North Carolina Department of Insurance
The state was one of the standout US domiciles for new formations during 2015. Debbie Walker of the North Carolina Department of Insurance reveals why
How has North Carolina’s captive programme grown since its inception in 2013?
The programme has grown in several ways. During the last two full years, the number of captive insurers licensed in North Carolina has increased to 96, and the number of cells or series has increased to 240.
The number of captive managers that are active in the North Carolina captive insurance company programme continues to grow. Currently, there are 23 captive managers actively managing North Carolina’s licensed captive insurers.
North Carolina’s captive service provider base also continues to grow. Today, there are more service providers, such as auditors, attorneys, investment advisors, captive managers and others, that have a physical presence in this state.
Additionally, there are many providers from outside of North Carolina that are active in our captive industry.
Due to the growth of the captive industry, North Carolina is benefiting from job growth and the receipt of increased premium tax revenue, service provider revenues and hospitality revenues, resulting in a favourable economic impact on the state.
Finally, the North Carolina Department of Insurance, the North Carolina Captive Insurance Association and the legislative leadership of the state are continually addressing national issues that have an impact on the captive insurance company industry.
What factors do you believe have contributed to the success of the North Carolina’s captive programme?
The North Carolina Captive Insurance Act provides the state’s insurance commissioner with discretion to appropriately regulate captive insurance companies. Our legislation is structured so that a one-size-fits-all regulatory framework is not imposed on captive insurance companies licensed in North Carolina.
The participation by the department’s senior management in the captive insurance programme is unique from what is seen in other captive insurance company domiciles. Our senior management team is accessible and available for conference calls and meetings to discuss our captive programme. Additionally, the captive regulatory team is professional, helpful and responsive to the captive insurance company industry.
The North Carolina Captive Insurance Act and the Department of Insurance’s regulatory approach allow for low costs for captive insurers and the programme has benefited from the support and contributions of the North Carolina Captive Insurance Association, captive insurer owners, captive managers, and other service providers.
What do you think makes North Carolina stand out from other competitive domiciles?
There are a number of benefits to forming a captive insurance company in North Carolina. First, North Carolina’s law provides the state’s insurance commissioner with discretion to regulate each captive insurance company as deemed appropriate. Not being tied to a one-size-fits-all approach, we subscribe to financial requirements that are tailored to the specific risk profile of each captive insurance company.
The North Carolina Department of Insurance’s regulatory approach provides for a low cost of captive insurance company operations in North Carolina. For instance, the department does not charge any fees whatsoever. Also, the department does not contract with outside consultants. It uses in-house analysts, auditors and actuaries to conduct all application reviews, financial filing reviews, and audits, so that expenses are not passed on to the captive insurers, as is done in some other jurisdictions. These are just some of the factors contributing to the lower costs of operation.
In addition, the Department of Insurance takes a smart, sensible, pro-business approach in its regulation of captive insurers. By this we mean our regulatory approach is effective and prudent but not burdensome for North Carolina captive insurance companies.
Our intent is to focus more of our resources on those captive insurers that require additional regulatory scrutiny and allow the well-managed, successful captives to conduct their business with less regulatory involvement.
The department is dedicated to providing outstanding customer service to the captive insurance company industry. Our senior management and our captive regulatory team are accessible and available for telephone calls, meetings and educational events. We are reaching out to businesses and their trusted advisors to educate them about the use of captive insurance for the management of their risks and the North Carolina captive insurance company programme.
Was 2015 a successful year? How many captives did you license?
Yes, the North Carolina Department of Insurance is very excited about the success of the captive insurance programme in 2015. In total, 42 captive insurance companies were licensed during the year (with two more approved for licensing in 2016), bringing the total number of approved captives in the state to 96. Additionally, the department approved 120 business plans, bringing the total number of approved cell business plans to 240. In total, 336 risk-bearing entities are currently approved to operate in North Carolina.
What type of captives did you license? And from which sectors?
During 2015, the North Carolina Department of Insurance licensed 32 pure captives, two protected cell captives, and eight special purpose captives. In addition, two risk retention groups were licensed for 2016.
With the addition of the new captive insurers described above, our totals for each type are 71 pure captives, 13 protected cell captives, 10 special purpose captives and two risk retention groups.
These captive insurers provide insurance to many types of industries, including: energy; home health care; automotive; transportation and logistics; physician and dental practices; equipment leasing; real estate investment companies; information technology; heating, ventilation and air conditioning, electrical, and plumbing; construction; steel distributors; warehousing and distribution centres; and manufacturing companies.
Do you expect to see growth continue during 2016?
We do anticipate another year of strong growth in North Carolina during 2016. To encourage this, we plan to: continue our participation in national, state and local captive insurance company educational events; meet with captive managers, business owners and other trusted advisors to tell them about the North Carolina captive insurance company programme; and provide outstanding service to the industry.
Are there any regulation updates due in 2016?
The North Carolina Department of Insurance plans to submit a legislative amendment proposal for the 2016 legislative session as we have done during 2014 and 2015.
We treat the act as a living document, continuously reviewing it and determining if amendments are necessary in order for the act to remain relevant to, and competitive within, the captive insurance company industry.
