By Dana Sheppard

The District of Columbia captive domicile’s annual review of 2008 spans a period of turbulence and uncertainty in the financial services industry. These events have had an impact on the captives and risk retention groups licensed in the District, and elsewhere.  The District of Columbia government, like all state and local governments, has been asked to do more with fewer resources.

Against this backdrop we have performed well. We licensed 19 new captives and risk retention groups during 2008, and ended the year with 104 licensed captive insurers, risk retention groups and incorporated cells. DISB has licensed six new captives and one incorporated cell to date in 2009. We anticipate about 20 new captives this year. Last year, the Council of the District of Columbia approved legislation authorizing the city to create its own captive to write medical professional liability coverage for certain healthcare clinics located in the District, and is now insuring numerous clinics and physicians. DISB also approved three new captive managers last year, and all three brought us new captives during the year.

DISB Commissioner Thomas E. Hampton continues to be very involved in the activities of the National Association of Insurance Commissioners (NAIC), including all the committees and working groups that considered issues affecting the regulation of captives and risk retention groups. The District, in cooperation with its fellow captive regulators, successfully argued against including association and agency captives in the NAIC’s definition of “multi-state insurer.” Changing the definition to include those entities would have dramatically altered the way those captives currently operate, in every U.S. captive domicile. DISB also led the way in overcoming the NAIC’s proposal to require risk retention group captives to file the NAIC Uniform Certificate of Authority Application. And lastly, the agency completed the review of the Part A Accreditation Standards, which was approved by the leadership of the NAIC in December 2008. The Part A Standards will become part of the NAIC accreditation standards for the regulation of risk retention group captives beginning in 2011. As we move forward, DISB continues to lead the debate on the future regulation of captives and risk retention groups.

Looking to the Future
DC Mayor Adrian M. Fenty and other elected officials are aware of our accomplishments to date, and are committed to providing support for the captive program. They stand ready to assist the Commissioner in his mission of ensuring that the District of Columbia remains an attractive and vibrant domicile for captive insurance companies.

DISB has established enduring relationships with its captive owners, captive managers and other services providers, and it has delivered on its commitment to provide fair and efficient regulation without compromising our responsibilities as regulators. These are uncertain times. But for us, they are also interesting times, and times that offer great opportunities. We’re prepared to meet the challenges we face, and we remain very optimistic about our prospects for continued growth this year and beyond.

Associate Commissioner Dana G. Sheppard is the head of DISB’s Risk Finance Bureau.