• YES. While we do not explicitly approve service providers in the usual sense, we generally consider changes in providers to be material changes to the plan of operations subject to our prior approval pursuant to A.R.S. 20-1098.22. See the Reference Guides on our website for more information about what is required when changing captive managers (section 3), opining actuaries (appendix A), and independent audit firms (appendix B).

  • See the current captive Reference Guide on our website for more information, including Appendix B. AZ captive law is also instructive, specifically A.R.S. 20-1098.07(B)

    Note the qualified auditor is expected to issue what is commonly called an Awareness Letter in conjunction with its first annual audit of an AZ captive. See the Reference Guide, Appendix B, section 6.

  • Qualifications may vary by the line(s) of insurance business, etc. and are guided in no small part by standards set by the actuarial profession. However, generally, it means someone who is a member in good standing of the Casualty Actuarial Society or a similar professional organization who has knowledge and experience in the insurance business, including issuing actuarial opinions and related reports for captives or other insurers. See the current captive Reference Guide on our website for more information, including Appendix A. AZ insurance law is instructive, specifically A.R.S. 20-696.01 thru 20-697.01. Generally, as long as the actuary to be used is qualified and complies with applicable professional standards, he/she may be an employee of the captive’s organization.

  • A person or organization that meets the definition of a “manager” in captive law, specifically, A.R.S. 20-1098(17).

  • NO. Unlike some other U.S. captive domiciles, Arizona does not approve ANY service providers, and therefore, does not maintain a list of such providers. DIFI expects captive owners and their advisors to engage qualified service providers, including captive managers, actuaries, auditors, banks, investment managers, and others as applicable.

    However, for captive managers, we expect an opportunity to become familiar with any manager that does not or has not managed an Arizona captive. Any such managers should submit to us a completed Captive Insurer Management Firm Profile available on our website and be prepared to answer any questions we may have before they engage with a current or proposed AZ captive.

    And, although we do not approve the manager, per se, we will review management agreements and any other relevant information available and may have questions or concerns with terms, etc.

    Finally, we reserve the authority to require an AZ captive insurer to change providers if warranted, e.g. if a provider is not providing adequate service to its client in complying with AZ requirements. Note that we are not otherwise in a position to identify, recommend or discourage the use of any particular service provider, though we may be able to give our perspective in general terms.

  • There is no exact answer to this question or standard form; it will depend on facts and circumstances, including the nature and magnitude of the change. In general, all business plan change requests will include a request letter with a description of the proposed change, the proposed date of the change, the purpose, rationale and/or drivers of the change, and other basic information that may include a before and after comparison of the relevant aspects of the change.

    When changing the insurance program, e.g. structure, coverages, limits, reinsurance ceded or assumed, etc., we would expect additional information to support the premium and losses expected if it is implemented, including formal or informal analysis of pricing, copies of draft policy language and/or reinsurance agreements, and the financial effects of the change, e.g. an updated pro forma balance sheet or income statement. Including commentary or rationale regarding whether or not the new risk profile would warrant a change in the amount of capital in the captive or not may also be useful.

  • The Jurat page of the captive annual report lists the board members and officers at a point in time. A completed bio should be submitted to DIFI for any new board member or officer in a timely fashion after the change takes place. The new bio, usually sent to us by email attachment but may also be mailed, should be accompanied by a cover letter explaining the change and purpose of the new bio.

    While DIFI reviews new bios sent to us and may have questions or concerns, we do not generally approve new members as part of this update. If a bio was recently submitted and in our files for a member, a new bio may not be necessary, though if older than 2 to 3 years, we are likely to expect an updated version.

  • At this time, there are a number of options to pay applicable fees though there is variation depending on which fee is being paid. See the table for the available methods for each payment purpose:





    DIFI portal

    NAIC OPTins

    Original license application/insurer ($1,175, total)




    Original per cell application ($1,000)




    Annual license renewal fee/insurer ($5,500)




    Annual renewal fee/per cell ($2,500)




    License amendment fee ($200)




    Amended charter document fee ($30)





    Checks should be mailed to DIFIs mailing address. The DIFI website is a good resource to verify the correct address. The captive license application form(s) should also have the current mailing address and basic payment instructions.

