D.C. Domicile Strives For Flexibility

Washington, D.C., which enacted captive legislation in 2001, hasset its sights on becoming one of the top domiciles worldwide,according to its new captive director.

William P. White had been serving as director of captiveinsurance with the Department of Insurance and SecuritiesRegulation in Washington, D.C. for about six weeks when he revealedhis plans to National Underwriter in late July. He said,ultimately, he plans for the domicile to be “regarded at the samelevel that you would regard Vermont, or Bermuda for thatmatter.”

He said it is “entirely possible to have D.C. regarded as atop-notch domicile for captives, and that is not taking anythingaway from the other domiciles.”

He said he would like the domicile to have a reputation for“being flexible within our responsibility as regulators.” Thatflexibility would be based on understanding clients business needs,he said.

Christopher L. Kramer, vice president of alternative riskmanagement with Neace Lukens in Beachwood, Ohio, recently visitedWashington, D.C. when seeking a domicile for a client, reportingthat he was “pleasantly surprised.”

“I found that the statutes are very flexible and that access toregulators was relatively easy,” he said. But they are “no lessdemanding” than regulators in other domiciles “in terms ofscrutinizing applications.” Washington, D.C., he predicted, holds“great promise for association captives, balanced with agencycaptives and rental captives.”

Mr. White said that Lawrence Mirel, the insurance commissionerfor Washington, D.C., has given him “a great deal of latitude todeal directly with the applicants.” Mr. White added that his ownpersonal approach “is to not get caught up in the bureaucracy ofputting the captive insurance companies together.” Rather, hefocuses on the motivating factors behind a captive, onunderstanding the applicant's overall strategy and making sure thiscoincides with regulatory requirements.

“I am going to take a very hands-on approach. Consequently, ifyou want to talk about captives, you need to talk to me as thedirector,” he said.

Mr. White also said his approach is tempered by his backgroundas an underwriter. “I look at this as developing a goodunderwriting portfolio of captives.”

He added that if he doesn't think an organizations approach fora captive is solid, “we're not going to push forward on it justbecause we want a captive.”

In many instances, he said, prospective clients don't yet have aconsultant and are “bouncing off ideas.” At the other end of thespectrum are those more familiar with captives, “trying to thinkout loud about what direction they want to go with that particularrisk financing mechanism. They are trying to decide if the waythey're putting it together would make sense and pass muster inD.C.”

Mr. White said he is supported by the rest of the department andis currently building a specialty staff from within. He expects toadd staff with the growth of the department, he said.

The domicile so far has licensed about 10 captive insurancecompanies.

Interested organizations so far have been from both D.C. andoutside the area. “I've only been able to field a few phone callsin the past few weeks,” he said. “I've spent the better part of mytime reviewing the existing process so that we can make changes tomake it more efficient.”

Inquiries about captives don't fall into any specific industryor category but are “across the board.” He said that hes seeninquiries from those segments of the market under the greatestpressure from hard market conditionsmedical malpractice and relatedareas like nursing home associations and doctors groupsas well assome for agency captives.

Those inquiries are also about everything from “explain to mehow a captive can be beneficial to I'm having trouble, specificallywith this area of the marketplace in terms of pricing or terms andconditions and as a group we have decided to form this captive,” henoted.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 18, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.