Vermont licensed 32 new captives in 2012 — finishing with strong showings by the construction and manufacturing sectors which each had five new licensees, according to data released on Jan. 16 by the Vermont Captive Insurance Division.Vermont Gov. Peter Shumlin shared the results during the Vermont Captive Insurance Association’s Legislative Day, where he was joined by owners of captive insurance companies from throughout the country, government officials and service providers.
“We’re very pleased with the results for 2012,” said Gov. Shumlin. “We will remain committed to preserving Vermont’s captive leadership role in 2013 with a priority on clarifying the ambiguities in the federal Dodd-Frank legislation which have caused undue confusion for the captive insurance industry.”
“The quality of the new captive insurance companies over the past year has been excellent,” said David Provost, Vermont’s deputy commissioner of captive insurance. “28 of the 32 were pure captives, an extremely high percentage of the overall total for 2012,” he added.
Vermont licensed 41 captives in 2011. In addition to the 28 pure captives, three were sponsored and there was one risk retention group in the past year.
Some of the notables in the newly licensed captives include Deutsche Bank, Conoco Philips, Tyco, and Allstate. Another continued trend in 2012 was the strong presence of the non-profits with new formations.
“The healthcare and religious organization activity was very strong in 2012,” said Dan Towle, Vermont’s director of financial services. “That trend has continued with two newly licensed captives in 2013 both being in the healthcare sector.”
2012’s new licensees brings Vermont overall total to 984 with 588 active captive insurance companies.
Officials also said 2013 is starting strongly with two new captives licensed, with an active pipeline of prospective captive insurance companies.
Captive insurance is a regulated form of self insurance that has been around since the 1960’s, and has been a part of the Vermont insurance industry since 1981, when Vermont passed the Special Insurer Act.
Captive insurance companies are formed by companies or groups of companies as a form of alternative insurance to better manage their own risk. Captives are typically used for corporate lines of insurance such as property, general liability, products liability, or professional liability.
Growth sectors of the captive insurance industry include securitization, professional medical malpractice coverage for doctors and hospitals, and the continued trend of small and mid-sized companies forming captive insurance companies.