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Was this an industry initiative or did the impetus come primarily
from the regulatory side?
The bill was developed and presented to the legislature by the
South Carolina Captive Insurance Association (SCCIA), but in truth
it was a joint effort in which the department’s captives division
played a very active supporting role.
From the outset I wanted this bill to be the product of a close
collaboration between some of the leading figures in the state’s
captives industry on one side and those departmental personnel
with the most in-depth knowledge of the captive statute on the other.
This was the spirit in which the project was launched and carried
out, and it turned out to be a very constructive, collegial, and
rewarding exercise for all who participated.
What led the SCCIA and the department to seek changes to the
captives statute at this point?
Given that a fairly substantial set of amendments was passed in
June 2014, which among other things permitted the formation and
licensing of incorporated cells within sponsored captive structures,
this more recent effort was driven primarily by two factors.
The first is the fact that we now have 18 years of practical experience
in administering this statute. Some of our staff, as well as some of the
industry’s leading practitioners, know this statute inside and out, and
know what parts of it facilitate the smooth and efficient administration
of our captives programme—and thereby lend credibility to the
programme—and which parts do not.
The second factor is the ever-increasing competition among states
to attract captives business. States that aspire to be leading captives
jurisdictions over the long term need to continually refresh their statutes
in light of competitive factors as well as practical business considerations.
What does the new legislation do? Is it a major overhaul of your
It is not a fundamental substantive re-working of our statutory
framework, nor does it signal a change of direction in our
department’s policies and practices overall. It certainly does not
represent a lowering of our regulatory standards or an abandonment
of our insistence on quality captive insurance programmes together
with well-informed and committed owners.
The new legislation essentially does three things:
• It introduces needed clarifications and eliminates redundancies.
• It removes provisions which are outdated and not in keeping with
the principle of proportionality that should define and govern any
domicile’s regulatory approach to captives.
• It seeks to align the statute with departmental policies and practices
that have evolved to a higher level of administrative efficiency over
time, and thus enhance our competitive appeal as a domicile.
Describe the provisions in the legislation that you and the SCCIA would
like captive owners, prospects, and practitioners to know about.
Here’s a quick run-down of the 10 most salient changes:
1. The definitions of “affiliate”, “control”, and “person” have been
revised to conform to the South Carolina Holding Company
2. The definition of “principal place of business” has been revised
to mean “the place physically located within the state of South
Carolina where the complete books and records of the captive