North Carolina DOI
A decade of captive growth
Lori Gorman and Jackie Obusek of the North Carolina Department of Insurance give an overview of the state’s captives market as it celebrates its 10th year as a captive insurance domicile.
“Our state is consistently ranked as one of the best environments for business.”
Lori Gorman
North Carolina DOI
“The formation of the PAC goes a step further to provide support to the industry.”
Jackie Obusek
North Carolina DOI
When and why did North Carolina decide to become a captive insurance domicile?
North Carolina is celebrating its 10th anniversary as a captive insurance domicile. Captive insurance laws were needed in our state as North Carolina business owners previously had to approach other jurisdictions with the laws in place to form captives to manage their business risks. As a result, North Carolina was not receiving the premium tax revenue and positive economic impact being generated by the captives industry in other domiciles.
Conversations initiated between industry leaders, legislators and the Department of Insurance led the creation of a captive insurance law in North Carolina. While other states’ captive insurance laws were used as a base in drafting the legislation, changes were made to allow for discretion in regulating each captive according to its unique risk profile. The Captive Insurance Act was passed into law during the summer of 2013 and North Carolina licensed its first captive later that year.
How many captives are now domiciled in the state?
North Carolina has licensed or provisionally licensed more than 460 captive insurers since inception of the programme. Currently, there are nearly 300 active captive insurance companies domiciled in our state, including 10 risk retention groups. We have also approved more than 980 cells or series.
These numbers continue to increase as more business owners and service providers learn about the benefits of establishing a captive in North Carolina. North Carolina’s Captive Insurance Act provides for low-cost formation and operation of captive insurers and our state is consistently ranked as one of the best environments for business in the country.
What progress did the state make in 2022, and have there been any legislative changes?
Our dedicated team of professionals worked closely with approved captive managers and other service providers to license 62 new captives in 2022. North Carolina’s captive insurance programme continues to have broad support in the North Carolina General Assembly. Proposed legislation (Senate Bill 319), which has passed the North Carolina Senate, would extend a premium tax holiday as an incentive for previously formed captives to redomesticate to our state.
The bill would also reduce the retaliatory tax applied to risk retention groups to 1.85 from 5 percent, while clarifying that the cost of examination for these groups will be the responsibility of the examined company.
What do you see ahead for North Carolina as a captive insurance domicile?
We expect that North Carolina will continue to experience growth in its captive insurance programme and attract new business to our state. With the continued hardening of market conditions and newly emerging risks, businesses of all sizes are turning to captives as an alternative to the commercial insurance market. Captive owners are seeking to manage their risks and control costs by accessing the reinsurance market and customising coverages to fill gaps not readily available in the traditional marketplace.
What else can you highlight about North Carolina?
The North Carolina Captive Insurance Association has formed a state-level political action committee (PAC). North Carolina’s captive insurance programme has long benefited from the collaborative support of North Carolina insurance commissioner Mike Causey, the legislature, and our association.
The formation of the PAC goes a step further to provide support to the industry and education to the general public about captive insurance companies in a more formalised manner. More information about the association may be found by visiting www.nccia.org
Lori Gorman is the deputy commissioner of the North Carolina Department of Insurance’s Captive Insurance Companies Division. She can be contacted at: lori.gorman@ncdoi.gov
Jackie Obusek is the chief deputy commissioner of the North Carolina Department of Insurance. She can be contacted at: jackie.obusek@ncdoi.gov
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