Vermont governor Phil Scott has signed new captive legislation into law, allowing for agency captives to be licensed in the state.
The legislation defines an agency captive as a reinsurance company controlled by an insurance agency or brokerage. Through a reinsurance agreement with a traditional insurer, the agency captive receives a share of the premiums written, and is obligated to pay its share of claims.
In addition to the agency captive provision, the legislation allows broader accounting systems, expands dormant captives and clarifies risk retention governance standards.
Scott said: "In what has become an annual tradition, these improvements to our captive legislation illustrate Vermont's ongoing commitment to the captive insurance industry, which has been an economic boon for the state. This bill will further advance Vermont's reputation as the 'Gold Standard' for domiciles and will provide greater flexibility and clarity going forward for our companies."
David Provost, deputy commissioner of Vermont's captive division, commented: "As we have for many years, we worked with the Vermont Captive Insurance Association (VCIA) to develop a bill that helps the industry grow while maintaining prudent regulatory standards."
Richard Smith, president of VCIA, added: "We're delighted to have [Governor Scott’s] continued support and that of the legislature in keeping pace with the changing needs of the industry. I have already been contacted by a number of entities interested in Vermont's new agency captive provision."
