Governor Ray Cooper has signed Senate Bill 347 into law in North Carolina, amending existing captive insurance legislation to incentivise redomestication to the state.
The amendments provide a premium tax holiday for two years for captives that redomesticate into North Carolina.
Subject to approval from the commissioner to operate as a North Carolina-domiciled captive on or before 31 December 2022, a captive formed and licensed under the laws of a separate jurisdiction is exempted from premium taxes for the year in which the redomestication occurs, as well as the following calendar year.
This subsection is set to expire for taxable years on or after 1 January 2024.
The new legislation also allows any sized captive to apply for exemption from the annual audit requirement. Previously, eligibility for this exemption was restricted to captives with less than US$1.2 million in written premium.
The commissioner will review exemption based on financial hardship on a case-by-case basis.
Another technical change under the new legislation amends the terminology describing the governance of a captive insurance company. SB 347 clarifies the definition of “governing board” and replaces all instances of “directors” with the phrase “governing board” or “governing board members”.
This is designed to provide clarification, as not all captive insurers are formed as stock insurers with a board of directors.
The substitution applies to all provisions concerning the licensing, authority and confidentiality of captives in the state.
You can read the commentary by members of North Carolina’s captive industry on SB 347 here.
