Subchapter I. General Provisions
TITLE 18
Insurance Code
Insurance
CHAPTER 69. CAPTIVE INSURANCE COMPANIES
Subchapter I. General Provisions
§ 6901. Finding; purpose.
(a) It is determined and declared as a matter of legislative finding that captive insurance companies can serve a valuable risk management function, and that their responsible utilization and the growth of the captive insurance industry in the State of Delaware are in the best interests of this State.
(b) It is further determined and declared that the purpose and policy of this chapter shall be:
(1) To provide for the regulation of captive insurance companies consistent with their nature and purpose;
(2) To provide flexibility and opportunity to captive insurance companies and to persons utilizing them; and
(3) To foster economic development in this State through the growth of the captive insurance industry.
75 Del. Laws, c. 150, § 1.;
§ 6902. Definitions.
As used in this chapter, unless the context requires otherwise:
(1) "Affiliated company" means any person (other than a natural person in that person's individual capacity) in the same corporate system as a parent, an industrial insured, or an association member by virtue of common ownership, control, operation, or management.
(2) "Agency captive insurance company" shall mean an insurance company described in paragraphs (2)a. and b. of this section:
a. An insurance company that is owned or controlled by an insurance agency, brokerage or reinsurance intermediary, or an affiliate thereof, or under common ownership or control with such agency, brokerage or reinsurance intermediary, and that only insures the risks of insurance or annuity contracts placed by or through such agency, brokerage or reinsurance intermediary; or
b. An insurance company that is owned or controlled by a marketer or producer of service contracts and/or warranties, and that only insures or reinsures the contractual liability arising out of such service contracts or warranties sold through such marketer or producer.
c. For the purposes of this paragraph (2), "common ownership or control" shall mean ownership of 10 percent or more of the voting securities of a person or such other form of ownership or control as the Commissioner may approve.
(3) "Alien" means formed under the laws of any country or jurisdiction other than the United States of America or any of its states, districts, commonwealths and possessions.
(4) "Association" means any legal association of persons that has been in continuous existence for at least 1 year or such lesser period of time approved by the Commissioner, the association members of which, or which does itself, whether or not in conjunction with some or all of the association members:
(4)a. Directly or indirectly, own, control or hold with power to vote all of the outstanding voting securities or other voting interests of, or have complete voting control over, an association captive insurance company; or
b. Constitute all of the subscribers of an association captive insurance company organized as a reciprocal insurer.
(5) "Association captive insurance company" means any captive insurance company that insures risks of the association members of the association and any of their affiliated companies.
(6) "Association member" means any person that belongs to an association.
(7) "Branch captive insurance company" has the meaning given such term in § 6972(c) of this title.
(8) "Capital and surplus" means the amount by which the value of all of the assets of the captive insurance company exceeds all of the liabilities of the captive insurance company, as determined under the method of accounting utilized by the captive insurance company in accordance with the applicable provisions of this chapter.
(9) "Captive insurance company" means any pure captive insurance company, association captive insurance company, agency captive insurance company, sponsored captive insurance company, industrial insured captive insurance company, special purpose captive insurance company, special purpose financial captive insurance company or risk retention group, whether domestic, foreign or alien, or branch captive insurance company, licensed under the provisions of this chapter.
(10) "Commissioner" means the Insurance Commissioner of this State.
(11) "Controlled unaffiliated business" means any person (other than a natural person in that natural person's individual capacity):
a. That is not in the corporate system of a parent and its affiliated companies;
b. That has an existing contractual relationship with such parent or any such affiliated company; and
c. Whose risks are managed by a pure captive insurance company in accordance with § 6919 of this title.
(12) "Department" has the meaning given such term in § 102(5) of this title.
(13) "Domestic" means formed under the laws of this State.
(14) "Excess workers' compensation insurance" means, in the case of an employer that has insured its workers' compensation risks in accordance with applicable law, insurance in excess of a specified per-incident or aggregate limit established by the Commissioner. Notwithstanding the foregoing, the per-incident and aggregate limit to be utilized by the Commissioner in establishing the excess workers compensation threshold for employers that are authorized under applicable law to self insure their workers compensation risks shall be $0.00.
