(SOUTHERN PINES)……Earlier today S.B. 347 was introduced in the North Carolina General Assembly and referred to the Senate Committee on Commerce and Insurance. The legislation has three primary sponsors, Senators, Todd Johnson (R-Union), Tom McInnis (R-Richmond) and Chuck Edwards (R-Henderson). Those Senators are also the Co-Chairs of the Commerce and Insurance Committee.
According to NCCIA President & CEO Thomas Adams the legislation will now “proceed through the committee process with stops in both Commerce and Insurance and then on to the Finance Committee to deal with the tax issues contained in the bill, before proceeding to the floor for a vote. The legislation will then face a similar process in the House.”
Lea Riddle, NCCIA Chair commented that “the association has worked in concert with the NC Department of Insurance to develop technical corrections and the centerpiece of the bill, a provision to attract redomestications to North Carolina through a “premium tax holiday.” The remaining provisions enhance administrative discretion to streamline operations. We are appreciative of the legislative leadership’s support of the legislation.”
“This legislation is designed to provide additional incentives to businesses so they will bring their captive insurers to North Carolina,” said Commissioner Mike Causey. “Our captive insurance industry has created jobs and generated revenue for this state, and it is imperative to keep our already attractive laws on the leading-edge to continue to invigorate our captive insurance industry.”
Senior Deputy Commissioner Debbie Walker of the Captive Division at NCDOI told NCCIA NEWSLETTER “This bill should entice captive insurers domiciled elsewhere to move to NC by waiving premium tax for the year they move and the following year. (Long term impact will be to increase premium tax and NC business revenues). In many instances large NC businesses (and businesses located out of state) formed their insurers in other jurisdictions before NC enacted captive enabling laws and it benefits NC to incentivize those insurers to come to NC. Although the premium tax would be waived initially, on a long-term basis NC will generate more premium tax from captives moving to the state.”
Adams further 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. We believe this provision will lead to economic growth, increased investment and increase North Carolina’s desirability for our native corporations domiciled elsewhere as well as others.”
The following is a summary of other changes in S.B. 347 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, dividend and distribution information pursuant to GS. 58-10-375, and affiliated loan and investment information pursuant to GS. 58-10-440 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.
- Addition (7a) to GS. 58-10-435 provides another violation, the “failure to operate in accordance with the plan of operation approved by the Commissioner” that may be considered as a reason for suspension or revocation of a captive insurer’s license.
- Exemption from the annual audit requirement for captive insurers amended to be substantially similar 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: A provision 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. Also, the premium tax holiday addressed above.
For further information contact Thomas Adams at the NCCIA headquarters.
For more info regarding the benefits of the domiciling your Captive Insurance Company in North Carolina, Contact:
151 Crest Road
Southern Pines, NC 28387