North Carolina


How has North Carolina developed since the implementation of its captive law?

Debbie Walker: There have been significant developments since the North Carolina Captive Insurance Act became effective in 2013. We established four initial goals for our programme, the first of which was to accommodate the needs of North Carolina businesses and others in the captive insurance industry that are interested in our programme. We are making great strides towards that goal. One of the ways we are doing this, as we decided from the start of the programme, is to treat our act as a living document where we monitor the act on an ongoing basis and make changes as appropriate to keep it relevant and competitive. As a result, the act that was passed in 2013 has been amended every year since with the full support of the commissioner, the general assembly and the governor. The most recent amendments to the act were enacted in July of this year.

We are seeing growth in the area of captive insurance company service providers operating in North Carolina, and more captive managers and other service providers bringing their clients to the state. We are also seeing further development of these North Carolina-based service providers, which is having a positive impact on our state’s economy, a primary reason our act was introduced. For 2014 and 2015, we believe our economy has been favourably affected to the tune of approximately $18 million dollars as a result of the captive industry, and 50 new jobs have also been created.

Ray Martinez: The most recent amendments to the act include an exemption from the annual in-state board meeting requirement, if the captive insurance company utilises at least two North Carolina-based service providers. These can include legal, accounting, actuarial, investment advisor and captive manager services, and others deemed acceptable to the commissioner.

Another important legislative change provides the commissioner with additional discretion to establish the minimum required capital and surplus for a protected cell captive insurance company. The law initially required a minimum capital and surplus of $250,000, however, the amendment allows the commissioner to set the minimum requirement below the $250,000 floor, as long as that amount is sufficient to support the captive insurer’s risk profile.

Other changes include authority for the commissioner to grant provisional approval of a captive insurer’s licence application for a period of up to 90 days, unless the commissioner determines that an extension or rescission of that provisional approval is warranted.

There were also minor technical amendments to the law regarding the formation of captive insurance companies; conflict of interest; plan of operation changes; insurance manager and intermediaries; extension for filing the annual reports; licence suspension or revocation; and clarification of the annual filing requirements for protected cell captive insurance companies.

How much growth has North Carolina seen in its captive market so far this year?

Walker: So far this year we’ve approved three risk retention groups and one new protected cell captive insurance company for licensure. We have also approved business plans for new protected cells. Several applications are under review at this time. Since the programme’s inception, we have approved 99 captive insurance companies, with 98 of those currently active. One captive insurer dissolved because its insured was sold and so it was no longer needed.

We are getting close to that 100 mark, and we are expecting to hit it in the very near future. We expect applications to pick up in the second half of the year, and we have a long list of captive insurer applicants that managers and other service providers have stated they will bring to North Carolina this year. We expect another year of strong growth like we had last year.

Martinez: It is fair to say that right now we are aware of over a dozen hard applications that will be submitted for our approval this year.

What involvement do you have at this year’s North Carolina Captive Conference?

Walker: We are involved in four sessions this year. There will be a North Carolina Department of Insurance (NCDOI) session where we will provide a regulatory update, including a discussion about the legislative changes that were enacted this year.

Next, our staff will present a case study of best practices in the submission of a licence application to North Carolina. We also have staff members who are participating in other sessions including those on redomestications, investments and pooling.

What will the NCDOI be working on for the rest of 2016?

Walker: We have a lot of things planned for this year. We are busy participating in local, regional and national meetings and conferences where we have the opportunity to educate and inform others about our captive insurance company programme. We anticipate another strong year for new licence applications, especially as the year-end gets closer.

We have hired a new analyst and the number of dedicated staff for our division has increased to seven, not including the assistance we receive from staff of other areas of the NCDOI.

Martinez: The bottom line from our perspective is that once again we are expecting another great year in 2016 for the North Carolina captive insurance company programme. We expect the number of licensed captive insurers to continue to increase, which will result in an even greater positive economic impact to the state of North Carolina.
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