In an article from the New York Times, discussion about numerous states and their interest in creating insurance Captives.  From the ariticle:

Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.

Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.

Caroline McDonald, author at, thinks the New York Times missed the mark.  From her article:

David Provost, deputy commissioner, captive insurance, Banking, Insurance Securities and Health Care Administration in Vermont, who is quoted in the article, says he plans to respond with a letter to the editor of The New York Times. “It’s not the sort of thing we can explain in two lines,” he notes, adding that he hesitates to “keep a story going that isn’t a story.”

The quick answer, he says, is “the policyholder is protected, which is the key and is the only way I would do [captives].”

Captive insurance is a regulated form of self-insurance that has been in use since the 1960s, and has been a part of the Vermont insurance industry since 1981, when Vermont passed the Special Insurer Act. About 30 states have captive regulations in place.

You can read both articles and decide for yourself by following the links above.