Bur Bureau of eau of Ca Captiv ptive e and and Financial In - - PowerPoint PPT Presentation

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Bur Bureau of eau of Ca Captiv ptive e and and Financial In Financial Insur surance ance Pr Products oducts Delaware Captive Insurance Association Fall Forum November 12, 2015 Steve Kinion Director of Captive Bureau of Captive and

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Bur Bureau of eau of Ca Captiv ptive e and and Financial In Financial Insur surance ance Pr Products

  • ducts

Delaware Captive Insurance Association Fall Forum November 12, 2015

Steve Kinion Director of Captive Bureau of Captive and Financial Insurance Products

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products Delaware is the 3rd Largest U.S. Captive Domicile and the World’s 6th Largest Captive Domicile

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Out Outli line ne of P

  • f Prese

resenta ntation tion

  • Changes since last DCIA fall forum and upcoming changes.
  • Domicile numbers update.
  • Application process.
  • Reinsurance.
  • Investments generating qualified opinions.
  • Regulatory changes.
  • Business plan changes.
  • Q&A.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Than Thank k you you!

  • Thank you for bringing either your captives or the captives that you

manage to Delaware.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Cha Chang nges es Si Sinc nce e La Last st DCIA DCIA Fo Forum rum in in Octo Octobe ber r 20 2014 14

  • Codification of House Bill 15. See Captive Insurance Advisory

Memorandum 2015-1.

  • Recognizes a series as a captive insurance company.
  • Amends section 330 to add liability protection to a person who

communicates or delivers information to the Commissioner pursuant to an examination, investigation, or regulatory inquiry conducted by the Commissioner.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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 Variety of Captive Types

Number Licensed Licenses Issued Captive Insurance Companies 1,167 Protected Cells 14 Active Captives/Licenses Captive Insurance Companies 989 Protected Cells 12

Licen Licenses ses Issued Issued

as of No Novemb mber r 1, 2015

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DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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App Appli lica cation tion Proce Process ss

  • Year end 2015 applications – what is the cut-off date and time?

Answer: December 31, 2015 at 11:59:59 P.M. EST.

  • Fees and genuine signature portion of biographical affidavits must be

received no later than 5:00 P.M. EST on January 12, 2016.

  • The Captive Bureau only needs hard copies with pen and ink signature on

the application and the biographical affidavits. The remainder of the application is filed electronically.

  • File electronically at captive@state.de.us

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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App Appli lica cation tion Proce Process ss

  • If changes must be made to the application, then all changed documents

must be dated with the new date clearly noted on the document.

  • Policies need to state the risk being covered and the conditions under

which a claim occurs.

  • All policies must be submitted with the application.
  • Asking for a waiver of actuarial and audit reports for December 31

licensees? Please send this request separate from the application.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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App Appli lica cation tion Proce Process ss

  • Send business plan and pro-forma in both pdf, word processing and

spreadsheet, i.e. MS Word and Excel, formats.

  • Only completed applications will be reviewed.
  • Be patient. On January 1, 2013 the Captive Bureau had 114 applications

ready for processing and on January 1, 2014 the number exceeded 150. On January 1, 2015 the number exceeded 200. Reviewing applications takes time.

  • Submitting an application is not a guarantee of approval.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reinsu Reinsuran rance ce

  • Clarification for what qualifies as multi-state reinsurance under NAIC

Accreditation Preamble.

  • Section 6911(a) of Title 18 of the Delaware Code, provides “Any captive

insurance company may provide reinsurance, on risks ceded by any other insurer, in accordance with §910 of this title.”

  • 18 Del C. §910 provides, “Any authorized insurer may reinsure all or any

part of an individual risk or of a particular class of risks in any other insurer or accept such reinsurance from any other insurer. Domestic insurers will be subject to § 4944 of this title with regard to bulk reinsurance.”

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reinsu Reinsuran rance ce

  • Dodd-Frank provides that if the state of domicile of a ceding insurer is an

NAIC-accredited state or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for an insurer’s ceded risk, then no other state may deny such credit.

