Captive Article Irks Vermont Regulator

The article said that Dr. Dean succeeded in turning Vermont into the "kingdom of captives" by enticing them with tax breaks.

But Len Crouse, deputy commissioner of the Captive Insurance Division in Vermont said, "This business was here 10 years before Gov. Dean became governor, and it's going to be here a lot longer after Dean leaves."

He added that "nothing changed under Dean's administration other than tweaking taxes."

He continued that Dr. Dean "played a role in it and supported us, but he didn't do it?so (Mr. Kranish) is barking up the wrong tree from day one."

In the article, Mr. Kranish said Dr. Dean has "often complained about Bermuda's tax haven status, saying that the United States needs a president ?who doesn't think that big corporations who get tax cuts ought to be able to move their headquarters to Bermuda.'"

Mr. Crouse responded that Dr. Dean was not referring to captives but rather to "the Enrons and the Tycos of the world. He's talking about the Tycos because Tyco is headquartered there."

The issue, he said, "is something that's been down in Congress for years. They've talked about large corporations headquartered in Bermuda?they're not talking about captive insurance companies."

Mr. Crouse added that Bermuda is "an insurance center, not a captive haven." Bermuda is "needed in this market. Without reinsurance, we wouldn't even have an insurance market."

Mr. Crouse noted that because of the hard market and the scarcity of some coverage, the alternative market has been a boost to consumers and corporations in the last three years.

"Over 50 percent of all commercial premium is going to be in alternative markets?self insurance, captives, pools and risk retention groups," he explained.

Risk retention groups have "helped immensely in the medical malpractice crisis," he added. "We've had commissioners from other states say ?talk to Vermont, maybe they can help you get something going here.'"

Though captives do not pay taxes in Vermont, they pay up to $200,000 in premium taxes, Mr. Crouse said.

The state recently capped premium at $200,000 because 11 companies were writing more than $200,000 in premium taxes. "These companies had been around a long time, the market is hard, they're putting more premiums into their programs, so it was a way of staying competitive." He added that next year the state plans to lower premium taxes by 5 percent.

"More important than premium tax are the jobs and the people coming to Vermont," he said.