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SC Passes Captive Statute Update, Heads to Governor for Signature

5/8/2025

South Carolina Senate Bill 210 (S. 210) represents a comprehensive update to the state’s captive insurance laws. The bill aims to modernize the regulatory framework, enhance flexibility for captive insurers, and strengthen South Carolina’s position as a leading domicile for captive insurance companies. S. 210 was introduced by Senator Turner and passed the Senate unanimously (43-0), reflecting broad bipartisan support for modernizing the captive insurance framework. The bill was passed in the South Carolina State Legislature today (May 8, 2025) and is on the way to Governor McMaster for signature.

Implications and Industry Impact

  • Modernization and Flexibility
    The bill’s updates are designed to keep South Carolina competitive as a domicile for captive insurance companies, especially as the industry evolves and more sophisticated structures, such as foreign captives and protected cells, become prevalent.

  • Regulatory Efficiency
    By granting the Director more discretion and making some examinations optional, the legislation aims to balance regulatory oversight with operational efficiency, potentially reducing unnecessary administrative costs for well-managed captives.

  • Enhanced Support for Industry Growth
    Increasing the allocation of tax revenue to the regulatory and supervision fund signals the state’s commitment to investing in the captive insurance sector’s continued growth and reputation.

  • Attractiveness for New Entrants
    The explicit recognition of foreign captives and the relaxation of certain licensing requirements may encourage new entrants and innovative captive structures to select South Carolina as their domicile.

Key Provisions of S. 210

  • Recognition of Foreign Captive Insurance Companies
    The bill amends definitions throughout the captive insurance statutes to explicitly include references to foreign captive insurance companies, broadening the scope of entities that can operate or be recognized under South Carolina law.

  • Plan of Operation and Meeting Requirements
    Updates to Section 38-90-20 clarify the required components of a captive’s plan of operation and amend meeting requirements, likely streamlining administrative processes for captive insurers.

  • Capitalization Requirements
    The Director of Insurance is granted greater discretion in determining capitalization requirements for captives, allowing for a more tailored approach based on the unique risk profile and business plan of each captive insurer.

  • Reporting and Deadlines
    The bill modifies reporting deadlines and explicitly includes foreign captive insurance companies in these requirements, ensuring consistent regulatory oversight.

  • Loss Reserve Discounting
    Sponsored captive insurance companies are now permitted to file a single actuarial opinion regarding the discounting of loss and loss adjustment expense reserves, simplifying compliance for these structures.

  • Examinations and Inspections
    Regulatory examinations for certain captive insurers are made optional, reducing regulatory burden where appropriate and including foreign captives in these provisions.

  • Taxation and Regulatory Fund
    The bill increases the portion of collected captive insurance premium taxes that is transferred to the Captive Insurance Regulatory and Supervision Fund from 20% to 40%. This fund supports the administration and promotion of the captive insurance industry in South Carolina.

  • Protected Cells
    Licensing requirements for protected cells within sponsored captive insurance companies are relaxed, and the Director is given authority to determine capital and surplus requirements for unincorporated protected cells based on their specific business plans and risk profiles

S. 210 represents a significant step forward in updating South Carolina’s captive insurance laws. The bill’s provisions are expected to enhance the state’s regulatory flexibility, support industry growth, and maintain South Carolina’s status as a leading captive domicile. The changes will be welcomed by captive managers, sponsors, and businesses seeking sophisticated risk management solutions in a favorable regulatory environment.

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