Louisiana Unveils “CHOICES” Law to Transform Captive Insurance Landscape

Louisiana has enacted sweeping new legislation aimed at transforming its captive insurance market and attracting more businesses to domicile in the state. Known as the Creating Holistic Options in Coverage for Enterprise and Self‑Insurance (CHOICES) Law, the measure introduces significant regulatory reforms designed to make Louisiana more competitive with established captive insurance hubs like Vermont and Utah.

Signed into law on June 20, Act 313 creates a tiered licensing system for different types of captive insurers, including pure captives, association captives, and risk-retention groups. The law reduces capital requirements, with pure captives now needing just $250,000 in capitalization to operate. It also lowers the cost of doing business by setting premium taxes on a sliding scale—ranging from $7,500 to $200,000 annually—while exempting captives from the state’s guaranty fund requirement.

To further reduce friction for businesses, the legislation grants the Louisiana Insurance Commissioner expanded authority to approve licenses, set capital standards, and oversee operational details such as reinsurance programs and investment strategies. Captives writing excess workers' compensation and other specialized lines will now face fewer procedural barriers, though solvency and corporate governance standards still apply.

A key feature of the law is the creation of a "dormant captive" designation, allowing insurers to suspend operations without dissolving entirely. This provides flexibility for businesses navigating economic shifts or evolving risk-management needs. The new framework also makes it easier for captives based in other states or countries to redomicile in Louisiana, further signaling the state's intent to compete globally in the captive market.

Industry experts have praised the move. One consultant called the new law a “game-changer,” noting that Louisiana had previously struggled to attract captives due to outdated regulations and higher costs. Representative Bubba Chaney, one of the bill’s authors, emphasized that the goal was to build a business-friendly captive domicile that fosters innovation and economic development.

Captive insurance, which allows companies to insure their own risks through wholly owned subsidiaries, has gained traction across the U.S. as commercial insurance markets tighten and premiums rise. Louisiana’s reforms reflect a growing recognition that the captive model can provide companies with more control, cost savings, and customized coverage solutions.

The CHOICES law positions Louisiana to benefit from this shift. By reducing red tape, cutting costs, and signaling a strong regulatory commitment to captive growth, the state is making a calculated bet: that a modern, flexible captive insurance framework will attract new investment, support local job creation, and elevate Louisiana's profile as a center for financial services. Whether that bet pays off will depend on how effectively the state executes its vision—and how businesses respond to the new opportunity.