Vermont marks 35th anniversary as captive insurer domicile
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As Vermont this week marks the 35th anniversary of the effective date of its landmark 1981 captive insurer statute, the state continues its longtime status as the largest captive domicile in the United States and the third largest in the world.
When the statute took effect on July 1, 1981, Vermont offered something not previously available in the United States: a highly attractive captive law.
While both Colorado and Tennessee passed captive measures earlier, Vermont's law, which the Risk & Insurance Management Society Inc. helped to draft, was far more attractive to buyers, captive experts said at the time.
For example, Vermont had far lower captive capitalization requirements than Colorado and Tennessee and did not, unlike its two domestic competitors, require prior approval for rates and forms.
“Vermont had a trail-blazing law,” said Sandy Bigglestone, director of captive insurance with the Captive Insurance Division of the Vermont Department of Financial Regulation in Montpelier.
At the same time, Ms. Bigglestone added, state legislators have updated the 1981 law as necessary.
Vermont's first captive, First Charter Insurance Co., sponsored by the BF Goodrich Co., was licensed just over two months after the law took effect.
Captive growth was slow initially: State regulators licensed just one captive — First Charter — in 1981 and two in 1982. But growth then picked up, with 10 captives licensed in 1983.
The biggest captive formation years were in 2003, when 77 captives were licensed; and 2002, when 70 captives were licensed. At the end of 2015, Vermont had 588 captives, making it the largest domestic domicile by far and the third largest in the world, trailing only Bermuda and the Cayman Islands.
Currently, Vermont has 589 captives, Ms. Bigglestone said.
Of last year's 588 captives, 383 are single-parent, followed by 89 risk retention groups, the most of any state.
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