    Checks should be accompanied by a completed transmittal form (on our website) or a cover letter to indicate the purpose of the payment and identify the entity to which it applies. Failure to do so may cause delays in processing or the check to be returned.

    The DIFI portal can be found on the website, currently at the Click here to make a payment link on this page: https://azinsurance.online/upload/captiveannual. This is also the main webpage for making state-specific captive report filing submissions annually (or quarterly if applicable). Payments can be made using ACH/e-check or most major credit cards (not AMEX). There is no fee or need to create an account to make a payment using the DIFI portal.

    OPTins is a payment system maintained by the National Association of Insurance Commissioners (NAIC). Currently, this system can be used for most DIFI fees other than the flat annual license renewal of $5,500. DIFI does not administer or control this system, but has access to payment information made in this manner. Users wishing to make AZ captive payments using OPTins will need to establish an account with the NAIC. See more information at: optins.org. There is no account fee, but NAIC charges a flat fee (not a DIFI fee) per transaction to make payments using the system.

  • NO. We are not in a position to waive, modify, or extend established requirements including those related to captive filing due dates, fee payments, etc. However, based on a request made prior to the due date, for good cause and an estimated submission date, we may be able to forgo the assessment of late fees at our discretion. Note that late fees generally are applied per day late.

  • The primary due dates are established by statute or regulation. They include the captive annual report and renewal fee payment which are due 90 days following the captive’s fiscal year-end (FYE). For captives with a calendar FYE, the due date is March 31 of the following calendar year. The annual independent audit report is due not later than six (6) months following the FYE. In addition to the annual filings, all AZ risk retention groups are also subject to required quarterly statement filings due not later than 5/15, 8/15, and 11/15.

    See the Captive Insurer Reference Guides and the DIFI and/or NAIC website for more information about RRG and non-RRG requirements and due dates.

  • See the relevant section (section 5 or 6) in the Reference Guides on our website.

  • The most common reason to amend a captive license is to add lines of insurance authority. For example, a current license may include authority to write Casualty without Workers Compensation insurance. The captive requests and receives DIFI approval for a business plan change to add Property or Surety or some other coverage, contingent on adding that authority to its license.

    To amend the license, the insurer should complete and submit to us the Application for Certificate of Authority Captive Lines of Business Change form by email attachment or mail, along with the current printed original Certificate of Authority being replaced. If the original license cannot be located, a completed and signed Affidavit of Lost Certificate of Authority should be sent instead. A check for $200 payable to DIFI is due as well that includes a cover letter indicating the purpose of the check. If you cannot locate the relevant forms on our website, we can provide them to you.

  • The fee schedule applicable to AZ insurers, including captives, is located on our website at the link below. 


    Fee Schedule

  • There may be other fees required in some circumstances, most often in one of two categories:

    • Protected cells: Additional application fees will apply with applications for protected cells connected to a protected cell captive insurer license. The examiners revolving fund and charter document fees do not apply for each protected cell. The $1,000 fee applies to each new cell to be formed whether at original license application or at a later date. [Fees to ACC will likely apply if the cell is a distinct legal entity, e.g. a corporation or LLC.]
    • Additional review fees for specialists, etc.: The Department may need to engage contractors to assist with an application review, particularly if it requires the expertise of a specialist, usually an actuary. These costs will be borne by the applicant. Every effort will be made to communicate the estimated cost of such services before they are incurred. Such fees are most commonly, but not always, associated with applications for new risk retention groups and will be billed separately.
  • There are three primary components to the captive application fee totaling $1,175. All are payable to the Arizona Department of Insurance and Financial Institutions. The components are:

    $1000 – new license,

    $100 – examiners revolving fund

    $75 – charter document fee

    Note: There is normally also a $60 fee payable to the Arizona Corporation Commission (not to DIFI) related to the legal entity formation. See the ACCs website for specific information.

