Sandy Bigglestone, Deputy Commissioner of Captive Insurance, State of Vermont
22 February 2023ArticleAnalysis

Bigglestone bullish on Vermont captives growth

Vermont is going into 2023 well positioned after a good 2022, according to Sandy Bigglestone, the deputy commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation (DFR).

Bigglestone told Captive International that Vermont had ended the year in line with recent years, saying that the state ended 2022 with 41 new captive licences, compared to the 45 new captive licences in 2021.

This similar pace was driven by the challenges of the current commercial marketplace, which include issues surrounding pricing and capacity, along with coverage issues that companies are experiencing when faced with renewals.

“When the commercial marketplace is a bit chaotic it makes captive insurance a lot more attractive,” she said. “We met with some companies where we were surprised to find they didn’t already have a captive. Some had thought about it for years, but had a great relationship with their carriers.

“Some companies are very conservative and, at the same time, felt they were getting what they need from their carriers, but the past few years with the commercial marketplace really changed that attitude.”

According to Bigglestone, more companies want to control their own destiny and manage what they can while still having good relationships with carriers. Typically, a company doesn’t exit the marketplace altogether and a captive can complement the marketplace for its insurance needs.

As a result, she said, growth has been great for Vermont. “The programmes coming in are high quality, and encompass all the standards we like. The companies are happy to find a home here in Vermont, and we welcome them among all the other great companies.

“The reasons for companies to come to Vermont are the usual ones: companies are attracted to the regulatory and political landscape, and to the expertise of the infrastructure Vermont boasts about, and the industry association is an attractive option for companies, with opportunities for networking and top-notch education,” Bigglestone explained.

“I suspect we will continue with a lot of similar activity in 2023. We’re still having an average of two or three new business meetings a week with prospective captive owners, so there’s a lot of activity in the pipeline. I don’t have any predictions as to how we will end 2023 but it’s looking like another exciting year for us.”

New sectors

Bigglestone said that one of Vermont’s growth areas has been in cell transactions. Although the state doesn’t count those numbers in its licensing totals, Bigglestone said cell formations are keeping pace with the number of new licences. She said that about 40 new cells were added to the state’s sponsored captive programmes in 2022 and at the end of the year, they totalled 510 cells and separate accounts.

Based on the number of licences Vermont has added so far in 2023, plus the total from 2022, Vermont has 644 captive licences and 510 cells and separate accounts, forming what Bigglestone described as a very good book of business for Vermont, and it’s still growing.

Bigglestone took over as deputy commissioner of the Captive Insurance Division from David Provost, who retired at the end of August 2022.

She described 2022 as a year of transition for Vermont, for both the captive division leadership and the DFR leadership, but underlined that all remains as stable as ever. Bigglestone has been with the division for 25+ years; for 14 of those years she served as director of captives under the deputy, making her, as she put it, the right-hand person participating in many of the activities and responsibilities of the deputy. As a result it felt like a very natural transition to her.

Bigglestone leads a division of 30 people, who “are skilled in and dedicated solely to the business of regulating captives”. She believes that the division is the most experienced and the largest captive regulatory team in the world, which helps it to keep up with the growth it is experiencing. She said that the division is looking to hire more people, while retaining current staff.

“With those efforts and focus, I expect we will continue to experience growth, and collectively all enjoy the success built here in Vermont,” Bigglestone told Captive International. “We have a robust infrastructure with the captive managers and all the other service providers, and we all share a similar mission for making Vermont a top domicile.

“We have always been a global domicile, and other exciting efforts involve increasing activities related to international business. We are travelling to Mexico City on a trade mission, in coordination with industry and the Vermont Captive Insurance Association. We are focused on attracting Latin American businesses as well as continuing to attract international business from all over the globe.”

Another area of possible future growth for Vermont involves cannabis-related captives which, Bigglestone said, is a current hot topic for captives. She said that the decision to allow cannabis operations to insure themselves through captives is not just the view of the captive division or the insurance department, it’s a decision that has to be made in alignment with other areas of state government and administration.

This is because there are some potential legal and banking issues to navigate. Vermont has been watching the developments with respect to the marketplace, and especially the SAFE Banking Act and how the federal government is responding to proposed amendments.

However, the DFR has not yet engaged in cannabis business in Vermont captives since cannabis is still listed as a federal schedule one drug, although other states are changing the landscape.

“Vermont has established a cannabis board that is dealing with legalisation issues and regulation of the industry,” said Bigglestone. “The banking division is actively looking at the issues involving the SAFE Banking Act and the changes that might occur. At some point, if all the standards align, Vermont may be in a position to participate on the captive side of insurance for cannabis operations.”