The Delaware Department of Insurance announced that the number of captive licenses it will ultimately issue for 2012 – and the projected premium tax revenue – is on the rise.
Anticipated growth may catapult Delaware over Hawaii into being the third largest U.S. captive domicile in terms of active captives, behind Utah and Vermont.
Forecasted premium tax revenue for 2012 is $1.5 million, compared to $1.23 million for 2011, a growth of more than 21%. Captive insurers have until March 1 to pay premium tax.
“This level of growth is unprecedented in the captive insurance world,” said Steve Kinion, captives director for the insurance department.
According to the department, Delaware is home to 190 active captive insurers, having added 59 in 2012.
Kinion said that when the captive bureau was formed in 2009, there were only 38 captive insurers.
In addition, Delaware saw a rise in the number of captive-related entities.
The department issued the following statistics:
• The 2012 additions are 59 captives, 1 cell, and 179 series units. The total number of licenses issued for risk bearing entities will be 212 captive companies, 12 protected cells, and 364 series business units. The total number of captive licenses issued will be 588. Not all of the licenses issued since the adoption of the captive law in 1984 remain active and over the course of time, Delaware has seen 22 captive companies dissolve or re-domesticate, one cell dissolve, and 6 series dissolve.
• Active license numbers are 190 active companies, 11 protected cells, and 358 series business units. The total active captive entity count is 559.
• In 2011 the Bureau added 58 captives, 3 protected cells, and 152 series. The total number of licensed risk bearing entities was 153 captive companies, 11 protected cells, and 185 series business units. The entity total for licenses issued was 349.
• Even though the captive bureau added the $1,800 series unit application fee, and imposed more stringent regulatory standards in 2012, it was the best year ever for captive growth. The total entity growth rate from 2011 to 2012 is 68%.
• The total captive company growth rate is 38.5%.
Captive insurance companies, which are owned by the entities that they insure, are usually formed by businesses that wish to better manage the cost and administration of their insurance coverage.
In 2005, the Delaware General Assembly modernized state law, allowing the formation of captives.