North Carolina targets competitive edge in crowded captive market

North Carolina regulators say the state has experienced another strong year for its captive insurance sector, with growing interest from companies of varying sizes and a continued focus on flexibility, service and technological improvements to maintain competitiveness among US domiciles.

Speaking before the Captive Insurance Companies Association (CICA) conference, Lori Gorman, deputy commissioner of the Captive Insurance Companies Division at the North Carolina Department of Insurance, said the captive market in the state continues to expand as more businesses explore alternative risk management structures.

Gorman noted that the past year had seen a particularly encouraging trend: increased participation from small and mid-sized companies entering the captive space.

“I think we’ve had another strong year for the captive industry,” she said. “We are seeing a lot more small to mid-sized companies enter into the captive arena as captive insurance becomes more widely accepted.”

According to Gorman, this reflects a broader shift in corporate risk management strategies. As captives become more familiar to businesses and advisors, they are increasingly viewed not only as standalone risk financing vehicles but also as part of a wider insurance strategy.

“We feel like the captive industry is well positioned to tackle emerging risks,” she said. “ More recently captives are also being implemented as a complement to traditional reinsurance coverages.”

Joe Rosenberger, chief captive analyst at the department, added that the state had also welcomed several larger companies forming captives during the year. In particular, some publicly traded companies with headquarters in North Carolina have chosen to establish their captive insurers within the state.

“We had a few larger North Carolina-based publicly traded companies that formed captives this year,” Rosenberger said. “It always makes us happy to see those homegrown entities forming captives in our domicile.”

For regulators, such developments represent more than a symbolic win. Captive formations contribute to the state economy through premium tax revenue while also supporting local businesses that choose to keep their risk management structures within the state.

“It’s always a good day for us when we see that we’re creating impact to the state, both economically through premium tax, but also to the businesses and corporations that are headquartered here,” Rosenberger said.

The desire to support local companies was one of the original motivations behind North Carolina’s captive legislation. Before the state created its own captive programme, many companies headquartered in North Carolina were establishing captives in other jurisdictions.

“That was the primary goal of North Carolina establishing a captive programme,” Gorman explained. “We saw where companies were going to other states prior to the enactment of the Captive Insurance Act here in North Carolina to form their captives, and we wanted to be able to meet those needs here.”

North Carolina’s Captive Insurance Act was passed in 2013, making it a relatively young domicile compared with some long-established US captive jurisdictions. Nevertheless, Gorman said the state believes it remains a competitive option in a crowded marketplace.

“We’re still a relatively new domicile,” she said. “We’re seeing more and more domiciles enter the captive arena, so there are a lot of offerings out there right now, but we feel like we’re a top choice for companies to find a home for their captives.”

Maintaining that position requires a combination of supportive leadership, industry collaboration and regulatory flexibility. Gorman pointed to strong backing from state officials, including Insurance Commissioner Mike Causey and Chief Deputy Commissioner Jackie Obusek.

The state also benefits from an active industry body, the North Carolina Captive Insurance Association, which works closely with regulators and industry stakeholders.

From a regulatory perspective, flexibility within the law has been key to adapting to evolving market needs.

“Our law was envisioned to be very flexible,” Gorman said. “We have a wide discretion in applying the law and how we regulate captives.”

Rosenberger emphasised that this discretion allows regulators to respond quickly to changing market conditions without waiting for legislative updates.

“Our law gives the commissioner a lot of discretion,” he said. “We’re able to meet the market where the needs are, which gives us a huge leg up against some other domiciles.”

In some jurisdictions, regulatory frameworks must be amended regularly to keep pace with developments in the captive sector. Rosenberger said North Carolina’s approach allows its regulators to remain nimble instead.

“We can adapt and be very nimble, which I think is a great asset that we have,” he said.

Another area of focus is technology. Rosenberger explained that the department has been working with its IT team to develop a new filing system designed to improve the experience for captive owners, managers and regulators alike.

The proposed system aims to streamline interactions with the department, making filings more efficient while also providing better data access for captive owners.

“We’re trying to move forward with a new filing system that we think will be beneficial to us as regulators, but also to captive owners and captive managers,” Rosenberger said. “The goal is to make all interactions with our department as user-friendly and clean as possible.”

The platform is expected to allow users to track their data more easily, review historical performance and complete filings in a more timely manner. If development proceeds as planned, the system could be operational by the end of 2026.

Alongside technological upgrades, regulators stress that accessibility remains one of the state’s defining characteristics.

“We feel it is important to be available and responsive to questions as we partner with captive owners,” Gorman said. 

The department also benefits from its location in Raleigh, close to the Research Triangle Park, one of the largest technology hubs in the United States. Rosenberger said the proximity to a thriving technology ecosystem has encouraged regulators to explore new ways to modernise their operations.

Finally, Gorman noted that the state is seeing several emerging trends among captive formations, particularly in areas such as medical stop-loss coverage, property, and excess of loss.

As businesses continue to navigate evolving risks, regulators believe North Carolina’s experienced team and flexible framework will allow it to remain well positioned for future growth.

“With our experienced staff,” Gorman said, “we are well positioned to handle innovative formations.”

North Carolina is exhibiting at CICA and encourages those interested in forming a captive to stop by Booth 304.

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