When Leonard Crouse began regulating the Vermont captive industry 18 years ago, there were only a handful of domiciles in the United States. During his tenure, not only has Vermont seen a steady growth in its own captive crop, with his state becoming the top domestic domicile, but it also is the model for all U.S. domiciles established since.
Now Mr. Crouse, Vermont's deputy commissioner of captive insurance, is retiring in June, leaving a successful, tightly-run department and a leadership legacy.
During his tenure, nearly 600 companies have been licensed in Vermont, and he became recognized as a leading authority in the alternative risk-transfer market.
"Our accomplishment is good, steady growth," he said. "You have to admit that when I came here 18 years ago, we were the only game in town. Hawaii had a few, Colorado had a few, but it was basically Vermont onshore."
Offshore, the captive giant was–and still is–Bermuda. Indeed, he acknowledged, "without Bermuda, I don't think we'd be where we are today, because we did a lot of things Bermuda did. Our relationship with Bermuda has been A-1 since day one."
Mr. Crouse acknowledged he could not have done the job alone, and takes pride in bringing together a dedicated, talented staff–now 29 strong, after starting with off with just four.
Recently, Derik White–who was the state's director of captive insurance, with the department for 15 years–left for the private sector. Mr. Crouse noted that because of the depth of skill in the department, "Pete Raymond moved right in to Derek's spot, and that was a smooth transition. Peter has 18 years, himself. When you come down to it, we all had the same amount of time in the business."
Vermont's strengths to date, he said, include a fully staffed, dedicated captive department and good, solid quality programs. "We try to avoid the headaches," he said. "We've done a good job of regulating and weeding out some of them."
Mr. Crouse said another strength is that the captive department has always had the backing of the governor and regulator.
"As we grew, they were always there," he said. "Despite whether the legislature was Democrat or Republican, they all know how important this is. It's a good, clean industry that pays money and provides jobs to a lot of Vermonters."
"We thank Len for his extraordinary and exemplary service to Vermont, and wish him well," said a statement from Gov. Jim Douglas, who has been a supporter of the captive industry in Vermont. "Len has been a credit to the state, and has been a tremendous asset and important contributor to our success in the captive industry. He set the bar high for Vermont–and we are fortunate to have time to conduct a thorough search for a worthy successor."
While Mr. Crouse is all for tweaking captive laws and adding new ones when necessary, he said he doesn't want to go too far. "I'm not too keen on putting too much on the statute because I think the more you put into black and white, you lose a little flexibility." He added, "I'd rather do things by directives or policies."
What does he say about the future of the captive industry? "I've been here through two or three cycles, and now we're back into a soft one," he said. "We do see an effect on activity, no question. I think that pure captive growth is a little slower than normal, and I think it's been that way for the last nine months–but that's expected."
He continued that many risk managers will wait for a change in the commercial insurance market before forming a captive and taking on more exposure themselves.
"But what I have seen is there are not as many established captives taking business out of their captives to go into the soft market, because these businesses that have basically self-insured have been successful, and they know the benefits," he explained. "They know their rates are good and they've proven themselves, so they're not releasing as much premium back into the traditional markets. But at the same time I think it affects new formations."
Although Mr. Crouse hasn't revealed where he'll go after June 1, he said that he will "stick around. I'm just not going to work five days a week. I'll keep my fingers in it because I'd miss it–I'd miss the people. I've been involved in it for 18 years and made a lot of good friends."
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