Vermont’s governor Phil Scott has signed new legislation to strengthen the state’s captive insurance laws, increasing efficiencies as well as adding flexibility to regulatory policy and procedures.
The captive bill includes new policies related to Vermont’s captive protected cells.
The changes in the law include providing simplified disclosure for agency captive owners; allowing regulatory discretion in setting the capital of an uncapitalised dormant captive to keep their captive intact at minimal cost, for future reactivation in Vermont; and reducing the minimum core capital for a sponsored cell captive from $250,000 to $100,000.
The bill will also allow flexibility to insure unaffiliated business in a cell under the same circumstances as might be allowed in a stand-alone captive and will help keep the captive option open.
Additionally, it will explicitly allow cells to form separate accounts within a given cell. The provisions mirror those applicable to standalone captives and extend the protections of statutory clarity.
Other changes to the bill include; flexibility in investments by giving sponsored captive companies, and the cells within said companies, the option to follow the old rules or develop a plan for Department of Financial Regulation approval; and specifying the timing of examination reports for risk retention groups to align with the National Association of Insurance Commissioners accreditation standards.
Commenting on the new legislation, Scott said: “COVID-19 has dramatically changed the way we all work, live and play, however, it has not changed Vermont’s continued commitment to be the ‘gold standard’ within the captive insurance industry.”
“The bill I signed demonstrates – as we do every year – that Vermont does not take this sector for granted and we are firmly committed to keeping pace with the ever-evolving needs of the captive insurance industry,” he added.
Dave Provost, deputy commissioner of captive insurance, noted: “One of the key changes recognises the importance of cells in the captive industry, and makes it clear that a cell can operate—and should be regulated—much the same as an individual captive.”
He continued: “I believe the captive industry will welcome this change, along with other updates included in the bill.”
Richard Smith, president of the Vermont Captive Insurance Association, explained: “Even during the pandemic where the attention of the governor and legislature is rightly focused on the health and welfare of its citizens, Vermont’s state leaders came through and passed a bill that updates and strengthens Vermont’s captive insurance statutes.”