Process and regulatory changes developed in partnership with the Delaware Captive Insurance Association

Insurance Commissioner Trinidad Navarro and the Delaware Captive Insurance Association (DCIA) are proud to announce a series of process and regulatory improvements intended to ensure Delaware remains a top domicile for businesses seeking to form captive insurance companies. The news was shared at DCIA’s Fall Forum last week, the premier event for industry leaders.

“As global leaders in captive insurance, we recognize that we must continue to explore improvement, innovation, and industry insight,” said Insurance Commissioner Trinidad Navarro. “This industry is an important economic engine in our state, and I look forward to continuing to foster its expansion.”

After robust stakeholder engagement, the department issued Captive Bulletin No. 14, which outlines the Bureau of Captive & Financial Insurance Products’ requirements for captives formed to write corporate “Side A” directors’ and officers’ (D&O) coverage for Delaware corporations. This progress was made possible by the passage of SB 203 (2022). It is expected that this will help companies access more affordable coverage and increase Side A D&O capacity.

The department also issued revised Captive Bulletin No. 12, adopting a more flexible approach for certain captive applicant’s capitalization requirements, including allowing use of brokerage accounts in certain circumstances. Additionally capital and surplus requirements have been recalibrated to place more emphasis on consulting actuaries’ adverse case projections.

Several process changes are anticipated to improve approval timelines and speed to market. Unless otherwise noticed, review of initial application filings will decrease from a goal of 45 days to 30 days. Conditional licensure applications typically see a significant spike toward the end of the year. Moving forward, those applications received after November 1 each year will be reviewed within 80 days of submission. All routine requests for approvals, such as dividends, business plan changes, statutory dormancy, and changes in approved service providers, will now be reviewed within ten days of receipt. Additionally, captives will now be able to seek contingent Bureau approval for actions requiring Board approval or ratification.

Michael Teichman, President of the Delaware Captive Insurance Association, said “Delaware has been a top global captive domicile since revamping its captive insurance statute almost 18 years ago. While we believe Delaware continues to have much to offer, we recognize other domiciles are not standing still, and we cannot rest on our laurels. Over the past year we have enjoyed the opportunity to work with Commissioner Navarro and Bureau Director Stephen Taylor to develop these helpful and timely domicile improvements.”

Captive insurance companies are owned by the entities that they insure and are usually formed by businesses to better manage the cost and administration of their insurance coverage. Delaware is the world’s fifth largest and the third largest U.S. captive domicile. It is one of four global domiciles recognized by the International Center for Captive Insurance Education as ICCIE Trained. To learn more, visit captive.delaware.gov.

The Delaware Captive Insurance Association is a Delaware non-stock not-for-profit corporation formed in 2005 to serve as the unified voice of the captive insurance industry in Delaware and to support the development and growth of the industry through marketing, networking, education, and legislative initiatives.

State’s dormancy laws now offer greater flexibility

With the Governor’s recent signature, Delaware’s Captive Insurance Division is celebrating increased flexibility in its offerings to captive insurance companies. Senate Substitute 1 for Senate Bill 36 allows captives to be classified as registered series, offers clarity to provisions regarding insuring a parent company, and allows for a captive to enter dormancy after 12 consecutive months of inactivity, rather than requiring a calendar year of inactivity.

“We continue to work to streamline processes to maintain our status as one of the most attractive captive domiciles,” shared Insurance Commissioner Trinidad Navarro. “In the past, if a company stopped writing insurance business mid-year, they would need to wait 18 months to file for dormancy in order to satisfy the calendar year provision and become eligible, and requiring the captive to pay premium taxes and continue to submit statements to the department during that period. Prior to this change, it may have been easier for captives to dissolve than elect dormancy and later return to the market.”

SB 1 for SB 36, sponsored by Senator Trey Paradee and Representative Bill Bush, is the result of a multi-year effort, after legislation did not proceed during 2020’s truncated session due to COVID-19. The Department of Insurance convenes stakeholder groups to discuss legislative proposals, and had many conversations with the DCIA, Delaware’s Captive Insurance Association, about the bill.

“The DCIA thanks Governor Carney, the sponsors of the bill, and Insurance Commissioner Navarro for their support of the captive insurance industry,” Joanne Shaver, President of the DCIA, said. “The DCIA believes these changes are beneficial to captive owners, especially with respect to Delaware’s dormancy statute. The change to a continuous 12-month period allows a captive to enter dormancy status sooner than it would have been able to previously. This change will make it more favorable for captive owners to elect dormancy status over dissolution of the captive, especially when the owner isn’t 100% sure they want to dissolve their captive immediately.”

In 2020, Delaware’s robust captive insurance program contributed $2.9 million to the state’s General Fund and $1 million to the City of Wilmington. The division licensed 70 new captives last year, which may be the most reported by a U.S. domicile.

The success of the Captive division continues to earn international recognition. Delaware was recently named a finalist for Non-Asian Domicile of the Year by leading industry magazine Captive Review and was a finalist for 2020 International Insurance Domicile of the Year.

Captive insurance companies, which are owned by the entities that they insure, are usually formed by businesses that wish to better manage the cost and administration of their insurance coverage. Delaware is the world’s fifth largest and the third largest U.S. captive domicile, with 783 active captives and $5.4 billion in gross written premiums. It is one of four domiciles in the world recognized by the International Center for Captive Insurance Education as ICCIE Trained. To learn more, visit captive.delaware.gov.

Shortlisted for European Captive Review honor

Insurance Commissioner Trinidad Navarro shared today that Delaware was named as one of three finalists for International Insurance Domicile of the Year within the European Captive Review Awards. The winning domicile will be announced in a virtual ceremony on November 26. Delaware is the fifth largest global captive domicile. Commissioner Navarro commended his staff and highlighted their experience and fluency in multiple languages as key attributes to the department’s success.

“With speakers of French, German, Lithuanian, Russian, and Spanish, and decades of experience in international captive matters, the Delaware Department of Insurance Captive Division has a worldwide presence that far exceeds our size,” said Commissioner Navarro, adding that the department’s work on international regulation is prominent in the industry. “Our team participates in supervisory colleges with other jurisdictions around the world to successfully coordinate insurance regulation on a global scale.”

In addition to the recent short-list announcement, the department’s captive team is one of only four captive domiciles to be trained and certified by the International Center for Captive Insurance Education. In 2019, Delaware was named a finalist for Non-Asian Domicile of the Year by leading industry magazine Captive Review.

To learn more about the Delaware Department of Insurance Captive Division, visit captive.delaware.gov.