Governor Phil Scott Signs New Captive Insurance Industry Legislation
New legislation strengthens Vermont's captive insurance laws, increasing efficiencies while adding flexibility to regulatory policy and procedures.
MONTPELIER, Vt., June 17, 2020 /PRNewswire-PRWeb/ -- Governor Phil Scott today signed new legislation strengthening Vermont's captive insurance laws, increasing efficiencies while adding flexibility to regulatory policy and procedures. This year's bill again highlights the continued collaboration between Vermont's executive and legislative branches to ensure the state's captive law remains the industry benchmark.
"COVID-19 has dramatically changed the way we all work, live and play, however it has not changed Vermont's continued commitment to be the 'gold standard' within the captive insurance industry," said Governor Scott. "The bill I signed demonstrates – as we do every year – that Vermont does not take this sector for granted and we are firmly committed to keeping pace with the ever-evolving needs of the captive insurance industry."
This year's captive bill includes new policies related to Vermont's captive protected cells. A protected cell is a popular alternative risk transfer mechanism that often operates like a stand-alone captive. Vermont has identified protected cells as a promising area for growth within the state's industry.
"One of the key changes recognizes the importance of cells in the captive industry, and makes it clear that a cell can operate—and should be regulated—much the same as an individual captive," said Deputy Commissioner of Captive Insurance Dave Provost. "I believe the captive industry will welcome this change, along with other updates included in the bill."
Additional key updates include allowing separate accounts within a cell of a sponsored captive, simplifying an agency captive owner's disclosure requirements, aligning with the National Association of Insurance Commissioners (NAIC) statutory accreditation standards for Risk Retention Groups and allowing dormant captives to remain intact at a minimum capital level so they may be reactivated in the future.
"Even in the midst of a pandemic where the attention of the Governor and legislature is rightly focused on the health and welfare of its citizens, Vermont's state leaders came through and passed a bill that updates and strengthens Vermont's captive insurance statutes," said Richard Smith, President of the Vermont Captive Insurance Association.
A summary of the changes in the law includes:
- Agency Captives: Provides for simplified disclosure for agency captive owners.
- Dormant Captives: Allows regulatory discretion in setting the capital of an uncapitalized dormant captive to keep their captive intact at minimal cost, for future reactivation in Vermont.
- Sponsored Captives: Reduces the minimum core capital for a sponsored cell captive from $250,000 to $100,000.
- Unaffiliated Business in Protected Cells of Sponsored Captives: Allows flexibility to insure unaffiliated business in a cell under the same circumstances as might be allowed in a stand-alone captive and will help keep the captive option open.
- Separate Accounts in Protected Cells: Explicitly allows cells to form separate accounts within a given cell. The provisions mirror those applicable to standalone captives and extends the protections of statutory clarity.
- Legal Investments in Cells: Provides flexibility in investments by giving sponsored captive companies, and the cells within said companies, the option to follow the old rules or develop a plan for Department of Financial Regulation (DFR) approval.
- Accreditation Standard for Risk Retention Group Examinations: Specifying the timing of examination reports for Risk Retention Groups to align with NAIC accreditation standards.
For more information on Vermont's captive industry, visit http://www.vermontcaptive.com, call Tim Tierney at 802-505-5496 or email [email protected].
The Department of Economic Development operates within the Agency of Commerce and Community Development, whose mission is to help Vermonters improve their quality of life and build strong communities.
SOURCE Governor Phil Scott
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