Florida Expands Captive Insurance Framework with Protected Cell Legislation

Florida has enacted legislation creating a statutory framework for protected cell captive insurance companies, marking a significant update to the state’s captive insurance laws.

CS/CS/HB 883, sponsored by Representative Tom Fabricio with companion legislation sponsored by Senator Tom Leek, was approved by Governor Ron DeSantis on May 11, 2026, and will take effect July 1, 2026.

What Is a Protected Cell Captive?

Captive insurance allows a business to form or participate in an insurance structure designed to insure certain risks that are typically not covered by the traditional commercial insurance market. Under Florida law, a captive insurer may apply to transact any and all insurance authorized under the Florida Insurance Code, other than workers’ compensation and employer’s liability, life, health, personal motor vehicle, and personal residential property insurance.  A protected cell captive insurance company, or PCC, is a single captive insurance company that may establish separate protected cells for different participants.

Each protected cell is designed to segregate and insulate an identified pool of assets and liabilities from the assets and liabilities of other protected cells and from the captive insurer’s general account. This structure allows participants to access captive insurance benefits without forming a standalone captive insurer.

Key Provisions of the New Law

The legislation amends Florida’s captive insurance statutes to include protected cell captive insurance companies within the definition of captive insurance company. A PCC may insure only the risks of its protected cell participants.  A “participant” is a person or entity, and any affiliate of such person or entity, which is insured by a PCC, if the losses of the participant are limited through a participant contract.

The new framework authorizes one or more sponsors to form a PCC and requires Office of Insurance Regulation (OIR) approval of the company’s plan of operation for each protected cell. A “sponsor” is any person or entity approved by the OIR to provide all or part of the capital and surplus required by law, and to organize and operate a PCC. Participant contracts also require prior written approval by OIR, and the addition of a new protected cell, withdrawal of a participant, or termination of a cell constitutes a plan-of-operation change requiring OIR approval.

The law establishes minimum financial requirements for PCCs, including at least $100,000 in unimpaired paid-in capital and at least $100,000 in unimpaired surplus. For nonprofit PCCs, the law requires at least $100,000 in unrestricted net assets.

The statute also includes detailed requirements for accounting, asset segregation, financial reporting, reinsurance contracts, dividends and distributions, insolvency procedures, and legal proceedings involving protected cells.

Litigation and Regulatory Implications

The new law has practical significance for insurers, reinsurers, captive managers, risk managers, and businesses evaluating alternative risk-transfer structures.

In litigation, pleadings involving a PCC must specify which protected cell or cells are parties to the action. If a legal action does not identify a protected cell, the action is deemed to be brought against the general account only. The law further provides that a nonparty protected cell is not deemed a party to the litigation and that assets of one protected cell generally may not be encumbered or seized to satisfy obligations or judgments against another protected cell.  Any protected cell that is not named in the pleadings of a lawsuit may not be deemed to be a party to the legal action, and any protected cell that is erroneously named as a party or named without proper cause is entitled to prompt dismissal from the lawsuit.

From a regulatory standpoint, PCCs will be subject to OIR oversight, including approval of plans of operation and participant contracts, annual financial reporting, examination authority, and notice requirements if a protected cell becomes insolvent or unable to meet claim or expense obligations.  Further, the business written by a PCC, with respect to each protected cell must be:

• Fronted by an insurance company licensed under the laws of any state;
• Reinsured by a reinsurer authorized or approved by Florida; or
• Secured by a trust fund in the United States for the benefit of policyholders and claimants or funded by an irrevocable letter of credit or other arrangement that is acceptable to OIR. The amount of security provided may not be less than the reserves associated with those liabilities which are neither fronted nor reinsured.

 What Comes Next

Effective July 1, 2026, Florida will join the majority of U.S. jurisdictions that recognize protected cell captive insurance companies. The new law may make Florida a more attractive domicile for businesses seeking captive insurance solutions, particularly companies with complex risks, high deductibles, self-insured retentions, or coverage needs not efficiently addressed in the traditional market.

Businesses considering a protected cell captive structure should evaluate the new statutory requirements, OIR approval process, capitalization obligations, tax considerations, governance structure, and litigation implications before moving forward.