• 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).

  • Yes. Public Entity Excess Retained Limits Liability Insurance. This large risk liability plan sets forth the methodology to be used in the design and pricing of Excess Retained Limits Liability insurance to eligible large public entity risks. The large risk liability plan provides excess liability limits coverage to large public entity insureds who have chosen to self-insure a portion of their liability loss exposures and all or a portion of defense costs.

    These coverages include:

    • General Liability
    • Automobile Liability
    • Law Enforcement Liability
    • Public Officials & Employment Practices Liability
    •  Educators Legal Liability & Employment Practices Liability
  •  The ATA assessment will be per vehicle regardless if the vehicle is replaced or not. In the end, you would collect .50 for the old vehicle and .50 for the new vehicle during that reporting period.

    Example: VIN 999 is the only vehicle on a policy written in Sep. That vehicle was replaced with VIN 8888 in Dec. The ATA would collect .50 on both vehicles for a total of 1.00, or would that just be .50 since it is only one vehicle.

  • A.R.S. § 20-1510 takes effect on June 30, 2023.


    A.R.S. § 20-1510


  • The law applies to new and renewing transactions.  The session law in the bill makes clear that the new law applies to both new and renewing policies of insurance:

    Sec. 3. Applicability. This act applies to new policies of insurance and renewed policies of insurance issued from and after June 30, 2023.

    Furthermore, A.R.S. § 20-1510(A) refers to actions associated with a “policy of insurance” which includes new and renewal actions.  Therefore, an insurer may not decline to write, non-renew, cancel, or price new or renewing policies based solely on the possession of a certain breed of dog on or after that date. 

  • A3: If rules or policy documents, including applications, reference “breed” they must be consistent with the definition of breed in A.R.S. § 20-1510. 

    While not directly applicable to insurer transactions, the newly added definitions in A.R.S. § 11-1025 may be helpful.  Although, because these definitions do not appear in Title 20, policy forms may have definitions for “Aggressive”, “Vicious”, or “Provocation” that differ from those in A.R.S. § 11-1025.

  • The law defines “Policy of Insurance” as “a homeowner's or renter's policy of insurance.”  Thus, it will apply to all types of HO policies: HO1, HO2, HO3, HO4 (renters), HO5, HO6 (condo), HO7 (manufactured home), and HO8.  A policy of insurance does not include commercial, excess, or umbrella policies. 

  • A.R.S. § 20-1510 states that “the breed of a dog may not be the sole factor considered or used for … [u]nderwriting or actuarial processes for determining risk, liability or actual or potential losses related to claims involving dogs under a policy of insurance.”  Insurers may not use the breed of a dog to make an underwriting decision about what coverage will or will not be included in the policy.  In addition, an insurer’s base rates and/or rating factors may not be developed based on whether the policy includes or excludes coverage for particular breeds of dogs.  However, an insurer may exclude coverage for liabilities arising from possession of any dog, or for reasons not associated with the breed of the dog, such as a history of viciousness or aggression.

  • The “policy of insurance” is the entire policy.  Any riders or endorsements to the policy would not be considered separately from the liability coverage under the base policy. 

  • Yes, insurers will need to make clear statements in their rules, including underwriting manuals, that demonstrate the company will not decline, non-renew, cancel, surcharge, or increase premiums based solely on the breed of dog.

  • An insurer may impose underwriting criteria related to the possession of any dog, but not based on a specific breed of a dog.  An insurer may impose underwriting criteria unrelated to the breed of the dog. For example, it will insure homes with a dog greater than 40 pounds only if they have a 6-foot fence. 

  • Only if the dog breed is not the sole factor determining a rating or underwriting decision, and as long as the elimination of the non-related factors does not result in the dog breed being the sole remaining underwriting factor.

  • Yes, a HO policy exclude “Animal Liability” in its entirety for all animals.

  • Insurers may ask about dog breeds on applications, but A.R.S. § 20-1510 precludes the breed of dog from being the “sole factor considered or used for … [q]uestionnaires, surveys or other means of gathering information regarding ownership or possession of a dog or the presence of a dog on the premises insured or to be insured under a policy of insurance.”  Underwriting guidelines must clearly demonstrate that the insurer will not decline, cancel, non-renew, or raise rates based solely on a particular breed of dog.

  • Yes, the definition of “breed” in A.R.S. § 20-1510 is “the actual or perceived breed or mixture of breeds of a dog.” 

  • Yes, a policy exclude a specific dog with a history of biting or aggression, similar to an excluded driver on an auto policy?

  • If a company currently has rating and underwriting factors that result in surcharges, non-renewals, declinations, etc. solely because of dog breeds, the Department would expect to receive a filing revising rates and supplementary rate information (e.g., underwriting guidelines/manuals).  Similarly, if your policy or application forms reference dog breed in a manner that is not consistent with the new law, the Department would expect a form filing.

  • Yes, as long as the rating applies to the mere possession of any/all dogs in the household and does not discriminate by breed whatsoever.  

  • Yes,  insurers may ask other dog-related questions on the application, but unrelated to the breed of dog, such as bite history, age of dog, number of dogs.

  • Yes, as long as the insurer can demonstrate the adverse action was not based solely on the breed of the dog and the insurer is in compliance with the applicable cancellation and nonrenewal provisions in A.R.S. §§ 20-1652 through 20-1656.

  • Yes, as long as the insurer is not declining only for specific breeds of dog, but for the possession of any dog.

  • Yes, as long as the insurer is not reducing coverage only for specific breeds of dog, but for the possession of any dog.

  • Yes, umbrella coverage does not meet the definition of “policy of insurance” in A.R.S. § 20-1510