Vermont Licenses 38 Captives in 2020 as Hard Market Drives Formations

Vermont licensed 38 new captive insurance companies in 2020, bringing the state's total number of licensed captives to 589.

A fourth quarter that saw 11 new licenses contributed significantly to Vermont's new captive formations in 2020.

In a statement, Vermont officials said the state's 589 licensed captives include 564 active captive insurance companies and 25 dormant companies.

Among the industries represented in the 2020's new formations were health care, real estate, manufacturing, insurance, transportation, technology, construction, and professional services.

Notable new Vermont captive parents included the University of Southern California, State Street Bank, Saputo, and the Blackstone Group. At least six of Vermont's new captives in 2020 were formed by companies with international roots including Canada, Germany, Sweden, Dubai, and Australia.

Vermont officials attributed much of 2020's formation activity to a hardening commercial insurance market.

"Vermont's 2020 licensing activity in many ways reflected the changing insurance environment," Brittany Nevins, the state's captive insurance economic development director, said in the statement. She noted that an ongoing hard market appears set to continue to drive a rapid pace of new captive formations in Vermont. "Before 2021 began, we had more captives in process for licensing than we had licensed total in the first month of 2020," Ms. Nevins said.

"The particularly hard market conditions in commercial property insurance influenced the number of captive formations in the construction and real estate sectors," Dave Provost, Vermont's deputy commissioner of captive insurance, said in the statement. "Nearly a third of the new formations this past year had parents from those industries, with price and availability commonly noted as drivers for the captive."

Vermont officials noted the state's ability to remain responsive, efficient, and collaborative despite the impact of the COVID-19 pandemic.

"As productive as 2020 has been with welcoming new captive companies to Vermont during trying times, the Vermont Department of Financial Regulation has followed its gold standard process for licensing," Sandy Bigglestone, Vermont's director of captive insurance, said in the statement. "One of the best practices proven to be effective is a pre-application meeting with the regulatory leadership team and the prospective company. Throughout 2020, despite not traveling and meeting people face-to-face, every new application included an introductory phone call or virtual meeting."

"Vermont continues to see exponential growth in numbers of licenses and interest around the country and around the world," Rich Smith, president of the Vermont Captive Insurance Association, said in the statement. "The stability, knowledge, and experience Vermont has to offer continues to be steadfast through challenging times."

Vermont is the largest US captive insurance domicile and the third largest in the world. State officials indicated that Vermont has an active pipeline of prospective new captive insurance companies and expects continued growth in 2021.