North Carolina Touts Growth of 5-Year-Old Captive Insurance Program

April 16, 2018

North Carolina’s captive insurance company program, now in its fifth year of operation, has established itself as a leading domicile for captive insurance companies, according to a statement from North Carolina Insurance Commissioner Mike Causey.

The North Carolina Captive Insurance Act enacted in October 2013 enabled the formation and operation of captive insurers in North Carolina. Since the program’s inception, the North Carolina Department of Insurance has licensed 248 captive insurers and approved 437 cells and series.

As of April 5, 2018, 635 risk-bearing captive insurance entities are under the regulation of NCDOI, including 232 active captive insurers and 403 active cells or series.

The 232 active captive insurers are comprised of the following:

  • Pure captive insurers: 180
  • Protected cell captive insurers: 26
  • Risk retention groups: 6
  • Special purpose captive insurers: 20

Captive insurance is a type of self-insurance through which a business may form its own insurance company to insure its risks. Potential benefits of captive insurance include reduced insurance costs, stabilized pricing, customization of policy terms and conditions to meet a business’s needs, and the ability to obtain coverage that is not readily available or too costly in the commercial market.

Growth of the program is attributed to the formation of new captive insurers and the transfer of other captive insurers to North Carolina from other U.S. and off-shore domiciles. Although the growth of small captive insurers continues to be strong, North Carolina is also seeing an increase in the licensing of larger captive insurers and risk retention groups, the statement from NCDOI said.

These insurers are primarily writing property and casualty lines of business; however, the NCDOI reported it continues to see an upward trend in the formation of medical stop loss captive insurers.

Other lines of business written by recently formed North Carolina captive insurers include tenant liability, surety, commercial auto, and warranty liability insurance.

The 2017 NCDOI captive insurance economic impact study is anticipated to be released in May 2018. NCDOI said the purpose of this study is to determine the favorable financial impact of the captive industry on the state’s economy.

“I applaud and welcome the solid growth of the state’s captive insurance company program,” said Commissioner Causey. “In just five years, as captive insurance companies have made North Carolina their home, the program’s growth has positively impacted the state’s economy by creating jobs and generating premium taxes and business revenues.”

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