The global economy is showing promising signs of recovery, but the recession took a heavy toll on nearly everyone. State governments, in particular, suffered in the wake of the economic calamity. In light of this, some are taking steps to remake themselves to be more attractive to businesses, specifically insurers. Vermont is the latest to join these ranks, joining Utah, South Carolina, Delaware and Hawaii, each making changes to their regulatory policies to bring in big insurers.
Many insurance companies partake in a number of business transactions that they would rather be kept private. These transactions are conducted almost exclusively at offshore locations, beyond U.S. borders. Such places provide companies with financial freedoms they could not enjoy in the U.S. Until now, that is.
Vermont legislators recently passed a law that would allow insurance companies to establish subsidiaries called captives. These subsidiaries allow companies to take advantage of offshore transactions without having the leave the U.S. Captives also provide insurance for their parent companies, giving them the ability to mitigate risk while maximizing profit.
The new law allows insurers to access funds that are usually stored in reserves, giving them millions of dollars to use as they see fit. More states have taken to adopting such legislation as the influx of insurance companies promotes business within the state as well as providing new jobs to residents.
More than 30 states currently have these types of laws. They have proven lucrative to states that have been struggling financially since the recession struck.