The State of Vermont licensed twenty-two new captive insurance companies in 2019, according to data released by the Department of Financial Regulation. The Department has licensed a total of 1,159 captive insurance companies since the 1980s and now regulates 585 licensed captives, making Vermont the largest U.S. domicile for captive insurance by a wide margin and third largest domicile in the world. In 2019, the Legislature passed, and Governor Phil Scott signed new legislation to modernize and strengthen captive insurance regulations.
“It’s great to see another strong year of growth for Vermont’s captive insurance industry,” said Governor Scott. “Captive insurance plays an important role in our efforts to grow the economy and make our state more affordable. We remain committed to Vermont’s gold standard reputation as a captive domicile.”
The new licenses include 14 pure captives, four sponsored captives, two risk retention groups (RRGs), one industrial insured captive and one special purpose financial insurer. The new captives were licensed in healthcare, real estate, manufacturing, insurance, transportation, technology and professional services. New and notable companies include Massachusetts Mutual Life Insurance Company, KPMG LLP, University of Vermont Medical Center, Stamford Health, RELX Inc. and Fortive Corporation. Six of Vermont’s new captives were redomesticated from other jurisdictions, including New York, Bermuda and Switzerland.
Captive insurance is a regulated form of self-insurance developed in the 1960s that has been a part of the Vermont insurance industry since 1981 upon passage of the Special Insurer Act. Captive insurance companies are formed by companies or groups of companies as a form of alternative insurance to better manage their own risk. Captives are commonly used for corporate lines of insurance such as property, general liability, products liability or professional liability.