Delaware Captive Insurance Legislation Signed by the Governor

With Delaware Governor John Carney’s recent signature, the state’s Captive Insurance Division is providing increased flexibility in its offerings to captive insurance companies.

Senate Substitute 1 for Senate Bill 36 allows captives to be classified as registered series, offers clarity to provisions regarding insuring a parent company and allows for a captive to enter dormancy after 12 consecutive months of inactivity, rather than requiring a calendar year of inactivity.

In the past, if a company stopped writing insurance business mid-year, they would need to wait 18 months to file for dormancy in order to satisfy the calendar year provision and become eligible. This would also require the captive to pay premium taxes and continue to submit statements to the department during that period, according to Delaware Insurance Commissioner Trinidad Navarro in a Delaware Department of Insurance press release.

“Prior to this change, it may have been easier for captives to dissolve than elect dormancy and later return to the market,” he said in the release.

SB 1 for SB 36, sponsored by Senator Trey Paradee and Representative Bill Bush, is the result of a multi-year effort, after legislation did not proceed during 2020’s truncated session due to COVID-19. The Department of Insurance convenes stakeholder groups to discuss legislative proposals and had many conversations with Delaware’s Captive Insurance Association (DCIA) about the bill, according to the release.

“The DCIA believes these changes are beneficial to captive owners, especially with respect to Delaware’s dormancy statute,” DCIA President Joanne Shaver said in the release.

In 2020, Delaware’s captive insurance program contributed $2.9 million to the state’s General Fund and $1 million to the City of Wilmington. The division licensed 70 new captives last year.

Source: Delaware Department of Insurance

Topics Legislation Delaware