“The bigger the hospital system and the more they have to provide insurance for their voluntary physicians, the more they need a captive,” he added.

While he is still seeing some re-domestications, their numbers are going down.

“They are finding that if they're offshore now, that all of the expense involved in re-domesticating starts to make that uncompetitive. It's a big expense,” Mr. Boughner said. “Since they've elected to be taxed as a U.S. entity anyway, they don't see the benefits.”

While perception of an offshore domicile also has been an issue with some organizations in the past, prompting re-domestications, he is not seeing this as being a problem now.

“Cayman has worked extremely hard to change that, and I think they've done it. And I'm not sure Bermuda ever had that [perception issue] among the informed; it's always been a very established domicile,” he explained.

While most onshore captives tend to be workers'-compensation directed, “we're starting to see more activity in both ERISA [Employee Retirement Income Security Act] and non-ERISA benefits,” he maintained.

Mr. Boughner, however, is “stunned” by how slow the development of employee-benefits captives has been. They were introduced more than 10 years ago, and “I would have guessed we would have had 300 captives with ERISA benefits right now,” he said. “I think there are about 35.”

He pointed out the “chasm between managing employee benefits and managing property-casualty” as one of the culprits for low formation.

Anecdotally, when employee-benefits captives first began with Columbia Energy, he explained the concept to division presidents of both risk management and employee benefits at the company he worked for at the time.

“The property-casualty guy got it right away,” Mr. Boughner said. “The one that ran the benefits area never did. It was like talking two different languages.”

He believes it will eventually happen, “but much slower than everyone anticipated.”