The formation of captives in Vermont over 2014 has been the lowest in recent memory, although the Vermont Captive Insurance Association remains optimistic.
In 2014, Vermont licensed 16 new captives and dissolved 17. Officials attributed last year’s numbers to a soft market and the continuing increase in competition from domestic domiciles.
Even with the net loss, Vermont projects a $2 billion increase in gross written premium to almost $30 billion.
The domicile’s captive insurance regulators, legislators and industry principals expressed optimism during the annual Legislative Day that 2015 will be a good year for captives. The Vermont Captive Insurance Association (VCIA) sponsors the day.
“As always, Vermont added quality captives to its portfolio,” said Len Crouse, partner at JLT Towner Insurance Management. “The legislature understands the value of Vermont’s captive business, and legislators and state regulators are always working to improve regulations.”
Crouse added that Vermont will once again examine areas in which regulations might be revised, a housekeeping exercise it undertakes each legislative year.
Two items under consideration are halving the capital requirement for sponsored captives to $250,000 and reducing the number of incorporators needed for captive formation from three to one.
The Legislature may also look at risk retention group governance standards promulgated by the National Association of Insurance Commissioners (NAIC) to identify exemption thresholds.
Another proposal captive professionals will follow closely is a change in the structure of Vermont’s capital requirement. Current law requires cash, a trust approved by the commissioner, or a bank-issued irrevocable letter of credit. The proposal would add marketable securities to this list.
VCIA, Insurance, North America, Len Crouse