North Carolina raises the bar for captive growth

Lori Gorman of the North Carolina Department of Insurance explained how flexible regulation, expanding cell captive structures and a business-friendly approach are helping North Carolina attract captive insurers while supporting innovation in an increasingly complex risk environment.

North Carolina has steadily strengthened its position as one of the United States' leading captive insurance domiciles, attracting a growing number of formations while adapting to an increasingly complex risk landscape. According to Lori Gorman, deputy commissioner of the Captive Insurance Companies Division at the North Carolina Department of Insurance (NCDOI), the state's success is rooted in a combination of legislative flexibility, regulatory expertise and a business-friendly approach that continues to resonate with organisations seeking greater control over their risk financing.

As businesses grapple with geopolitical uncertainty, cyber threats, climate-related exposures and evolving supply chain risks, captive insurance is becoming an increasingly important strategic tool. North Carolina's regulatory framework is evolving alongside these trends, positioning the state to remain competitive in an increasingly crowded US captive market.

“Our state's flexible legal framework has been key to the successful growth of North Carolina as a leading captive domicile,” said Gorman. “North Carolina serves a geographically diverse client base across the United States and internationally, spanning industries including healthcare, construction, financial services, manufacturing and transportation.”

She attributes the state's continued appeal to its ability to combine “regulatory expertise, legislative flexibility and operational efficiency”, creating “a scalable and adaptive platform for organisations seeking to form and grow captive insurance companies”.

That flexibility has become particularly important as captive owners seek more tailored approaches to managing risk. Rather than relying solely on traditional commercial insurance markets, many organisations are turning to captives to gain greater control over underwriting, improve cash flow and address emerging exposures that may be difficult or expensive to insure conventionally.

One of the most significant developments in North Carolina's captive sector has been the rapid expansion of cell captive structures, particularly among small and medium-sized businesses.

“We are continuing to see rapid expansion of cell captive structures, particularly for small and mid-sized organisations,” Gorman explained. “The flexibility of cell structures with the ability to house multiple cell types, including incorporated, unincorporated and LLC cells, within a single structure provides unmatched versatility.”

The advantages extend beyond structural flexibility. By reducing capital requirements and accelerating implementation, cell captives are making alternative risk financing more accessible than ever before.

“This format has lowered barriers to entry, reducing capital requirements and providing greater speed to market, which has contributed directly to increased number of cell formations,” she said.

Beyond the growth in cell structures, Gorman notes that organisations are increasingly using captives as part of a broader risk management strategy rather than as a complete replacement for commercial insurance.

“Overall, we see that captive owners are seeking greater control of their risk management programmes through better underwriting and improved cash flows and are using captive solutions as a complement to their traditional programmes.”

Supporting this evolution requires a regulatory approach that balances innovation with appropriate oversight. North Carolina has sought to distinguish itself by maintaining a responsive, collaborative relationship with captive owners while preserving rigorous regulatory standards.

“North Carolina's captive regulatory approach is focused on its business-friendly mindset combined with prudent regulation,” Gorman said. “This overall principle ensures responsive, individualised oversight while minimising administrative burden for captive owners and service providers.”

Rather than applying a one-size-fits-all model, the department tailors its oversight according to each captive's specific risk profile.

“Innovation is embedded within the programme's regulatory philosophy,” she explained. “The Department leverages discretionary authority to tailor requirements based on each captive's risk profile, enabling the development of customised solutions for emerging risks such as cyber liability, healthcare costs and complex property exposures while ensuring that captives remain both compliant and effective as risk management tools.”

That tailored approach has become increasingly valuable as organisations confront an environment characterised by economic volatility and rapidly changing risks.

Captives, Gorman said, provide organisations with greater flexibility to retain risks that may no longer be economically viable within the traditional insurance market.

“Captives provide business owners with greater control over risk financing by allowing them to retain and finance exposures that are difficult or too costly to insure in the commercial marketplace,” she said.

In addition to providing bespoke coverages, captive insurers can also improve access to reinsurance capacity, allowing businesses to build more resilient risk financing programmes.

“Captive insurers offer a nimble alternative to the traditional market and can be used to customise coverages to meet specific or niche coverage needs and provide access to reinsurance markets,” Gorman explained. “This agility helps companies respond quickly to economic uncertainty, whether from geopolitical factors, supply chain disruptions, extreme weather events or other emerging exposures.”

Among the most prominent drivers of captive growth are emerging risks that continue to reshape corporate risk management priorities. Cyber attacks, artificial intelligence, escalating healthcare costs and increasingly complex property exposures are all contributing to renewed interest in captive solutions.

“Today's emerging risks are spurring continued interest in captive formations even in the face of a softer market,” said Gorman.

She adds that North Carolina has adopted a proactive stance in helping organisations address these challenges.

“NCDOI is highly proactive in partnering with captive programmes seeking to address emerging risks. Captives domiciled in North Carolina are increasingly used to smooth volatility and manage exposures related to cyber liability, artificial intelligence, healthcare costs and complex property risks.”

Importantly, innovation is accompanied by regulatory discipline. “NCDOI's individualised review process ensures that these innovative coverages are implemented responsibly, balancing innovation with sound regulatory oversight,” Gorman said.

Competition among US captive domiciles remains intense, with established jurisdictions continually refining their offerings to attract new business. Gorman believes North Carolina's competitive advantage lies in its responsiveness and willingness to tailor its regulatory approach.

“A defining feature of North Carolina's success is the responsiveness of its regulatory approach,” she said.

The department's specialist team works closely with captive owners throughout the formation and operational process, while legislation grants the Insurance Commissioner considerable flexibility.

“The Captive Insurance Act provides the Commissioner with broad discretionary authority, enabling the Department to tailor requirements to each captive's unique risk profile. This flexibility allows NCDOI to respond quickly to changing market conditions and emerging risks.”

Operational efficiency also plays an important role in the state's attractiveness. “Our programme remains committed to its low-cost formation with low operational expenses policy by charging no fees for regulatory filings or business plan changes and provides streamlined review timelines while offering competitive premium tax rates,” Gorman said.

Looking ahead, Gorman believes North Carolina is well positioned to build on its recent momentum despite ongoing uncertainty across global insurance and financial markets.

“North Carolina's success reflects a balanced and forward-looking strategy,” she said. “The state has combined a flexible legal framework, strong regulatory expertise and a commitment to innovation to create a domicile that is both stable and dynamic.”

While competition between domiciles is expected to remain strong over the coming years, she believes organisations will increasingly value jurisdictions capable of adapting quickly to changing market conditions without compromising regulatory standards.

“Over the next three to five years, we expect a competitive global landscape; one in which North Carolina will continue to stand out by delivering measurable growth, implementing impactful innovations and maintaining a highly responsive regulatory environment.”

As businesses continue to seek alternative approaches to financing increasingly complex risks, North Carolina appears determined to reinforce its reputation as a domicile that combines flexibility with stability.

“In a time marked by continued market disruption, geopolitical uncertainty and increasing demand for alternative risk solutions,” Gorman concluded, “we anticipate that North Carolina will continue to evolve as a domicile that delivers clarity, flexibility and results.”

Lori Gorman is the deputy commissioner of the North Carolina Department of Insurance’s Captive Insurance Companies Division. She can be contacted at: lori.gorman@ncdoi.gov

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