(15) "Foreign" means formed under the laws of any state.
(16) "Industrial insured" means an insured:
a. Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;
b. Whose aggregate annual premiums for insurance on all risks total at least $25,000; and
c. Who has at least 25 full-time employees.
(17) "Industrial insured captive insurance company" means any captive insurance company that insures risks of the industrial insureds that comprise the industrial insured group and any of their affiliated companies.
(18) "Industrial insured group" means any group of industrial insureds that collectively:
a. Directly or indirectly, own, control, or hold with power to vote all of the outstanding voting securities or other voting interests of, or have complete voting control over, an industrial insured captive insurance company; or
b. Constitute all of the subscribers of an industrial insured captive insurance company organized as a reciprocal insurer.
(19) "Insurance" has the meaning given such term in § 102(2) of this title.
(20) "Insurer" has the meaning given such term in § 102(3) of this title.
(21) "Mutual insurer" has the meaning given such term in § 502 of this title.
(22) "Parent" means a person that directly or indirectly owns, controls, or holds with power to vote more than 50 percent of the outstanding voting securities or other voting interests of a pure captive insurance company.
(23) "Person" means a natural person, partnership (whether general or limited), trust, estate, association, corporation, limited liability company, statutory trust, business trust, custodian, nominee or any other individual or entity in its own or any representative capacity, in each case whether domestic, foreign, or alien.
(24) "Protected cell" has the meaning given such term in § 6932(3) of this title.
(25) "Pure captive insurance company" means any captive insurance company that insures risks of its parent and any of such parent's affiliated companies and any controlled unaffiliated business.
(26) "Reciprocal insurer" has the meaning given such term in § 503 of this title.
(27) "Risk retention group" means a risk retention group formed pursuant to the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq., as amended.
(28) "Special purpose captive insurance company" means any person that is licensed under this chapter and designated as a special purpose captive insurance company by the Commissioner.
(29) "Special purpose financial captive insurance company" means a captive insurance company that is granted a certificate of authority under subchapter III of this chapter of this title.
(30) "Sponsored captive insurance company" has the meaning given such term in § 6932(5) of this title.
(31) "State" means the State of Delaware, and "state" means any other state, district, commonwealth or possession of the United States of America.
(32) "Transacting insurance" has the meaning given such term in § 103 of this title.
64 Del. Laws, c. 454, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 1; 77 Del. Laws, c. 252, §§ 1-4.;
§ 6903. License application; certificate of authority.
(a) Any person complying with § 6906 of this title may apply to the Commissioner for a certificate of authority to do any and all insurance business comprised in §§ 902-905, 906(a)(1),(2), (4)-(15) and (b), 907 and 908 of this title and to issue annuities as defined in § 2902 of this title; provided, however, that:
(1) No pure captive insurance company may directly insure any risks other than those of its parent, any of such parent's affiliated companies, and any controlled unaffiliated business;
(2) No association captive insurance company:
a. Organized as a reciprocal insurer may insure any risks that a reciprocal insurer is not permitted to insure under Chapter 57 of this title; and
b. May insure any risks other than those of the association members of its association and their affiliated companies, provided that an association captive insurance company may insure risks of any other person if the insurance for such other persons satisfies each of the following requirements:
1. The insurance lines for such other persons must be the same as are authorized by the Commissioner to be written by the association captive insurance company for its association members;
2. Such other persons conduct the same or a related or similar business as that of the association members of the association captive insurance company; and
3. The maximum amount of premiums received in any year from all such other persons cannot without the express written consent of the Commissioner exceed 50% of the gross direct premiums received by the association captive insurance company from its association members in its preceding financial year;
(3) No industrial insured captive insurance company:
a. Organized as a reciprocal insurer may insure any risks that a reciprocal insurer is not permitted to insure under Chapter 57 of this title; and
b. May insure any risks other than those of the industrial insureds of its industrial insured group and their affiliated companies, provided that an industrial insured captive insurance company may insure risks of any other person (other than a natural person in his or her individual capacity) if the insurance for such other persons satisfies each of the following requirements:
1. The insurance lines for such other persons must be the same as are authorized by the Commissioner to be written by the industrial insured captive insurance company for its industrial insureds;
