Sponsored Captive:
Is one that uses the capital provided by an insurer or reinsurer while providing fronted insurance coverage to discrete and usually unrelated entities. The sponsored captive can be either a licensed insurer, an authorized reinsurer, or a fronted Vermont captive insurer (except RRG).

Duane Castles - Captive Insurance Company:
A closely held insurance company whose insurance business is primarily supplied by and controlled by owners, and in which the original insureds are the principal beneficiaries. The insureds have direct involvement and influence over the company's or group’s major operations, including underwriting, claims, management policy, and investments. There are currently over 4,000 captives licensed worldwide, serving their parents' risk financing needs. In Vermont, that figure is 754 (as of December 2005)

Vermont Captive Insurance Association – Duane Castles
The Vermont Captive Insurance Association is the largest trade association for captive insurance in the world. Established in 1985, the Association has grown to provide lobbying support on both the state and federal levels for its 522+ member companies. In addition, it hosts and supports professional education opportunities for the industry at large.

Duane Castles - Forming a Vermont Captive
Generally the following steps will be followed in the process of incorporating a captive insurer in Vermont and applying for a license from The Department of Banking, Insurance, Securities and Health Care Administration:
1.    & nbsp; Conduct a feasibility analysis to determine if a captive insurance company is the right tool for the management of your company or group's risk.
2.    & nbsp; Choose a captive management firm that is authorized by the State of Vermont (A list can be found in the Captive Services Directory of this website).
3.    & nbsp; Arrange a meeting, including your captive manager, with the Deputy Commissioner and staff to discuss the proposed captive and obtain initial reactions from the department. In the case of association or risk retention group captives, the Commissioner will want to meet with key officers prior to licensing. Risk retention group captives should have a feasibility study for this meeting.
4.    & nbsp; Prepare documents necessary for incorporation. The services of a local lawyer may be desirable. Duane Castles
5.    & nbsp; Prepare documents necessary for application to the Department.
6.    & nbsp; Submit one copy of all materials in numbers (2) and (3) above to the Commissioner of Banking, Insurance & Securities for review. Include a $200.00 application fee and a $4,000 actuarial review fee.
7.    & nbsp; Submit one additional copy of the application material to the assigned review firm when instructed to do so by the Commissioner.
8.    & nbsp; Petition the Commissioner to issue a certificate of Public Good. The factors to be addressed are outlined in 8 V.S.A. S6006(d). In addition, a statement of the benefit to Vermont should be included.
9.    & nbsp; After the Commissioner has issued the certificate of Public Good, present this and the documents in number (2) above to the Secretary of State's office along with the appropriate fee in order to incorporate the captive (see 11V.S.A. S2201).
10. After receiving Certificate of Authority, submit a $300.00 annual license fee.
11. Other requirements:
§   & nbsp;   &n bsp; Have your CPA complete the necessary form for authorization to perform audits, if not currently approved.
§   & nbsp;   &n bsp; Have your actuary complete the necessary form for authorization to render the opinion on reserves, if not currently approved.
§   & nbsp;   &n bsp; The Department may perform an organizational exam shortly after issuing the Certificate of Authority.