South Carolina has passed a new bill that cleans up the captive legislation in the state.
HB 4675, which was signed by the state governor on 18 May, was focused on cleaning up the state’s original captive legislation, Chapter 90 of South Carolina Code of Laws, removing anything unnecessary and modifying the language to avoid any confusion.
According to Jeff Kehler, captive programme manager at the South Carolina Department of Insurance (SCDOI), the bill was “probably the most extensive clean” since the state’s original captive statute was signed into legislation on 1 June 2000.
The bill was a product of collaboration between the state legislature, the SCDOI, and the South Carolina Captive Insurance Association (SCCIA).
One of the notable amendments made in the bill was a clarification of a statement about a captive’s principal place of business.
Previously it required the captive to have an office in South Carolina, usually done by a captive manager, but under the new clarification only the books and records of the captive need to be made physically available to the director in the state should he need to physically examine them.
Additionally, the required frequency of board meetings in the state was clarified, and ‘unimpaired capital’ and ‘free surplus’ were combined to leave only one number required for capitalisation.
HB 4675 also alters the date that non-risk retention groups (RRGs) are required to file their annual reports by to 1 July, instead of 1 March.
The examination schedules for non-RRGs were also modified, meaning that after the first-three-year financial examination the company can be examined at the discretion of the director.
Kehler said the alterations to the legislation would make business more efficient and more cost-effective for both existing and new captive owners.
He stated: “It doesn’t compromise our regulatory regime at all and it is really an investment in making our domicile more attractive and helping those who are willing to make an investment in the state by increasing efficiency and cost-effectiveness.”
“This was an effort to emphasise the fact that South Carolina is a domicile that is easy to do business with, with professional regulators, and we took the time and effort to go through our statute line by line and ensure that we are a business savvy and friendly domicile for our captive owners.”
Kehler added: “It was the regulatory, the association and the industry, and the legislature all working together to get this done.
“The end result is a captive statute that is up to date and emphasises our ease to do business with and our regulatory efficiency.”
