Image credit: State of Vermont
9 August 2022ArticleAnalysis

Maintaining the gold standard

Looking ahead at the next six to 12 months, we expect there will be continuing opportunities for businesses to fill gaps in typical commercial coverages through the use of captives. Beyond the typical use, we can see a great potential for parametric solutions and captive insurance to open up capacity for organisations to protect its balance sheet and operations when natural disasters strike.

In terms of what regulatory changes we would like to see primarily, we would like undergo a process to identify ways Vermont might improve upon the gold standard of captive regulation and potentially modernise some of our regulatory processes. We are also in the process of developing and sharing ideas with the Vermont Captive Insurance Association (VCIA) leading up to the 2023 legislative session.

Vermont continues to see record captive formations in 2022. We are already surpassing the pace of growth in 2021 and 2021 was considered our fourth highest year of growth in our 40-plus year history. There is still tremendous interest in forming a captive.

Vermont remains a leader in the captive insurance industry due to our quality regulation, robust captive infrastructure, and our dedication in the Department of Financial Regulation and commitment from the legislature to constantly improve to meet the needs of businesses.

Vermont is home to the largest captive insurance association in the world, the VCIA, which provides extensive support and education to captive professionals and the companies they represent.

Turning to how long the hard market will continue, market cycle fluctuations and the timing of any changes are difficult to predict. The commercial marketplace difficulties and capacity shortfalls seem to indicate a continuing existence, especially given the growth in alternative solutions. We believe this to be true based on conversations we are having with industry and captive insurance proposals being presented.

There are some undoubted challenges ahead. It’s important to see more young and new professionals enter the captive industry in Vermont and beyond. Raising awareness about captives as a career choice will be an essential change for all facets of the industry, no matter where you are located.

Although growth is positive, one of the challenges it creates is finding and retaining professionals to manage the work. The industry has several initiatives in play to address the labour challenges, highlighting and promoting the many career choices available.

Our advice to the next generation of talent in our sector is to say yes to opportunities to expand your leadership, such as networking, speaking on a panel, contributing to an article, taking the lead on a project. Stay curious about your own growth potential and know that you can grow in this industry if you stay open to the possibilities and leverage your networks. The captive insurance industry is not all that intuitive, so don’t be afraid to ask questions. Many are more than happy to support you along the way.

Vermont has stayed committed to providing quality regulation while being efficient and available in meeting the needs of businesses. Vermont remains committed to improving our processes year after year and that commitment has helped Vermont be successful over time and has created a stable regulatory environment that has been beneficial for businesses that license their captive insurance company in our state.