The New York Times has published an article raising questions about whether use of captive insurers could weaken insurance industry oversight.
The Times ran the article, by Mary Williams Walsh and Louise Story, on the front page, immediately below the masthead.
“Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda,” the reporters begin. “Today, all it takes is a trip to Vermont.”
The reporters note that a number of large life insurers and reinsurers have used captives in Vermont to refinance life, disability, long term care and annuity business.
The reporters do not cite any examples of problems occurring as a result of the use of Vermont-based captives, but they say American International Group Inc., New York (AIG), used a captive reinsurance subsidiary to get $7 billion in mortgage insurance claims off its books and resume selling policies.