Delaware captive formations surge in 2008

WILMINGTON, Del.—The Delaware Department of Insurance licensed a record 22 captive insurance companies last year, more than doubling the number of captives in the state to 40.

The 22 captive formations in 2008 compares to six formations in 2007.

The surge in captive formations in 2008 came more than three years after state legislators in 2005 updated the state's 1984 captive law to attract captive sponsors. Those changes included a significant cut in premium taxes--especially for new, smaller captives--a cap on the maximum taxes paid by larger captives and an additional tax break to captives with big staffs in the state.

In 2006, Delaware brought in Bill White, a former director of the District of Columbia captive division, as the state's first administrator of its captive insurance program.

In 2007, state legislators approved several more changes, including the authorization of special-purpose financial captives to attract more captives.

Those actions now are producing results, captive observers say. "We feel that the growth of the captive market is directly attributable to the sound statute, financial, services infrastructure and regulatory environment," Richard Klump, president of the Delaware Captive Insurance Assn. in Wilmington, said in a statement.