Just a month after leaving his captive director position at Delaware, Steve Kinion is back in the world of captive regulation with Oklahoma. He has some big plans for how to grow its captive footprint, as he explained to Mark Richardson in this interview for Captive Review.

When Steve Kinion first announced he would be stepping down as Delaware’s captive director in September of this year, the last thing he expected was to be walking into a new state regulator role just over a month later.

He had already returned to his law practice, Zack Stamp Ltd, and promised to take on various clients, when Oklahoma’s insurance commissioner Glen Mulready got in touch and made him an offer to lead the state’s captive unit.

Kinion had some conditions, though. He would be able to continue his legal work, primarily representing clients in Delaware and Illinois, where he lives. However, he said he would not represent clients before the Oklahoma Insurance Department, or any Oklahoma-domiciled captives.

Having just started helping his clients again, Kinion didn’t feel he could just immediately drop them. With these assurances in place, Oklahoma-native Kinion signed a one-year contract from November, with the option for a second.

He explained to Captive Review why it was a job he couldn’t turn down.

Returning home

“It’s like any place you have a natural affinity to where you are from,” he said. Kinion’s first job out of law school was at the Oklahoma Insurance Department, working for four years under a previous insurance commissioner, John Crawford. “Oklahoma is my home state, I have family that live there and I lived in Oklahoma City for four years. There’s a natural tendency there to go back to what you know. And to go back home,” he says.

But it’s hardly just for sentimental reasons that Kinion wanted to return to the Oklahoma Insurance Department and reinvigorate its captive division. The ambition of commissioner Mulready was another factor for Kinion, and his willingness to take bold steps to grow Oklahoma’s captive industry.

“Commissioner Mulready is very entrepreneurial,” Kinion says. “He is an insurance commissioner who has many years of private insurance industry experience, and then uses that experience to benefit insurance regulation in Oklahoma.”

Kinion says the commissioner is very excited about captive insurance. He remembers attending the Oklahoma Captive Insurance and IBT Conference in August and said that “the electricity was prevalent in the room” then.

“When the electricity comes from the top, you see a captive team in the Sooner State that wants to be successful, that wants to grow, that wants to be innovative, that wants to be entrepreneurial, and I want to be part of that,” he adds.

Big plans

And Kinion is already talking big about what he wants to bring to the state. Permitting Side A directors’ and officers’ liability insurance cover written by captives, something which worked very well when he introduced it in Delaware, is on his agenda, as is encouraging parametric policies and the introduction of a publicly shared procedures and practices system.

“In Delaware, we had a policies and procedures system wherein the industry could see how dividends, for example, were handled internally by the department,” he says. “In other words, a captive insurance company comes to the regulator and asks for approval against those policies and procedures, so the industry knows what to present.

“One of my favourite sayings is it’s the industry’s job to get the regulator to say yes, and in order to get the regulator to say yes, the industry must know what to present, and it should not be a guessing game in terms of going back and forth.”

Other changes he has in mind are administrative, relating to which systems the department uses, but he believes all these adjustments can transform Oklahoma’s reputation and popularity as a captive domicile.

“One of the nice things about this job is, when I started as Delaware’s captive insurance director in 2009, I didn’t know everything I know today,” he says. “Now I do know that and I can implement that knowledge on behalf of Oklahoma.”

‘Blank slate’

Delaware had 38 captives when Kinion joined in 2009 and, according to our World Domicile Update, at the end of 2021 the state had 277 (excluding cells).

Oklahoma had 41 at the end of 2021, and Kinion said it has been described to him as a ‘blank slate’ for him to shape how he chooses. However, he warns it is unlikely that Oklahoma will match the same growth rate as with Delaware.

“The benefit I had in Delaware in 2009 was that there were far fewer states to compete against. Today that is not the case,” he says. “I will grow Oklahoma’s captive insurance industry, probably not at the rate at which Delaware grew though, simply because the competition is more intense than what it was 13 years ago.”

Nevertheless, Kinion thinks it’s highly likely there will be some Delaware-based captives that are immediately drawn to join him in Oklahoma.

“It’s something that could happen because there will be managers that worked with me in Delaware that developed a comfort level with me,” he says. “They know the questions I’ll ask and the expectations I’ll have, and familiarity in this industry breeds success.”

Kinion says captive managers like to work with the same regulators they know and he believes he has built very good credibility with them during all his years with Delaware.

“Those captive managers know I’ll take their call at 9pm on a Friday night or on a Sunday afternoon,” he says. “They remember those things. Being a captive director is a seven-days-a-week job.”

Oil and gas

Where Kinion also sees strong potential for captive growth in Oklahoma is through energy companies. More and more commercial insurers and reinsurers are pulling out of backing carbon-based industries due to ESG and reputational concerns.

This is causing reduced availability of capacity, leading many companies to turn to captive solutions. With Oklahoma’s historic association with oil and gas production, Kinion believes this is an industry that should be targeted for captive growth.

“Oil and gas production has fueled Oklahoma since before statehood in 1907. It’s very important to Oklahoma. That industry is facing serious challenges now, and an Oklahoma-based captive insurance company can be a great alternative,” he says.

Kinion himself worked on an oil drilling rig in Oklahoma while in college, being from a small town built heavily on petroleum production.

“That doesn’t make me an energy expert, but I have a working knowledge of how to drill oil,” he adds.

Billion-dollar club

With various strategies already lined up, Kinion fully expects Oklahoma to achieve strong growth in its captive footprint in the coming years. However, he doesn’t have a target number of captives he wants to hit by a particular year. More important to Kinion is the premium growth.

“I don’t look at it so much in terms of numbers, I look at it first in terms of premium dollars,” he says. “Because there’s what I like to call the billion-dollar club, and then domiciles that are not in the billion-dollar club. We have about 10 domiciles in the US that have $1 billion or more of captive insurance premium.”

Oklahoma currently sits at around $200 million to $300 million in captive premium, giving Kinion the difficult goal of roughly quadrupling premium income if he is to achieve his goal.

“One of my jobs is to attract captives, and especially large captives,” he adds. “I want to be very innovative with how we achieve that.”