"Archer Daniels Midland has proposed that its captive be used to reinsure life insurance benefits, which is a bit different than what was being done by the Columbia Energy Group," said Mr. Hamilton, referring to the first approval of a benefits' captive.

Mr. Hamilton, who is also president and general manager of CSX Insurance Company, a single parent captive of CSX Corporation in Burlington, Vt., noted that Columbia Energy's captive "was to be used for disability."

Columbia Energy Group's captive, which is domiciled in Bermuda and has a branch in Vermont, was approved by the Department of Labor in August 2001.

ADM's captive, Agrinational, is also domiciled in Vermont, Mr. Hamilton said.

It took more than a year for ADM to be approved by the department, he said, because the department takes the position that it's not their obligation to act quickly, but instead "to protect the interest of the planned participants and beneficiaries."

What is interesting, he said, is that "to the extent that someone else would step forward and paint a fact pattern that is materially the same as what Columbia Energy Group and now ADM have done, they'll be able to qualify for a fast-track review."

This would mean the Department of Labor would have only "45 days to make a determination as to whether they will propose an exemption," he said.

A request must include provisions similar to those already approved by the department, Mr. Hamilton said. In other words, an entity making the request must be a licensed insurance company, it has to have been in existence for five years, it has to have had an examination within the past five years in its domiciliary state, and it must be domiciled in a U.S. state or territory.

Going beyond that, he said, the employer?the parent of the captive? would have to offer some additional benefit to the participants, an inducement for the arrangement.

An example would be "an increase in the level of disability benefit, in the one case [Columbia Energy] that had not been provided before," he said.

To satisfy this requirement, ADM will offer employees accidental death benefits through its captive, adding those death benefits to life insurance policies at ADM's expense.

"The difficulty we have, as risk managers, is in understanding what goes beyond nominal improvement. Certainly, we're looking for something substantive, but not outrageously costly," he said.

He added that the right balance seems to have been struck by the Department of Labor in both of these cases.

"The other element that is different," he said, is that an independent fiduciary must "step forward and opine as to the appropriate cost, the appropriate benefit and the appropriate administration of the program going forward. In this case it is Milliman [USA, formerly known as Milliman & Robertson,] has taken that role."

In the future, he added, "the fiduciary enables the Department of Labor to step back their regulatory role"--to make the determination that an exemption is allowed "and then to let the business process roll out with considerable flexibility."