Delaware Captive Domicile Offers Same-Day Conditional Licensing

GREAT SEAL OF THE STATE OF DELAWARE with the years 1704 1776 1787 on a white background

November 13, 2018 |

GREAT SEAL OF THE STATE OF DELAWARE with the years 1704 1776 1787 on a white background

This year in Delaware, whose 391 captives at the end of 2017 made it the third-largest domestic captive domicile, lawmakers approved and Gov. John Carney signed two measures amending the state's captive law.

Under one measure, H.B. 334, which received final approval by lawmakers on June 20 and was signed October 16 by Gov. Carney, the state insurance commissioner can issue conditional certificates of authority to enable new captive insurers to operate while their applications are being reviewed by regulators.

To gain conditional authority, captives would have to meet Delaware's minimum capital and surplus requirements and pay a $100 fee.

However, the insurance commissioner could revoke a captive's conditional certificate of authority if regulators find that the captive failed to meet Delaware's captive licensing requirements.

In an A.M. Best interview, Steve Kinion, director of the bureau of captive and financial insurance products, Delaware Insurance Department, referred to the conditional licensing program as Delaware's flagship achievement for this year. He explained that conditional licensing is a speed-to-market system, which allows a captive to receive its conditional license on the same day its application is submitted to the Delaware Insurance Department. This is accomplished through its web-based protocol system.

"We have received a tremendous amount of interest in this program because it offers to a captive insurance company the availability of a license on the same day of application," he said. "Consider this—most applications require a 30- to 45-day [review] period.... Because we know our customers in this area, we are willing to issue a conditional license, and then, during the 6-month period, we will review the application."

In the same interview, Mr. Kinion spoke about the adoption of H.B. 289, which Gov. Carney signed May 24, as another milestone, allowing captive insurance companies to file their annual financial statement, as well as their premium tax payment, on April 15, as opposed to the prior date of March 1. He said, "This allows an extra 6 weeks for a company to make a better annual financial statement to submit to us, as well as a more accurate premium tax statement."

Highlighting the achievements of the Delaware captive industry in 2017 and 2018, Mr. Kinion said to A.M. Best, "In 2017, we grew our total captive insurance premium by $8.1 billion," noting that Delaware finalized the year with $12.5 billion in total captive insurance premium. "That makes Delaware the fastest-growing US captive insurance domicile in terms of captive insurance premium."

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November 13, 2018