Article

Louisiana's Creating Holistic Options in Coverage for Enterprise and Self-Insurance (CHOICES) Law, represents the state's first major captive statute overhaul since 2008. By reducing capital requirements, introducing dormancy provisions, and expanding regulatory flexibility, Louisiana aims to compete with established domiciles like Tennessee, North Carolina, and Grand Cayman. Below is a comparative analysis of key competitiveness metrics with a few established captive domiciles:

Metric	Louisiana	Tennessee	North Carolina	Grand Cayman
Total Risk-Bearing Entities	Not reported	839 (182 captives + 657 cells)	1,069 (311 captives + 758 cells)	569 captives
Formation Time	30-day policy approval	30-day licensure	~60 days	~90 days
Active Association	Under development	TDCI Captive Section	NC Captive Insurance Association	Cayman Islands Captive Insurance Association
Statute Recency	2025 (CHOICES)	2021 (protected cell reforms)	2024 (tax amendments)	2023 (governance updates)

Competitive Advantages and Gaps

Louisiana's Strengths:

• Capital Efficiency: $250,000 for pure captives matches Tennessee's entry point while introducing unique dormancy options to reduce administrative costs.
• Regulatory Agility: 30-day approval aligns with industry leaders, and expanded regulator authority enables faster coverage/investment approvals.  *Note that formation time for cell captive is considerably less for nearly all domiciles. 
• Innovation: Novel structures like branch captives and formalized risk retention groups address modern risk needs

Established Domicile Advantages:

• Tennessee: Demonstrated scalability with 59% economic growth (2015–2016) and premium volume nearing $3B. Its mature ecosystem includes rapid licensing and dormant captive tax exemptions.
• North Carolina: 2024 tax amendments (e.g., redomestication holidays) enhance retention, though formation lags at 60 days.
• Grand Cayman: Dominates complex structures with segregated portfolio flexibility but imposes heavier compliance (e.g., $1M manager indemnity insurance) and slower formation.

Louisiana’s 2025 CHOICES Law introduces innovative reforms—reduced capital requirements ($250K for pure captives), 30-day approvals, and dormancy provisions—that theoretically position the state as a competitive captive domicile. However, critical weaknesses impede its ability to challenge established jurisdictions:

Critical Gaps for Louisiana

1. Statute Update Cadence

Louisiana’s 17-year hiatus between major captive statute updates (2008–2025) contrasts sharply with industry leaders:

• Tennessee: Updates every 2–4 years (e.g., protected cell reforms in 2021)
• North Carolina: Annual amendments (e.g., 2024 tax holidays)
• Vermont: Continuous enhancements, including 2023 governance refinements 
  This infrequency risks regulatory obsolescence, as competitors adapt rapidly to market shifts

2. Absence of Active Association

While Tennessee (TDCI Captive Section), North Carolina (NC Captive Insurance Association), and Cayman (Cayman Islands Captive Insurance Association) leverage robust industry groups for advocacy and education, Louisiana’s association remains under development. Louisiana currently lacks this ecosystem, hindering stakeholder coordination.  Established associations accelerate growth through:

• Legislative lobbying for timely reforms
• Risk-management training and networking
• Market promotion to attract redomestications

3. Unproven Regulatory Framework

Louisiana’s post-CHOICES environment lacks validation:

• No reported captive counts or premium volume, unlike Tennessee’s 839 entities and $2.9B premiums.
• Zero economic impact data, while Cayman’s captives contribute significantly to GDP.
• Regulatory inexperience: The Louisiana Department of Insurance’s poor score in R Street’s 2024 efficiency rankings (citing politicization and high regulatory surplus) combined with lack of captive experience should be considered when evaluating a formation or redomestication to the state.
• Scalability Proof: Tennessee’s $2.9B premiums and 17% cell growth demonstrate measurable success. Louisiana lacks comparable metrics.

Strategic Implications

For Louisiana to compete:

• Accelerate Updates: Match Tennessee/NC’s 1–2-year amendment cycles to avoid repeating the 17-year stagnation.
• Launch Association: Replicate other domicile models for advocacy and education.
• Publish Metrics: Report entity counts/premiums to demonstrate scalability, as Tennessee did with 14.7% YoY growth.
• Redomestication Incentives: Mirroring NC’s tax holidays to attract entities.
• Transparent Reporting: Publishing entity counts/premiums to validate competitiveness.

Louisiana’s CHOICES Law offers competitive features but remains structurally disadvantaged. The 17-year update gap, lack of association, and unproven framework place it behind domiciles with decades of validated growth. Although the update is a tremendous step in the right direction, the success of CHOICES will likely lie on new formations or redomestication of Louisiana-based insureds that value state pride over practicality.  Until Louisiana addresses these gaps through sustained legislative activity, association development, and transparent reporting, it will trail established players in scalability, innovation, ecosystem maturity, and reputation.