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Vermont Captive Insurance Legislation Signed into Law - Bill to Strengthen Vermont’s Leading Captive Insurance Law

 

Vermont Captive Insurance Legislation Signed into Law

Bill to Strengthen Vermont’s Leading Captive Insurance Law 

  

MONTPELIER, VT – Governor Peter Shumlin has signed new legislation passed in the 2016 session strengthening Vermont’s captive insurance legislation in a variety of areas including refining governance standards, expanding dormancy and allowing for cells to be transferred, sold, assigned or converted to stand alone captives without affecting the rights or obligations of the cell.    

“These improvements in Vermont’s law may seem technical,” said Governor Shumlin, “but taken as a whole they reinforce Vermont’s standing as the ‘Gold Standard’ for domiciles and will provide greater flexibility and clarity going forward for our companies.”

“The legislation makes Vermont more attractive and sends a strong message to the industry that we are committed to always improving our captive insurance law,” said David Provost, Deputy Commissioner of Vermont’s Captive Division.

 “We’re proud of our continued support by the Governor and the Legislature in keeping pace with the changing needs of the industry,” said Dan Towle, Director of Financial Services for Vermont. “The modification to ease the process for converting a cell into a standalone captive is a welcome addition.” The new changes will make it easier for an existing cell company to convert to a standalone captive and allow for cells to move more easily to another captive arrangement.

 

A summary of the changes in the law include the following:

Captive Insurance Company Reports and Statements -Allow sponsored captives and association captives to file reports on a fiscal year-end.

Dormant Captives -Allow sponsored or industrial insured captives to enter a dormant status. 

Conversion, Sale, Assignment of Protected Cells - Allow for the free movement of cells to a different sponsored captive or the conversion of cells into either an incorporated cell or a separate captive.

Risk Retention Group Governance Standards - Several governance standard changes were made.  These governance standards were required for the NAIC model law required for accreditation.

 

 

A complete copy of the bill as passed with amendments can be found at:

http://www.vermontcaptive.com/laws-regulations/laws.html .

 

 

The law became effective upon the Governor’s signature on April 13, 2016. 

Captive insurance is a regulated form of self-insurance that has existed since the 1960’s, and has been a part of the Vermont insurance industry since 1981 when Vermont passed 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 typically used for corporate lines of insurance such as property, general liability, products liability, or professional liability.  

For more information on Vermont’s captive industry, visit http://vermontcaptive.com , call Dan Towle at 802-828-5232, or email dan.towle@vermont.gov