He said Gov. Christie has been brought up to speed on captives and what they can bring to the state. “I get the sense that at a minimum, he recognized that other states—notably Vermont, South Carolina and Hawaii—have created jobs and certain revenue in their states without having to create a major infrastructure.”

He added, “That’s a compelling story with all the states that are struggling with revenue right now.”

He admitted to being skeptical early on as to the potential success of the domicile. “I argued that New Jersey is pretty late to the party. That Bermuda and Cayman were setting up captives in the 60s, 70s and 80s, Vermont in the 80s, and now there are roughly 30 states and D.C. with captive legislation, so why would anybody want to go to New Jersey?” he said.

He added, however, that “as I’ve worked on it over the last several months, I think there may be some compelling reasons for New Jersey-based companies to establish New Jersey-based captives.”

New Jersey companies that already have captives may also have compelling reasons to re-domicile there from Vermont and other domiciles or from offshore locations, he said.

Mr. Wright pointed out that New Jersey is the home of a number of pharmaceutical firms, life insurance companies and other industries that might benefit from having a captive in the state.

A major incentive to domicile in the state, he said, involves procurement taxes. Currently, he said, a New Jersey company with a captive in Vermont would pay a self-procurement tax. Potentially a company could save two or three points on significant premiums by not having to pay self-procurement taxes to another state. “This could be a home run,” he said.

Gregg Scambati, founder and president of the NJCIA, told NU Online News Service in an e-mail, “Self-procurement has not been eliminated as part of the legislation. It could be a direction for legislators to take in the coming years since it might lead to re-domestications.”

Two other advantages for New Jersey captive owners are reduced travel expenses for New Jersey companies and “resolving the perception issue of shareholders and the public” for organizations that might have a captive domiciled outside the state, Mr. Wright said.

While there is some concern about saturation of domiciles, Mr. Wright said that given the current soft market, “it’s interesting that we’re still very active in the captive world.”

He observed that since Willis’ acquisition of HRH, “we’re seeing a lot of activity with the smaller middle-market companies that either want to prepare for a hard market or feel that the insurance industry continues to rip them off. So we’re seeing a lot of interest from firms wanting to form a new captive or find new ways to use captives that were set up years ago.”

As for a captive infrastructure in New Jersey, Mr. Wright said that Doug Wheeler, director of the Division of Insurance, will be involved with fleshing out the captive legislation. Advisory boards and committees will be set up to create the infrastructure, a process he said Willis has volunteered to be part of.

“We’re hoping to develop a pro-forma financial model to show the state how much revenue is potential, and that will help them craft and fund a budget,” he said.