Iowa Updates Captive Insurance Law

Des Moines, Iowa—Governor Kim Reynolds signed into law H.F. 2766, the State of Iowa’s captive insurance bill on Friday, May 15th, affirming Iowa’s commitment to captive insurance companies by clarifying certain provisions and keeping Iowa competitive with other captive insurance regulatory leaders.  The legislation establishes a new subchapter applying to life captive reinsurance companies that are formed under chapter 521J.  The updated captive insurance law becomes effective on July 1, 2026.

“This legislation ensures our captive statute remains cutting-edge and consistent with the most established captive jurisdictions, while also drawing on Iowa’s existing expertise in life insurance regulation,” said Iowa Insurance Commissioner Doug Ommen.

In 2023 the Iowa legislature enacted Iowa Code Chapter 521J Captive Companies.  Captive insurance is a form of self-insurance where a parent company or a group of individuals or businesses form their own insurance company.  Captive insurance companies are a risk management tool for businesses, and their use is accelerating in the United States and globally.

"Iowa is seeking to widen its footprint as an onshore U.S. captive domicile by focusing on quality and discipline,” said Jeff Wilson, Captive Director for the Iowa Insurance Division.  “By creating a dedicated framework for life captive reinsurance and reducing capital requirements for protected cells, we are providing the flexibility businesses need to manage risk while maintaining the non-negotiable standards of solvency and governance that Iowa is known for.”

The updated captive insurance law includes several significant changes, including the following:

• Creates a temporary premium tax waiver to help attract non-life captive insurance companies to redomesticate to Iowa.
• Creates a new subchapter to build a regulatory framework for life captive reinsurance companies (LCRCs).
• Allows for special purpose captives to be formed as a reciprocal insurer.
• Reduces the minimum capital and surplus required for a protected cell captive company to be $100,000.
• Allows protected cells to be formed as LLCs or series LLCs.
• Clarifies that a captive insurer may utilize parametric insurance.
• Clarifies tax confidentiality on returns filed by captives.

The new subchapter for LCRCs was based on Iowa Code section 508.33A limited purpose subsidiary life insurance companies (and its regulations).  An organizing company for a life captive reinsurance company need not be domiciled in Iowa.

Companies looking to form a captive insurer in Iowa or redomesticate a captive insurer to Iowa should contact Captive Director Jeff Wilson at jeff.wilson@iid.iowa.gov or 515-654-6651.

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