Fast Track Your Benefits


fasttrack scene


Business Insurance this week reported that Hormel Foods Corp. has received tentative authorization from the U.S. Department of Labor to fund several benefit risks through its Vermont captive insurer.

Hormel, the Duluth, Minnesota-based meat and other food products producer and marketer, wants to use the captive, Diversified Foods Insurance Co. L.L.C., to fund life and accidental death and dismemberment benefits for its employees. This comes on top of the announcement a couple of weeks ago that regulators gave final approval to an application filed by Sealed Air Corp., a North Carolina-based packing materials manufacturer, to fund life and accidental death and dismemberment benefits through its Vermont-based captive insurer.  Advantages of the approach include cutting insurance costs and diversifying a captive’s risk portfolio.

The application of Sealed Air, whose products include Bubble Wrap, was reviewed under a regulatory process known as ExPro. Under ExPro, the Labor Department must act within 45 days of a company request for an exemption from an arrangement that would be normally barred by the Employee Retirement Income Security Act. The Department suspended ExPro last fall to give regulators time to examine whether the process ensures that captive benefit funding arrangements adequately protect plan participants, according to consultants interviewed by Business Insurance.  The U.S. Labor Department’s recent actions affirms that the door again is open to employers to seek fast regulatory review of their captive benefit funding proposals.

Using your captive for employee benefits has been a tantalizing opportunity for businesses for many years now. The expectation was that many enterprises would jump on the chance and take advantage of the option. However, only about two dozen employers, including well-known companies with Vermont captives such as Alcoa, Microsoft and Archer-Daniels Midland, have received Labor Department approval to fund benefit risks through their captives over the last 15 years.  Clearly it is a complex decision to make. With these two recent approvals, perhaps we will see a steadier beat toward this innovation.

Come hear the Director of Risk Management for Sealed Air Corp., Howard Edelstein, discuss employee benefits through their captive, Saddle Brook Insurance Company, on a panel at VCIA’s 30th Annual Conference, this August 11th through 13th, in Burlington, Vermont.

Thank you all very much, and I look forward to hearing from you.

Richard Smith
VCIA President

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