Arkansas Advances Bill to Establish State-Owned Captive for Public Property Insurance

The Arkansas General Assembly is advancing legislation to establish a state-owned captive insurance company aimed at stabilizing property insurance for public schools, higher education institutions, and state-owned buildings. House Bill 1821 (HB1821)—also known as the State Captive Insurance Program Act—was passed by the House and is now under consideration in the Senate. 

What HB1821 Proposes 

HB1821 creates a comprehensive legal framework for Arkansas to form, operate, and regulate a captive insurance company that would exclusively insure public entities. Key elements include the following.

• Creation of a Captive Insurance Company. The bill authorizes the treasurer of state, with the approval of the state board of finance, to establish a captive insurer under Arkansas Code § 19–3–706. The Department of Transformation and Shared Services (DTSS) will oversee its operation. 
• Mandatory Participation. All public schools, state agencies, and institutions of higher education that accept state funds for facilities will be required to participate in the captive insurance program. 
• Funding and Structure. A new State Captive Insurance Program Trust Fund will be established to manage capital, claims, reserves, and operating expenses. The captive will be a separate legal entity owned and controlled by the state and will be subject to Arkansas's captive insurance laws (§ 23–63–1601 et seq.). 
• Regulatory Oversight. The captive's actuarial plans, premium structures, and reserve policies will be reviewed and approved by the state board of finance. An annual report will be submitted to the Arkansas legislative council for transparency. 
• Ban on Public Adjusters. The bill prohibits participating entities from using public insurance adjusters, citing legislative findings that their use "has caused an increase in property insurance premiums and a lack of viable options on the insurance market for future years." 
• Transitional Provisions. Existing public insurance programs—such as the Arkansas Multi-Agency Insurance Trust Fund and the Public School Insurance Trust Fund—will be transferred to the new captive by December 2025, with full operational capability by December 2026. 

You can track its progress on the Arkansas State Legislature website.

If enacted, Arkansas will join a short list of US states actively using captive insurance to manage public property risk at scale—offering a compelling case study in government-sponsored risk management innovation.