South Carolina Captive Regulator Discusses Oversight and Emerging Risks

A well-developed captive insurance program requires more than meeting initial licensing requirements. Regulators also consider the quality of an organization's risk management strategy, financial projections, capitalization, and commitment to operating a captive over the long-term.

In a recent episode of The Edge of Risk podcast by IRMI, Joel Appelbaum speaks with Andrew "Andy" Noga, director of captives at the South Carolina Department of Insurance. Noga discusses the state's approach to captive insurance regulation and why the department places importance on the substance of captive applications rather than licensing volume alone.

Mr. Noga explains how preapplication meetings, feasibility studies, and detailed risk management plans help regulators evaluate whether a proposed captive is supported by a clear business purpose. He also discusses the department's approach to reviewing financial assumptions, assessing capital requirements, and working with captive managers and owners to address questions during the application process.

The conversation examines how regulatory oversight continues after licensing. Mr. Noga describes the department's use of financial ratios and company-specific research to identify potential concerns, including developments involving litigation, corporate transactions, and broader industry conditions. He also addresses the importance of maintaining open communication between regulators and captive owners as programs evolve.

Looking ahead, Mr. Noga discusses the potential role of artificial intelligence and predictive analytics in captive insurance operations and regulatory oversight. He also raises concerns about increasing private equity involvement in the captive market and the possibility that changes in the industry's business models could lead to additional regulatory attention.

Hear the full conversation on Captive.com to learn how South Carolina evaluates captive insurance applications, monitors financial and operational risks, and considers emerging developments that may influence the future of captive regulation.