2. Such other persons conduct the same or a related or similar business as that of the industrial insureds of the industrial insured captive insurance company; and
3. The maximum amount of premiums received in any year from all such other persons cannot without the express written consent of the Commissioner exceed 50% of the gross direct premiums received by the industrial insured captive insurance company from its industrial insureds in its preceding financial year;
(4) No risk retention group may insure any risks other than risks that may be insured by a risk retention group under Chapter 80 of this title;
(5) A special purpose captive insurance company may, in addition to the authority set forth in this section for captive insurance companies, provide insurance or reinsurance, or both, for such other risks as approved by the Commissioner;
(6) No captive insurance company may provide personal motor vehicle or homeowner's insurance coverage or any component thereof;
(7) No captive insurance company may accept or cede reinsurance except as provided in § 6911 of this title; and
(8) Any captive insurance company may provide excess workers' compensation insurance to its parent and affiliated companies, unless prohibited by federal law or laws of this State or any other state having jurisdiction over the transaction, and any captive insurance company, unless prohibited by federal law, may reinsure workers' compensation of a qualified self-insured plan of its parent and affiliated companies.
(b) No captive insurance company shall do any insurance business in this State unless:
(1) It first obtains from the Commissioner a certificate of authority authorizing it to do insurance business in this State;
(2) Its board of directors, members, partners, managers, committee of managers or other governing body, or in the case of a reciprocal insurer, its subscribers' advisory committee, holds at least 1 meeting each year in this State, provided that this requirement shall not apply to: (i) a branch captive insurance company, or (ii) a captive insurance company that has 5 or more full-time employees each of whom has that employee's principal place of employment in this State;
(3) It maintains its principal place of business in this State or, in the case of a branch captive insurance company, it maintains in this State a principal place of business in accordance with the provisions of § 6972(c) of this title; and
(4) It identifies in its application for a certificate of authority its registered office in this State and its registered agent located at such office to accept service of process on its behalf and to otherwise act as its registered agent in this State, provided that whenever such registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the Commissioner shall be an agent of such captive insurance company upon whom any process, notice or demand may be served.
(c)(1) Before receiving a certificate of authority, an applicant captive insurance company shall file with the Commissioner a certified copy of its organizational documents, a statement under oath of its president or other authorized person showing its financial condition, and any other statements or documents required by the Commissioner.
(2) Each applicant captive insurance company shall also file with the Commissioner evidence of the following:
a. The amount and liquidity of its assets relative to the risks to be assumed;
b. The adequacy of the expertise, experience, and character of the person or persons who will manage it;
c. The overall soundness of its plan of operation;
d. The adequacy of the loss prevention programs of its insureds; and
e. Such other factors deemed relevant by the Commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
(d) Each applicant captive insurance company shall pay to the Commissioner a nonrefundable application fee of $200 for reviewing its application to determine its completeness, and a nonrefundable processing fee of $3,000 for examining, investigating and processing its application for a certificate of authority, and the Commissioner is authorized to retain legal, financial and examination services and other expert services from outside the Department, the reasonable cost of which may be charged against the applicant. The provisions of § 330 of this title shall apply to reviews, examinations, investigations, and processing conducted under the authority of this section. In addition, each captive insurance company shall pay a nonrefundable license fee for the year of registration and a nonrefundable renewal fee for each year thereafter of $300.
(e) Two or more captive insurance companies under common ownership and control shall pay the $200 application fee and the $300 renewal fee required by subsection (d) of this section as though they were a single captive insurance company; provided however, that each such captive insurance company shall be charged the reasonable cost of any legal, financial and examination services and other expert services from outside the Department retained by the Commissioner in connection with the examination, investigation and processing of its application for a certificate of authority. For purposes of this subsection, "common ownership and control" has the meaning set forth in § 6914(e) of this title.
(f) If the Commissioner is satisfied that the documents and statements that such captive insurance company has filed comply with the provisions of this chapter, the Commissioner may grant a certificate of authority authorizing it to do insurance business in this State until April 1 thereafter, which certificate of authority may be renewed.
