Vermont Enacts Captive Insurance Updates Through H.649

Vermont has enacted legislation updating its captive insurance framework, codifying established regulatory practices for risk retention groups while refining reporting and compliance requirements.

The bill, H.649, was signed into law on March 24, 2026, and is scheduled to take effect July 1, 2026. The legislation focuses on targeted changes affecting risk retention groups, reporting standards, and sponsored captive structures, while maintaining the state's broader captive insurance framework.

A central provision of the legislation prohibits risk retention groups from making loans to or investing in their parent companies or affiliated entities, with a grandfathering provision for arrangements in place prior to January 1, 2026.

According to the Vermont Department of Financial Regulation, this provision codifies an established regulatory practice designed to ensure that premium and surplus funds remain available to pay claims and to avoid potential conflicts of interest.

The legislation also addresses reporting requirements applicable to captive insurers and risk retention groups. Captive insurers are required to report using generally accepted accounting principles, statutory accounting principles, or international financial reporting standards, subject to approval by the commissioner.

Risk retention groups are required to file annual and quarterly financial statements with the National Association of Insurance Commissioners (NAIC), including annual statements, actuarial certifications, and quarterly reports, in a form and manner prescribed by the commissioner.

State officials indicated that the legislation codifies existing quarterly reporting practices for risk retention groups in alignment with NAIC standards.

The legislation also includes provisions addressing protected cells within sponsored captive insurance companies. Each protected cell is required to file a certification within 30 days of commencing business, confirming that it has met required funding and collateral obligations in accordance with its approved plan of operation.

According to the Department, the certification requirement aligns protected cell requirements with those already applicable to licensed captive insurers.

"This year's updates keep with our practice of working together with regulators and industry leaders to maintain our framework, which is strong, competitive, and responsive to evolving risks," Governor Phil Scott said in a statement.

"This bill demonstrates both the strength of Vermont's laws and our commitment to continually enhancing them," said Christine Brown, deputy commissioner of captive insurance at the Vermont Department of Financial Regulation. "H.649 advances our strong foundation, ensuring alignment with evolving risks and industry best practices."

Vermont is widely recognized as a leading captive insurance domicile, with more than 1,400 licensed captives and a long-established regulatory framework. State officials noted that the legislation reflects Vermont's ongoing approach to collaboration among regulators, industry participants, and stakeholders.

"Vermont's approach to captive regulation is rooted in expertise and responsiveness," said Brittany Nevins, captive insurance economic development director at the Vermont Department of Economic Development.

"The updates included in H.649 reflect ongoing collaboration with industry and ensure that our regulatory framework continues to adapt to emerging risks while preserving the stability and integrity that captives depend on."