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Captive Insurance Overview Given by DISB at CIC-DC Annual Conference

Famous Washington DC monuments viewed from across the water
October 22, 2015

Attendees at the Captive Insurance Council of the District of Columbia (CIC-DC) Annual Conference October 21, 2015, received an overview of captive growth for 2015 during the lead presentation by the Department of Insurance, Securities and Banking (DISB).

Dana Sheppard, DISB deputy insurance commissioner, who copresented the session with Sean O’Donnell, DISB director of financial examination, began the discussion by providing an overview of captive growth for 2015. On September 30, the District had 131 active captives and cells. For 2015 year to date, the domicile had seen 21 new formations broken down as follows.

  • 1 pure captive

  • 2 risk retention groups (RRGs)

  • 16 unincorporated cells

  • 2 rental captives

Mr. Sheppard continued by commenting on the 2014 Captive Insurance Company Amendment Act that took effect on March 10, 2015. Major components of the change in captive regulation included the following.   

  • Minimum capital and surplus requirements for protected cell captive insurers are now set at the discretion of the commissioner

  • The minimum 5-year examination cycle for captives other than RRGs may be extended at the discretion of the commissioner (although the extensions are on a year-by-year basis)

  • Captive applications filed with the Department are expressly exempt under the Freedom of Information Act

  • The Unfair Trade Practices Act is now applicable to RRGs (meaning RRGs must treat all of their members similarly)

Finally, the commissioner noted the Model Risk Retention Act Corporate Governance Guidelines will become part of the accreditation standards beginning in 2017.

Mr. O’Donnell reported the District had just undergone its 5-year National Association of Insurance Commissioners (NAIC) accreditation review. The review has been forwarded to the NAIC Accreditation Committee, which will act on it at the Fall Meeting, and the Department expects to have its accreditation extended.

Mr. O'Donnell encouraged the audience to begin to follow the NAIC Risk Limiting Contracts working group. This subcommittee is looking into reinsurance arrangements with adjustable provisions and is likely to issue guidance on how these are to be handled under statutory accounting. He also provided an update on several other issues on which the NAIC is working that are germane to captives.  Items under this list are the following.    

  • Insurance Holding Company and Credit for Reinsurance Modernization Amendment Act of 2014

  • Corporate Governance Disclosure Model Act

  • Revisions to the Model Audit Rule

  • Revisions to the Holding Company Model Rule

  • Own Risk Self Assessment (ORSA) Model Rule

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