Governor Jim Douglas of Vermont signed S.284 (the “Bill”) into law on May 28, 2008.  Among other things, the Bill includes provisions to strengthen existing captive insurance company regulations, facilitates the merger of captives into existing companies and increases consumer protection.

Last year, the Vermont allowed the creation of “special purpose financial captive insurance companies,” which are sponsored captive insurance companies, licensed and approved by the commissioner, that usually act as ceding insurers.  These entities are created by companies and authorized by the commissioner to create separate accounts for the maintenance of assets necessary for funding the liability of the sponsored captive insurance company and assumed on behalf of commissioner-approved participants.  A major component of the recent Bill clarifies the process by which these special purpose financial captive insurance companies merge and redefines the terms under which the commissioner will supervise their activities.  Additionally, the Bill enhances the commissioner’s ability to ensure the solvency of these captives.

Click here to see the full text of the Bill for further information.