NU Online News Service, March 22, 3:10 p.m.EDT

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, expands Vermont's captive laws to allowcells within a sponsored-cell captive to be formed as incorporatedprotected cells. Vermont currently allows protected cells createdby contract alone.

Dan Towle, Vermont's director of Financial Services, tells NUOnline News Service that the bill is sponsored by the committee ofCommerce and Economic Development.

After it is introduced, he expects it to be assigned to the Waysand Means Committee. He adds that the bill "updates and expands ourcell legislation. We're going to allow incorporated protectedcells. The cell market is matured, and in keeping with that, we'reupdating our laws to respond to the need in the marketplace."

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."

Related: A Guide to U.S. Captive News 

Another change has been proposed to create greater flexibilitywithin cell structures.  This change will eliminate thecurrent restrictions on cell business.

Business written by a sponsored captive will no longer berequired to have the business be fronted, reinsured or secured by atrust. This requirement will now also be at the discretion of thecommissioner.

"This presents another option for a cell owner in addition tocells created by contract alone," David Provost, DeputyCommissioner of Vermont's Captive Insurance Division, said in astatement. "We've heard from the captive industry that they wantedthe option of having incorporated cells.  This legislationdoes just that, without limiting any rights or protections affordedby cells created by contract."

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