64 Del. Laws, c. 454, § 1; 70 Del. Laws, c. 107, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, §§ 2, 3; 77 Del. Laws, c. 252, § 5.;
§ 6904. Company name.
No captive insurance company shall adopt a name that is the same as, deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6905. Minimum capital and surplus; letter of credit.
(a) No captive insurance company shall be issued a certificate of authority unless it shall possess and thereafter maintain capital and surplus of:
(1) In the case of a pure captive insurance company, not less than $250,000;
(2) In the case of an association captive insurance company, not less than $750,000;
(3) In the case of an industrial insured captive insurance company, not less than $500,000;
(4) In the case of an agency captive insurance company, not less than $250,000;
(5) In the case of a risk retention group, not less than $1,000,000;
(6) In the case of a sponsored captive insurance company, not less than $500,000;
(7) In the case of a special purpose captive insurance company, not less than $250,000 or such other amount determined by the Commissioner;
(a)(8) In the case of a branch captive insurance company, not less than $250,000 or such other amount determined by the Commissioner; and
(9) In the case of a special purpose financial captive insurance company that is also a sponsored captive insurance company, not less than $500,000, and in the case of a special purpose financial captive insurance company that is not also a sponsored captive insurance company, not less than $250,000.
(b) In connection with the issuance of a certificate of authority, the Commissioner may prescribe additional minimum capital and surplus based upon the type, volume, and nature of insurance business transacted.
(c) Minimum capital and surplus described in paragraphs (a)(1)-(a)(9) of this section shall be maintained in this State and may be in the form of cash, an irrevocable letter of credit issued by a financial institution chartered by or licensed or otherwise authorized to do banking business in this State, or by any other financial institution approved by the Commissioner, or such other assets as may be approved by the Commissioner.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, §§ 4, 5; 77 Del. Laws, c. 252, §§ 6, 7.;
§ 6906. Formation of captive insurance companies.
(a) A pure captive insurance company may be incorporated as a stock corporation or as a nonstock corporation, or may be formed as a limited liability company, partnership, limited partnership or statutory trust.
(b) An association captive insurance company or an industrial insured captive insurance company may be incorporated as a stock corporation or as a nonstock corporation, may be formed as a limited liability company, partnership, limited partnership or statutory trust, or may be organized as a reciprocal insurer.
(c) A special purpose captive insurance company or a special purpose financial captive insurance company or an agency captive insurance company or a branch captive insurance company may be incorporated as a stock corporation or as a nonstock corporation, may be formed as a limited liability company, partnership, limited partnership or statutory trust, or may be such other person, other than a natural person in that natural person's individual capacity, approved by the Commissioner.
(d) A sponsored captive insurance company, including a sponsored captive insurance company that is also a special purpose financial captive insurance company, may be incorporated as a stock corporation or as a nonstock corporation, or may be formed as a limited liability company, partnership, limited partnership, or statutory trust.
(e) A risk retention group may take any form permitted under the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq., as amended.
(f) In the case of a captive insurance company other than a branch captive insurance company:
(1) Formed as a corporation, at least 1 of the members of the board of directors or other governing body shall be a resident of, or have that member's principal place of business in, this State;
(2) Formed as a reciprocal insurer, at least 1 of the members of the subscribers' advisory committee shall be a resident of, or have its principal place of business in, this State;
(3) Formed as a limited liability company, at least 1 member, manager or person in whom management of the limited liability company is vested or to whom rights and powers to manage and control the business and affairs of the limited liability company have been delegated shall be a resident of, or have its principal place of business in, this State;
(4) Formed as a partnership, at least 1 partner or person in whom management of the partnership is vested or to whom rights and powers to manage and control the business and affairs of the partnership have been delegated shall be a resident of, or have its principal place of business in, this State;
(5) Formed as a limited partnership, at least 1 general partner or person in whom management of the limited partnership is vested or to whom rights and powers to manage and control the business and affairs of the limited partnership have been delegated shall be a resident of, or have its principal place of business in, this State; and
(6) Formed as a statutory trust, at least 1 trustee or person in whom management of the statutory trust is vested or to whom rights and powers to manage and control the business and affairs of the statutory trust have been delegated shall be a resident of, or have its principal place of business in, this State.
