D.C. Seeks Captive Law Change To Match Rivals

By Caroline McDonald

NU Online News Service, June 2, 10:57 a.m.EDT?Washington, D.C. regulators are seeking "wild card"language for the district's captive insurers' law that gives themthe option of matching legal arrangements for captives in competingvenues.[@@]

Arthur D. Perschetz, chairman of the Captive Insurance Councilof the District of Columbia, explained that, under the proposedamendments that are pending before the D.C. City Council, theinsurance commissioner would be able to allow "a captive in D.C. orone being formed in D.C. to avail itself of any benefit of anothercaptive law anyplace else."

He said the change being sought is "similar to banking wild cardstatutes," which allow a state bank to do "basically anything thata national bank can do."

Under the proposed D.C. captive law amendment, for example, if ajurisdiction has a unique provision allowing credit forreinsurance, "the commissioner could allow D.C. captives to do thatif he thought it was beneficial to the district," with the decisionmade on a case-by-case basis. Another example might be allowing acaptive to write workers' compensation, he said.

Mr. Perschetz, who is a counsel with Muldoon Murphy &Faucette LLP in Washington, said the legislation would give thecommissioner "broad powers" because "the legislative process hereis time consuming, as opposed to some other jurisdictions wherethey can do things on a dime."

He said the amendments would allow more flexibility with captiveinvestments, lower minimum capital and surplus requirements, andfacilitate redomestication of captives. Another major amendment, hesaid, would liberalize the domicile's captive branch rules, which,he noted, would help attract American companies with offshorecaptives wishing to write employee benefits in an onshorefacility.

The proposed amendments must be approved by the D.C. Council andsigned into law by Mayor Anthony Williams, noted George Pantos,president of the CIC-DC. Congress ultimately has the final saybefore the amendments become law.

William P. White, captive director of the D.C. Department ofInsurance, Securities and Banking, said he will be making most ofthe decisions about what captives are allowed to write, but willconfer with Insurance Commissioner Lawrence H. Mirel "where it'ssensitive or something we're not quite sure of. But like everythingelse, 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-stepstrategy to put D.C. on the map, to make sure we were being aresponsible market and at the same time bringing some value to themarketplace. This is all part of creating a business atmosphere tosupport what we think is important in terms of a consultativeregulatory environment."

Mr. Perschetz said he anticipates legislation to be passed bythis fall.