[G]ov. Phil Scott signed a bill Thursday that will continue to promote the growth of Vermont’s thriving captive insurance industry.
The legislation, H.694, will provide some of Vermont’s captive insurance companies with an additional two weeks to prepare their annual reports and all of the companies an additional two weeks to pay their Vermont premium taxes, according to the Vermont Department of Financial Regulation.
It also corrects outdated references in the state’s captive insurance statute.
The legislation marks the state’s latest effort to pave the way for captive insurance companies to settle and do business in Vermont, where more than 1,100 of such insurers already reside.
“Updating our captive laws each year has now become an important tradition,” Scott said at a signing ceremony Thursday morning. “This bill will further strengthen Vermont’s reputation as the gold standard of domiciles and will provide greater flexibility and consistency for our companies as we move forward.”
Captive insurers, also known as “captives,” are small insurance companies set up and owned by larger companies. Companies create captives and pay premiums into a bank account to insure for risks, such as liability or malpractice. The captives then pay the company’s claims.
Using this form of regulated self-insurance can be a financial boon and less costly than paying premiums to existing insurance companies.
Last year, Scott signed a bill that created a new type of captive insurance account and allowed companies with captive insurance accounts to use new accounting methods.
At the time, he said health care was the biggest sector in Vermont’s captive insurance market.
Richard Smith, president of the Vermont Captive Insurance Association, said captives are drawn to the state because it has supportive lawmakers and “the best regulators in the industry.”
“That means they understand the needs of the captives themselves and the clients,” he said. “But they also know that they have to protect this industry and protect the gold standard of the state of Vermont.”