(g) A captive insurance company incorporated, formed or organized under the laws of this State or under the laws of another jurisdiction that is licensed under the provisions of this chapter shall have the privileges and be subject to the provisions of the laws of this State or the laws of such other jurisdiction, as applicable, under which such captive insurance company is incorporated, formed or organized as well as the applicable provisions contained in this chapter. In the event of conflict between the provisions of the laws of this State or the laws of such other jurisdiction, as applicable, under which such captive insurance company is incorporated, formed or organized, and the provisions of this chapter, the latter shall control.
64 Del. Laws, c. 454, § 1; 66 Del. Laws, c. 223, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 6; 77 Del. Laws, c. 252, §§ 8, 9.;
§ 6907. Annual reports.
(a) Captive insurance companies shall not be required to make any annual report to the Commissioner except as provided in this chapter.
(b) Prior to March 1 of each year, each captive insurance company other than a branch captive insurance company for which the Commissioner has waived any of the requirements of this section pursuant to § 6974 of this title, shall submit to the Commissioner a report of its financial condition, verified by oath of 2 of its executive officers or other authorized persons. Each captive insurance company shall report using generally accepted accounting principles, unless the Commissioner approves the use of statutory accounting principles or international accounting standards, with any appropriate or necessary modifications or adaptations thereof required or approved or accepted by the Commissioner for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the Commissioner. Any captive insurance company whose use of statutory accounting principles is approved by the Commissioner may make such modifications and adaptations thereof as are necessary:
(1) To record, as "admitted," the full value of all investments by such captive insurance company permitted under this chapter; and
(2) Subject to the Commissioner's approval, to make its reports under this section consistent with the purposes of this chapter.
The Commissioner shall by rule propose the forms in which captive insurance companies shall report.
(c) Any captive insurance company may make written application to the Commissioner for filing the required report on a fiscal year-end. If an alternative reporting date is granted by the Commissioner:
(1) The annual report is due 60 days after the fiscal year-end; and
(2) In order to provide sufficient detail to support the premium tax return, the captive insurance company shall file prior to March 1 of each year for each calendar year-end such form or information as the Commissioner shall by rule prescribe, verified by oath of 2 of its executive officers or other authorized persons.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1; 77 Del. Laws, c. 252, § 10.;
§ 6908. Examinations and investigations.
(a) At least once in 3 years, and whenever the Commissioner determines it to be prudent, the Commissioner or the Commissioner's examiner shall personally visit each captive insurance company and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations and its compliance with the provisions of this chapter. The Commissioner may enlarge the aforesaid 3-year period to 5 years, provided said captive insurance company is subject to a comprehensive annual audit during such period of a scope satisfactory to the Commissioner by independent auditors approved by the Commissioner. The expenses and charges of the examination shall be paid to this State by the company or companies examined.
(b) The provisions of §§ 318-320, 321 (other than subsection (g)), 322 and 330 of this title shall apply to examinations conducted under this section.
64 Del. Laws, c. 454, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6909. Suspension or revocation of certificate of authority.
(a) A captive insurance company's certificate of authority to do an insurance business in this State may be suspended or revoked by the Commissioner for any of the following reasons:
(1) Insolvency;
(2) Failure to meet the requirements of § 6905 of this title;
(3) Refusal or failure to submit an annual report, as required by § 6907 of this title, or any other report or statement required by law or by lawful order of the Commissioner;
(4) Failure to comply with the provisions of its own organizational documents;
(5) Failure to pay any tax or fee, or to submit to or pay the cost of examination or any legal obligation relative thereto, as required by this chapter;
(6) Use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or its policyholders; or
(7) Failure otherwise to comply with the laws of this State.
(b) If the Commissioner finds, upon examination, hearing or other evidence, that any captive insurance company has committed any of the acts specified in subsection (a) of this section, the Commissioner may suspend or revoke such company's certificate of authority if the Commissioner deems it in the best interest of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this title.
