Skip Navigation

Close and don't show again.

Your browser is out of date.

You may not get the full experience here on National Journal.

Please upgrade your browser to any of the following supported browsers:

States Loosening Insurance Regulations to Attract Business States Loosening Insurance Regulations to Attract Business

This ad will end in seconds
Close X

Want access to this content? Learn More »

Forget Your Password?

Don't have an account? Register »

Reveal Navigation



States Loosening Insurance Regulations to Attract Business

States are loosening their insurance regulations to draw business from companies that typically look outside the U.S. to make complex transactions.

The New York Times reports that states like Vermont, Utah, South Carolina, and Hawaii are changing their state insurance rules to allow companies to create special insurance subsidiaries called captives. Captives have long been used in the oil industry, but changes to the state laws now expand the definition of captives to include insurance companies.


Some insurers have been cashing in on the new regulation. Aetna was able to refinance a block of health insurance policies through a subsidiary in Vermont, saving the company $150 million. At the height of the economic downturn in 2008, MetLife was able to use a subsidiary in the same state to take over a $3.5 billion letter of credit, which allowed the company to stay afloat.

While companies and states are reaping the benefits of the captives, some insurance regulators have expressed concerns about devaluing the state’s financial security and oversight.

“We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers,” Dave Jones, the California insurance commissioner.


Want the news first every morning? Sign up for National Journal’s Need-to-Know MemoShort items to prepare you for the day.

comments powered by Disqus