Vermont Governor Signs New Captive Insurance Industry Legislation

Vermont Governor Phil Scott has signed new legislation that aims to strengthen Vermont’s captive insurance laws, increase efficiencies and add flexibility to regulatory policy and procedures.

“COVID-19 has dramatically changed the way we all work, live and play, however it has not changed Vermont’s continued commitment to be the ‘gold standard’ within the captive insurance industry,” Scott said in a press release issued by his office. “The bill I signed demonstrates – as we do every year – that Vermont does not take this sector for granted and we are firmly committed to keeping pace with the ever-evolving needs of the captive insurance industry.”

The captive bill includes new policies related to Vermont’s captive protected cells. A protected cell is an alternative risk transfer mechanism that often operates like a stand-alone captive. Vermont has identified protected cells as a promising area for growth within the state’s industry, the release stated.

“One of the key changes recognizes the importance of cells in the captive industry, and makes it clear that a cell can operate—and should be regulated—much the same as an individual captive,” said Vermont Deputy Commissioner of Captive Insurance Dave Provost in the release. “I believe the captive industry will welcome this change, along with other updates included in the bill.”

Additional key updates include allowing separate accounts within a cell of a sponsored captive, simplifying an agency captive owner’s disclosure requirements, aligning with the National Association of Insurance Commissioners (NAIC) statutory accreditation standards for Risk Retention Groups and allowing dormant captives to remain intact at a minimum capital level so they may be reactivated in the future.

The changes in the law include:

Source: State of Vermont Office of Governor Phil Scott