S.C. Passes $100,000 Captive Premium Tax Cap Alast minute rush to include captive insurer legislation, includinga cap on premium taxes of $100,000, proved fruitful for thedomicile of South Carolina.

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A bill was passed on June 5 just moments before thelegislature's summer recess.

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At press time the bill awaited the “imminent” signature ofRepublican Governor Mark C. Sanford.

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“The governor said he was not going to call them back, so theywere not coming back until January to take up anything,” saidClayton Ingram, manager of business development, alternative risktransfer services, for the South Carolina Department ofInsurance.

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“They adjourned at 5:00 on that last day, and do you want toknow when this bill was passed? Four-fifty-nine-forty. They werenot going to adjourn without passing the captive legislation.”

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

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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, thisyear, because we could not have a negative-revenue bill.”

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He said the legislation includes language that allows captivesto form as limited liability companies. “We inserted thisthroughout the entire statute,” he said. “Every place captivecompanies are mentioned, LLCs are mentioned. Before, you had to bea stock company or a mutual.”

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He said the domicile allowed LLC captives, but under the specialpurpose captive heading. “The more we looked at it, the more itmade sense to put it in all the way through,” Mr. Ingram said.

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

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“I think we're still lower than anybody else,” he said, “but wedo all internal review and the time it takes is just incredible. Itwas just killing us. This puts it more in line with our personnelcosts.”

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

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Mr. Ingram said the department, located in Columbia, S.C., alsohas added an office in Charleston, where several ancillarybusinesses, such as captive management, have located.

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

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


Reproduced from National Underwriter Edition, June 16, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.


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