The high number of US states passing captive legislation is putting a premium on experienced regulators, according to AM Best.
The ratings agency wrote: “states across the country are working to differentiate themselves as they try to convince captives to set up shop within their borders. Industry experts said the reputation of a state’s regulators can be a deciding factor.”
According to Dennis Harwick, president of CICA: “time and again, what I hear from captive managers is that the regulators are one of the most important things to consider when you’re looking for a place to set up a captive. It’s a perennial challenge to get regulators who are familiar with captives.”
David Provost, who heads Vermont’s captive insurance division, told AM Best that he is often approached by new domiciles looking for an experienced leader. He said: “they may say, ‘Do you want the job?’ But what they mean is ‘The legislature just passed the law. What do we do now?’”
According to Nancy Gray, regional managing director for the Americas for Aon Global Risk Consulting: “no one wants to see a domicile that doesn’t have a good reputation for regulation. The regulatory experience and how responsive the regulators are is critical to the industry.”
AM Best, Vermont, CICA, regulation