Vermont Captives Off to an Even Stronger Start this Year

In a recent statement from the Vermont Department of Economic Development, 2023 reflected a strong year for captive insurance in the State of Vermont, and 2024 is already off to an even stronger start.

Beyond being recognized globally as the leading domicile for captive insurance, Vermont licensed a total of 38 new captive insurance companies in 2023, making it home to 659 licensed captives, consisting of 632 active and 27 dormant captives.

The domicile licensed 9 new captives this year. To date, Vermont's total number of licensed captive insurance companies is 1,330. The domicile reported that the growth in captive formations last year was among the top 10 highest since it licensed its first captive in 1981.

"Vermont remains a credible global leader and committed to continuing to lead the industry with innovative, high-quality regulation that meets the needs of captive insurance companies," Governor Phil Scott said in the statement.

Vermont captives were licensed in 13 different industries, with the top 3 industries being manufacturing with 7 captives, insurance with 6 captives, and real estate with 6 captives.

"Companies continue to face challenges placing insurance and find they are better able to negotiate when they have a captive that can take on higher retentions and fill gaps in coverage," said Christine Brown, director of captive insurance.

In terms of the types of captives formed in 2023, 24 were pure captives, 6 were sponsored captives, 1 was an agency captive, 2 were special purpose finance insurers, and 3 were risk retention groups.

Cell formations are also keeping pace with growth in licensed captives. In addition to the number of newly licensed captive insurance companies, Vermont's 62 sponsored captive insurance companies continue to experience growth in the number of new protected cells, with over 30 additions in 2023. Sponsored captive insurance companies provide a licensed insurance vehicle with an established structure for companies to participate in their own risks via protected cells.

"I am appreciative and grateful for the entire captive insurance division staff for their consistent great work and dedication to quality regulatory standards involving licensing, analysis, and examinations and those who quietly excel in their daily tasks to make the workplace function smoothly," Deputy Commissioner of Captive Insurance Sandy Bigglestone said.

At least seven of Vermont's new captives in 2023 have international roots, hailing from Canada, Chile, Germany, and the United Kingdom.

"We'd heard consistently that the Latin American market needed more captive insurance education," said Kevin Mead, president of the VCIA. "When we went to Mexico, we found that there was indeed great interest in captive insurance as a risk financing tool, and we plan to continue our efforts in the region in the year ahead."