Alabama DOI Lifts 16-Month Moratorium on New Captive Insurers in the State

Now that a new Alabama law has had time to take effect, the state Department of Insurance has lifted a 16-month moratorium on new captive insurance companies in the state.

A captive manager and supporter of the new law said the move is good news for Alabama and for firms who want to domicile captives in the state.

“Alabama captives are back,” said Travis Bowden, a former Georgia insurance regulator and now president of Crossroads Risk Management. “The lifting of this moratorium has occurred at an ideal time as Alabama is continuously explored as a strong option for filers seeking new risk management strategies.”

Alabama Insurance Commissioner Mark Fowler did not say why he imposed the temporary moratorium on processing new captives in March 2025, then extended it last October. But Bowden said the moratorium was done in part because of DOI concerns about the state’s relatively low solvency and reserve requirements for captives.

House Bill 415, approved by state lawmakers this spring and signed by Gov. Kay Ivey, took effect June 1. It addressed most of the concerns that regulators had about a potential proliferation of captives, as has been seen in a few other U.S. states. The law raised the capital requirement for pure and protected-cell captive companies, from $100,000 to at least $250,000. It also stipulates at least $1 million in capital for risk retention groups.

The state insurance commissioner will be authorized to require higher reserve funding levels, based on actuarial analysis.

The measure also updated 50-year-old statutory language on formation and renewal of captives and RRGs; it will require companies to have bank accounts in the state; it will give the commissioner more authority to require firms to terminate captive managers who fail to fulfill their duties. The law also requires firms to submit plans of operation that detail the types and limits of insurance to be provided, along with financial statements, underwriting policies, claims-handling procedures and ratemaking procedures, the bill reads.

That was enough to lift the moratorium, Fowler said in a bulletin last week.

“Effective July 1, 2026, acceptance and processing of new filings for registration of captive insurance companies and domestic risk retention groups will be accepted and resolved in the ordinary course,” the bulletin reads.

The law and the regulations have put Alabama on an equal footing with many other states, Bowden has said. Alabama had only about 80 domiciled captive firms as of 2024, according to the National Association of Insurance Commissioners. But a few other states have embraced the captive domicile model, due in part to the promise of revenue from premium taxes and fees on captives, and it’s likely that Alabama could follow suit.

“Through the resumed activity found in new captive insurance company and Risk Retention Group formations, Alabama will continue to provide more bespoke and customized options for entities as they expand their operations,” Bowden said in a statement.

Vermont led the nation with about 680 captives in 2024; North Carolina boasted 300; and 184 were in Tennessee, the NAIC reported. Captive supporters in other states, including Florida, also have made plans to expand domiciles for the increasingly popular insurance model for businesses. Read more here.