Vermont is proposing changes to its captive-insurance law aspart of its annual enhancements to its captive statute, accordingto the Dept. of Banking, Insurance, Securities and Health CareAdministration (BISHCA).

The proposed bill, H438, expandsVermont's captive laws to allow cells within a sponsored-cellcaptive to be formed as incorporated protected cells. Vermontcurrently allows protected cells created by contract alone.

Dan Towle, Vermont's director of Financial Services, tellsNU that the bill is sponsored by the committee of Commerceand Economic Development.

After the bill is introduced, he expects it to be assigned tothe Ways and Means Committee. He adds that the bill "updates andexpands our cell legislation. We're going to allow incorporatedprotected cells. The cell market is matured, and in keeping withthat, we're updating our laws to respond to the need in themarketplace."

He says the bill should move quickly, as it is a component of alarger package including health care. "We've had nothing butsupport from the governor and the legislature on all of our captiveinitiatives."

David Provost, deputy commissioner of Vermont's CaptiveInsurance Division, says in a statement, "This presents anotheroption for a cell owner in addition to cells created by contractalone. We've heard from the captive industry that they wanted theoption of having incorporated cells. This legislation does justthat, without limiting any rights or protections afforded by cellscreated by contract."

Another change has been proposed to create greater flexibilitywithin cell structures. Under the proposed change, business writtenby a sponsored captive will no longer have to be fronted, reinsuredor secured by a trust. This requirement will be at the discretionof the commissioner.

Vermont saw a strong 2010 with the licensing of its 900th captiveinsurance company, BISHCA notes.