North Carolina is planning a number of amendments to its captive law designed to make the domicile more competitive and encourage redomestications.
HB 220, which is the result of collaboration between the North Carolina Captive Insurance Association (NCCIA) and the North Carolina Department of Insurance (NCDOI) Captive Division, was introduced to the state’s General Assembly on Thursday 28 February.
A companion bill is expected to follow in the Senate soon.
The bill proposes both technical and substantive amendments to the captive insurance act, which was originally passed in 2013.
The technical amendments are engineered to make the state more competitive in the captive market and reflect the maturity of the NCDOI’s regulatory team.
The key substantive change is the addition of a “premium tax holiday”, which would allow any captives operating in the domicile that are licensed by other states to pay no premium tax for the contract years 2019 and 2020 if they take action to relicense with North Carolina.
There are a number of large businesses in the state, such as banks, health care providers, retail chains, and utilities, that formed captives for risk management prior to enactment of the captive law in 2013.
Tom Adams, NCCIA president, said the “premium tax holiday”, which will not currently cost North Carolina anything in tax revenues, is designed to persuade these captives to return to the state.
He explained: “Our objective is to fashion an economic incentive that will encourage these alien and foreign captives to redomesticate and ‘come home’ to North Carolina where their risk management businesses are located.”
Leon Rives, chairman of the NCCIA, said the association was "pleased that one of its major legislative goals is now under consideration by the General Assembly".
He added that the NCCIA believes that "many captives formed in other jurisdictions will find the opportunity to redomesticate very attractive, particularly if they are already writing coverage for risks associated with North Carolina-based businesses".
Insurance Commissioner Mike Causey noted that the proposal "would bring future tax revenue to the state, as foreign and alien captive insurers do not currently pay any premium taxes in North Carolina".
The bill has been referred to the House Insurance Committee, which is unlikely to meet before Thursday 14 March.