Governor Phil Scott has signed new legislation aimed at improving Vermont’s captive insurance laws, an annual tradition driven by collaboration between the Vermont Captive Insurance Association (VCIA) and the Vermont Department of Financial Regulation (DFR).

This year’s bill, H.659, makes several clarifications and updates to simplify regulatory practices, eliminate redundancy, and better align with industry needs.

“Vermont has a strong foundation of regulators and providers working together to ensure our state is as supportive as possible to Vermont insurers,” Governor Scott said. “Passing the annual POW bill is always an important measure to further improve the quality of our regulation.”

Key updates to the legislation include provisions to convert captive insurance companies into protected cells, revisions to parametric contract language to support different structures, reductions in minimum statutory requirements for agency-type captives, and amendments to confidentiality mandates.

One notable amendment, Section 4, revises Section 6004(a)(4), reducing the minimum capital for agency captives from $500,000 to $250,000. Since the agency’s enactment in 2017, Vermont has built significant regulatory expertise in this area. Reducing the minimum capital ensures compatibility with the current market landscape without compromising regulatory standards.

“Captive insurance companies are regulated based on their individual risk profile, and our strong regulatory team is skilled at understanding the appropriate capital to match unique risks,” said Sandy Biggleston, deputy commissioner of DFR’s Insurance Division. “Because of this, we realized that we didn’t have to have an arbitrary high starting point for these companies.”

“The Vermont industry knows that regulators and the legislature are open to discussing new ideas and open to feedback,” commented VCIA President Kevin Meade. “It is one of the main reasons companies choose Vermont to license their insurance company.”

Meanwhile, Brittany Nevins, director of insurance economic development at the Vermont Department of Economic Development, added: “This process is essential for Vermont to proactively address deficiencies in its laws without compromising quality regulation.” This annual process ensures that Vermont continues to regulate captive insurance companies as best as possible.

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