Vermont State Legislature passes new captive legislation
The Vermont state legislature has passed House Bill 649, an act that affects captives and other risk related entities in the state.
The bill proposes to prohibit certain loans and investments made by a risk retention group; restructure report and statement requirements applicable to a risk retention group; and require a certification statement from each protected cell within a sponsored captive insurance company.
It states that no risk retention group shall make a loan to or investment in its members or affiliates of its members. This prohibition shall not apply to any loan or investment in effect prior to January 1, 2026.
Captive insurance companies shall not be required to make any annual report except as provided in this chapter. In addition prior to March 1 of each year, and prior to March 15 of each year in the case of pure captive insurance companies, association captive insurance companies, sponsored captive insurance companies, industrial insured captive insurance companies, or agency captive insurance companies, each captive insurance company shall submit to the Commissioner a report of its financial condition, verified by oath of two of its executive officers or, in the case of a captive insurance company formed as a limited liability company or as a reciprocal insurer, of two individuals authorized by the governing board.
Also each captive insurance company shall report using generally accepted accounting principles, statutory accounting principles, or international financial reporting standards unless the Commissioner requires, approves, or accepts the use of any other comprehensive basis of accounting, in each case with any appropriate or necessary modifications or adaptations thereof required or approved or accepted by the Commissioner for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the Commissioner. As used in this section, “statutory accounting principles” means the accounting principles codified in the NAIC Accounting Practices and Procedures Manual. Upon application for admission, a captive insurance company shall select, with explanation, an accounting method for reporting. Any change in a captive insurance company’s accounting method shall require prior approval.
The act has been signed into law by Governor Phil Scott and takes effect on July 1, 2026.
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