The North Carolina Captive Insurance Association (NCCIA) has introduced an Insurance Revisions Bill, which, if passed, will extend the premium tax holiday for re-domestications until 2025.
In 2022, North Carolina introduced legislation that waived premium taxes for the year in which a captive re-domiciles. It also waives the next year’s premium taxes.
The waiver is designed to encourage captives to re-domicile to North Carolina, but the original legislation did not run for the full two years originally intended.
SB 319, if passed, will extend its application until 1 January, 2025.
“Even with the quirk caused by the shortened allotted time frame North Carolina received and approved seven re-domestications during the period,” said Diana Hardy, NCCIA chair.
“We are confident there will be re-domestications, assuming extension of the legislation.”
North Carolina has been reluctant to introduce and enforce self-procurement taxes on local businesses that utilise out-of-state domiciles, but hopes a premium tax incentive achieves a similar result.
The Tar Heel State licensed 62 new captives in total during 2022, bringing its year-end total to 294 captives plus 730 individual cells. View the full breakdown of 2022 captive statistics here.
SB 319 also proposes to change the retaliatory tax that is applied to risk retention groups (RRGs), reducing the maximum rate language in the statute to 1.85%.
The association had originally planned to ask for a reduction to 2%, but Senator Johnson suggested North Carolina could be more competitive at 1.85%.
The Bill also permits the Commissioner to examine any RRG when he deems it prudent and reasonable, and that the costs for such examinations will be the responsibility of the examined RRG.
SB 319 passed its first reading in the State Senate on 20 March and is sponsored by Senator Todd Johnson and co-sponsored by Senator’s Jim Perry and Benton Sawrey.
The Bill was also in front of the Senate Commerce and Insurance Committee on March 28. All legislation must pass three readings on the floor in each chamber.