The South Carolina Department of Insurance announced it has joined the Coalition for Fairness to Captive Insurers (CFCI) to help stop a proposed regulation by the Internal Revenue Service it says could harm the captive industry.

The proposal change announced on Sept. 28 would reverse a long-standing tax treatment of captive insurers and put them on the same footing as self-insureds. Unlike insurers, self-insureds are unable to deduct a discounted reserve for estimated losses and expenses, whether or not claims have been filed.

As proposed, the South Carolina department said the IRS revisions would adversely impact a long-standing tax accounting treatment for captives and potentially drive many away from U.S. regulation to offshore domiciles, according to a department news release.

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