The differentiation between onshore domiciles and offshore domiciles is shrinking, Vermont Captive Insurance Association president Richard Smith told Captive International in a discussion about domicile selection.
Speaking before the release of the Marsh Captive Benchmarking Report, which found that new domiciles are tending to select onshore jurisdictions over the offshore competition, Smith said: “I think the differentiation between offshore and onshore has diminished considerably over the last five or ten years in terms of the tax benefits. Any of the specific experience that might have been offshore, you now see in many of the onshore jurisdictions as well. I don’t see much of a difference.”
Smith continued: “Vermont has been in the captive industry since the early 1980s and I think the longevity, expertise and support that the State has built up around this industry has created what people consider the gold standard in terms of the regulatory environment. Every year Vermont looks for ways to improve our captive statutes and regulations, because there are always ways to improve. It’s a very innovative and flexible industry and if you’re not looking at ways to keep current, or be on the leading edge in terms of the regulation and statutes, then you start falling behind as a domicile.”
According to Smith, a responsive government is a big part of Vermont’s success, but only one half of the puzzle. Domiciles also benefit if they have a strong lobbying presence to fight on behalf of the industry. He concluded: “having the largest captive insurance association is helpful for folks. We’re able to work very closely with the leadership and regulators in [Vermont’s capital] Montpelier but we also have clout in Washington DC when we have to actively pursue national issues that could adversely affect the captive industry. VCIA has cloud, and that’s a big plus for the whole captive industry.”
VCIA, onshore, offshore, captive insurance, Marsh