Vermont continues to set the captive standard

Sandy Bigglestone of the Vermont Department of Financial Regulation details this year’s developments in the state’s captive insurance market.

“Property and casualty lines continue to be leaders in new captive insurance programmes.” Sandy Bigglestone

What has 2024 been like for Vermont?

2024 has been as vibrant and active as ever. Alongside our daily regulatory responsibilities, Vermont was represented at many industry events, sharing knowledge on various topics by participating in educational sessions. We continue to set the regulatory standard, which includes an emphasis on financial analysis and examinations, which companies find extremely valuable.

Because of this, other regulators often seek our guidance, and that type of activity continues, especially when new domiciles emerge and the complexity of captive programmes evolves. New business activity shows no signs of slowing down, demonstrating the industry’s confidence in Vermont as a domicile.

We continue to work closely with local service providers and the Vermont Captive Insurance Association (VCIA). The industry is fortunate to have an ever-growing and robust association for advocacy, education, and networking needs. The VCIA’s annual conference this past August drew 1,100 attendees from around the world, representing 44 states and 11 countries.

What trends have you observed?

At the end of Q3, Vermont had licensed 34 new captive insurance companies so far this year. The trend continues for the use of single-parent or pure-type captive insurance company formations, which make up 27 of the 34 new licences. Organisations across 16 different industry sectors are taking control of their risk and own destiny through captive formations.

Six formations were for sponsored protected cell companies, indicating sustained interest in these types of structures. Property and casualty lines continue to be leaders in new captive insurance programmes.

What has been driving the market?

Businesses recognise there are risks they face today that have not traditionally been financed in any formal way. They also recognise they face new risks because of a hardening and constantly changing commercial market. These risks can arise from changes to the laws relating to employment and working conditions, rising rates, and forced retentions due to a deteriorating commercial insurance market, an ageing workforce, and an increasingly volatile environment due to climate change.

As businesses develop their financial strategy, they recognise the potential benefits of using formal risk financing mechanisms, such as captive insurance companies, to manage these types of risks.

In the aftermath of hurricanes Helene and Milton, do you think the damage reported might increase interest in captives?

Helene is reported to be the second-deadliest hurricane to strike the mainland US in the last 55 years, topped only by Katrina in 2005. With Milton immediately following, there is a great deal of uncertainty about the future of risk. After recovery efforts, businesses will be seeking enhanced protection. I expect the commercial marketplace will need to adjust to the needs of businesses, and captives will play a crucial role alongside commercial carriers to meet these needs in a volatile, changing market.

What do you see on the horizon for Vermont?

I anticipate continued growth in captive insurance programmes, and I expect Vermont to attract a significant share of quality programmes. I look forward to the collaborative efforts of state government and industry coming to fruition to expand the workforce. Various initiatives are underway to position the industry for success in the future, and Vermont will continue to support these efforts and maintain our leadership for years to come.

Sandy Bigglestone is Deputy Commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation. She can be contacted at: sandy.bigglestone@vermont.gov

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