North Carolina Senate Approves Redomestication Incentive Measure
May 06, 2021
The North Carolina Senate Tuesday approved legislation that would give captive insurance companies licensed in other domiciles a new incentive to redomesticate to North Carolina.
Under the legislation, S.B. 347, which passed on a 49–0 vote, captives that redomesticate to North Carolina before December 31, 2022, would be exempt from state premium taxes for the tax year in which they redomesticate and the following year.
North Carolina insurance and captive regulators strongly support the measure.
"This legislation is important because it provides the incentive for businesses to bring their captive insurers to North Carolina, which will result in the creation of jobs and the generation of business revenues for our state," said North Carolina Insurance Commissioner Mike Causey.
The measure "provides clarity to certain existing laws as well as the important incentive for other captives to move to North Carolina and receive the benefits of the North Carolina captive insurance program," added Debbie Walker, senior deputy commissioner of the Captive Insurance Companies Division of North Carolina.
In addition to the temporary premium tax waiver for captive insurance companies that redomicile to North Carolina, the legislation would broaden a provision in the current law that allows smaller captives to request an exemption from a requirement to get an annual audit from a certified public accountant.
Under current law, captives with less than $1.2 million in written premiums may request an exemption from the annual audit requirement. The legislation would allow all captives to seek such an exemption. Under the legislation, the state insurance commissioner could grant such an exemption "if the commissioner finds that compliance would cause the insurer a financial or organizational hardship." Such exemptions, Ms. Walker earlier noted, "would continue to be granted on an exception basis only."
The measure now will be considered by the North Carolina House of Representatives, where passage is expected.
North Carolina is both one of the largest and the fastest-growing US captive insurance domiciles. Last year, 250 captive insurance companies were domiciled in North Carolina, up from just 52 in 2014.
May 06, 2021