Vermont Governor Phil Scott has signed new legislation passed in the 2017 session which aims to strengthen the domicile’s status by including agency captives to the portfolio of captive types allowed to operate in the State.
An agency captive refers to a reinsurance company controlled by an insurance agency of brokerage.
This type of captive, through a reinsurance agreement with a traditional insurer, receives a share of the premiums written, and is obligated to pay its share of claims.
They are designed to create a long-term relationship between the agency and the insured, where interests such as risk appetite, selection, pricing, loss control and claims management are aligned.
Further changes to Vermont’s captive law allow broader accounting systems, expanding dormant captives and clarifying risk retention governance standards, among other things.
"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," said Gov. Scott. "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."
Gov. Scott was joined by Richard Smith, president of the Vermont Captive Insurance Association, which lobbied for the changes.
Smith commented: "Governor Scott has supported the captive industry in Vermont since his days as a State Senator and Lt. Governor.
"We're delighted to have his 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."
David Provost, Deputy Commissioner of Vermont’s Captive Division, added: "As we have for many years, we worked with the VCIA to develop a bill that helps the industry grow while maintaining prudent regulatory standards.
"The legislative process is part of making sure that our captive law meets the needs of business within a regulatory framework that recognises the special purposes for which captives are formed."
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Vermont, Captives, VCIA, Phil Scott, Richard Smith, Legislation, North America