Delaware Captive Insurance Association

Long Title: AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO CAPTIVE INSURANCE COMPANIES.

Synopsis: Section 1 adds the definition of a special purpose financial captive insurance company to the chapter.
Section 2 requires that the costs for experts retained by the Commissioner are paid for by the insurer.
Section 3 removes a duplicate license fee that is unnecessary.
Section 4 adds new minimum surplus requirements for special purpose financial captive insurance companies.
Section 5 provides for the renumbering of a subsection required by other amendments.
Section 6 allows a special purpose captive insurance company or a special purpose financial captive insurance company to use certain business organization forms permitted by Delaware law.
Section 7 amends §6909 relating to activities of captive insurers under suspension.
Section 8 makes the investment restrictions applicable to special purpose financial captive insurance companies.
Section 9 amends §6914 to add special purpose financial captive insurance companies.
Section 10 amends the confidentiality provisions based on the addition of new subchapter III.
Section 11 adds new § 6923 governing the management and location of an insurer’s books and records.
Section 12 rewrites §6932 based on the addition of new subchapter III.
Section 13 rewrites §6937 based on the addition of new subchapter III.
Section 14 redesignates subchapter III as subchapter IV and renumbers the sections of the subchapter accordingly.
Section 15 adds new subchapter III to provide for special purpose financial captive insurance companies as part of the chapter. Special purpose financial captive insurance companies are specialized captive insurers typically designed to act as special reinsurance vehicles for life or property and casualty insurers whereby insurance business transferred to such special purpose captive insurance companies can be funded through capital markets offerings. Significant growth in the number of these captive insurance companies has occurred in other jurisdictions; however, Delaware’s position as the domicile of choice for business entities makes Delaware an ideal domicile for special purpose financial captive insurance companies. Delaware corporate entity law has been used as the basis for forming many of the special purpose financial captive insurance companies in these other jurisdictions. This is a key consideration for the market participants because the agreements are written for terms up to 30 years. This legislation will permit the transfer of insurance risk and associated premium to a special purpose captive insurance company, which will be authorized to fund its obligations with respect to such risk by means of appropriately structured capital markets transactions. This legislation will further provide a detailed description of the requirements for application and approval for a special purpose financial captive insurance company and will provide certainty as to the treatment for accounting and regulatory purposes of certain assets involved in the special purpose captive insurance company’s insurance securitization transaction. Accordingly, this legislation will enhance Delaware’s position as a captive insurance domicile by aligning its existing financial services capabilities to meet insurance market needs while providing appropriate regulatory oversight.

Current Status: Signed On 07/18/2007

Volume Chapter 76:161

Fiscal Note: Not Required

Date Governor acted: 07/18/2007

Full text of Legislation: House Bill #214 (in PDF format)

Committee Reports:
House Committee Report 06/20/07 F=0 M=11 U=0
View the Report

Voting Reports:
House vote: () Passed 6/26/07 7:49:43 PM
View the Report

Senate vote: () Passed 7/1/07 12:27:28 AM
View the Report

Actions History:

Jul 18, 2007 - Signed by Governor
Jul 01, 2007 - Passed by Senate. Votes: 18 YES 0 NO 0 NOT VOTING 3 ABSENT
Jul 01, 2007 - Necessary rules are suspended in Senate
Jun 26, 2007 - Passed by House of Representatives. Votes: 41 YES 0 NO 0 NOT VOTING 0 ABSENT
Jun 20, 2007 - Reported Out of Committee (ECONOMIC DEVELOPMENT/BANKING & INSURANCE) in House with 11 On Its Merits
Jun 14, 2007 - Introduced and Assigned to Economic Development/Banking & Insurance Committee in House

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Primary Sponsor: Stone

Additional Sponsor(s): Sen. Blevins

CoSponsors: { NONE...}

Introduced on: 06/08/2005

Long Title: AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO CAPTIVE INSURANCE COMPANIES.

Synopsis: Delaware's captive insurance company statute initially was enacted in 1984. This bill represents the first major revision of the statute and substantially rewrites the current law. The main objective of the legislation is to enhance Delaware's appeal as a domicile for captive insurance companies. With recent dramatic increases in commercial insurance premiums and greater difficulty in securing access to certain types of insurance coverages, more and more business organizations are turning to captive insurance companies as a risk management tool. Captive insurance companies also allow businesses to gain greater financial control by helping them to secure more stable insurance pricing, reduce expenses, improve cash flow, access tax savings and increase negotiating leverage with commercial insurers. Building on Delaware's existing reputation for business, including access to Delaware's highly regarded business entity laws and preeminent court system, the new Delaware Revised Captive Insurance Company Act provides flexibility to captive insurance companies within a tax efficient framework, especially for start-up captive insurance companies, and within an appropriate regulatory context. This legislation will create new opportunities especially for captive insurance companies and those who use them. It also will foster economic development in Delaware, by cultivating the growth of the captive insurance industry in the State.

Current Status: Senate Passed on 06/30/2005 04:07:55 PM

Fiscal Note: Not Required

Full text of Legislation: House Bill #218 (in PDF format)

Actions History:

Jun 30, 2005 - Passed by Senate
Jun 21, 2005 - Assigned to Insurance & Elections committee in Senate
Jun 21, 2005 - Passed by House of Representatives
Jun 21, 2005 - Amendment HA 1 passed
Jun 21, 2005 - Amendment HA 1 introduced and Placed With Bill
Jun 15, 2005 - Reported Out of Committee (ECONOMIC DEVELOPMENT/BANKING & INSURANCE) with 2 Favorable, 9 On Its Merits
Jun 08, 2005 - Introduced and Assigned to Economic Development/Banking & Insurance Committee in House