D.C. Seeks Wild Card Captive Provision
Washington, D.C. is looking to add a “wild card” to its captive law.
Arthur D. Perschetz, chairman of the Captive Insurance Council of the District of Columbia, explained that under the proposed amendments, the insurance commissioner would be able to allow “a captive in D.C. or one being formed in D.C. to avail itself of any benefit of another captive law anyplace else.” He said this is “similar to banking wild card statutes,” which allow a state bank to do “basically anything that a national bank can do.”
Under the proposed D.C. captive law amendment, for example, if a jurisdiction has a unique provision allowing credit for reinsurance, “the commissioner could allow D.C. captives to do that if he thought it was beneficial to the district,” with the decision made on a case-by-case basis. Another example might be allowing a captive to write workers' compensation, he said.
Mr. Perschetz, who is a counsel with Muldoon Murphy & Faucette LLP in Washington, said the legislation would give the commissioner “broad powers” because “the legislative process here is time consuming, as opposed to some other jurisdictions where they can do things on a dime.”
He said the amendments would allow more flexibility with captive investments, lower minimum capital and surplus requirements, and facilitate re-domestication of captives. Another major amendment, he said, would liberalize the domicile's captive branch rules, which, he noted, would help attract American companies with offshore captives wishing to write employee benefits in an onshore facility.
The proposed amendments must be approved by the D.C. Council and signed into law by Mayor Anthony Williams, noted George Pantos, president of the CIC-DC. Congress ultimately has the final say before the amendments become law.
William P. White, captive director of the D.C. Department of Insurance, Securities and Banking, said he will be making most of the decisions about what captives are allowed to write but will confer with Insurance Commissioner Lawrence H. Mirel “where it's sensitive or something we're not quite sure of. But like everything else, he signs the licenses and we're charged with doing the work,” he said.
Mr. White added that the changes are part of a “three-step strategy to put D.C. on the map, to make sure we were being a responsible market and at the same time bringing some value to the marketplace. This is all part of creating a business atmosphere to support what we think is important in terms of a consultative regulatory environment.”
Mr. Perschetz said he anticipates legislation to be passed by this fall.
Reproduced from National Underwriter Edition, June 4, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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