 |
|
Captive insurance companies double in Delaware By AARON NATHANS • The News Journal • February 2, 2011 The Delaware Insurance Commissioner's Office has doubled the number of captive insurance companies that operate in the state, ending the year with 96. But the unit set up to attract the companies is still losing money, and Insurance Commissioner Karen Weldin Stewart is still defending the Captive Bureau after criticism last year of spending on outside consultants. The Captive Bureau still spends more than it brings in from premium tax revenue. But with the growth in the number of captive insurance companies doing business in Delaware, revenue should meet or exceed costs at this time next year, said the bureau's director, Steve Kinion. During the last year, premium tax revenue from captive insurance companies increased by 28 percent, or about $250,000, Stewart's office reported. Many of the businesses came to Delaware toward the end of the year, which limited the amount of premium tax they paid that year, Kinion said. Captive insurance companies are created by the companies they serve to provide property and liability insurance at a lower cost than if they were to buy that insurance from an outside company. Stewart pledged two years ago to lure more such companies to Delaware to raise more revenue and increase business for local attorneys and accountants. Businesses are finding Delaware's laws attractive for setting up captive insurance companies, including a rule that allows different spinoffs of the same business to shield themselves from each others' insurance liability, Kinion said. Delaware law is flexible for setting up nontraditional kinds of captive insurance companies, said Clay Foltz, a part owner of Delmarva Underwriters Ltd. of Dover. The company, which underwrites surety bonds for the construction industry, does business under the name The Bond Agency. The Bond Agency wanted to move beyond simply being a commissioning agent and set up a captive insurance company to participate in the premiums and losses on the policies it writes, Foltz said. His company could have gone to one of many states that offer captive insurance services, including Vermont, long the leading state for such services, he said. It also could have set up shop offshore, Foltz said. But he said he appreciated the state's willingness to get involved with this relatively new form of captive insurance. And Foltz said he feels better paying local attorneys and accountants than sending the company's money to other areas. His company set up Delaware Surety Insurance Co. last year. "We're happy to stay close to home," Foltz said. |
