How to win friends and regulate people

The consumer-friendly captive insurance team at the North Carolina Department of Insurance has made great efforts to provide a quick turnaround for captive applicants. This effort has not gone unnoticed, and has resulted in growth in the state’s captive insurance industry, and a boost to the state’s economy.

North Carolina’s captive insurance programme is no longer in its infancy. The programme has matured, with regulators showing that North Carolina’s captives laws work for all size companies, and that they know how to regulate them.

The message is clear. North Carolina stands ready to provide consistent regulation, with top-notch customer service, to captive insurance companies of all sizes.

“I want to applaud our captive insurance team, led by Debbie Walker, for their dedication in making our programme so responsive to the industry’s needs,” says North Carolina insurance commissioner Mike Causey.

“These highly skilled team members stand ready to help insurers who want to domicile their captive insurance company to North Carolina.”

The state’s captive insurance programme continues to receive bipartisan support in the North Carolina General Assembly, the state’s legislative body.

The programme has now transcended and flourished under two insurance commissioners, who come from both major political parties.

North Carolina’s captive insurance programme approved 26 new captives last year: 20 pure captives, four protected cell captives and two special purpose captives. The total includes seven captive insurance companies that were domiciled in other jurisdictions, which saw the advantages of setting up shop in North Carolina and moved here.

Jeff Ellington, vice president of Atlas Insurance Management and a captive insurance manager, says a couple of his clients moved to North Carolina in 2019 because of the opportunities for growth allowed by the state’s captive programme.

“They liked North Carolina’s business-friendly attitude and flexibility when considering their plans for the captive,” Ellington says.

“They felt an onshore domicile better suited their business and insurance plans for expansion. They also felt an onshore domicile lessened any perceived tax exposure compared to offshore domiciles.”

Another Atlas client saw North Carolina’s programme as being more flexible than those in many other jurisdictions, Ellington says.

“By organising the captive in North Carolina, the client intends to grow the captive in the future by writing more lines of business,” he explains.

“The North Carolina captive insurance programme, through its captive law and regulatory approach, enables a captive insurer to adjust its business plan to meet the changing insurance needs of its insureds.”

Looking forward

The department and the North Carolina captive insurance industry stand ready to flourish in the 2020s. The department has set goals of having continued consistent, appropriate regulation, staff development, a focus on customer service, and educating the public about the captive insurance industry.

Already in 2020, the department has licensed five new captive insurance entities: three pure captives and two protected cells. Five new licence applications are pending: two pure captives, two special purpose captives, and one protective cell captive.

North Carolina’s captive insurance programme has been successful for a number of reasons: the North Carolina General Assembly has enacted modern captive laws; the regulatory costs are low; and the state has an active trade organisation, the North Carolina Captive Insurance Association. The regulatory staff at the North Carolina Department of Insurance is customer service-oriented.

But the state cannot rest on its laurels. The department will continue to strive for excellence, always looking for better ways to provide consistent, appropriate regulation and to determine when changes are needed to the captive insurance law. The department will also continue to update its best regulatory practices.

The department will continue to provide training and educational opportunities to its team of credentialled professional staff. This training will keep the team of CPAs, CFEs, and ACIs abreast of developments within the industry, accounting changes and regulatory issues.

The department aims to retain its top-notch employees and allow them to grow their knowledge of the industry. This will make them better able to regulate the state’s captives.

Causey has made customer service a top priority throughout the department. This priority has filtered down to the captive insurance companies division. This customer service commitment has distinguished North Carolina from other captive domiciles.

Staff members provide reasonable and appropriate regulation and are accessible, available and responsive. Applications and other filings submitted to the department for approval are efficiently processed.

The department, along with the North Carolina Captive Insurance Association, continues an outreach programme aimed at educating the public about the benefits of using captive insurance to manage their risks. They also strive to share information about the benefits of making North Carolina a captive insurer’s home.

Members of the state’s captives team will continue attending local, state, regional and national captive insurance events to share information about North Carolina’s captive insurance programme. Team members understand the importance of building relationships with industry professionals. That will allow the regulators to learn more about industry issues and allow people in the industry to know more about North Carolina’s business-friendly environment.

All the efforts are geared toward providing appropriate, timely regulation and fostering growth in North Carolina’s captive insurance industry.

Barry Smith is assistant director of public affairs at the North Carolina Department of Insurance. He can be contacted at: barry.smith@ncdoi.gov