First State of Captives?

Delaware domicile poised to take advantage of capacity crunch.

By Matthew Brodsky

A lot of big talk could be heard at the Delaware Captive Insurance Association's first annual conference, which occurred in October in Wilmington. Revised captive laws and a big hire point to a newfound dedication for the domicile, but marketplace conditions could also determine its success.

Bill White, the big hire as administrator of Delaware's captive insurance program, said that he believes Delaware could be a "leading" domicile in a year's time. "I think it's entirely possible," said the former director for Washington, D.C.'s captive program.

Insuring Public-Private Construction (11/01/11)
Second Thoughts About the China Market (07/11/11)
Federal Flood Insurance Program Gets Extension (01/24/12)
When the Birds Bring Down the Planes (07/19/11)
Immunity Bites ... for Shark Victims (07/19/11)

The reason, White explained, is timing. Alternative risk transfer is in transition. Price is not driving the market anymore. Capacity, or the lack thereof, is, thanks to a grimmer global perspective on catastrophe severity.

"The Three Sisters (hurricanes Katrina, Rita and Wilma) did a number on us," he said, adding that a tsunami, European windstorms and other CATs worldwide have also hit the industry in the last couple years.

Delaware can help risk managers solve this capacity crunch. As White put it, the domicile is following a "demand-pull" model, and not playing a numbers game in pursuit of Vermont or focusing on one kind of captive or industry. Instead, he said, Delaware offers captive owners flexibility to create an ART vehicle that meets their needs.

"If you're a risk manager, what's keeping you up at night?" White asked rhetorically, expressing his problem-solving mentality toward captive formation.

Other conference speakers shared White's optimism. Christopher L. Kramer, president of Captive Edge Risk Services, compared Delaware to Bermuda in its early stages because of the First State's established business services sector.

More than half of U.S. publicly traded corporations call Delaware home, and the state already has established legal and banking infrastructure and a business-friendly reputation.

Lunch keynote speaker David Mair, director, client relations, Medex Global Group, said Delaware is poised to take advantage of the trend of more U.S. companies leaving offshore domiciles for onshore ones.

The Delaware Revised Captive Insurance Company Act was signed into law by Gov. Ruth Ann Minner on July 12, 2005, with the goal of making Delaware a more attractive captive domicile.

November 1, 2006

Newsletter Sign-up