D.C. Strives To Be Top Captive Domicile

He said it is "entirely possible to have D.C. regarded as a top-notch domicile for captives, and that is not taking anything away from the other domiciles."

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

Christopher L. Kramer, vice president of alternative risk management with the captive management firm Neace Lukens in Beachwood, Ohio, recently visited Washington, D.C. when seeking a domicile for a client. Mr. Kramer said he was "pleasantly surprised" by the flexibility and accessibility he found there.

"I found that the statutes are very flexible and that access to regulators was relatively easy," he said. "But no less demanding than other domiciles in terms of scrutinizing applications."

Washington, D.C., he continued, holds "great promise for association captives, balanced with agency captives and rental captives."

Mr. White described the domicile as "a little bit different" than others for several reasons.

The captive law, enacted in 2001, was "pointed towards doing some of the things the other domiciles are doing, but we're taking a little bit of a different tact on this," he said. For instance, "with some of the structures that we're willing to look at," some of the domicile's requirements are "a little more broadly based, or business friendly" in recognition of the specific business needs for putting together the captive.

He added that Lawrence Mirel, the Washington insurance commissioner, D.C., "has given me a great deal of latitude to deal directly with the applicants."

Mr. White's approach "is to not get caught up in the bureaucracy of putting the captive insurance companies together," he said. Rather, he focuses on the motivating factors behind the captive, understanding the applicant's overall strategy and making sure this coincides with regulatory requirements.

This means that in producing and servicing accounts "I am going to take a very hands-on approach," he said. "Consequently, if you want to talk about captives, you need to talk to me as the director."

Mr. White said his approach is also tempered by his background as an underwriter. "I look at this as developing a good underwriting portfolio of captives," he said.

He added that if he doesn't think an organization's approach for a captive is solid, "we're not going to push forward on it just because we want a captive." Rather, he said, "If it wouldn't work as a captive, I would probably encourage them to think in terms of doing something a little bit different. Or to go back to whoever they're using as a consultant, if that is the case."

In many instances, he said, prospective clients don't yet have a consultant and are "bouncing off ideas." At the other end of the perspective are those more familiar with captives, "trying to think out loud about what direction they want to go with that particular risk financing mechanism. They are trying to decide if the way they're putting it together would make sense and pass muster in D.C."

Mr. White said he is supported by the rest of the department and is currently building a specialty staff from within. He expects to add staff with the growth of the department, he said. The domicile so far has licensed about 10 captive insurance companies.

Interested organizations so far have been from both D.C. and outside the area. "I've only been able to field a few phone calls in the past few weeks," he said. "I've spent the better part of my time reviewing the existing process so that we can make changes to make it more efficient."

Inquiries about captives don't fall into any specific industry or category but are "across the board," he added. "We've had inquiries from those segments of the market under the greatest pressure from hard market conditions?medical malpractice and related areas like nursing home associations and doctors groups, also inquiries about agency captives."

Those inquiries are also about everything from "?explain to me how a captive can be beneficial,' to ?I'm having trouble, specifically with this area of the marketplace in terms of pricing or terms and conditions and as a group we have decided to form this captive,'" he noted.

Already the domicile is anticipating making regulatory changes, "not so much captives and captive laws, but we're taking a step back and looking at alternative risk transfer as a market place," he said.

Rather than change regulations to make Washington, D.C. different or more competitive, he said the domicile is taking a strategic approach, "looking at what we intend and what our motivating factors are."