Vermont: Another Record Signing Captives

By Caroline McDonald

NU Online News Service, Jan. 19, 1:52 p.m.EST?Vermont set another record as a captive domicile in2003 by licensing 77 captive insurers, according to the VermontBanking, Insurance, Securities and Health CareAdministration.[@@]

Last year's licensees were seven more than the 2002 record of70. There are now a total of 674 captives domiciled in Vermont.

The new captives represent every form available in Vermont withthe majority being pure captives.

Nineteen new risk retention groups were formed, with industrialinsureds, sponsored and association captives rounding out the new2003 licensees. Gross written premium in 2003 is expected to be$8.5 billion, up from $7 billion in 2002, the department said.

Leonard Crouse, Vermont's Deputy Commissioner of CaptiveInsurance, told National Underwriter, "We're a littleahead of last year, so it's another bounty year."

He added that the new licensees were "mostly traditionalcaptives and we saw a lot of retention group activity. Overall,we'll end up licensing close to 20 risk retention groups." TheRRGs, he said, are mostly medical malpractice and hospitalliability.

"We've tried our best to be careful, do a good job, and writethose that make good business sense," he added.

Mr. Crouse said in a statement that two captives wereredomesticated from another state, and that a pure captive wasconverted to a risk retention group.

Parent companies of the licensed captives came from hospitals,manufacturing sectors, financial services, religious organizations,hotels, sports teams, construction, airlines and fast food. "Wehave several applications in the pipeline," Derick White, directorof captive insurance, said in a statement. "2004's pace is notslowing down one bit."

Interest in Vermont as a domicile was very high on severalrecent recruitment trips, the department said.

"Vermont's solid reputation for consistent and knowledgeableregulation, world-class professional support services andaccessible government officials is at the heart of our continuingsuccess," said Vermont Gov. Jim Douglas. "We will continue to makesure that we keep pace with the changing needs of the industry andwill do whatever it takes to retain our leadership position."

The growth of the overall industry is a clear indication of thevalue captive insurance offers. "It is fair to ask whether we cancall this industry the alternative risk market anymore," said DanTowle, Vermont's director of financial services. "It may well bebecoming the mainstream choice for risk managers,"