Florida's Captive Insurance Market: Opportunities and Key Developments

Executive Summary

Florida is positioning itself to become a significant domicile for captive insurance companies, aiming to increase its captive population from just a handful to 200 within the next five to ten years. This initiative, led by the newly formed Florida Captive Insurance Association, reflects a strategic effort to enhance Florida’s competitiveness in the captive insurance space, which is currently dominated by states like Vermont, North Carolina, and Tennessee. Key legislative developments, including the introduction of protected-cell captives (PCCs), signal growing state interest in building a robust captive ecosystem.

For insurance professionals—agents, underwriters, and company executives—understanding Florida’s evolving captive landscape is critical. Captives offer Florida businesses the potential for premium control, risk management flexibility, and improved negotiating leverage with traditional insurance carriers. However, regulatory considerations such as premium tax rates and reserve requirements remain important factors influencing captive domicile decisions. This article analyzes these developments and explains their relevance and practical applications for insurance stakeholders operating in or with Florida-based risks.

Key Insights

• Florida’s Ambitious Captive Growth Target
  The Florida Captive Insurance Association aims to establish 200 captives in the state within five to ten years, a significant increase from its current minimal captive presence. This goal reflects a recognition of captives as valuable tools for risk management and premium stabilization in a state grappling with rising property and liability insurance costs.
• Premium Tax Structure Is a Primary Competitive Factor
  Florida’s current premium tax on captives stands at 1.75%, which is considerably higher than rates in established captive domiciles like Vermont, North Carolina, and Tennessee (0.3% to 0.4%). This tax differential has led some Florida companies, such as The Graham Companies, to domicile captives in states like Utah, which imposes no premium tax but requires physical presence and associated costs.
• Introduction of Protected-Cell Captives (PCCs)
  Senate Bill 990 authorizes PCCs in Florida, allowing multiple captive programs to operate under one legal entity with segregated assets and liabilities. This structure offers cost efficiencies and risk isolation benefits, proven popular in other states, and could attract new captive formations by lowering barriers to entry.
• Regulatory and Tax Enforcement Trends
  Florida is actively enforcing a 5.3% tax on insurance procured outside the state without a Florida-based broker or agent, incentivizing local insurance procurement and potentially driving captive formation domestically. Legislative efforts to address captive premium tax rates remain ongoing, reflecting a dynamic regulatory environment.
• Risk and Capital Management Considerations
  While captives can benefit from lower reserve requirements—sometimes as low as $250,000 in unrestricted net assets—successful Florida captives are expected to maintain substantial surplus levels to ensure financial strength and facilitate borrowing capacity. This approach balances flexibility with prudent risk management.

Insurance Industry Applications

• For Insurance Companies and Underwriters: Florida’s evolving captive market presents opportunities to partner with captive owners for tailored underwriting solutions. Understanding the specific regulatory framework and surplus expectations in Florida will be essential to accurately assess captive risk profiles and pricing.
• For Insurance Agents and Brokers: Agents can leverage Florida’s captive-friendly initiatives to advise clients on captive feasibility and domicile selection. The introduction of PCCs offers a new product to present to mid-market and large commercial clients seeking cost-effective captive solutions.
• For Corporate Risk Managers: Florida domiciled captives may provide a strategic vehicle for managing escalating property and liability premiums, particularly for industries heavily exposed to natural catastrophe risks. Using captives as leverage in negotiations with traditional insurers can result in more favorable premium terms.
• For Legal and Financial Advisors: The anticipated growth in Florida captives will increase demand for specialized actuarial, legal, and accounting services. Advisors should stay abreast of legislative changes, taxation nuances, and captive structuring options such as PCCs to support clients in captive formation and compliance.

Conclusion and Recommendations

Florida’s push to become a leading captive domicile signals a transformative opportunity for insurance professionals in the state. Captive insurance offers a compelling risk management strategy that can help mitigate the impact of rising premiums while fostering local economic growth. However, premium tax competitiveness and regulatory clarity will be decisive factors in attracting captives home to Florida.

Insurance professionals should closely monitor legislative developments, particularly around premium tax reforms and PCC implementation. Engaging proactively with clients on captive feasibility and domicile options will position agents, underwriters, and advisors to capitalize on Florida’s emerging captive market. By fostering a well-regulated and economically viable captive environment, Florida can retain insurance premium dollars locally and stimulate broader industry growth.

For more detailed insights, the original article can be reviewed at Carrier Management’s report on Florida’s captive insurance initiative.

Original Source: https://www.carriermanagement.com/news/2026/02/05/284208.htm