South CarolinaS 0210126th General Assembly (2025-2026)Senate

AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 38-90-10, RELATING TO DEFINITIONS, SO AS TO INCLUDE REFERENCES TO FOREIGN CAPTIVE INSURANCE COMPANIES AND TO ADD TERMS; BY AMENDING SECTION 38-90-20, RELATING TO REQUIREMENTS OF CAPTIVE INSURANCE COMPANIES, SO AS TO AMEND MEETING REQUIREMENTS AND OUTLINE COMPONENTS OF A PLAN OF OPERATION; BY AMENDING SECTION 38-90-40, RELATING TO CAPITALIZATION REQUIREMENTS, SO AS TO GIVE DISCRETION TO THE DIRECTOR; BY AMENDING SECTION 38-90-60, RELATING TO INCORPORATION OPTIONS AND REQUIREMENTS, SO AS TO INCLUDE FOREIGN CAPTIVE INSURANCE COMPANIES; BY AMENDING SECTION 38-90-70, RELATING TO REPORTS, SO AS TO CHANGE A DEADLINE AND INCLUDE REFERENCES TO FOREIGN CAPTIVE INSURANCE COMPANIES; BY AMENDING SECTION 38-90-75, RELATING TO DISCOUNTING OF LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES, SO AS TO ALLOW A SPONSORED CAPTIVE INSURANCE COMPANY TO FILE ONE ACTUARIAL OPINION; BY AMENDING SECTION 38-90-80, RELATING TO INSPECTIONS AND EXAMINATIONS, SO AS TO MAKE THE EXAMINATION OF SOME CAPTIVE INSURANCE COMPANIES OPTIONAL AND TO INCLUDE REFERENCES TO FOREIGN CAPTIVE INSURANCE COMPANIES; BY AMENDING SECTION 38-90-140, RELATING TO TAX PAYMENTS, SO AS TO AMEND REQUIRED TAX PAYMENTS FOR A SPONSORED CAPTIVE INSURANCE COMPANY; BY AMENDING SECTION 38-90-165, RELATING TO DECLARATION OF INACTIVITY, SO AS TO ALLOW FOR THE SUBMISSION OF A WRITTEN APPROVAL; BY AMENDING SECTION 38-90-175, RELATING TO THE CAPTIVE INSURANCE REGULATORY AND SUPERVISION FUND CREATED, SO AS TO INCREASE THE ALLOWED TRANSFER OF COLLECTED TAXES; AND BY AMENDING SECTION 38-90-215, RELATING TO PROTECTED CELLS, SO AS TO REMOVE LICENSING REQUIREMENTS.

Summary

Captive Insurance Companies

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Bill Overview

Analyzed Economic Effects

9 provisions identified: 1 benefits, 1 costs, 7 mixed.

Capital and security rules for cells

The Director sets paid‑in capital and surplus for sponsored captives and for each protected cell after reviewing plans and risks. Beginning May 22, 2025, each unincorporated cell must keep loss reserves or use one security option: fronting, approved reinsurance, or a U.S. trust funded by a letter of credit or other approved assets. The trust must at least cover the cell’s reserves, and the Director can require more. If a letter of credit is used, it must be issued or confirmed by an approved bank. Beginning May 22, 2025, each incorporated cell must also hold capital and surplus as set by the Director.

More captive taxes fund oversight

Forty percent of taxes collected under the captive insurance chapter, plus all related fees and assessments, go to the Captive Insurance Regulatory and Supervision Fund. Fees from reinsurers that assume only captive risk also go to the fund. All fines and administrative penalties go to the state’s general fund. This supports ongoing oversight without changing the tax rate itself.

Lower costs for inactive captives

The Director can declare a captive inactive if it has no insurance liabilities and stops writing coverage. While inactive, required capital can drop to no less than $25,000. The minimum premium tax can be set at no less than $2,000, and no other premium taxes are due. The Director can also waive some reports in the written approval.

New in-state rules for captives

Captive insurers must keep their main office in South Carolina. Branch captives must keep the branch’s main office in the State. Starting the year after licensing, each captive must hold one annual board (or equivalent) meeting in South Carolina, with a quorum present and at least two members in person. Foreign captives licensed as branches must also register to do business in South Carolina after getting a certificate of authority. Sponsored captive applicants must file a business plan that tracks each cell’s results, submit contracts or sample contracts, and state that expenses are shared fairly among cells.

Exams focused on higher-risk captives

The Director examines risk retention groups and industrial insured insurance companies at least once every five years, and more often if needed. Other captive insurers may be examined when the Director decides it is prudent. For branch captives, the exam may be limited to branch business if the captive provides a domiciliary compliance certificate each year and shows sound finances.

Limited use of foreign currencies

A captive or its protected cell can receive premiums, pay claims, and hold capital in a non‑U.S. currency if its plan allows it. The currency must be from the insured owner’s home country and cannot be from an alien adversary. All payments to the Department are in U.S. dollars, and reports must convert to dollars using U.S. Treasury exchange rates. Policies payable in foreign currency are treated as equal in U.S. dollars and paid in U.S. dollars when due.

New definitions for foreign and cell captives

The law defines what counts as an alien or foreign captive and a branch captive that operates in South Carolina. It defines who is a participant in a sponsored captive and says their losses are limited to the assets in their protected cell. It adopts a federal "alien adversary" standard and bars corporations controlled by an alien adversary. It also defines a dominant shareholder as one owner with at least 10% or owners together with at least 20%. These definitions set who can take part and under what limits.

New reporting dates; single actuarial filing

Risk retention groups must file a verified financial report by March 1 each year. All other captive insurers must file by July 1, with a fiscal‑year option if the Director approves. Branch captives must send copies of domiciliary reports within 180 days unless the Director waives it. The Director can also allow a sponsored captive to file one actuarial opinion that covers the captive and all its protected cells.

Sponsors & Cosponsors

Sponsor

Ross Turner
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 149 • No: 0

House vote • 5/1/2025

(Captive Insurance Companies)Passage of Bill

Yes: 106 • No: 0

Senate vote • 4/2/2025

(Captive Insurance Companies)2nd Reading

Yes: 43 • No: 0

Actions Timeline

Act No. 62
5/27/2025legislature
Effective date 05/22/25
5/27/2025legislature
Signed By Governor
5/22/2025Governor
Ratified R 88
5/20/2025legislature
Ordered enrolled for ratification
5/8/2025Senate
House recedes from amendment(s)
5/8/2025House
Non-concurrence in House amendment
5/6/2025Senate
Read third time and returned to Senate with amendments
5/2/2025House
Unanimous consent for third reading on next legislative day
5/1/2025House
Roll call Yeas-106 Nays-0
5/1/2025House
Read second time
5/1/2025House
Amended
5/1/2025House
Committee report: Favorable with amendment Labor, Commerce and Industry
4/30/2025House
Referred to Committee on Labor, Commerce and Industry
4/9/2025House
Introduced and read first time
4/9/2025House
Scrivener's error corrected
4/3/2025legislature
Read third time and sent to House
4/3/2025Senate
Roll call Ayes-43 Nays-0
4/2/2025Senate
Read second time
4/2/2025Senate
Committee Amendment Adopted
4/2/2025Senate
Scrivener's error corrected
3/5/2025legislature
Committee report: Favorable with amendment Banking and Insurance
3/4/2025Senate
Scrivener's error corrected
1/28/2025legislature
Referred to Committee on Banking and Insurance
1/15/2025Senate
Introduced and read first time
1/15/2025Senate

Bill Text

Introduced
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