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Vermont committee reviews captive-insurance bill to bar certain RRG loan‑backs, require attestations for protected cells
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Summary
The Vermont House Commerce & Economic Development Committee reviewed a housekeeping captive-insurance bill Jan. 13 that would bar risk-retention groups from lending to parent companies, codify quarterly NAIC filings and require sworn funding attestations for protected cells, regulators and industry said.
The Vermont House Committee on Commerce and Economic Development heard testimony Jan. 13 on a captive-insurance housekeeping bill that would prohibit risk-retention groups from making loans or investments in parent companies and affiliates, require quarterly filing with the National Association of Insurance Commissioners (NAIC) and obligate protected-cell captives to file sworn attestations that they held required funding before commencing business.
Acting Deputy Commissioner Christine Brown of the Vermont Department of Financial Regulation said the loan prohibition largely codifies existing departmental practice and protects premium dollars held to pay claims. "We want to protect the premium dollars and the capital that's in the captive, and make sure that that money is available to pay claims," Brown said. She added that "any transaction like this requires prior approval already from the department," underscoring the department’s existing authority to vet exceptions.
The bill would also clarify captive reporting rules. Committee members and department witnesses said the NAIC accreditation process identified that the statute did not explicitly require quarterly filings; the proposal inserts explicit quarterly and annual filing language in the captive section and requires electronic filing with the NAIC. The department said these are codifications of current practice rather than new burdens on regulated entities.
For sponsored captives with protected cells, the bill would require that each protected cell file, within 30 days of commencing business, a sworn statement certifying it possessed the requisite funding and any required collateral as set out in its approved plan of operation. The attestation must be signed by the president and secretary of the cell or, if those offices do not exist (for example, in an LLC), by two individuals authorized by the governing board.
Industry representatives also testified. Ian Davis, president of the Vermont Captive Insurance Association, described the bill as the product of a collaborative process between regulators and industry and said Vermont’s consistent regulatory framework helps attract captive business amid national and international competition. "It's a model of collaboration and transparency," Davis said, describing annual stakeholder consultations that shape the amendments.
Committee members pressed for clarifications on retroactivity and scope. The transcript includes discussion about whether certain transactions occurring after Jan. 1 but before final enactment would be affected; departmental witnesses said they would confirm applicability to existing cells and expected the attestation requirement would apply to cells formed after the act’s effective date. The bill text on the effective date appeared in the record as "effective July 1"; the committee record did not specify the calendar year.
No formal votes were recorded during the Jan. 13 meeting. The committee was told additional testimony on risk-retention groups is expected next week, when a representative of an RRG is scheduled to appear.
