The first full year of North Carolina’s captive insurance program has “exceeded expectations,” according to a statement from North Carolina Insurance Commissioner Wayne Goodwin.
While he’s pleased with the progress, Goodwin nevertheless plans to recommend changes to the law in the upcoming legislative session so the program remains competitive with other domiciles. His office would not give details at this time.
North Carolina began licensing captive insurance companies in late 2013. As of Feb.1, 2015, the state had approved 53 domestic captives. Forty-nine of those captive approvals came in 2014, a number that is higher than NCDOI’s original estimate of 40 licensed captives by the end of the year.
The total premium written in 2014 by North Carolina captives has not yet been determined as the NCDOI has still not received annual reports, but the NCDOI estimates the number to be approximately $125 million in direct and assumed premium was written.
Captive insurance is typically a form of self-insurance in which an insurance company is formed to insure the risks of the parent company and its affiliates.
Captive insurance has a positive impact on the economy, according to the North Carolina Department of Insurance (NCDOI).
“When captive insurance companies form in or relocate to North Carolina, they create jobs, generate premium tax revenue and bring business to the hospitality industry in our state,” said Goodwin. “I am proud of our progress toward becoming a leading captive domicile and look forward to what I’m confident will be another successful year.”
Debbie Walker, director of Captive Insurance for the NCDOI, told Insurance Journal that the Captive Insurance Act passed in 2013 has encouraged captives to form in North Carolina because it “provides regulatory flexibility ” and allows the commissioner some discretion in the regulation.
According to Walker, the businesses like that North Carolina law allows for reasonable captive requirements; competitive premium tax rates; the formation of both incorporate cells and protected cells in a protected cell captive insurance company; and possible annual audit exemption for captives writing less than $1.2 million in premium.
In 2014, lawmakers amended the original captive law to allow for the formation of special purpose captive insurance companies and added even more regulatory flexibility, said Walker.
And the state is not through. She said NCDOI will be proposing additional legislative changes that she believes the “captive industry will find favorable.”
Walker said NCDOI intends to continue marketing the North Carolina captive program at national and state captive conferences and partnering with service providers to educate the public on the benefits of captive insurance.
Three types of captives have been formed in North Carolina as of Jan. 31 of this year: 39 “pure” captives; 11 protected cell captives; and three special purpose captives, which includes micro-captives that are providing insurance to their owners and affiliates for enterprise risks.
Other captives formed during 2014 provide insurance including but not limited to medical stop-loss insurance for self-insured health benefit programs; workers’ compensation deductible reimbursement insurance; reinsurance of workers’ compensation insurance and reinsurance of mortgage guaranty insurance.
Was this article valuable?
Here are more articles you may enjoy.