{"data":{"id":"us-ut/utah-code-31a-37-402","jurisdiction":"us-ut","citation":"Utah Code § 31A-37-402","heading":"Sponsored captive insurance companies -- Certificate of authority mandatory.","body":"(1) A sponsor of a sponsored captive insurance company shall be:\n(a) an insurer authorized or approved under the laws of a state;\n(b) a reinsurer authorized or approved under the laws of a state;\n(c) a captive insurance company holding a certificate of authority under this chapter;\n(d) an insurance holding company that:\n(i) controls an insurer licensed pursuant to the laws of a state; and\n(ii) is subject to registration pursuant to the holding company system of laws of the state of domicile of the insurer described in Subsection (1)(d)(i);\n(e) an approved captive management firm in Utah or its affiliates; or\n(f) another person approved by the commissioner after finding that the approval of the person as a sponsor is not inconsistent with the purposes of this chapter.\n(2)\n(a) The business written by a sponsored captive insurance company with respect to a protected cell shall be fronted by the sponsored captive insurance company through a controlled unaffiliated contract or an insurer that is:\n(i) authorized or approved:\n(A) under the laws of a state; or\n(B) under any jurisdiction if the insurance company is a wholly owned subsidiary of an insurance company licensed pursuant to the laws of a state;\n(ii) reinsured by a reinsurer authorized or approved by this state; or\n(iii) subject to Subsection (2)(b), secured by a trust fund:\n(A) in the United States;\n(B) for the benefit of policyholders and claimants;\n(C) funded by an irrevocable letter of credit or other asset acceptable to the commissioner; and\n(D) held by the sponsor as provided in Subsection 31A-17-404(1).\n(b)\n(i) The amount of security provided by the trust fund described in Subsection (2)(a)(iii) may not be less than the reserves associated with the liabilities of the trust fund, including:\n(A) reserves for losses;\n(B) allocated loss adjustment expenses;\n(C) incurred but unreported losses; and\n(D) unearned premiums for business written through the participant's protected cell.\n(ii) The commissioner may require the sponsored captive insurance company to increase the funding of a trust established pursuant to this Subsection (2).\n(iii) If the form of security in the trust described in Subsection (2)(a)(iii) is a letter of credit, the letter of credit shall be established, issued, or confirmed by a bank that is:\n(A) chartered in this state;\n(B) a member of the federal reserve system; or\n(C) chartered by another state if that state-chartered bank is acceptable to the commissioner.\n(iv) A trust and trust instrument maintained pursuant to this Subsection (2) shall be in a form and upon terms approved by the commissioner.\n(3) The business written by a sponsored captive insurance company with respect to an incorporated cell may be:\n(a) fronted by the sponsored captive insurance company in accordance with Subsection (2)(a); or\n(b) with prior approval of the sponsored captive insurance company, written directly by the incorporated cell.\n(4) A risk retention group may not be either a sponsor or a participant of a sponsored captive insurance company.","path":["Title 31A Insurance Code","Chapter 31A-37 Captive Insurance Companies Act","Part 31A-37-4 Sponsored Captive Insurance Companies"],"source_url":"https://le.utah.gov/xcode/Title31A/Chapter37/31A-37-S402.html","current_through":"2026 General Session","vintage":"","retrieved_at":"2026-09-03T11:34:33Z","sha256":"785aa17cd20e3df4c29a2851a2d5bd37b96c9c2fdddd7538526b7625d80023e6","source_id":"us-ut","stale":false,"prev":"us-ut/utah-code-31a-37-401","next":"us-ut/utah-code-31a-37-403"},"notice":"GroundRules: Original legal text. Not legal advice."}