Each year the Delaware Insurance Department prepares a Notice of Guaranty Fund Assessment Premium Tax Offset Allowance that details Guaranty Fund Assessments permitted for use as premium tax credits to calendar year taxes for eligible individual Active Companies. 

Only those Active companies with Guaranty Fund Assessment credits available to apply to calendar year premium taxes will receive the Notice of Guaranty Fund Assessment Premium Tax Offset Allowance.

GENERAL INFORMATION AND INSTRUCTIONS

Credit may only be taken for Class "C" assessments. Credit may not be taken for Class "A" and Class "B" assessments. Class "A" and Class "B" Guaranty Fund Assessments are administrative assessments and are therefore not eligible to be included in calculation of credits to premium taxes.

The "Year Paid" date on the Certificates of Contribution issued by Delaware Insurance Guaranty Associations (LH & PC) indicates the year in which the payment is received.

If company records indicate a payment to either Guaranty Association that is not included on the Notice, or if there is no record of receiving a certificate of contribution, in all likelihood, that payment was for a Class "A" or Class "B" assessment. Only those assessments for which a certificate of contribution is either on record or enclosed will be considered when reviewing credits to premium tax filings.

The Guaranty Fund Assessment Credit Available is calculated in the following manner:

Total each assessment amount(s) for each year (list any credits not already included), then add totals across and multiply by 20% to calculate credit amount. This credit amount is entered on Annual Premium Tax and Fees Summary Report, Line 8 and/or Line 9.

NOTE: Credit may not exceed premium tax amount. Do not reduce Net Premium Tax amount on Annual Premium Tax and Fees Summary Report, Line 10, to less than zero.

In cases where two or more companies merge or otherwise join to transfer guaranty fund credit availability assets, a separate notice is prepared showing the credits available from each company. These amounts are added into the Combined Credits total for the Active Company.

The data for the Notice is compiled from available Certificates of Contribution for Class "C" Assessments only.

If you disagree with the figures on the Notice and/or the company has paid a Class "C" assessment that is not included on the Notice, make necessary changes on the Notice. You MUST attach a copy of the Certificate of Contribution for any additional assessment(s). Insurance Department files will then be updated according to the amount and date listed on the certificate(s).

According to 18 Del. C., §§ 4208(a)(3)(a) and 4409(b), there are three classes of assessment as follows:

(1) Class A assessments: for the purpose of meeting administrative costs and other expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. The Class A assessments will be equal in amount as to each member and may be assessed not more often than once each year. Such assessment shall not exceed one hundred and fifty dollars ($150.00) annually.

(2) Class B assessments: made annually to provide for the oversight activity of the Commissioner, thereby minimizing the need to make Class C assessments.

(3) Class C assessments: to the extent necessary to carry out the powers and duties of the Association with regards to an impaired or insolvent member insurer.

According to 18 Del. C., §§ 4219 and 4409(h), the Association issues to each insurer paying a Class C assessment a Certificate of Contribution, in a form prescribed by the Commissioner, for the amount of the assessment so paid. All outstanding certificates are given equal dignity and priority without reference to amounts or dates of issue. The insurer may show a Certificate of Contribution in its financial statement as an asset in such form and for such amount, if any, and period of time as the Commissioner may approve.

According to 18 Del. C., §§ 4219(b) and 4413(a), insurers may deduct 20% of the total of Class "C" assessments, as shown on Certificates of Contribution, from their premium tax liability each year for the 5 years following payment of the assessments. No deduction may be taken for the year in which the assessment is paid.