Magazine article Risk Management

Captives Bloom in the Green Mountain State

Magazine article Risk Management

Captives Bloom in the Green Mountain State

Article excerpt

Since Vermont's state legislature passed its captive law in 1981, Vermont has been the leading U.S. captive domicile, with over 318 licenses provided as of June 1995. This puts Vermont well ahead of other U.S. domiciles such as Colorado, Hawaii, Tennessee and Illinois. The reasons for Vermont's success as a captive domicile include the state's flexible regulatory philosophy, a sophisticated capital infrastructure, competitive tax and surplus requirements and a state insurance division devoted exclusively to captive issues. Parent organizations in Vermont write a wide variety of business lines, providing everything from general liability, directors' and officers' liability, to errors and omissions coverage.

"Business is steady, and we expect it to remain so," says Leonard D. Crouse, director of captive insurance for the State of Vermont. "We've given out 11 new captive licenses this year so far, and I think we'll finish the year with about 22 to 25 new captives."

Vermont also recently scored a coup in its efforts to become accredited: In June, the National Association of Insurance Commissioners (NAIC) ruled that risk retention groups operating in Vermont that are structured as captives no longer have to be regulated like traditional insurance companies. "The Vermont Captive Insurance Association (VCIA) and the NAIC are very pleased with the progress we've made so far," says Guy Ragosta, managing director of North American captive operations at Willis Corroon Management in Burlington. "We're hoping that we will be accredited sometime in September." He adds that accreditation will be a boon to risk retention groups and help remove some of the uncertainty surrounding insurance laws in the state.

Vermont's captive industry is enhanced by the activities of the VCIA. The VCIA's first decade has seen development and growth that can only be described as "phenomenal," says Diane Leach, executive director of the VCIA. "In 1985, the conference consisted of 14 people involved in roundtable discussions," she says. "This year, we are estimating that we will have close to 700 participants." Entitled "Celebrating the Past ... Planning the Future," the VCIA's tenth annual conference will be held from August 15 to 18 in Burlington.

The Vermont Insurance Institute also plays a key role in the state's captive industry. …

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