1 January 1970Regional titles

Vermont: put your company in good hands

Vermont. What comes to mind for most when you think about Vermont is our rural landscape that some say remains “what America used to be”—maple syrup, world-class skiing and winter sports, and Ben & Jerry’s ice cream. That’s all true. Vermont is a four-season destination with four-season amenities—mountain resorts, friendly country inns and small-town charm around every corner. Our outdoor recreation choices include world-class golf, evening cruises on Lake Champlain and outstanding ski resorts for downhill, cross-country, snowboarding and snowshoeing.

But the world’s leading domicile for captive insurance? Those rural and bucolic images belie Vermont’s leadership in the growing alternative risk management industry.

For 30 years, Vermont has been a global leader in captive insurance. Using the latest data through 2010, Vermont is number one in gross premium, number one in assets under management, and third in total numbers of captives in the world. Vermont is home to 42 of the Fortune 100, and 18 of the companies that make up the Dow 30 have Vermont captives.

2010 was a year of captive insurance growth for Vermont, with 33 new captives being licensed. The new captives formed include 19 pure captives, nine special purpose financial captives (SPFC), four new risk retention groups and one industrial insured captive, bringing the total number of licences issued at year end in Vermont to 911.

Some of the companies in the class of 2010 include: NBC Universal, PricewaterhouseCoopers LLP, Aetna Inc., Proctor & Gamble Company, Crowe Horwath LLP, Towers Watson & Co, and Nationwide Financial Services.

Why Vermont?

Firm and fair regulation

First is our balance of firm and fair regulation. The trade press called Vermont’s law and experienced regulators “the gold standard”, and since 1981, successive governors and legislatures have worked hard to keep current with the changing needs of this dynamic industry. Despite challenging economic times for states throughout the nation, Vermont has continued to invest in our captive insurance division while other domiciles have downsized. This experienced staff is knowledgeable and ready to handle all inquiries, and provide ongoing examinations and service to existing captives and to new formations.

World-class infrastructure support

Second is our infrastructure of brokers, managers and accountants that make Vermont a ‘one-stop shop’ for the management expertise companies are looking for when considering captive strategies. Vermont’s captive infrastructure is sophisticated and diverse, with 14 approved captive management firms. The options range from the largest insurance brokers in the world to smaller independent captive managers.

No matter whom you choose, you can be assured that you will be working with some of the best captive experts in the industry. You will also find a full complement of other service providers to help ensure a complete team will be working for you and your programme. There are knowledgeable investment professionals, bankers, actuaries, accountants and lawyers all ready to serve your needs.

The infrastructure is further complemented by the largest captive insurance trade association in the world, the Vermont Captive Insurance Association (VCIA). The VCIA provides constant support for the Vermont domicile and is an excellent partner to the state. It hosts the world’s largest captive insurance conference held annually in August. This event saw more than 1,200 attendees last year. The conference has become a ‘must attend’ event, and provides incredible education and networking opportunities. It also brings together all of the leading stakeholders of the captive industry to share knowledge and best practices. You can find out further details regarding the conference by visiting:


Third is consistency. Vermont can arguably boast the most stable regulatory environment in the world. Since 1981, only three individuals have led its captive insurance division. Currently, deputy commissioner David Provost—a 22-year industry veteran—and Sandy Bigglestone, director of captive insurance with 14 years in the business, represent the most experienced and knowledgeable regulatory team anywhere. This means that you will not waste time, but can expect to receive some of the best advice you can get in the initial formation process and ongoing support of your captive programme. Twenty-eight individuals make up the regulatory team, which is the largest and most comprehensive in the industry. This is important as new applications are reviewed efficiently, with the process usually taking no more than 30 days from receipt of a completed application.

As your captive matures, Vermont’s captive department becomes a partner for your captive. We were here yesterday and we’ll be here tomorrow to provide ongoing support to help your captive insurance company evolve and grow. It is common to have your captive add new lines of business or make plan changes, which require the approval of the department. These plan change requests can be very important to the ongoing success of your insurance programme.

In Vermont, this process usually occurs in a matter of days, not weeks or months. The department can often accommodate more urgent time requirements, if needed. Examinations are done by Vermont examiners—not contract examiners—which keeps the process affordable, timely and competent.

Governors and legislatures since 1981 have had a track record of extraordinary support for the captive industry. Virtually every year, Vermont makes changes to, and fine-tunes, its leading insurance regulation. In 2011, we are seeking to broaden our legislation toallow incorporated protected cell structures. We are also proposing to expand the options for structures of cell captives and making the ‘tax holiday’ permanent for newly licensed captives. Other technical amendments are being proposed to keep us at the forefront of captive legislation. These proposals have been widely supported by legislators across the political spectrum.

Captive insurance is a very important industry to the Vermont economy. It creates more than 1,400 full-time and part-time jobs, and creates direct tax revenue that generates approximately 2 percent of the general fund budget. To put it in perspective, if those 1,400 jobs were at a single employer in Vermont, it would be a top-10 employer in terms of size of employees.

"Vermont is home to 42 of the Fortune 100, and 18 of the companies that make up the Dow 30 have Vermont captives."

While offshore domiciles experienced a decline in total numbers from 2009 to 2010, Vermont experienced steady growth. Hospital and physician groups forming captives for medical malpractice coverage are on the rise, with nearly 100 physician and hospital groups, writing $1 billion in premium volume, now domiciled in Vermont. This line of business—often perceived as the purview of offshore domiciles—is finding its way onshore and to Vermont. Some of the nation’s largest hospitals have chosen Vermont for their captives. New healthcare captives in the class of 2010 include: Albert Einstein Healthcare Network, a group of Midwestern Physicians, Nursing Homes & Home Healthcare Agencies, and a group of New Hampshire hospitals.

Vermont is also a leader in risk retention groups (RRG), with most of the largest RRGs domiciled in Vermont. Vermont has also taken an active role in support of RRGs with the National Association of Insurance Commissioners (NAIC), with representation on all of the NAIC’s working committees affecting captives. RRGs are in good hands when they are licensed in Vermont. In addition, employee benefits in captives also continue to be a strong area of interest, withmost of the U.S. Department of Labor-approved captives writing their premiums through a Vermont captive.

We’re known for large captives, but you may be surprised to know that one of Vermont’s largest sectors of growth is in captives that write $5 million or less annually in premium. This sector makes up half of all of Vermont’s licensed captives. In fact, Vermont has 150 captives that write $1 million or less annually.

While larger premium volume may create additional savings for some companies forming captives, smaller companies can still benefit in many of the same ways as larger companies from forming captives. It is still an excellent way to take control of your risk management programme, and we can show you why captives might make sense for smaller companies as well.

Choosing the right domicile is critical to the long-term success of your insurance programme, and forming a captive is not a single transaction but, rather, it’s a process. Make Vermont your first contact. If it doesn’t look like a good fit, we’ll be the first to suggest other options to make your programme successful.

We’re poised for another strong year for captive growth in 2011, with the first quarter off to a very promising start. Find out what 42 of the Fortune 100 have already learned—that Vermont is “the gold standard”. So look around, conduct your due diligence, and in the end, we’re confident that Vermont will exceed your expectations. And you will be among some great company.

Dan Towle is the director of financial services for the State of Vermont. He can be contacted at: More information about Vermont can be found at: