Delaware's Insurance Commissioner and DCIA unveil game-changing reforms to bolster State's captive insurance industry
Delaware’s Insurance Commissioner Trinidad Navarro and the Delaware Captive Insurance Association (DCIA) have announced a series of process and regulatory improvements intended to ensure Delaware remains a top domicile for businesses seeking to form captive insurance companies.
“As global leaders in captive insurance, we recognize that we must continue to explore improvement, innovation, and industry insight,” said Navarro. “This industry is an important economic engine in our state, and I look forward to continuing to foster its expansion.”
After what it described as ‘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’ 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.
“Delaware has been a top global captive domicile since revamping its captive insurance statute almost 18 years ago,” said Michael Teichman, president of the DCIA. “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.”