S.C. Passes $100,000 Captive Premium Tax Cap A last minute rush to include captive insurer legislation, including a cap on premium taxes of $100,000, proved fruitful for the domicile of South Carolina.

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

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

“The governor said he was not going to call them back, so they were not coming back until January to take up anything,” said Clayton Ingram, manager of business development, alternative risk transfer services, for the South Carolina Department of Insurance.

“They adjourned at 5:00 on that last day, 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 are 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, has a total of 43 captives now, he said.

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

Special Reports /

S.C. Passes $100,000 Captive Premium Tax Cap

Related Stories

Recommended For You