The Delaware state legislature has passed Senate Bill 203 to amend Title 8 of the Delaware Code, allowing corporations to use captives for directors’ and officers' (D&O) liability insurance.
Section 145 of the title, relating to the indemnification of officers, directors, employees and agents, previously set out limitations that meant corporations had no alternative but to buy traditional D&O insurance policies.
Under the new bill, the section is amended to include: “[A]ny insurance provided directly or indirectly (including pursuant to any fronting or reinsurance arrangement) by or through a captive insurance company organised and licensed in compliance with the laws of any jurisdiction.”
The bill notes that this inclusion is contingent upon such captive insurance companies adhering to the relevant codes of conduct, for example, exclusions from coverage attributable to any personal profit, or the use of an independent claims administrators.
In July 2021, Delware passed Senate Bill 36 allowing captive structures to be classified as registered series, clarifying provisions around insuring a parent company, and allowing a captive to enter dormancy after 12 consecutive months of inactivity, rather than a calendar year of inactivity.
