The premier onshore captive domicile continues to grow at a fast rate. It is difficult to keep track of current captive numbers, such is the pace of growth. The last estimate was 339. What can be reported with certainty is that 70 captives were licensed in the 24 months to December of last year, and Vermont is home to over 70% of all active, onshore captives.

Not content to let Vermont rest on its laurels, Governor Howard Dean spoke for the domicile when he recently remarked that the plan is to overtake Bermuda as the global captive leader. (Vermont currently ranks fourth internationally.) It is this blatant ambition which has got Vermont where it is today, aided by its fiercely pro-active association.

It all started in 1981 when the Vermont Legislature passed the Special Insurer Act, designed to provide a unique and attractive statutory framework for captive formation. To this day, the Act remains the benchmark copied by other domiciles keen on attracting captive clientele. There is no doubt that many would also like to replicate Vermont's captive infrastructure which is among the most sophisticated and mature networks in the world.Vermont celebrated its first captive in 1981. A mere six years later, the domicile was boasting its hundredth formation. Today, the Green Mountain state is unquestionably the onshore domicile of choice.

Package deal
Some domiciles can match Vermont when comparing individual features, but none can match the package, which includes the following:
• Responsive and stable government.
• Flexible and knowledgeable regulators.
• Internationally accessible location.
• Competitive tax structure and capital requirements.
• Loan backs to single parent captive owners.
• All property/casualty lines and excess workers' compensation allowed. No personal auto and homeowners.
• A tourist oriented environment.

While Vermont continues to build on its success, it is not letting this dull its innovative zeal. As Len Crouse, the director of captive insurance, points out, the creation of a niche market for mortgage insurance companies has triggered recent growth. “We built it and they came,” states Mr Crouse.

In addition, Vermont has launched branch and sponsored captive initiatives. Branch captives allow offshore captives to set up a US branch, which can bring tax benefits to the company. Sponsored captives allow companies with smaller premiums to join forces to form a captive, as long as a licensed insurer or captive backs it financially. Although similar to rent-a-captives in other domiciles, Vermont does not allow participants in sponsored captives' protected cells to write unrelated third party business through the cell. Sponsored captive formation is also limited to traditional (re)insurers and existing captives.

So far, Vermont has seen the first establishment of a branch of an offshore captive. Observers agree that there is more success to come in these areas.

Vermont's forward looking approach is reflected in this year's VCIA conference theme - “2001: A Captive Odyssey, Vermont Looks Ahead.” According to the marketing literature, the VCIA's 15th conference will be exploring “the limitless possibilities for the industry.” The conference takes place from 8 - 11 August.