Delaware Department of Insurance

Delaware's Department of Insurance licenses captives through its Captive Bureau, applying Chapter 69 of Title 18 of the Delaware Code. The Insurance Commissioner issues the certificate of authority.

Captive types and legal forms

Chapter 69 defines pure, association, industrial insured, agency and special purpose captives, as well as series captives and branch captives, and has separate subchapters for sponsored captives and special purpose financial captives. A captive can also be organized as a corporation, LLC or other permitted entity. Because "series," "cell" and "sponsored" arrangements are legally distinct, ask counsel to confirm the exact Delaware form before comparing it with another domicile.

What the application asks for

The Captive Bureau's application asks for:

• a strategic business plan with an organizational chart
• an actuarial feasibility study with expected and adverse five-year projections
• formation documents, by-laws and service-of-process designations
• owners' financial statements, a draft investment policy, and sample policies and reinsurance agreements
• biographical affidavits for owners, officers and fiduciaries

It also asks applicants to name an authorized captive manager, certified public accountant and actuary, along with an attorney, registered agent and other service providers.

Formation and residency

Formation requires the Commissioner's approval. At least one member of the board of directors or other governing body must be a Delaware resident or have a principal place of business in Delaware. The Bureau also offers an expedited conditional-license process for managers who already run Delaware captives; whether it applies depends on the manager.

Ongoing obligations

Captives file annual reports with the Commissioner under § 6907 and are subject to examination under § 6908. Premium tax is levied under § 6914. Material changes and certain transactions require notice to the Department (§§ 6921–6922).