Captive Industry Insights

In this episode, Vermont Captive Insurance Association (VCIA) President Ian Davis joins The Edge of Risk podcast by IRMI to unpack how captive insurance legislation evolves in one of the world's most established domiciles. Mr. Davis explains the core pillars of "captive-friendly legislation," emphasizing clarity, flexibility, and responsiveness as foundational to Vermont's regulatory philosophy. He also reflects on the state's long-standing commitment to aligning oversight with real-world risk, ensuring both innovation and integrity remain central to the captive framework. The conversation explores how Vermont's legislative process is rooted in collaboration among regulators, lawmakers, and industry participants, supported by continuous dialogue, trust, and transparency. Mr. Davis also highlights recent developments, including growth in cell structures and adaptive regulation for emerging risks such as artificial intelligence; environmental, social, and governance; and evolving tax considerations. Finally, he shares how captive owners and service providers can engage with VCIA's advocacy committee to help shape future priorities.

Continued global turbulence is reinforcing the importance of robust risk management and risk financing strategies. While insurance market rate increases have eased in property, natural catastrophe and losses from secondary perils remain high. There continues to be deteriorating results in carrier casualty books driven by social inflation and third-party litigation funding. Rising healthcare costs and the impact of costly specialty drugs are leading to more employers using captives to manage these risks. Interest in parametric solutions, especially around climate and environmental risks, remains strong, as clients seek capacity that may not be available in traditional insurance markets. The resultant overall effect remains positive for captive activity and utilization remains strong as captive owners seek to maximize the value from having a captive. This is played out in terms of increased premiums going into captive, additional lines of risk, using analytics to optimize retentions and refreshed risk appetite statements.