Popular Searches:  AIG  LIFE  china  financial  sunamerica+aig  old republic

South Carolina Report Finds Captive Concerns

 

Tuesday, Aug 04,2009, 9:59:08 AM   Click:

South Carolina’s top insurance regulator says the state’s insurance department has addressed or is working to correct concerns about the state’s captive insurance regulation raised in a report from South Carolina’s Legislative Audit Council.

The recent audit found that “generally, the department’s licensing and examinations of captives complies with state law and regulations.” But it cited three issues with regard to captive insurance: The department didn’t collect all required information from captive companies; the department lacked standard procedures for examining captives other than risk retention groups or special-purpose financial captives; and 43 of 53 scheduled captive examinations were not completed within the three-year period required by state law.

The audit came at the request of legislators, driven initially by concerns about rising workers compensation costs.

Since licensing its first two captives in 2000, South Carolina has experienced rapid growth as a captive domicile, with 163 active captives at the end of 2008, according to a Business Insurance survey.

Scott H. Richardson, director of the South Carolina Department of Insurance, said information that was missing from captive files has been added. In addition, he said the department is auditing all captive licensing files to ensure that required information is collected and filed properly.

Regarding the lack of standard practices, the director said the department previously used National Assn. of Insurance Commissioners procedures for reviewing pure captives but now has implemented its own practices.

As for the examinations not conducted within the required three-year period, Mr. Richardson said, “That was true,” due to inadequate staff resources and making RRG examinations a priority over pure captive exams.

“We have a fair amount of RRGs, which is a pretty serious audit,” Mr. Richardson said. “We didn’t have the staff to do all the audits” because of budget cuts and staff departures, he said. “We said we’re more worried about the public from an RRG standpoint than from a single-parent captive standpoint.”

The audit report noted that of the 197 captive licenses South Carolina issued through September 2008, 60 were RRGs.

Mr. Richardson said the department will complete all outstanding examinations by mid-2010, contracting out most of the work.

Brady Young, managing director and president of Strategic Risk Solutions in Concord, Mass., agreed with South Carolina’s approach. “If you have to do triage and you don’t have adequate resources to do everything, spending the limited resources on RRGs…that’s a prudent decision,” he said. “Practically speaking, most captives are audited every year.”

David F. Provost, deputy commissioner in the Captive Insurance Division of the Vermont Department of Banking, Insurance, Securities & Health Care Administration, took a similar view, though he noted, “We are not in the same position. We do have the resources.”

Vermont’s captive law allows the state to expand the examination period from three to five years if the captive has been audited, and the division has used that flexibility to smooth its examination load, Mr. Provost said.

Mr. Richardson agreed that South Carolina’s rapid growth as a captive domicile, making it the third-largest U.S. captive domicile in 2008, could have been a factor in getting behind on exams. “There’s no question that that was probably an issue,” he said.

The department has a captive staff of 15, and probably will add one or two more soon, the insurance director said.

Citing the loss of staff in the department, Garry W. Coulter, executive vp at USA Risk Group in Greenville, S.C., said, “I’m not surprised with the report.” He added, however, that the South Carolina captive industry is strong and said, “The industry has offered to help any way it can to make the department more successful in the captive business.”

  • Print

You may also be interested in:

Discuss this news

Click Here to see all comments
Please aware of self to obey the Internet related policy laws and strictly forbid to release porn, violence.
Appraisal:

Name:

Email:

Content:

Featured

by Sylvester Enoghase Mar 24, 2009 (Daily Independent / All Africa Global Media via COMTEX) -- The National Pension Commission (PenCom) said that contributions to the scheme have reached N1.1

Name Pencom defaulting employers

by Sylvester Enoghase Mar 24, 2009 (Daily Independent / All Africa Global Media

WASHINGTON, April 22, 2009 The Independent Insurance Agents Brokers of America (IIABA), AHIA NAIFA Health Employee Benefits (AHIA), The Council of Insurance Agents Brokers (CIAB), National

Insurance Groups Urge Slowing Down Health Reform

WASHINGTON, April 22, 2009 The Independent Insurance Agents Brokers of America

NEW YORK, June 15 /PRNewswire/ -- A coalition of insurance companies today expressed serious concerns about the possible impact on insurers of changes to the Available for Sale (AFS) classification

NY AFS classification

NEW YORK, June 15 /PRNewswire/ -- A coalition of insurance companies today

Newport Beachs Pacific Life Insurance Co. has been on a wild ride with its investments in the past year but its mainstay life insurance business appears to be holding up. Parent company Pacific

Insurer Pacific Life Sees AIG Hangover, Policy Sales

Newport Beachs Pacific Life Insurance Co. has been on a wild ride with its

DUBLIN, Ireland--(BUSINESS WIRE)-- Research and Markets (http://www.researchandmarkets.com/research/5c40f8/european_markets_f) has announced the addition of Frost Sullivan's new report European

Research and Markets: European markets for claims

DUBLIN, Ireland--(BUSINESS WIRE)-- Research and Markets

Copyright: Unknown Source: PR Newswire U.S. Wordcount: Leader of Georgia insurance giant appears on the list of best CEOs fourth time COLUMBUS, Ga., April 14 / PRNewswire / - Aflac Chairman and CEO

Aflac 'Dan Amos America's Best' Named CEO of life

Copyright: Unknown Source: PR Newswire U.S. Wordcount: Leader of Georgia

Avid fans of Saturday night 'must see TV' are being warned to guard against potential 'sneak-in' burglaries. Swinton has seen a 12% rise in sneak-in burglaries committed on Saturday evenings during

'Strictly Come Chancing'-Saturday Night 'Sneak-In'

Avid fans of Saturday night 'must see TV' are being warned to guard against

MOST POPULAR