Efficiency & teamwork in action

Vermont’s captive insurance domicile is celebrated in part due to its streamlined, economical and efficient license-issuing process.

Author: Vermont Captive

Vermont State House
Vermont is home to a captive industry that boasts experienced regulators and an efficient way of doing business.

As the number one domicile worldwide and the largest domicile in the U.S., the captive insurance industry in Vermont is far more mature than many others.

Zaw Win, director, captive insurance and business law at Downs Rachlin Martin, said that Vermont’s limited geography means members of the captive industry, its trade association and its regulators are also tightly knit.

“The familiarity, appreciation and trust that arise out of these relationships enhance the efficiency of every aspect of a captive’s life cycle,” Win said.

On the service provider side, this means that captive owners have a choice of numerous highly qualified captive managers, law firms, actuaries and more.

“And most of these folks work exclusively with captives, giving them a level of experience and efficiency that would be very difficult to find elsewhere,” Win said.

Vermont is home to some of the longest-standing U.S. captive programs and most experienced regulators, state officials and service providers. Aaron Ciullo, CPA, vice president, senior account manager, Marsh Captive Solutions, said that this expertise is always at the forefront of the industry, exploring new and innovative ways to use captive programs.

“Folks within the industry and the Vermont Department of Financial Regulation collaborate in many forums to ensure opportunities exist for captives to be used to the highest degree and [align] with captive legislation,” Ciullo said. As an example, this past legislative term enacted changes to the captive law that allowed the exploration of parametric solutions for captive owners.

Kevin Mead, president of the VCIA, added that the way Vermont captive regulators, elected officials, business leaders and the VCIA itself have created such efficiency in Vermont’s captive insurance market is through focus.

“A team of 30 professionals in the Captive Division is unmatched. That size creates its own gravitational pull, and entry-level people within the division can see an established career path focusing on captives,” Mead said.

Dan Petterson, director of examinations, Vermont Department of Financial Regulation, pointed out that, as a small state, Vermont has been nimble enough to also pass timely legislation that provides opportunities to its captives, but as a large player in the captive space, Vermont takes a leadership role, helps craft and steer captive policy, and contributes to educating the world about captives.


    • The state of Vermont has established itself as a premier captive domicile.
    • Innovation plays a vital role in how Vermont remains a top player in the captive space.
    • The state plans to remain a leader in driving the captive industry forward.
Julie Bordo
Julie Bordo, President & CEO, PCH Mutual Insurance Company

“During my time with captives, which basically covers about 15 years, the Vermont captive industry has continued to prioritize ongoing efforts to meet the needs of its insureds and stakeholders,” Petterson said.


The captive industry evolves with the needs of captive owners, which in turn are dictated by volatility in the commercial insurance market. As Win explained, it would be impossible to draft laws to keep up with all the changing needs of the captive industry.

“Instead, Vermont’s statutes create a basic framework within which the regulators have substantial discretion to evaluate each captive arrangement on its own merits,” Win said.

Julie Bordo, president & CEO of PCH Mutual Insurance Company, a Vermontlicensed captive, agreed that Vermont has established extremely high standards with a keen eye and ear to what the industry needs to thrive.

“Regulation and oversight by individuals with the depth of knowledge and understanding of the Vermont team not only encourages the industry to strive to achieve the highest standards and results, but it provides input and reassurance that give us the tools to meet these lofty objectives,” Bordo said.

For example, even before the economy buckled under the weight of the pandemic, Vermont had passed legislation to allow captives more flexibility in their investment policies, which allowed them to better maintain their portfolios.

“They clearly understand industry trends and shifts and support industry leaders as they navigate them,” Bordo said. “Members of the Vermont team often inquire of me or my peers how they can better serve the industry, not just through regulation but through innovation and streamlining the process without sacrificing excellence.”

Mead believes it is critical to consider effective licensing and supervision as being a value-add. He said that, if treated as merely a “cost of doing business,” then it’s a race to the bottom for the cheapest option, and that does not do the industry’s reputation any good at all.

dan petterson

“During my time with captives … the Vermont captive industry has continued to prioritize ongoing efforts to meet the needs of its insureds and stakeholders.”

— Dan Petterson, Director of Examinations, Vermont Department of Financial Regulation

“So, the ‘Vermont attitude’ is to have quality captives that are performing well for their owners through a supportive process,” Mead said. “Led by the Vermont Department of Financial Regulation (DFR) in regulation, this attitude is then supported by the Vermont Department of Economic Development in the recruitment and growth of the market, and by the VCIA in providing outstanding educational, networking and benchmarking opportunities for the industry.”

The DFR is attuned to ways of ensuring the domicile is operating efficiently and at the highest level possible. As Ciullo pointed out, not only does the department vet its own operations but it also listens to captive owners, service providers and other stakeholders about areas of opportunity for improvement.

“Over the past year, they have reduced the requirement for fiveyear financial projections for new captives and captives going into runoff, enacted legislation to allow parametric solutions within a captive, reduced the information needed to complete their annual report and implemented resources to aid in regulatory filing preparation,” Ciullo said. “All of these create more efficiencies in the day-to-day management of a captive.”

In the past year, the DFR has also prepared a list of approved reinsurers including the information needed for captive managers to more efficiently complete their required annual report filings.

“We’re very focused on the success of all our captives, providing support and being receptive to the individual needs of our companies. We’ve always had a firm but fair regulatory approach, which complements the consistent and stable captive environment provided in Vermont,” Petterson said.

Part of the reason that Vermont has been able to sustain its status is by understanding and embracing the unique needs of the industry from the legislative and regulatory side. As Ryan Gadapee, shareholder at Primmer Piper Eggleston & Cramer, explained, the approach of these respective entities is focused on how they can help sustain and grow the industry.

“The annual efforts of DFR and VCIA to support legislation that addresses necessary updates or additional options in the captive law helps keep elected leaders aware and informed of the impact of the industry and fosters a sense of shared responsibility in maintaining Vermont as the ‘gold standard,’ ” Gadapee said.

“This ongoing inclusion of all stakeholders shows additional benefits when fast actions are needed to respond to new or changing circumstances in the industry. By having an informed and engaged legislature, Vermont is positioned to respond to changing circumstances, as well as refraining from taking actions that, regardless of their intention, result in a negative impact on the industry.

“The industry will grow,” Petterson continued, “and we will remain true to our values but will continue to evolve to meet the needs of our companies and the industry.”

By: Maura Keller

Reprinted from the May/June 2023 Risk & Insurance Vermont Report 

View the original article at https://www.riskandinsurance-digital.com/riskandinsurance/library/item/may_june_2023/4101946/

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