Delaware Outlines Captive Process and Regulatory Improvements

Delaware Insurance Commissioner Trinidad Navarro and the Delaware Captive Insurance Association (DCIA) announced a series of process and regulatory improvements meant to keep Delaware an attractive choice for businesses seeking a captive domicile.

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

Among the recent moves, the Delaware Department of Insurance issued Captive Bulletin No. 14, which outlines the department's Bureau of Captive & Financial Insurance Products' requirements for captives formed to write Side A directors and officers (D&O) insurance coverage for Delaware corporations. The guidance came after robust stakeholder engagement and was made possible by the passage of Delaware SB 203 in 2022.

The Delaware department also issued revised Captive Bulletin No. 12, adopting a more flexible approach towards certain captive applicants' capitalization requirements, including allowing the use of brokerage accounts in certain circumstances. In addition, the state's capital and surplus requirements have been recalibrated to place greater emphasis on consulting actuaries' adverse case projections.

The department said several process changes are expected to improve Delaware captive approval timelines and speed to market. Unless otherwise noticed, the 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, the department said. 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, Delaware 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," Michael Teichman, president of the Delaware Captive Insurance Association, said in the statement. "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."