An economic impact study shows that the Department of Insurance’s captive insurance program contributes nearly $360 million to Delaware’s annual grow domestic product.
The program also directly and indirectly supports 2,537 Delaware jobs, creates almost $109 million in additional income, and generates more than $5 million for the state in tax revenue, according to the study.
Delaware is third largest domicile for captives in the country and the fifth largest in the world. But at home, the economic impact is much more extensive, according to Insurance Commissioner Karen Weldin Stewart, who celebrated the launch of the year-long study this week.
The Economic Contributions of the Captive Insurance Industry to the Delaware Economy, was conducted on behalf of the DOI by the University of Delaware’s Alfred Lerner College of Business & Economics’ Center for Applied Business & Economic Research (CABER), which has produced similar economic impact studies for the Firefly Music Festival and Delaware’s horseracing industry.
CABER surveyed 1081 captive insurance companies doing business in Delaware in 2015 and used data from businesses providing services to those companies. The report breaks out the program’s economic impact per $1,000 spent by the DOI for the captive industry. For every $1,000 spent, 1.95 jobs are created, $83,574 in income is generated, and $4,301 in taxes are collected. Captive program spending supports 950 jobs in finance and investment industry, 447 jobs in legal, accounting and professional support, and 209 retail jobs. The complete report may be found at http://captive.delawareinsurance.gov/docs/pdfs/captive-industry-impact-on-de-econ-caber-report-201608.pdf
“I instituted the Bureau of Captive and Financial Insurance Products in 2009 and I’ve watched it grow ever since,” said Commissioner Stewart. “Thanks to my captive director, Steve Kinion, and my topnotch captive staff, we are consistently one of the top captive domiciles in the US and in the world. But until now, I don’t think many people were aware of exactly what we contribute to Delaware’s economy. The CABER report rewards my faith in captives as a revenue generator for our state.”
“The captive industry has catapulted through tremendous growth,” said Kinion, who said the results of the study exceeded expectations. He added that the study will be useful as the bureau grows Delaware support for the industry.
Captive insurance entities are owned by the companies that they insure, and are generally formed by businesses who wish to better manage the cost and administration of their insurance coverage. DOI’s captive bureau is self-sustaining and currently contributes an annual surplus in tax and fee revenue of over $3 million to the Delaware general fund.