Captive Breakout

The amount of business funneled through captive insurance companies domiciled in Vermont surged last year, fueled largely by existing captives taking on more risk.

In 2007, gross written premiums jumped to $15.26 billion, a 32.1% increase over 2006, according to statistics complied by the state's Captive Insurance Division.

At end of last year, Vermont—the world's third-largest and the United States' largest domicile—had 567 captives, up from 563 in 2006.

- Business Insurance.com

This is great news and makes for a really good example of how legislation can have a direct impact on the markets.  But for Vermont's innovative captive insurance regulations, the industry simply would not exist here.  When  Gov. Richard Snelling signed the Special Insurer Act of 1981 he created the first highly attractive domestic domicile for these insurers. The Act created a niche  industry that Vermont continues to dominate today. The New York Times writes that,

Vermont’s success in attracting insurance captives also highlights the many ways that American corporations are allowed to minimize their tax bills by moving their profits, intellectual property or liabilities to places that provide substantial tax advantages."

So while some of our leaders continue to go around dismissing tax competion as an urban (rual) legend, we are in fact the willing and happy beneficiaries of our competative captive insurance tax regulation. However, strategic advantage is fleeting. Other states have taken notice and are one the move. More than half of the states now have captive insurance enabling statutes, and a half-dozen others now aggressively cater to the domestic captive market - Arizona, Hawaii, Kentucky, Montana, South Carolina, and Utah.

Comments

[Jeff]

This Memorial Day weekend take time to remember those who have made the ultimate sacrifice for our country.

[Brattleboro_conservative]

Jeff, I believe the article in question was about the captive insurance industry and had nothing to do with the Memorial Day holiday. While we all appreciate the sacrifice of our men and women in uniform, your comment was way off topic. Let's keep our comments focused on the article, OK?