(c) Although issued and delivered to the captive insurance company, the certificate of authority at all times shall be the property of this State. Upon any expiration, suspension or termination thereof, the captive insurance company shall promptly deliver the certificate of authority to the Commissioner.
(d) Suspension of a captive insurance company's certificate of authority shall be for such period as the Commissioner specifies in the order of suspension. During the suspension period the Commissioner may rescind or shorten the suspension by further order.
(e) During the suspension period the captive insurance company may not solicit or write any new business but must file annual statements, pay fees and taxes as required under this chapter, and, unless otherwise provided in the order of suspension, may service its business already in force as if the certificate of authority had continued in full force.
(f) If the certificate of authority has not terminated within the suspension period, then upon expiration of the suspension period, the captive insurance company's certificate of authority shall automatically be reinstated, unless the Commissioner finds that 1 or more causes of the suspension are continuing or that the captive insurance company is otherwise not in compliance with the requirements of this chapter, of which finding the Commissioner shall give the captive insurance company notice not less than 30 days in advance of expiration of the suspension period. If not automatically reinstated, and if not already terminated, the certificate of authority terminates at the end of the suspension period.
64 Del. Laws, c. 454, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 7.;
§ 6910. Legal investments; management of assets.
(a) Association captive insurance companies, special purpose captive insurance companies and risk retention groups shall comply with:
(1) The investment requirements contained in Chapter 13 of this title, as applicable; or
(2) Such investment requirements as may be approved by the Commissioner upon application by any such captive insurance company.
(b) No pure captive insurance company, industrial insured captive insurance company, agency captive insurance company, special purpose financial captive insurance company or branch captive insurance company shall be subject to any restrictions on allowable investments whatsoever, including those limitations contained in this title; provided, however, that the Commissioner may prohibit or limit any investment that threatens the solvency or liquidity of any such captive insurance company.
(c) Loans of minimum capital and surplus funds required by § 6905 of this title are prohibited.
(d) Subject to subsections (a) and (b) of this section and § 6937 of this title, as applicable, a captive insurance company may own securities of or other interests in another captive insurance company, whether voting or nonvoting.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 8; 77 Del. Laws, c. 252, § 11.;
§ 6911. Reinsurance.
(a) Any captive insurance company may provide reinsurance, on risks ceded by any other insurer, in accordance with § 910 of this title.
(b) Any captive insurance company may take credit or a reduction from liability for the reinsurance of risks or portions of risks ceded to reinsurers in accordance with subchapter III of Chapter 9 of this title, or as otherwise approved by the Commissioner.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6912. Rating organization membership.
No captive insurance company shall be required to join a rating organization.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6913. Prohibited associations.
No captive insurance company shall be permitted to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any such captive insurance company, or any insured or affiliate thereof, receive any benefit from any such plan, pool, association or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6914. Tax on premiums collected.
(a) Each captive insurance company, other than a sponsored captive insurance company (including a sponsored captive insurance company that is also a special purpose financial captive insurance company), and each protected cell of a sponsored captive insurance company shall pay to the Commissioner no later than March 1 of each year a tax at the rate of 2/10 of 1% on each dollar of direct premiums collected or contracted for, during the year ending December 31 next preceding, on policies or contracts of insurance written by the captive insurance company, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums with respect to such preceding year only, which amounts shall include only dividends or distributions of unabsorbed premiums or premium deposits returned or credited to policyholders, up to a maximum tax for such year of $125,000; provided however, that no tax shall be due or payable as to consideration received for annuity contracts.
(b) Each captive insurance company, other than a sponsored captive insurance company (including a sponsored captive insurance company that is also a special purpose financial captive insurance company), and each protected cell of a sponsored captive insurance company shall pay to the Commissioner no later than March 1 of each year a tax at the rate of 1/10 of 1% on each dollar of assumed reinsurance premiums collected or contracted for, during the year ending December 31 next preceding, on policies or contracts of insurance written by the captive insurance company, up to a maximum tax for such year of $75,000; provided, however, that no such tax applies to premiums for risks or portions of risks which are subject to taxation on a direct basis pursuant to subsection (a) of this section, and no such tax shall be payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if such transaction is part of a plan to discontinue the operations of such other insurer and if the intent of the parties to such transaction is to renew or maintain such business with the captive insurance company.
