Vermont just codified its captive insurance rules into law, formalizing practices for risk retention groups and protected cells in the gold-standard domicile.
Governor Phil Scott signed House Bill 649 on March 24. The legislation, described by the state as its annual captive insurance bill, takes effect on July 1, 2026. The state said the bill reaffirms Vermont's commitment to licensed captive insurance companies by enhancing regulatory clarity, strengthening oversight, and supporting continued innovation across the sector.
The bill introduces three key updates to Vermont law. First, it prohibits risk retention groups from making loans to, or investments in, their member-owners and/or affiliates. According to the state, this codifies a longstanding regulatory practice designed to ensure that premium and surplus funds remain available to pay member claims and to avoid conflicts of interest.
Second, the bill formalizes the requirement for quarterly financial statement filings by risk retention groups, aligning with standards promulgated by the National Association of Insurance Commissioners. State officials said this, too, reflects existing practice now being written into statute.
Third, the legislation requires protected cells, upon formation, to certify that funding is in place consistent with their approved business plans. The state said this brings protected cells in line with requirements already applicable to licensed captive insurers, reflecting the increasing role of these entities in risk financing and risk retention.
Vermont remains widely recognized as the gold standard among captive insurance domiciles, with more than 1,400 licensed captives and decades of regulatory leadership. Recent recognition and continued licensing activity underscore the state's global standing and the strength of its collaborative regulatory approach, according to the state.
Christine Brown, Deputy Commissioner of Captive Insurance at the Vermont Department of Financial Regulation, said H.649 advances the state's strong foundation, ensuring alignment with evolving risks and industry best practices. Brittany Nevins, Captive Insurance Economic Development Director at the Vermont Department of Economic Development, said the updates reflect ongoing collaboration with industry and ensure that Vermont's regulatory framework continues to adapt to emerging risks while preserving the stability and integrity that captives depend on.
The annual legislative update reflects Vermont's long-standing model of engagement among captive insurance companies, regulators, and stakeholders. Governor Scott said the updates are consistent with the state's practice of working with regulators and industry leaders to maintain a framework that is strong, competitive, and responsive to evolving risks.
