S.C. Puts Cap On Premium Tax For Captives

By Caroline McDonald

NU Online News Service, June 12, 11:29 a.m. EDT?South Carolina, in a measure that squeaked through the closing minutes of the legislative session, has raised application fees for captive insurance operations while capping their premium taxes at $100,000.

The bill passed June 5 moments before the legislature's summer recess and is now on the desk of Republican Gov. Mark C. Sanford, who is expected to sign it shortly.

Clayton Ingram, manager of business development, alternative risk transfer services for the South Carolina Department of Insurance, said on June 5 the legislature had adjourned at 5 p.m. "And do you want to know when this bill was passed? Four-fifty-nine-forty. They were not going to adjourn without passing the captive legislation."

He said the legislation included a cap on premium taxes at $100,000, which previously was unlimited.

So far, he said, the most paid by a captive was around $100,000. If it had been more, he said, "we could not have done this, this year, because we could not have a negative-revenue bill."

He said the legislation includes language that allows captives to form as limited liability companies. "We inserted this throughout the entire statute," he said. "Every place captive companies is mentioned, LLCs are mentioned. Before, you had to be a stock company or a mutual."

He said the domicile allowed LLC captives, but under the special purpose captive heading. "The more we looked at it, the more it made sense to put it in all the way through," Mr. Ingram said.

The bill also increases application fees to $2,400 from $200.

"I think we're still lower than anybody else," he said, "but we do all internal review and the time it takes is just incredible. It was just killing us. This puts it more in line with our personnel costs."

He said renewal fees were raised from $300 to $500 and a fee was added for processing certifications.

Mr. Ingram said the department, located in Columbia, S.C., also has added an office in Charleston, where several ancillary businesses, such as captive management, have located.

The annual South Carolina Captive Insurance Association conference also takes place in Charleston in December.

The domicile, which began licensing captives in June 2000, now has a total of 43 captives, he said.

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S.C. Puts Cap On Premium Tax For Captives

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