  • All laws, regulations, and other actions of a state that is not the

domiciliary state of the ceding insurer, except those with respect to taxes and assessments on insurance companies or insurance income, are preempted.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reinsuran Reinsurance ce

  • Proposal before the NAIC to amend the Credit for Reinsurance Model Law

(MDL-785) to say,

  • MDL-785, Section 2 . . . Credit for reinsurance shall be allowed a domestic

ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of Subsections A, B, C, D, E or F of this section; provided further, that the commissioner may adopt by regulation an approval requirement and specific additional requirements relating to valuation of assets and

  • bligations, and the amount and forms of security held, in connection with

particular types of reinsurance arrangements, or may specify by regulation that credit will be reduced or eliminated in connection with particular types

  • f reinsurance arrangements.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reinsu Reinsuran rance ce

  • MDL-785, Section 3 . . . An asset or a reduction from liability for the

reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of Section 2 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer; provided further, that the commissioner may adopt by regulation an approval requirement and specific additional requirements relating to valuation of assets and

  • bligations, and the amount and forms of security held, in connection

with particular types of reinsurance arrangements, or may specify by regulation that credit will be reduced or eliminated in connection with particular types of reinsurance arrangements.

  • This proposal is known as Option 3.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reinsu Reinsuran rance ce

  • Send comment letter or email message opposing Option 3.
  • Please address comments to the Honorable John M. Huff, Chair of the

Reinsurance (E) Task Force, and direct to jarpin@naic.org and dschelp@naic.org.

  • Reinsurance (E) Task Force meets on Friday, November 20.
  • Comment period ended November 11, but Delaware informed the NAIC

that late comments would be forthcoming due to the DCIA meeting.

  • Send comments no later than Tuesday, November 17.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Inve Investmen stments ts Crea Creating ting Qua Quali lifi fied ed Opinion Opinions s

  • Background: Captives investing in LLCs which generate unqualified
  • pinions because the CPA cannot value the LLC investment. What should

be the regulatory response?

  • Response under consideration: The Captive Bureau will prohibit LLC

investments that cannot be valued.

  • Why? Investments must be valued. If a value is given but an auditor

cannot confirm the value which results in a qualified opinion, then the investment is prohibited.

  • What is the regulatory value of a qualified opinion? Answer: Zero.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Reg Regulato ulatory ry Cha Chang nges es

  • New annual statement forms and instructions published by year end.
  • The filing of pro-forma financial statements is no longer necessary for

business plan changes. Exceptions are material changes and adding workers’ compensation and any other mandatory coverages.

  • Allowance for dormant captive. If a captive has not accepted premium

and risk during a calendar year, it may apply for dormancy by becoming a special purpose captive insurer. Dormant captives do not pay a minimum premium tax but are subject to the $400 annual license renewal fee.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Core LLC Capital $0 $400 annual license fee No min. premium tax No risk or premium Series 3 Association Series 2 Series Captive IC Series 1 Pure Captive

HB HB 15 15 Cha Chang nges es for for Series Series Cap Captive tive IC IC

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Series Series Cap Captive tive Regu Regulatory latory Chan Change ges

  • Consideration of reducing the $250,000 capital in the core of a series

captive insurance company structure. Decision in 2016.

  • Core will remain licensed and subject to $400 annual licensing fee, but

not a minimum premium tax if the core is not writing insurance business.

  • List of restricted lines of business for series captives removed. Effective

January 1, 2016, series captive insurance company may third party and pollution coverages.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Busine Business ss Pl Plan an Cha Chang nges es

  • Reminder - Effective as of January 1, 2014, business plan changes must be

submitted in the following format:  Redline showing changes. Simple addendums will no longer be accepted. In word processing format, i.e. MS Word, WordPerfect, etc. Spreadsheets in Excel, Quatro Pro, etc., format.

  • Reminder - No dividend and loan requests nor coverage changes allowed

for series captives during first-year of operations. Ownership changes are allowed.

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Vote Vote: Cap : Captive tive Power Power 50 50

  • I’m Steve Kinion and I approved this message.
  • Vote for Delaware by voting for Steve Kinion.
  • http://captivereview.com/news/nominations-open-for-2015-captive-

review-power-50/

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products

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Qu Ques estion tions s an and An d Answers swers

Steve Kinion, Director Bureau of Captive and Financial Insurance Products Delaware Department of Insurance 302-577-5280 Wilmington Office steve.kinion@state.de.us Please copy our office manager, Jamie Bafundo, jamie.bafundo@state.de.us on all correspondence

DELAWARE DEPARTMENT OF INSURANCE INSURANCE COMMISSIONER KAREN WELDIN STEWART Bureau of Captive and Financial Insurance Products Delaware is the 3rd Largest U.S. Captive Domicile and the World’s 6th Largest Captive Domicile