North Carolina has quickly established a successful and popular domicile for captive insurers. With its innovative captive insurance company legislation, experienced and dedicated professional staff, and low cost of insurer formation and operation, North Carolina has demonstrated its sensible and pro-business approach to regulation and commitment to exemplary customer service.
[Last updated: 06/06/18]
Debra M. Walker
Senior Deputy Commissioner, Captive Insurance Companies Division
Address of regulator
North Carolina Department of Insurance
Captive Insurance Companies Division
325 N. Salisbury Street
Raleigh, NC 27603
Name of Captive Legislation
North Carolina Captive Insurance Act
Year Legislation Passed
The North Carolina Captive Insurance Act became effective in October of 2013.
North Carolina regularly reviews its law to identify enhancements that will allow the North Carolina Captive Insurance Act to remain relevant and competitive. However, legislative amendments were not necessary during 2017. Prior to 2017, the following substantial enhancements were made to the Act:
- Provides for the special purpose captive insurer definition, which is a captive that does not meet the definition of any other type of captive insurer and is designated a captive by the Commissioner. (Captives such as agency captives and group captives fall under this category)
- Provides discretion for the Commissioner to grant extensions of filing due dates for the annual report, audit report and actuarial opinion filing requirements.
- Allows for the establishment of one or more separate accounts within a captive insurer.
- Provides the Commissioner with discretion to waive the annual report filing requirement, subject to the captive insurer’s filing of the audit report.
- Provides the Commissioner with the discretion to waive the filing of the audit report, subject to the captive insurer’s filing of an annual report. Such a waiver is granted on a very limited basis.
- Allows the Commissioner to grant an inactive status to a captive insurer. If the captive ceases the transaction of insurance business and has no remaining direct or assumed policy liabilities, the captive may be granted an inactive status. Upon receiving that status, the captive insurer does not have to pay premium tax and may be exempted from any of the filing and reporting requirements.
- Provides for the transfer of a cell from one protected cell captive to another or a conversion of a cell to a standalone captive insurer.
- Allows a captive insurance company to obtain an exemption from the in-state board meeting requirement, if the captive insurance company utilizes at least two of the following North Carolina service providers: legal, audit, actuarial, investment advisor, captive manager, or other service providers acceptable to the Commissioner.
- Allows an entity organized under the laws of another jurisdiction to obtain a license in North Carolina as a captive insurance company.
- Provides the Commissioner with authority to grant an applicant provisional approval for a license. The provisional approval is for a 90 day-period, unless another period is otherwise determined by the Commissioner.
- Provides the Commissioner with discretion to establish the minimum capital and surplus requirement for a protected cell captive insurance company (the Commissioner has the same discretion for establishing the requirement for pure captives and special purpose captives).
- Provides the Commissioner with the authority to grant a captive insurer an extension of the due date for filing the annual report.
Do you allow Cell Captives?
Yes – North Carolina does allow for the formation and operation of protected cell captive insurance companies. These insurers may form incorporated or unincorporated cells.
Total Number of Licenced Captives
230 captive insurers and 405 cells or series are currently licensed and participating in our program. Since the inception of the North Carolina captive insurance program, 249 captive insurers have been licensed and 444 cells/series have been approved.
Number of Risk Retention Groups or Group Captives
Of the 230 standalone licensed captive insurers, North Carolina has licensed 6 risk retention groups to date.
Number of Single Parent Captives
North Carolina has 178 currently licensed pure captive insurers.
Number of Cell Captives
North Carolina has 30 protected cell/special purpose captive insurance companies, which house 405 cells or series business plans.
Number of licences granted in the past year (2017 calendar year)
North Carolina licensed 66 captive insurance companies in the 2017 calendar year, which represents an 37% increase from the total number of 178 licensed captive insurers within the program at the beginning of the year.
Approximate (or Average) length of time to process a new captive
Our process takes approximately 2 - 3 weeks to license a new captive insurer.
Captive tax rates
Minimum Premium Tax: $5,000 ($10,000 for protected cell captive insurers with more than 10 cells)
Maximum Premium Tax: $100,000 ($200,000 for protected cell captive insurers with more than 10 cells)
Rate of Tax - Assumed Reinsurance Premiums: Up to $20 Million - .225%; $20 to $40 Million - .150%; $40 to $60 Million - .050%; Over $80 Million - .025%
Rate of Tax - Direct Premiums: Up to $20 Million - .4%; $20 Million and more - .3%
Minimum capitalisation rate
Capital and Surplus Requirements: Pure - $250,000 or such other amount the Commissioner determines; Association - $500,000; Industrial Insured - $500,000; RRG - $1,000,000; Protected Cell - $250,000 or such other amount the Commissioner determines; Special Purpose - $250,000 or such other amount the Commissioner determines; Special Purpose Financial - $250,000.
Capital may be in the form of cash, securities approved by the Commissioner, a clean irrevocable letter of credit or other form approved by the Commissioner.
No fees are paid to NCDOI (with the exception of the application fee for a special purpose financial captive).
Industry sectors best represented in the domicile
North Carolina’s captive insurers provide insurance to a varied group of industries, including but not limited to energy; construction; healthcare; information technology; and transportation.
Top uses for captives in domicile
Life insurance (reinsurance), medical stop loss and employee benefits, general liability, commercial auto, employee benefits, and other property and casualty risks.
Total premiums received by the Captives
$824 million in 2017
Total value of assets under management
Not available at this time.
Captive Insurance Managers registered to conduct business in domicile
A listing of the captive managers approved to manage North Carolina captive insurers is found on our website at www.nccaptives.com.