Traditionally dominated by tropical offshore domiciles such asBermuda and the Cayman Islands, the captives industry in recentyears has been shifting its focus to U.S. shores—a trend that isexpected to continue and perhaps accelerate in 2013 as morecompanies recognize some of the distinct advantages of domicilingdomestically.

“There has been a re-balancing between onshore and offshorecaptive domiciles as these risk-transfer mechanisms become moremainstream,” says Richard S. Smith, president of the VermontCaptive Insurance Association. “The cost, tax and expertiseadvantages to domiciling your captive offshore have disappeared andgiven way to healthy competition among U.S. domiciles.”

On the savings front, domestic captives present loweroperating costs by, for one, eliminating the need to traveloverseas for board meetings.