Vermont governor Phil Scott has signed new captive bill legislation into law, which aims to strengthen the state’s captive regulation in a variety of areas.
Senate Bill 88 makes several updates to Vermont’s captive law, including clarifying the ability for a cell to convert to another type of entity, and simplifying processes around redomestication, mergers, and the filing of organisational documents prior to licensure.
Changes to the law includes: captive formation process, which amends the statute to no longer require certified copies of organisational documents and contribution of capital prior to licensure.
Instead, capital may be contributed after licensure, and the company is required to file a statement to that effect with the department. Reports and statements, where agency captives are added to the list of companies required to file an annual report.
Meanwhile, protected cell conversions will now provide the ability for protected cells to convert to a standalone captive insurance company or to a different type of cell.
It will also see consolidations of captives simplify the merger process, provided there is unanimous consent of the parties. It creates a new section in the captive statute instead of referencing the traditional statute.
Redomestications will also have a creation of a new section in the captive statute instead of referencing the traditional insurance statute.
Finally, for service of process, it has changed the designated agent for service of process for foreign risk retention groups and purchasing groups doing business in Vermont from the Secretary of State to the Commissioner.
“Through the years, Vermont has remained proactive in modernising our laws to help the industry grow in the state,” said governor Scott.
He adds: “Vermont is a global leader in captive insurance and continues to collaborate with the sector to ensure we remain a top destination for companies looking to create captives.”
Commenting on the protected cell conversions, David Provost, deputy commissioner of captive insurance, says: “Protected cells are a popular alternative risk transfer mechanism worldwide and are a growth area for the captive industry.”
“The department has always liked the idea of cells as an incubator space for captive growth and wants to be sure it is easy for cells to convert to a standalone captive insurance company,” he concludes.
In 2020, Vermont updated its captive legislation to include new policies related to the state’s captive protected cells.
