North Carolina Insurance Commissioner Mike Causey is praising a new state law which updates North Carolina’s Captive Insurance Act and impacts the premium taxes paid by captive insurers.
“We are grateful to all parties involved in getting this law over the line,” Commissioner Causey said. “Each of those who participated were committed to making North Carolina a great home for captive insurance companies. The time is right for those that want to be a part of the North Carolina captive program to make the move to our great state.”
Captive insurance is a formalized type of self-insurance that many businesses use as a means of managing their risks. North Carolina is a relative newcomer to the captive insurance industry, with the N.C. General Assembly enacting the state’s captive insurance law in 2013.
With passage of Senate Bill 347 and its technical corrections, companies that formed their captive insurance companies in other jurisdictions will have a strong incentive to consider moving them to North Carolina, a welcoming domicile for captive insurers.
The new law also includes a waiver of premium taxes for the year in which any captive insurer, whether onshore or offshore, moving its home base to North Carolina, as well as a waiver of the next year’s premium taxes. It is hoped that the premium tax holiday will entice those captive owners to move their captives to North Carolina.
Additionally, new law modifies the captive insurer audit exemption provision by granting the Commissioner the authority to consider captive insurers’ requests for an exemption from an audit when the cost would pose a financial hardship. Exemption requests from the annual audit and actuarial opinion requirement based on financial hardship will be considered by the Commissioner on a case-by-case basis.
Together, these two provisions provide for significant cost savings to those captive insurers and are expected to fuel continued growth for North Carolina’s captive insurance industry.
North Carolina has continuously demonstrated a strong commitment to the captive industry and has grown to its current ranking as the fourth largest U.S. domicile due largely to its modern law and commitment to customer service in a business-friendly regulatory environment.
The impact of the captive industry has been a positive one for the state. Since the 2013 enactment of the N.C. Captive Insurance Act, captive insurers have contributed nearly $200 million in positive economic impact to North Carolina.