Kevin LaCroix of the outstanding D&O Diary blog addresses proposed DGCL Section 145(g):
As readers of this blog well know, in recent months, the D&O Insurance industry has been in a so-called “hard market,” characterized by rising prices, increased self-insured retentions, and reduced capacity. In light of the increased costs, many buyers have elected to purchase less insurance than they have in the past. As companies and their advisors considered alternatives, questions have arisen whether companies may use of alternative risk transfer mechanisms such as captives. One specific question with respect to these alternatives is whether a captive insurer could, as is the case with respect to traditional D&O insurance, provide insurance protection for liabilities that cannot be indemnified by the corporation itself. ....
The main purpose of the Bill is to authorize Delaware corporations to use captive insurance, which is described in the synopsis accompanying the Bill as insurance provided by or through a wholly-owned subsidiary funded by the corporation, to protect their directors and officers and other indemnifiable persons from liability. The Bill also clarifies that a Delaware corporation’s establishment or maintenance of a captive insurance company does not subject the corporation to the provisions of the Delaware Insurance Code.
Corporate lawyers will want to go read the whole thing. It's a great analysis.
