Governor Signs S.C. Captive Bill
South Carolina Governor Jim Hodges recently signed into law a bill that allows a new class of captive and adds provisions to sponsored captive legislation in South Carolina.
"Effective [immediately] we have a new class of captive–a reinsurance captive," said Clayton Ingram, director of business development for the Alternative Risk Transfer Division of the S.C. Department of Insurance in Columbia. "We wanted it passed quickly and we wanted it signed quickly and it moved right on through at a brisk pace."
The new legislation adds provisions to sponsored captive legislation by "giving alternatives to having [a captive] purely fronted," said Mr. Ingram.
It also allows a holding company to have a sponsored captive; allows sponsored captives to discount reserves; and establishes that "the most salient provisions of the new protected cell legislation pertain to sponsored captives," Mr. Ingram said.
(A sponsored captive is an insurer owned by an association or group. Each members assets are protected in a separate cell within the captive so that one member in the captive never pays for the expenses or losses of another.)
The bill was originally introduced as S.B. 537 and ratified on May 23 as R57. The first part of the legislation, which allows for reinsurance captives, "creates an equal playing field by allowing reinsurers to do in the United States what they are able to do now offshore and overseas–namely discounting reserves," he said.
The second part of the bill expands captive legislation and "affirms that the laws in our protected cell statutes are applicable to protected cells in captives," Mr. Ingram said.
So far industry response has been positive, he said. "Weve had some interest. In fact, yesterday I had some callbacks and a lot of the questions that were asked concerned application procedures, so it looks like thats getting ready to happen," he said.
Since South Carolinas Captive Act was passed on June 6, 2000, the state has licensed seven captives. Those include three risk-retention groups and several single-parent captives, Mr. Ingram said.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 11, 2001. Copyright 2001 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.
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