Captive bill S.347 signed into law in North Carolina
North Carolina Governor Roy Cooper has signed S. 347, a captive bill amending existing law that features as its centerpiece a tax holiday for redomesticating captives.
The bill offers a tax break to captive insurers that redomesticate to the state and is giving the insurance commissioner authority to further ease their financial reporting obligations.
The law states that a captive formed outside North Carolina that redomesticates into the state before December 31 will pay no premium taxes to the state for 2022 and 2023. The subsection of the law expires January 1, 2024.
“This legislation is designed to provide additional incentives to businesses so they will bring their captive insurers to North Carolina,” insurance commissioner Mike Causey said when the bill was introduced. “Our captive insurance industry has created jobs and generated revenue for this state, and it is imperative to keep our already attractive laws on the leading-edge to continue to invigorate our captive insurance industry.”
North Carolina Captive Insurance Association President and chief executive Tom Adams told media sources that the state had been “late to the party” to pass captive legislation in 2013 and is trying to entice captives that were established elsewhere before passage of the law.
According to Adams the association worked with lawmakers to keep the law flexible and consumer-friendly so that North Carolina would be an attractive domicile for captives.
For example, a second attraction of the bill, he said, is new language allowing the insurance commissioner to determine if an audit of a captive would present “an organisational or financial hardship.”
In those cases, the commissioner would have the authority to order an exemption from the audit requirement, it said.
The legislation additionally amends the insurance code to address conflict of interest issues and clarifies that they apply to officers and governing board members.