(c) The annual minimum aggregate tax to be paid by a captive insurance company or a protected cell of a sponsored captive insurance company under subsections (a) and (b) of this section shall be $5,000 and the annual maximum aggregate tax to be paid by a captive insurance company or a protected cell of a sponsored captive insurance company under subsections (a) and (b) of this section shall be $200,000, provided, that the tax to be paid by a captive insurance company under subsections (a) and (b) of this section and this subsection is subject to subsections (d), (e) and (h) of this section.
(d) For all purposes of this section, 2 or more captive insurance companies under common ownership and control shall be taxed as though they were a single captive insurance company.
(e) For all purposes of this section, "common ownership and control" means the direct or indirect ownership of 80% or more of the outstanding voting securities or other voting interests of 2 or more captive insurance companies by the same person or persons.
(f) The tax provided for in this section shall constitute all taxes collectible under the laws of this State from any captive insurance company, and no other occupation tax or other taxes shall be levied on or collected from any captive insurance company by this State or any county, city or municipality within this State, except ad valorem taxes on real and personal property used in the production of income.
(g) The tax provided for in this section shall be calculated on an annual basis, notwithstanding that policies or contracts of insurance or contracts of reinsurance are issued on a multiyear basis. In the case of multiyear policies or contracts, the premium shall be prorated for purposes of determining the tax under this section.
(h) A captive insurance company that has 25 or more separate qualified individuals throughout a given tax year and that otherwise would be liable under this section for tax for such year in an amount exceeding $50,000 shall pay to the Commissioner under this section a tax for such year in the amount of $50,000. For purposes of this subsection, "qualified individual" means a natural person employed in this State on a regular basis of 35 or more hours per week either by such captive insurance company, or by a wholly-owned subsidiary of such captive insurance company that provides captive insurance company management, operating, investment or related services exclusively to such captive insurance company.
64 Del. Laws, c. 454, § 1; 67 Del. Laws, c. 155, § 1; 75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 9.;
§ 6915. Rules and regulations; in general.
The Commissioner may establish and from time to time amend such rules and regulations relating to captive insurance companies as are necessary to enable the Commissioner to carry out the provisions of this chapter.
64 Del. Laws, c. 454, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6915A. Exemption from rules and regulations; special purpose captive insurance companies.
The Commissioner, on a case by case basis, may by order exempt a special purpose captive insurance company from the provisions of this chapter and any rule or regulation established by the Commissioner pursuant to § 6915 of this title that, as reasonably determined by the Commissioner based on such factors deemed relevant by the Commissioner consistent with the purposes of this chapter, are inappropriate to apply to such special purpose captive insurance company.
75 Del. Laws, c. 150, § 1.;
§ 6916. Applicable laws.
No provisions of this title, other than those contained in this chapter or specifically referenced in this chapter, shall apply to captive insurance companies.
64 Del. Laws, c. 454, § 1; 75 Del. Laws, c. 150, § 1.;
§ 6917. Captive insurance regulatory and supervision fund.
(a) There is hereby created a fund to be known as the captive insurance regulatory and supervision fund for the purpose of providing the financial means for the Commissioner to administer this chapter. All of the tax under § 6914 of this title and all other amounts received by the Department pursuant to this chapter shall be credited to this fund.
(b) At the end of each fiscal year, the balance in the captive insurance regulatory and supervision fund, in excess of such amount reasonably necessary to finance the Commissioner's administration of this chapter during the upcoming fiscal year, shall be transferred to the General Fund.
(c) Within 30 days after the end of each fiscal year, the Commissioner shall submit to the Secretary of Finance of this State a written report stating:
(1) The total amount of taxes and other amounts paid to the Department pursuant to this chapter during such fiscal year, and the total amount of the Commissioner's costs and expenses to administer this chapter during such fiscal year; and
(2) The Commissioner's estimate of the total amount of the Commissioner's costs and expenses to administer this chapter during the current fiscal year.
75 Del. Laws, c. 150, § 1.;
§ 6918. Delinquency.
