The University of Vermont Health Network’s captive insurance company has moved from Bermuda to Vermont.
VMC Indemnity Company, which provides medical malpractice insurance to most of the network’s doctors and hospitals, had been based in the British isle since 1993.
Hospital officials announced the change this week, finalizing a process that was started in December 2017.
John Brumsted, president and CEO of UVM Health Network, said the board of VMC Indemnity based its decision on “efficiency and buying local.”
Trips to Bermuda for board meetings had become “cumbersome,” Brumsted said.
In 2017, VTDigger reported on the company’s lavish spending on annual board weekend retreats at 4-star luxury hotels that featured extravagant parties. Each of the meetings cost the company between $15,000 to $25,000, Brumsted said at the time.
The “politics” were part of the reason for the move, Brumsted acknowledged in an interview. “The optics were better here,” he said.
VMC Indemnity is a subsidiary of UVM Health Network. The company has no employees and no headquarters. It offers medical malpractice and liability insurance to doctors at all but one of the network’s six hospitals in Vermont and upstate New York. The last hospital, Alice Hyde Medical Center in Malone, N.Y., will be added within the next 18 months, according to Brumsted. A captive insurance company is a form of self-insurance with certain tax advantages.
The board of VMC Indemnity voted to make the move back to Vermont in 2017, after VTDigger starting asking questions about the retreats.
The move cost between $35,000 and $50,000, a figure that wasn’t significant enough “to be a driver of the decision,” Brumsted said. VMC Indemnity will pay about $50,000 in taxes annually to the state of Vermont. The company, which had total assets of $68 million in 2017, has now registered as a nonprofit. Until now, it has been a for-profit company.
State officials praised the health network for bringing the company back home. Vermont pioneered the captive insurance industry in the United States and has a well-regarded captive program for self-insurance that is used by hospitals in other states around the country. More than 1,100 companies have registered captives in Vermont since 1987.
Gov. Phil Scott said he supports the move.
“It’s great to see the UVM Health Network take this step,” Scott said in a statement released by the hospital group. The move “further validates the state’s leadership in this industry.”
Brumsted said he hoped moving VMC Indemnity to Vermont could help woo captive insurance agencies from other academic medical centers to the state.
David Provost, deputy commissioner for the state’s Department of Financial Regulation, said his agency did not actively invite the company to return to Vermont. His department will monitor the company’s finances, the first time VMC Indemnity Company will be overseen by a Vermont regulator. The Green Mountain Care Board, which regulates hospitals, does not have purview over the company.
Now VMC Indemnity board members will be meeting in Vermont — a legal requirement, according to Provost. Meetings will “be as lavish as going upstairs,” Provost quipped.
