The 2025 Legislature passed several meaningful structural reforms that may have gone unnoticed. One was HB 2334. The bill updated the regulatory and legal framework in Kansas for captive insurance products. House Commerce Chairman Sean Tarwater, also a licensed insurance agent, led the effort to allow Kansans the opportunity to reconsider how they think about managing risk and keeping Kansas laws competitive with other states.
Captives represent a relatively new insurance product that is quickly gaining acceptance worldwide. Hundreds of Kansas companies had already begun using captives, but until this legislation passed, they could only use companies based out of state. Now, local companies can set up captive insurance right here in Kansas.
A captive is a form of self-insurance often adopted when a business desires to exert control over the claims process and pay itself, rather than a commercial insurer, to lower costs. On June 3, the Kansas Business Roundtable hosted a discussion about how captives function and the benefits they can provide. Ryan Ralston, President of Elevate Risk Solutions, also explained how the use of captives can change the business model regarding reinsurance.
As Senator Kellie Warren noted during the conversation, HB 2334 was instrumental in bringing a new industry to Kansas. The benefits to businesses of the new regulations include more options to innovatively manage risk than just traditional insurance, better insulation from volatility in the commercial insurance market, and lower costs for risk management.
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As a Kansas business owner, I appreciate seeing our state take steps to provide more options for managing risk. Captive insurance can be a valuable tool for companies looking to control costs and plan for the future. This seems like a positive move for Kansas competitiveness.