To the extent not inconsistent with this chapter, the provisions of Chapter 59 of this title shall apply to captive insurance companies licensed under this chapter (including for this purpose individual protected cells of sponsored captive insurance companies as set forth in § 6938 of this title).
75 Del. Laws, c. 150, § 1.;
§ 6919. Rules for controlled unaffiliated business.
The Commissioner may adopt rules establishing standards to ensure that a pure captive insurance company's parent or any of its affiliated companies is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by the pure captive insurance company; provided, however, that, until such time as rules under this section are adopted, the Commissioner may approve the coverage of such risks by a pure captive insurance company, on a case by case basis.
75 Del. Laws, c. 150, § 1.;
§ 6920. Confidentiality.
All portions of license applications reasonably designated confidential by or on behalf of an applicant captive insurance company, all information and documents, and any copies of the foregoing, produced or obtained by or submitted or disclosed to the Commissioner pursuant to subchapter III of this chapter of this title that are reasonably designated confidential by or on behalf of a special purpose financial captive insurance company, and all examination reports, preliminary examination reports, working papers, recorded information, other documents, and any copies of any of the foregoing, produced or obtained by or submitted or disclosed to the Commissioner that are related to an examination pursuant to this chapter must, unless the prior written consent (which may be given on a case-by-case basis) of the captive insurance company to which it pertains has been obtained, be given confidential treatment, are not subject to subpoena, may not be made public by the Commissioner, and may not be provided or disclosed to any other person at any time except:
(1) To the insurance department of any state or of any country or jurisdiction other than the United States of America; or
(2) To a law enforcement official or agency of this State, any other state or the United States of America so long as such official or agency agrees in writing to hold it confidential and in a manner consistent with this section.
75 Del. Laws, c. 150, § 1; 76 Del. Laws, c. 161, § 10.;
§ 6921. Material changes in information; continued licensure.
In the event of any material change in the financial condition or management of a captive insurance company, the captive insurance company shall notify the Commissioner in writing promptly of any such change and in any event within 10 business days thereof.
75 Del. Laws, c. 150, § 1.;
§ 6922. Material transactions; prior notice.
No captive insurance company shall voluntarily take any of the following actions without providing the Commissioner at least 30 days prior written notice or receiving the Commissioner's approval of any such action within such 30 day period:
(1) The dissolution of the captive insurance company;
(2) Any sale, exchange, lease, mortgage, assignment, pledge or other transfer of or granting of a security interest in, all or substantially all of the assets of the captive insurance company;
(3) Any incurrence of material indebtedness by the captive insurance company;
(4) Any making of a material loan or other material extension of credit by the captive insurance company;
(5) Any material payment out of capital and surplus;
(6) Any merger or consolidation to which the captive insurance company is a constituent party;
(7) Any conversion of the captive insurance company to another business form;
(8) Any transfer to or domestication in any jurisdiction by the captive insurance company; or
(9) Any material amendment of the organizational documents of the captive insurance company.
75 Del. Laws, c. 150, § 1.;
§ 6923. Books and records.
(a) Unless otherwise approved by the Commissioner, a captive insurance company shall maintain its books, records, documents, accounts, vouchers and agreements in this State. A captive insurance company shall make its books, records, documents, accounts, vouchers and agreements available for inspection by the Commissioner at any time. A captive insurance company shall keep its books, records, documents, accounts, vouchers and agreements in such manner that its financial condition, affairs and operations can be readily ascertained and in such manner that the Commissioner may readily verify its financial statements and determine its compliance with this chapter.
(b) Unless otherwise approved by the Commissioner, all original books, records, documents, accounts, vouchers and agreements of a captive insurance company must be preserved and kept available in this State for the purpose of examination and inspection until the Commissioner approves the destruction or other disposition of the books, records, documents, accounts, vouchers and agreements. If the Commissioner approves the preservation and keeping of the foregoing outside this State, the captive insurance company shall maintain a complete and true copy of each such original in the State. Books, records, documents, accounts, vouchers and agreements may be photographed, reproduced on film or stored and reproduced electronically.
76 Del. Laws, c. 161, § 11.;