Vermont continues tradition of enhancing captive insurance regulations

Vermont continues tradition of enhancing captive insurance regulations | Insurance Business America

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Vermont continues tradition of enhancing captive insurance regulations

New bill introduces several clarifications and updates

Insurance News

By
Terry Gangcuangco

Governor Phil Scott has signed new legislation aimed at refining Vermont’s captive insurance statutes, an annual tradition driven by collaboration between the Vermont Captive Insurance Association (VCIA) and the Vermont Department of Financial Regulation (DFR).

This year’s bill, H. 659, introduces several clarifications and updates to streamline regulatory practices, eliminate redundancies, and better align with industry needs.

“Vermont has a strong foundation of regulators and service providers who work together to ensure our state is as supportive as possible for Vermont’s captive insurance companies,” Governor Scott stated. “The passage of the yearly captive bill is always an important action to further improve the quality of our regulation.”

Key updates in the legislation include provisions for converting captive insurance companies into protected cells, revisions to parametric contract language to support various structures, reduced minimum statutory requirements for agency-type captives, and adjustments to confidentiality mandates.

One notable amendment, Section 4, revises §6004(a)(4), reducing the minimum capital for agency captives from $500,000 to $250,000. Since the enactment of agency captive statutes in 2017, Vermont has built substantial regulatory experience in this area. Lowering the minimum capital ensures alignment with the current market landscape without compromising regulatory standards.

“Captive insurance companies are regulated based on their individual risk profile, and our robust regulatory team is skilled at understanding appropriate capital to match the unique risk,” DFR captive insurance division deputy commissioner Sandy Bigglestone said. “Because of this, we realized it wasn’t necessary to have a high arbitrary starting point for these companies.”

VCIA president Kevin Mead commented: “The industry in Vermont knows that the regulators and the legislature are open to discussing new ideas and open to feedback. It’s one of the central reasons why companies choose Vermont to license their captive insurance company in.”

Meanwhile, Brittany Nevins, captive insurance economic development director at the Vermont Department of Economic Development, added: “This process is essential for Vermont to proactively address inefficiencies in its statutes without compromising on quality regulation. This annual process ensures that Vermont is continuing to regulate captive insurance companies as best as possible.”

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