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New Delaware law allows captives to write Side A D&O insurance


Delaware Gov. John Carney has signed into law a bill to permit captives to write Side A directors and officers liability insurance.

Side A provides coverage for claims against directors and officers whose costs are not indemnified by the corporation such as with the settlement of derivative suit claims.

Senate Bill 203, which amends the state’s general corporation law, passed the legislature unanimously on Jan. 27 and was signed into law by Gov. Carney on Monday. Its progress has been closely watched by the D&O insurance sector.

The law takes effect immediately.

A Delaware Department of Insurance spokeswoman said in an email that she does not expect captives to take extensive advantage of the legislation until regulations are created, and it is unlikely these will be published for public comment before April.

Priya Cherian Huskins, San Francisco-based partner and senior vice president at broker Woodruff Sawyer & Co., said it previously was unclear under the state’s corporate law whether a company could fund a captive to provide Side A coverage.

Ms. Huskins said that while she does not expect the law to result in a rush to form captives, which require significant capital investment, it provides publicly held companies with a new option for coverage.