The South Carolina captive insurance legislation was passed in 2000, and the state enjoyed rapid growth in the early part of that decade. The growth has since slowed due in part to a more restrictive regulatory climate and a desire to focus on specific groups such as healthcare related captives, which comprise 40% of the captives licensed in South Carolina. Risk retention groups are another market segment that has been a primary target for South Carolina. South Carolina currently regulates approximately CAPTIVE_FORMATIONS captives. With its marketing plan firmly in place, there is little interest in middle market captives covering a broad range of industries.
Benefits of South Carolina Captive Insurance
Advantages that are promoted by the South Carolina Department of Insurance include:
Minimum capital requirement can be in the form of $100,000 unimpaired paid in capital and $150,000 free surplus for a total capital requirement of $250,000,
- No investment restrictions for pure captives,
- No approval of rates and forms required,
- A well-developed infrastructure,
- Reasonable capitalization requirements that may be met with a Letter of Credit, and
- A stable business-friendly climate.
South Carolina uses its position as a major captive domicile to boost the local economy by requiring:
- A principal place of business to be in South Carolina,
- At least one incorporator must be a resident of South Carolina, and
- At least one Board of Directors meeting per year must be held in South Carolina.
As with Vermont, South Carolina is focused on the captive domicile industry to bring jobs and tax revenue into the state. In a recent Captive Insurance Times article, Jeff Kehler, program manager at the South Carolina Department of Insurance said, “The only downside to putting up a captive in South Carolina is if the board of directors like to snow ski. We struggle to provide snow skiing as an activity.” While Mr. Kehler made the statement in jest, the underlying comparison to Vermont highlights the South Carolina captive insurance domicile’s climate for very specific industries.
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