinkedIn.
“In the most simplistic terms, a captive insurance company is an insurance subsidiary of a non-insurance entity or parent and is owned by the insured,” wrote Joe McDonald, products manager, captive and risk finance, with the International Risk Management Institute. Captives are an alternative risk transfer mechanism used to finance risk.
Traditional insurance transactions begin by providing an insurance company information used for underwriting and determining premiums, which are paid as consideration in a contract (policy) issued by the insurance company that obligates the company to repay losses of the policyholder under the specified conditions of the contract.
“However, if circumstances warrant, as they often do, other options may be sought where alternative risk financing and transfer mechanisms may prove quite useful in addressing the unmet needs of companies from traditional insurance,” McDonald wrote. “One of these options is captive insurance.”
The best captive insurance companies are those created and utilized by “companies that understand their risk profile better than the traditional market does, having superior loss histories and more robust risk management in place,” McDonald said. These captives are run and operated by “sophisticated companies looking for greater control over their risk and their risk financing.”