S.C., N.Y., Changing Captives' Laws

Clayton Ingram, director of business development for Alternative Risk Transfer Services for South Carolina, said the new legislation, signed into law March 12 by Gov. Jim Hodges, "was our response to a rapidly changing market. It gives us the ability to manuscript a captive program if something doesn't fit anywhere else."

Flexible legislation is necessary, he explained, because the insurance market has changed to a point "where lines that nobody ever thought would leave the market are leaving the market. We can now set the capitalization and surplus accordingly, since there are no statutory minimums."

Mr. Ingram said the state's goal is to be recognized as "the onshore laboratory," and as the "most progressive market for insurance and financial services in the United States, if not the world."

The competition now, he said, is with offshore domiciles. U.S. and international markets now have "no reason to go offshore," he said. "We want to level the playing field and say ?bring your business to us and let a U.S. regulator oversee this.'"

South Carolina's new provisions are designed to:

? Simplify re-domestication procedures for captives moving into South Carolina from other domiciles.

? Establish a new category of captive insurer, a Special Purpose Captive Company, which gives the department more flexibility in approving captives that may not fit into other categories.

? Prorate the statutory minimum tax quarterly.

? Establish a special fund to be used for expanding and improving captive programs and promoting the state as a domicile.

? Clarify provisions under which third-party business is allowed.

New York, which last month reported two captives and one application pending, yesterday announced proposed new legislation to allow sponsored captives and "add flexibility for corporations and public agencies and authorities that wish to self-insure," said Gregory V. Serio, New York's superintendent of insurance, in a statement.

The new legislation is designed to give "even more of New York's businesses a valuable option by offering the use of captives as an alternative form of insurance," he said.

The legislation would "curtail the trend" for businesses and public entities to look outside the state when "implementing their risk management strategies if they involve the formation of captives," Mr. Serio said.