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.

The Delaware Department of Insurance today announced that industry veteran Stephen Taylor has joined the department as the incoming Director of its world-renowned Captive Bureau. Taylor will succeed Steve Kinion, who transitions out of the role on September 30.

“Stephen Taylor’s extensive experience as an innovative yet meticulous insurance regulator stood out amongst contract applicants for our Captive Director position, and we are happy to welcome him to the department,” said Insurance Commissioner Trinidad Navarro. “This role is certainly not without its challenges, but Taylor’s adeptness at engaging in both federal and nonfederal policy matters will serve our state well in the years to come.”

Stephen Taylor served as Insurance Commissioner of the District of Columbia from 2015 to 2020. In that role, he instituted a number of innovative insurance regulation reforms and prioritized initiatives that aimed to empower residents and increase economic inclusion. Taylor has held numerous prominent leadership roles in the National Association of Insurance Commissioners. He most recently served as Director of Policy and Assistant General Counsel to the Surety and Fidelity Association of America, and has nearly 30 years of insurance regulation, legislative, and legal experience.

“I look forward to working with the Commissioner and the talented Captive team to continue providing a best-in-class captive program for the risk management community and bringing important economic opportunities to the State of Delaware,” said Stephen Taylor.

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. 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.

Department shares appreciation for Steve Kinion’s years of service

The Delaware Department of Insurance today announced a planned leadership transition following an upcoming departure of long-time Captive Bureau Director Steve Kinion on September 30. The unique form of insurance regulated by this division contributes millions of dollars to the State of Delaware and City of Wilmington each year. As of year-end 2021, the Bureau had 759 total active licenses.

“Despite challenges, we have pursued some of the nation’s most effective captive innovation efforts, like our conditional licensing program, and are set up success in future endeavors as well,” said Insurance Commissioner Trinidad Navarro. “This transition of leadership will continue our tradition of success, and we wish Steve Kinion the best in his future endeavors.”

While the number of captives nationwide has seen decreases in recent years, Delaware’s long history as a top captive domicile across the globe has continued. Commissioner Navarro and the Bureau created a successful conditional licensing program, improved flexibility in dormancy, and continue to work to generate innovative insurance solutions while reducing taxpayer burden including planning for captive-based corporate Directors & Officers liability coverage.

Accolades for the Bureau during Commissioner Navarro’s years in office include being named a finalist for U.S. Captive Domicile of the Year (2022), a nomination for International Captive Domicile of the Year (2021), finalist for Non-Asian Domicile of the Year (2021), finalist for International Insurance Domicile of the Year (2020), finalist for Non-Asian Domicile of the Year (2019), and nomination for Non-European Union Domicile of the Year (2016).

The Bureau Director position operates via contract, and a recent RFP process resulted in a new awardee. The Department will announce the awardee as soon as a contract is finalized, which the Department hopes will occur in the next few weeks.

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. 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.

Successes in serving residents continue

The Delaware Department of Insurance (DOI) today published performance and productivity data for 2021. While the pandemic necessitated continued operational adjustments, staff continued to focus efforts on consumer services and saw great success. The department also released an infographic of key statistics.

“Year after year, our DOI team delivers for Delaware. In the face of many changes and challenges due to COVID-19, we continued to prioritize consumer services, and never wavered from that commitment,” said Insurance Commissioner Trinidad Navarro. “This year in review provides just a glimpse into the incredibly vast and diverse array of work our team takes on, and I look forward to continuing to make a difference every day in 2022.”

Despite minimal in-person events, services directed to individual consumers and local businesses continued to thrive in 2021. The Delaware Medicare Assistance Bureau (DMAB) held more than 5,500 free one-on-one counseling sessions with residents, ultimately saving beneficiaries a combined $521,000 – an increase of more than $230,000 compared to 2020 savings. The Consumer Services Division managed over 3,000 complaints and inquiries, recovering nearly $700,000 for consumers. In the Legal Division, 274 settled arbitration cases resulted in awards totaling more than $640,000. These services, combined with $12.3 million in ACA plan refunds and $7.4 million in workplace safety savings, amount to over $21.5 million for Delaware’s insurance consumers in 2021.

A critical focus of the department during COVID-19 continues to be ensuring health insurer compliance with state and federal rules, coverage requirements, and initiatives to reduce burdens on hospitals and those seeking care. The Market Conduct team continued investigations into insurer’s Mental Health Parity compliance, resulting in $635,000 in fines. Throughout the ACA Special Enrollment Period, more than 21,000 residents took advantage of increased subsidies and savings from the American Rescue Plan, saving an average of 53% on their monthly premiums – a savings of $1.2 million in total. To protect consumers and create a nationwide network of strong regulation, Commissioner Navarro successfully worked to create the National Improper Marketing of Health Plans Working Group within the National Association of Insurance Commissioners.

Nationally, Commissioner Navarro and the department remain engaged in numerous industry organizations. The Commissioner was recently named Vice-Chair of the National Association of Insurance Commissioners’ Market Regulation and Consumer Affairs (D) Committee, a prestigious honor, in addition to being elected to the Executive Committee of the Northeast Zone and continuing to serve as Chair of the National Anti-Fraud Task Force. Delaware continues to participate in the Special Committee on Race and Insurance, the Healthcare Fraud Prevention Partnership, the National Insurance Crime Bureau Medical Task Force, the Delaware Valley Association of International Special Investigative Units, and other committees and groups.

In 2021, the General Assembly utilized virtual procedures for session. DOI pursued 14 pieces of legislation with our partners in Legislative Hall and engaged with more than 30 insurance-related bills, including legislation to regulate the multi-billion-dollar Pharmacy Benefit Manager industry, protecting consumers of auto and homeowner’s insurance, and making progress on issues like health care access and pharmaceutical costs. The DOI also continued to work on other legislative mandates, such as the Office of Value-Based Health Care Delivery.

In Market Conduct, 16 completed insurer examinations resulted in $1.2 million in fines, and several examinations are in progress. More than 50,000 licenses were issued, and licenses total more than 200,000. Across all lines of insurance, more than 30,000 rates and forms were processed and approved.

The Bureau of Examination, Rehabilitation and Guaranty oversees the financials of 136 domestic companies that manage $680.6 billion, and more than 2,000 other companies operating in the state. They completed 62 financial examinations, and have 49 exams in progress, in addition to completing nearly 3,500 other projects including Uniform Certificate of Authority Application amendments and Security Exchange Requests.

The Fraud Bureau worked to investigate many tips and reports, and 5 criminal cases of insurance fraud were indicted in addition to the collection of nearly $9,500 in civil penalties.

Going into 2022, businesses will see the fifth consecutive decrease in Workers’ Compensation premiums, an average reduction of more than 20%. The Workplace Safety team engaged more than 1,200 companies in earning additional savings in 2021.

The Captive Division, named a finalist for International Captive Domicile of the Year, received 70 new applications and has 759 licenses in effect.

View the 2021 Infographic