The Vermont House Committee on Commerce and Economic Development is considering draft legislation that would allow captives to retain their licences while their business was on hold.
Four in 10 Vermont captives are considered inactive, and the legislation would allow them to pay a licence fee to maintain a legal dormant status. This would be renewed every five years.
In October, state governor Peter Shumlin announced that the Department of Financial Regulation had licensed Vermont’s 1,000th captive insurance company.
Captives are big business in the state. In 2012, captives wrote more than $26 billion in gross written premiums. There is more captive business in Vermont than in the ten next largest domiciles combined.
Given the complexity and cost involved in setting up a captive the approach set out in the draft legislation could prove to be popular.
Under the proposed legislation (H. 563), which only applies to pure captives, companies wishing to become active again would need to make an application to do so.
Captives wishing to go down this route would have to maintain a capital surplus of $25,000, as well as continuing to file annual financial reports.
