North Carolina Governor Signs Redomestication Incentive Measure

North Carolina Governor Roy Cooper has signed into law recently passed legislation, SB 347, that will give captive insurance companies licensed in other domiciles a new incentive to redomesticate to North Carolina.

Under the new law, captive insurance companies that redomesticate to North Carolina before December 31, 2022, will be exempt from state premium taxes for the tax year in which they redomesticate and the following year.

Earlier, the measure received strong support from the state's insurance regulators.

"This legislation is important because it provides the incentive for businesses to bring their captive insurers to North Carolina, which will result in the creation of jobs and the generation of business revenues for our state," said North Carolina Insurance Commissioner Mike Causey.

Aside from the temporary premium tax waiver for captive insurance companies that redomesticate to North Carolina, the new statute broadens a provision in prior law that had allowed smaller captives to request an exemption from a requirement to obtain an annual audit from a certified public accountant.

Under the prior law, captive insurance companies with less than $1.2 million in written premiums were allowed to request an exemption from the annual audit requirement. The new law will allow all North Carolina-domiciled captive insurance companies to seek such an exemption. Under the new law, the state insurance commissioner can grant such an exemption "if the commissioner finds that compliance would cause the insurer a financial or organizational hardship."

Debbie Walker, North Carolina's top captive regulator before retiring at the end of March, noted earlier this year that such exemptions "would continue to be granted on an exception basis only."

North Carolina is one of the largest and fastest-growing US captive insurance domiciles. Last year, 257 captive insurance companies were domiciled in North Carolina, up from just 52 in 2014.