Vt. Captive Insurance Gross Written Premium Nears $30B

Vermont licensed 16 new captives in 2014 and the state’s captive insurance gross written premium is nearing $30 billion, according to the Vermont Captive Insurance Division.

The new captives were made up of 10 pure captives, two sponsored, two special purpose financial insurers, one association and one Risk Retention Group. Two new captives were re-domesticated from Bermuda and Delaware.

The Division said growth in 2014 was down from previous years attributed primarily to the prolonged soft market and added competition by other U.S. states. (Looking at the number of new captives licensed in Vermont over the past few years, Vermont licensed 29 new captives in 2013, 32 in 2012, 41 in 2011 and 33 in 2010.)

But despite fewer formations, gross written premium continued to grow with a projected $29.8 billion, up from $27.5 billion in 2013 which was already the most of any captive insurance domicile.

“Vermont’s primary focus is licensing quality companies regardless of market conditions,” said David Provost, Vermont’s deputy commissioner of captive insurance. “Much of the activity across other jurisdictions is driven by small 831b companies which is not a core market for Vermont.”

New captives were licensed in healthcare, insurance, financing, manufacturing, real estate, technology, religious institutions and mining.

Vermont officials said the strong diversity of licenses were highlighted with three in healthcare. The continued formation of hospitals and doctor’s groups setting up captives in Vermont has been a positive trend that is expected to continue, according to officials.

2014’s new licensees bring Vermont overall licenses to 1,029, with 581 active captives. Captive insurance is a regulated form of self insurance that has been around since the 1960’s, and has been a part of the Vermont insurance industry since 1981, when Vermont passed the Special Insurer Act.