Special Edition No. 1
The NC Captive Insurance Association announced today the introduction of HB 220 in the NC House of Representatives
(Southern Pines)The NC Captive Insurance Association announced today the introduction of HB 220 in the NC House of Representatives. Association Chairman Leon Rives said “The NCCIA is pleased that one of its major legislative goals is now under consideration by the General Assembly.” The bill was introduced by the Co-Chairs of the House Insurance Committee, Representatives Dana Bumgardner (R) Gaston, Kevin Corbin (R Cherokee, Clay, Graham, Macon) and Mitchell Setzer (R Catawba) on February 28.
Rives commented further that “the association has worked collaboratively with the NC Department of Insurance for the past 6-8 months to develop technical corrections and the centerpiece of the bill, a provision to attract redomestications to North Carolina through a “premium tax holiday.” NCCIA believes many captives formed in other jurisdictions will find the opportunity to re-domesticate very attractive, particularly if they are already writing coverage for risks associated with NC based businesses.”
Senior Deputy Commissioner Debbie Walker of the Captive Division staff at NCDOI told NCCIA NEWSLETTER “Our goal is to treat the 2013 North Carolina Captive Insurance Act as a living document. As a result, legislative changes to the act are proposed this year in House Bill 220. One of the primary proposals for 2019 is a provision that will temporarily exempt existing foreign and alien captive insurers from premium taxes — if those foreign and alien captive insurers are approved by the North Carolina Department of Insurance to redomesticate to North Carolina by December 31, 2020.”
“This provision is yet another benefit for captive insurance companies to domesticate in North Carolina versus other jurisdictions onshore or offshore,” said Insurance Commissioner Mike Causey. “In addition, this 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.”
Thomas Adams, President & CEO of the association told us, “our members are excited about the potential for additional growth of the number of captives in the domicile, particularly as more companies see the significant benefit of these changes.”
The following is a summary of HB 220 as introduced:
- Clarification that information contained in material business plan amendments and other notifications submitted by captive insurers to the Commissioner pursuant to GS. 58-10-395 is confidential just as the statutes provide confidentiality for the information contained in the original business plan submitted to the Commissioner through the license application.
- Exemption from the annual audit requirement for captive insurers amended to the wording contained in a similar exemption for traditional insurers.
- Clarification that the NCDOI’s internal financial analysis workpapers are confidential.
- Overall use of the term “governing board” instead of “board of directors” because not all captive insurers are stock companies with a board of directors.
There are two proposed changes affecting the premium tax paid by captive insurers:
- Amendment to require special purpose captive insurers with a cell or series structure to pay the same tax as that imposed on protected cell captive insurers.
- Amendment to provide for a “premium tax holiday” to encourage the redomestication of captive insurers domiciled in other jurisdictions to move to North Carolina. This will result in additional premium tax paid to NC and encourage the use of North Carolina businesses that provide services to the captive industry.
NCCIA will monitor the progress of the legislation, and will be attending House and Senate Insurance Committee meetings when HB 220 is considered. For more information contact Lane Brown, NCCIA VP of Government Affairs at 704.773.0008.