South Carolina Department of Insurance
John Michael Alexander and Ryan Basnett from the South Carolina Department of Insurance explain the competitive advantages for small and medium-sized businesses when choosing South Carolina as the domicile to establish their captives
Which regulatory provisions or legislative frameworks make South Carolina particularly attractive for SMBs considering captive insurance solutions?
South Carolina offers a highly flexible regulatory framework for captive insurance. Our low fees and taxes, coupled with a variety of captive formation options, are designed to meet your business's specific needs. With a rich history in captive insurance, we have established and regulated a diverse array of captives across various industries.
Our extensive experience includes pure captives, which serve as the most accessible entry point for SMBs, as well as protected cell companies that offer enhanced protection for SMBs entering the captive space. Additionally, we cater to unique requirements through special purpose captives, designed for programmes that don't align with the other captive types we offer. If it makes sound business sense, we are committed to setting you up with a South Carolina captive.
Which types of SMBs in South Carolina are experiencing the greatest success with captive insurance solutions? Are there specific industries or sectors where captives are delivering the most value?
Many of our smaller captives share a common focus: insuring property or equipment that is exceptionally costly or challenging to replace or repair.
This often includes items such as drones for roofing contractors or construction firms, specialised motorised equipment and vehicles, or livestock. These smaller companies have frequently found such coverage either entirely unavailable or prohibitively expensive in the commercial market, which, as we recognise, is a principal strategic reason for establishing a captive in the first instance. Despite typically having minimal loss histories in these areas, the commercial market is currently unwilling to assume this risk. Our captives have achieved considerable success in underwriting these lines in South Carolina.
What are the primary risks that SMBs in South Carolina are mitigating through captive insurance programmes? Are there any emerging or industry-specific risks that are driving increased captive adoption?In our existing and newly established captives, the predominant emerging lines observed recently are cyber, wildfire, and director and officer (D&O) coverage. Additionally, product liability has become a significant line for some of our smaller businesses. For smaller startups, in particular, this line can be highly advantageous to include in a captive.
What resources and support mechanisms are available for SMBs in South Carolina exploring captive insurance, including educational initiatives, advisory services, and access to specialised service providers?
South Carolina is proud to collaborate with outstanding service providers across all key areas of captive management, including captive management firms, auditors, actuaries, legal service providers, and consultants. Our fully autonomous captive regulation team values the opportunity to be good partners with these providers in service of the industry’s needs.
What key challenges do SMBs face when establishing or managing a captive in South Carolina — such as cost, regulatory complexities, or access to expertise — and how can these be effectively addressed?
We have observed that many SMBs are unprepared for the costs associated with establishing a new captive. While we, as a domicile, offer lower fees and tailor capitalisation requirements as closely as possible to the individual business, these expenses can become burdensome if not anticipated from the outset. In the long term, captives are generally less expensive than obtaining insurance from the commercial market, but startup costs can pose challenges for SMBs.
These issues can be addressed by businesses conducting thorough research into captives and utilising the resources available here in South Carolina. Introductory calls with the captive team are free of charge, and we are happy to discuss the formation process from our perspective with anyone considering opening a captive in our state. Additionally, each year the South Carolina Captive Insurance Association (SCCIA) holds a captive insurance educational conference in Charleston, where potential captive owners can learn more about captives, meet service providers, and connect with our captive team.
How does South Carolina’s regulatory framework cater to the unique needs of smaller captives? Are there any streamlined processes, exemptions, or tailored provisions that benefit SMBs?
We recognise that all businesses, particularly SMEs, need to be agile and adaptive to achieve their objectives.
In light of this, we strive to be agile and responsive during both the formation process and the ongoing regulation phase of your captive’s operations.
Our licensing process takes 30–45 days, depending on the size and complexity of the programme, and we have a dedicated licensing team working to complete this as quickly as possible. Additionally, business plan changes are processed within 24–48 hours, with most completed much sooner.
Moreover, we do not charge for business plan changes, reducing the burden on your captive as it grows and evolves.
We aim to be not only effective regulators of your company but also valuable business partners. We have a vested interest in the success of your captive.
What role do captive managers and consultants play in supporting SMBs in South Carolina with captive formation and ongoing operations? What critical expertise should businesses look for when selecting a service provider?
As previously mentioned, South Carolina has excellent captive managers and consultants dedicated to the success of our current and prospective new captive companies. A comprehensive list of approved service providers can be found on our captives website.
These service providers can offer key insights into the most suitable type of captive for your business and assist throughout the entire formation process. Once established, they play a crucial role in preparing and providing the required regulatory filings and helping you adapt your captive for successful operation and future growth.
How does the South Carolina Department of Insurance actively support and promote the growth of the SMB captive market? Are there any upcoming initiatives aimed at fostering this segment?
South Carolina remains a business-friendly and open domicile for captives that make sound commercial sense. We recognise that small businesses are the backbone of the economy and have always fully supported SMEs in forming captives. We regularly attend industry conferences and events to promote the domicile and look forward to meeting any company considering a captive with us.
How does South Carolina compare to other domiciles that also cater to smaller captives? What are its key competitive advantages, and why should SMBs consider it over alternative jurisdictions?
Captive owners have several excellent options for domiciling their captives both in the US and internationally. What distinguishes South Carolina is the maturity of our domicile, our extensive experience handling a variety of captives, and the responsiveness and agility of our captive team.
Since 2000, South Carolina has managed captives in various forms across a multitude of industries. With over 440 captives formed and more than 230 currently operational, our team possesses the experience and track record to regulate your captive with a high level of excellence. We strive to be a good business partner with our captive companies by being available, responsive, and efficient in our approach to forming and regulating your captive.
