Iowa Becomes Latest State To Enact a Captive Insurance Law

Iowa lawmakers have passed and Governor Kim Reynolds has signed legislation to allow the formation of captive insurance companies in the state.

Under the bill, SF 549, captives would have to submit an annual report to Iowa's Insurance Division by April 1.

Captives would be assessed a 0.35 percent premium tax on the first $20 million of direct premiums and a 0.25 percent tax on direct premiums above $20 million.

In addition, premium taxes will be imposed on assumed reinsurance premiums. Those taxes will be 0.20 percent on assumed reinsurance premiums up to $20 million, 0.125 percent on assumed premiums between $20 million and $40 million, and 5.0 percent on assumed reinsurance premiums that exceed $40 million.

"With a modern, competitive bill that is comparable in many ways to the captive statutes of other jurisdictions, including with respect to premium taxes and fees, dedicated captive regulators, and a robust insurance industry, Iowa will be a competitive domicile to watch in the future," law firm Womble, Bond, Dickinson said in a news release.