With revenue last year of $4.6 million it’s clear that the captive insurance industry is a lucrative addition to Delaware’s insurance program.
Monies flow into the First State from mostly out-of-state captive owners as a result of application fees, premium taxes, and surcharges for required examinations.
The Department of Insurance, as statutorily mandated, sends a portion of those net captive revenues to the City of Wilmington’s coffers. However beyond the financial shot in the arm to state and city government due to captive revenue growth, the captive industry has directly had a ripple effect throughout the business community.
And that ripple effect is a wide one: accountants, attorneys, wealth management advisors, and others are all reaping the benefits of captive business.
An economic impact study commissioned by Department of Insurance is wrapping up with completion anticipated later this fall. The state has asked the University of Delaware (CABER Institute) to conduct the study, and Associate Professor of Economics William Latham is compiling that data.
Insurance Commissioner Karen Weldin Stewart said “through the years, the University of Delaware has been a valuable partner”. The university for example offered recently a 42-hour professional development certificate program. The continuing education program was intended to train professional service providers interested in building their skills as captive managers.
Dr. Latham is not a stranger to researching and authoring impact studies, having examined everything from the impact of Delaware’s beaches and horse-racing industry to musical events like Firefly.
Regarding the conceptual part of the study, Latham said his methodology is tried and true. “It’s pretty well known and we are confident in it. The hard part is in getting the data,” Latham said.
The state’s insurance department has been collecting the responses from the captive insurers. Once they are turned over to Latham, he will begin his analysis. With over a forty percent rate of response – a higher rate than anticipated – the study should provide valuable insight into Delaware’s captive insurance industry and the ways in which it has benefitted both the private and public sectors.
Aside from quantifying revenue sources, the completed study is one more marketing tool as the state’s captive domicile continues to build its domestic and offshore captive business. Latham said the document is evidence that Delaware takes its captive insurance business seriously.
“[The study] will be released to the public, and internally looked at as a good snapshot of growth over the last five to six years,” said Mark Murowany, assistant director of Delaware’s captive bureau, adding, “It will give us a sense of where we are … and also where we might need to be.”