Kane Jurisdictions: Vermont

Vermont - State Background

One of the smallest and most rural states, Vermont is a mountainous region with large rivers and valleys. The state's name is derived from: Ver, from the French word for green, vert; and -mont from mountain. 

Tourists have discovered the state's natural beauty, ski slopes, and small town character. Vermont's industry ranges from production of electronic components and equipment, machine tools, specialty products, quarried and finished stone, and printing. Vermont is America's largest producer of maple syrup.

Interested in Setting Up a Captive in Vermont? Call Liz Frederick Managing Director, Kane USA and Head of ILS T +1 345 914 7563 or M +1 345 938 7563 or Email her at liz.frederick@kane-group.com   For more information visit: Regulatory Body - State of Vermont - Department of Banking, Insurance, Securities & Health Care Administration

General Information

Applicable Legislation
In 1981, Vermont passed the 'Special Insurer Act', which made the state a captive domicile. Laws and Regulations related to Vermont captives are codified in Title 8 of the Vermont Statutes and Captive Insurance Regulations 81-2 and 99-2.

Regulatory Environment
The Vermont Department of Banking, Insurance and Securities and Health Care Administration regulates all insurance companies in Vermont.

General Requirements

• State examination every three to five years;
• Principal office and records maintained in Vermont;
• Retain qualified manager, attorney, CPA and actuary;
• Resident director required;
• Captive annual report (non-RRGs) or NAIC Property & Casualty annual and quarterly statements (RRGs, Association) required;
• Annual audit by CPA firm;
• Annual actuarial certification;
• Annual Board of Directors' meeting held in Vermont,
• Annual Certificate of Authority Renewal $300;

Types of captives that can be formed in Vermont:

• Pure captives - a captive insuring only the risks of its parent and affiliated companies;
• Association captives - a captive that insures the risks of the member organizations of an association and the affiliated companies of those members;
• Industrial Insured captives - a captive that insures the risks of a group of insureds in the same industry and of a certain size;
• Branch captives - an alien (i.e., foreign) captive licensed to transact insurance in the state through a business unit with a principal place of business in the state;
• Special Purpose Financial Company - a captive used to assume specified assets and liabilities, often used to securitize risk;
• Sponsored captives - any type of captive may form one or more segregated accounts to insure risks of participants through the use of "protected cells." Each segregated account is capitalized separately;
• Risk Retention Group - a group insurance company formed pursuant to the federal Liability Risk Retention Act of 1981 and 1986.

Annual Requirements

Premium tax on Direct Premium Written

38/100 of 1%	0 - $20,000,000
285/1000 of 1%	$20,000,000 - $40,000,000
19/100 of 1%	$40,000,000 - $60,000,000
72/1000 of 1%	$60,000,000 and over

Premium tax on Assumed Reinsurance Premium

214/1000 of 1%	0 - $20,000,000
143/1000 of 1%	$20,000,000 - $40,000,000
48/1000 of 1%	$40,000,000 - $60,000,000
24/1000 of 1%	$60,000,000 and over

The annual minimum aggregate premium tax is $7,500 and the maximum aggregate premium tax is $200,000.

Minimum Capitalisation and Surplus

Pure Captive	$250,000
Association captive	$750,000
Industrial Insured	$500,000
Sponsored Captive	$500,000
Risk Retention Group	$1,000,000
Letters of credit acceptable

Permissible Lines of Business
Nearly all commercial property/casualty lines of business.

Captive Costs (Estimate)

Range	Low	High
Application Costs (non recurring regulatory and Legal)	US$4,500	Dependent on type of captive
Annual Government Fee	US$300	US$300
Premium Taxes	Please see general information above

In addition to the costs specified above, there will be annual management fees, directors' fees, annual auditors' charges as well as investment management and consultants' fees.

The information in this document is intended as a general overview of jurisdictional requirements at the time of publication. It is not to be construed as legal advice or opinion and persons reading this publication are advised to obtain independent legal, accounting or tax advice on this regard.