North Carolina has introduced a captive bill, which includes two proposed changes affecting the premium tax paid by captive insurers.
Senate Bill 37, introduced on 24 March, has three primary sponsors, Senators, Todd Johnson, Tom McInnis and Chuck Edwards.
It has been referred to the Senate Committee on Commerce and Insurance, where the three Senators are also the co-chairs of the Commerce and Insurance Committee.
The proposed changes to premium tax paid by captive insurers include a provision to require special purpose captive insurers with a cell or series structure to pay the same tax as that imposed on protected cell captive insurers as well as a premium tax holiday.
Lea Riddle, North Carolina Captive Insurance Association (NCCIA) chair, explains that the association has worked in concert with the North Carolina Department of Insurance (NCDOI) to develop technical corrections and the centrepiece of the bill, a provision to attract domestications to North Carolina through a ‘premium tax holiday’.
Riddle says “The remaining provisions enhance administrative discretion to streamline operations. We are appreciative of the legislative leadership’s support of the legislation.”
The bill will include exemption from the annual audit requirement for captive insurers amended to be substantially similar to the wording contained in a similar exemption for traditional insurers.
It will also have a clarification that information contained in material business plan amendments and other notifications submitted by captive insurers to the commissioner pursuant to GS. 58-10-395, dividend and distribution information pursuant to GS. 58-10-375, and affiliated loan and investment information pursuant to GS. 58-10-440 is confidential just as the statutes provide confidentiality for the information contained in the original business plan submitted to the commissioner through the license application.
“This legislation is designed to provide additional incentives to businesses so they will bring their captive insurers to North Carolina,” says commissioner Mike Causey.
Commissioner Causey adds: “Our captive insurance industry has created jobs and generated revenue for this state, and it is imperative to keep our already attractive laws on the leading-edge to continue to invigorate our captive insurance industry.”
Senior deputy commissioner, Debbie Walker of the Captive Division at NCDOI, states: “This bill should entice captive insurers domiciled elsewhere to move to North Carolina by waiving premium tax for the year they move and the following year. (Long term impact will be to increase premium tax and NC business revenues).”
“In many instances large North Carolina businesses (and businesses located out of state) formed their insurers in other jurisdictions before North Carolina enacted captive enabling laws and it benefits North Carolina to incentivise those insurers to come to North Carolina. Although the premium tax would be waived initially, on a long-term basis North Carolina will generate more premium tax from captives moving to the state,” Walker adds.
According to NCCIA president and CEO Thomas Adams, the legislation will now proceed through the committee process with stops in both commerce and Insurance and then on to the finance committee to deal with the tax issues contained in the bill, before proceeding to the floor for a vote.
The legislation will then face a similar process in the house.
Earlier this year, it was announced that North Carolina licensed 47 captive insurance companies and approved 126 cells and series in 2020.
