David Provost, State of Vermont Department of Financial Regulation
20 January 2021USA analysis

Vermont licenses 38 new captives in 2020

The State of Vermont licensed 38 new captive insurance companies in 2020, according to the Vermont Department of Economic Development, with 11 of those licenses issued in Q4 alone.

Vermont is now home to 589 licensed captives, consisting of 564 active and 25 dormant captive insurance companies.

The new captives were licensed in healthcare, real estate, manufacturing, insurance, transportation, technology, construction, and professional services. New and notable companies this year include the University of Southern California, State Street Bank, Saputo, and the Blackstone Group.

At least six of Vermont’s new captives in 2020 were formed by companies with international roots, including Canada, Sweden, Dubai, Australia, and two from Germany.

Brittany Nevins, captive insurance economic development director for the State of Vermont, said its 2020 licensing activity reflected the changing insurance environment. “The market that began hardening in 2019, continued rapidly throughout 2020 and now into 2021,” she said. “Before 2021 began we had more captives in process for licensing than we had licensed total in the first month of 2020.”

David Provost, Vermont’s deputy commissioner of captive insurance, agreed the “particularly hard market conditions in commercial property insurance” had played a significant role in the number of captives being formed, especially in the construction and real estate sectors.

“Nearly a third of the new formations this past year had parents from those industries, with price and availability commonly noted as drivers for the captive,” he said,

Sandy Bigglestone, director of captive insurance in Vermont, stressed the Vermont Department of Financial Regulation had not compromised on its gold standard approach to licensing, despite the challenges of doing business amid the pandemic.

“One of the best practices proven to be effective is a pre-application meeting with the regulatory leadership team and the prospective company,” she noted. “Throughout 2020, despite not traveling and meeting people face-to-face, every new application included an introductory phone call or virtual meeting.”

Joan Goldstein, Vermont’s commissioner of economic development, added: “Captive insurance plays a key role in our efforts to strengthen the state economy and its growth is welcomed as the pandemic continues to impact every sector of our economy.”

“Vermont continues to see exponential growth in numbers of licenses and interest around the country and around the world,” said Rich Smith, president of the Vermont Captive Insurance Association (VCIA). “The stability, knowledge and experience Vermont has to offer continues to be steadfast through challenging times.”

Vermont has licensed a total of 1,197 captive insurance companies since 1981 and remains the largest US domicile for captive insurance, and third largest in the world. It has a pipeline of prospective new captive insurance companies already underway for 2021 and expects continued growth in 2021.