A Vermont bill proposing a number of updates to its captive insurance statute, including alterations to its financial examinations requirements, has been given the final approval by the Senate and House.
S.109, a consensus bill composed by the state’s Department of Financial Regulation (DFR) and the Vermont Captive Insurance Association (VCIA), was passed by the Senate and House on 28 March.
The bill includes a number of small changes to the statute, including requiring captives to be examined every five years (or more frequently if necessary), rather than every three years, which can currently be extended to five if the captive is audited.
Other tweaks include amending the statute to clearly identify nonprofit incorporated protected cells as eligible for dividends or distributions with commissioner approval and allowing the commissioner to exempt the attorney-in-fact from the bonding requirements under specific circumstances.
The bill also suggests clarification of the definition of an independent director; a requirement for National Association of Insurance Commissioners statutory accounting for affiliated reinsurance companies, the new captive structure introduced in the state last year; and specific inclusion of sole proprietorships among eligible businesses to be cell participants.
Additionally, it would allow captives to use any organisational form permitted by Vermont law, meaning the captive law will automatically stay current, and DFR still has plenty of opportunities to decline an application or reject a business form if not appropriate for an insurance company, or for a particular circumstance.
The bill will now pass to the Vermont governor to be signed into law.
Rich Smith, VCIA president, said the suggested change to financial examinations “better reflects the options captives could utilise that better suit their risk and investment needs”.
He added that the bill would provide “updates and tweaks to Vermont’s captive law that incorporate a number of the issues VCIA’s legislative committee has discussed the past few months, as well as policy suggestions from DFR”.