Governor Peter Shumlin announced today that the Department of Financial Regulation (DFR) has licensed Vermont’s 1,000th captive insurance company. Cassatt Insurance Group is a group of nine independent non-profit hospitals in southeastern Pennsylvania that share risk in providing medical liability coverage for 1,200 physicians.
The Governor said the captive industry is an example of a public-private partnership that has created huge dividends for Vermont’s economy.
‘The captive insurance industry has generated almost $350 million in direct taxes and fees to Vermont’s coffers since its inception in 1981,’ Shumlin said. ‘It is exactly the type of industry that is a priority of my administration. It creates high paying jobs, has minimal impact on our environment, creates tourist traffic and generates much needed tax revenue.’
Cassatt President and CEO Eric W Dethlefs said Vermont was an easy choice.
‘We know how important it is to be in an environment that has an established track record with proven experience,’ he said, ‘so when we compared experience, governmental support and its long-standing tradition of quality regulation, we knew Vermont was the place to be.’
DFR Commissioner Susan Donegan agreed and noted that this is a milestone in the state’s financial services history.
‘Vermont’s captive insurance law has been called the ‘gold standard’ by trade press for its consistency in keeping pace with the changing needs of the industry over the past 32 years and it has been used by other domiciles as a model of regulation,’ she said, ‘Vermont is proud of its reputation in the captive world and we’re happy to welcome Cassatt to the Vermont captive family.’
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Attorney William D Riley, a senior member of Paul Frank + Collins’ Captive Insurance Group, and newly-appointed chairman of the board of directors of VCIA, acknowledges that this is a significant milestone for the history of the industry in the State.
‘It is a testament to the consistency, quality and responsiveness demonstrated by Vermont’s regulatory staff, government leaders and service providers since the captive insurance law was first enacted here in 1981,’ says Riley. ‘The VCIA and its members are extremely proud of the role we have played in helping to build this highly successful industry in Vermont.’
VCIA Board of Directors
Captive insurance is a regulated form of self-insurance that has existed since the 1960’s and has been a part of the Vermont insurance industry since 1981, when Vermont passed the Special Insurer Act. Captive insurance companies are formed by companies or groups of companies as a form of alternative insurance to better manage their own risk, and are licensed in a state or country and regulated by that jurisdiction.
Captive insurance companies are typically used for corporate lines of insurance like property, general liability, products liability, or professional liability. Growth sectors of the captive insurance industry include professional medical malpractice coverage for doctors and hospitals, and the continued trend of small and mid-sized companies forming captive insurance companies. Vermont has approximately 100 hospital and doctors groups who have formed captives for professional medical liability.
Vermont’s captive insurance industry employs more than 1,400 full and part time jobs. These jobs are primarily in captive insurance management, accounting, law, banking and investment professionals. The industry also generates tourist traffic as all captive insurance companies are required to hold annual board meetings in Vermont.
Vermont is the largest captive insurance domicile in the U.S. and the third largest in the world in terms of sheer numbers. There are more than 30 states with captive insurance authorizing legislation. Vermont’s captive insurance companies wrote more than $26 billion in gross premium in 2012, which was the most of any domicile in the world. Vermont is also home to 42 of the companies that make up the Fortune 100 and 18 of the companies that make up the Dow 30.