The Vermont Department of Financial Regulation (DFR) and the Office of the Vermont Secretary of State (SoS) are collaborating on a pilot programme that will explore the use of blockchain technology in the captive insurance market.
DFR commissioner Michael Pieciak and secretary of state Jim Condos signed a memorandum of understanding on 9 January, which outlined their combined efforts to explore the use of blockchain in the digital recordkeeping practices of the state’s captive industry.
On 10 January, the DFR and SoS jointly issued a request for information (RFI) to identify vendors that may work with the State to launch a pilot programme that would allow new captives to register with the SoS using blockchain technology.
Questions related to the RFI are due 24 January, while the RFI itself is due 14 February.
Blockchain is a digital ledger technology designed to create a transparent and validated record of transactions, which provides users with more efficiency, accuracy, and security than traditional recordkeeping methods.
The pilot is being set up to experiment with the functionality of blockchain in state regulatory processes.
In addition, the programme will review and revise relevant statutes, rules, regulations, and bulletins to ease the implementation of blockchain technology.
In May last year, the Vermont Captive Insurance Division revealed it was planning to work with the SoS on a project that tested the use of blockchain in captives.
David Provost, captive insurance deputy commissioner, commented: “Vermont has long been known as an international leader in the captive insurance industry with a robust regulatory and professional community and a willingness to embrace innovation.”
“This makes Vermont’s captive insurance industry the ideal place to pilot this blockchain programme.”
Condos suggested the pilot would allow the state to “examine whether or not the application of blockchain technology for digital recordkeeping can improve aspects of the state regulatory process”.
Commissioner Pieciak stated: “Financial services firms are innovating at lightning speed and regulators have an obligation to keep up.”
“This partnership with the SoS provides a great opportunity for our teams to become better acquainted with distributed ledger technology and understand how the state and Vermont businesses might benefit.”