Vermont's captive sector reports strong growth and development

Vermont’s captive sector reports strong growth and development | Insurance Business Canada

Reinsurance

Vermont’s captive sector reports strong growth and development

State licensed 38 new captives in 2023

Reinsurance

By
Kenneth Araullo

The Vermont Department of Economic Development reported a robust performance for its captive insurance sector in 2023, continuing into 2024.

The state, recognized globally as a premier domicile for captive insurance, licensed 38 new captive insurance companies last year, bringing its total to 659, including 632 active and 27 dormant entities. In 2024, Vermont has already added nine new captives, contributing to a historical total of 1,330 licensed captive insurance companies since its first in 1981. This growth places 2023 among the top 10 years for captive formations in the state.

Governor Phil Scott highlighted Vermont’s sustained global leadership in the industry and its commitment to innovative, high-quality regulation tailored to the needs of captive insurance companies.

The diversity in the new captives is also notable, spanning 13 industries with manufacturing, insurance, and real estate leading. The formations varied, including pure (24), sponsored (6), agency (1), association (2), special purpose finance insurer (3), and risk retention groups (2). Additionally, Vermont’s 62 sponsored captive insurance companies witnessed growth in new protected cells, exceeding 30 in 2023. Sponsored captives offer a structured licensed insurance vehicle for companies to manage their risks via protected cells.

“Companies continue to face challenges placing insurance and find they are better able to negotiate when they have a captive that can take on higher retentions and fill gaps in coverage. A captive gives its owner(s) options and allows for greater control over underwriting and claims management, ultimately resulting in better risk management practices to create positive outcomes,” Captive Insurance director Christine Brown said.

In 2023, several of Vermont’s new captives originated from international locations, including Canada, Chile, Germany, and the United Kingdom. A Vermont delegation, in collaboration with the Vermont Captive Insurance Association (VCIA), hosted a trade mission and educational event in Mexico City in March 2023 to promote captive insurance in Latin America.

“We’d heard consistently that the Latin American market needed more captive insurance education. When we went to Mexico, we found that there was indeed great interest in captive insurance as a risk financing tool and we plan to continue our efforts in the region in the year ahead,” VCIA president Kevin Mead said.

The Vermont Captive Insurance Emerging Leaders (VCIEL) initiative, launched in March 2023, aims to raise awareness about captive insurance careers in the region. Supported by the VCIA and the State of Vermont Economic Development Department, VCIEL comprises approximately 30 professionals, as featured in Captive International’s Special 20th Anniversary Commemorative International Center for Captive Insurance Education Report.

“Vermont continues to be a thought leader in this industry in the face of new challenges. Raising awareness in all aspects of this industry is essential to our continued success,” DFR commissioner Kevin Gaffney said.

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