    The initial application fee represents the license fee for the first year (or partial year) of the captive’s licensing. As an example, a calendar year captive that gets its initial license effective November 1, 2022, will be expected to make its first annual report filings based on the two months of licensing and pay the first annual license renewal fee ($5,500) in connection with those filings by March 31, 2023.

  • The license effective date will default to the date the Director formally approves the application. The effective date will NOT be earlier than the Director’s approval date, though we may be amenable to establishing a reasonable later effective date.

  • Once the captive license application is initially approved, there will likely be one or more administrative steps in order to complete the application process and receive a captive license – we will communicate those to you at initial approval. While there may be others, the most common steps for the applicant to complete are to execute a license Conditions Addendum, if any, and to initially fund the captive with at least minimum required capital. Completion of administrative steps is generally expected to occur within 60 days of initial application approval.

    Arizona does not release a printed version of the captive license, but instead sends a soft copy to the applicant contact, usually by email attachment. This version is considered the ORIGINAL and should be returned to us if and when it is surrendered for amendment or withdrawal, or for some other reason, usually in the form of a printed copy.

    Note: AZ does not license individual protected cells, only the protected cell captive insurer, sometimes referred to as the “Core”.

  • Incomplete applications make the review and licensing process inefficient and cause confusion and delays. Here are some typical issues associated with an incomplete application:

    • Application form line items are left blank, do not address the request, or are inconsistent relative to other responses.
    • Key aspects of the business plan are not well-developed, e.g. negotiations with key participants are not far along, policy documents or reinsurance terms are not well-established or known.
    • Financial statements of the captive’s direct parent or, if applicable, a direct upstream entity, are not provided.
    • Corporate governance documents are: not submitted, inconsistent with each other, or incomplete.
    • The feasibility study is not submitted, does not support the financial aspects of the business plan, or is otherwise inadequate or incomplete.
    • A statement under oath by the President and the Secretary showing the captive’s financial condition is not submitted or is not properly signed.
    • The submission includes a set of financial pro forma that do not include an adverse scenario, or do not comport with other information in the business plan, feasibility study, or other exhibits.
    • The application fee payment is not made/received.
  • A.R.S. 20-1098.01(L) provides for a 30-day time frame from receipt of a complete application to a director approval or denial decision. The average decision time frame in recent years has ranged from 35-50 days, though the actual time frame of any particular application can vary significantly from that range. We try to work within the applicant’s desired time frame, and make every reasonable effort to help the applicant complete the application and perform an efficient review to make a recommendation to the Director.

  • Section 1 of the two Reference Guides on our website provide guidance on how the application process usually takes place for non-RRGs and RRGs. The captive application form noted above also has useful information in the introductory section.
  • The current Captive Insurer Certificate of Authority Application form is located on our website in the Captive Insurer License App section at: difi.az.gov/captive-division

    The application is free form and all items should be answered whether applicable or N/A.

    If the captive application includes protected cells, the application should include a completed Captive Insurer Protected Cell Supplement Application (a per-cell application fee also applies). That form is also found at the link above.

  • This information is available at the Captive Division Facts and Statistics exhibit link on our website located at difi.az.gov/captive-division and is generally updated every two months.

    This exhibit provides publicly-available information about the program. Information associated with AZ captives is subject to confidentiality provisions per A.R.S. 20-1098.23.

  • A lot of useful information is located on the DIFI website. The two primary web pages specific to the AZ captive program are:

    Captive Division 

    Financial Reporting - Domestic: Captive Insurer

  • Applicable statutes are available online at https://www.azleg.gov/arstitle/ (see primarily Title 20), or through the Department of Insurance and Financial Institutions (DIFI) website at https://difi.az.gov/laws, which is also where to find formal regulation (administrative code), including R20-6-2002 related to certain captive fees. Captive-specific law is located in the sections of A.R.S. 20-1098, et seq and 20- 2401, et seq, though other general insurance law applies in many respects (see 20-1098.15).