Climate Change–Attitude Change


Vermont has enjoyed amazing weather since roughly the beginning of this year–that is, if you are not a big fan of snow, cold and rain.  I have both enjoyed basking in this “endless summer” up north here while also been frightened about what it portends. It somewhat follows the inconsistency in the broader insurance market when it comes to dealing with climate change.

On the one hand, many international insurance and reinsurance organizations have been very vocal about climate change and the need of the insurance market to respond. Lloyd’s of London and other insurers called for collective action to address climate change earlier this year after a report from the U.K. regulator this week highlighted risks to their industry from global warming.  “An increase in temperature of more than 2 degrees could lead to a lack of affordable insurance,” Carmen Bell, policy advisor for personal insurance and general insurance at trade body Insurance Europe, told Reuters.

This very much should be in the wheelhouse of the insurance industry to lead the way, one would think. On the other hand somewhat surprisingly, most P&C insurers are not adequately prepared for climate change-related risks, according to a Ceres survey that rated insurers as minimal, beginning, developing, or leading. Only 3 percent earned the leading rating, while 83 percent received the ratings of beginning or minimal. While there remains an active debate on the cause of climate change, our industry should be focused less on that and more on how we respond to and mitigate it.

My hope is that the captive insurance industry will follow the lead of some of the insurance leaders in this area. After all, that’s what good risk managers do–assess and protect their owners from risks.

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

Rich Smith
VCIA President

Brexit?? Verm-enter!

I just hosted a VCIA Members-only webinar yesterday called “Captive State of the Union” where we explored what VCIA is doing legislatively in Vermont, DC and internationally to keep the captive industry strong and thriving. I was joined by the redoubtable Dave Provost, Deputy Commissioner of Captive Insurance for the State of Vermont, and the sagacious Jim McIntyre, VCIA’s veteran DC counsel.

Toward the end of the webinar, we had a chance to discuss a few international events that may impact the captive industry, including my favorite term of the year: Brexit. Lately, much of the news has been dominated by Britain’s vote to leave the EU, and especially how it might affect the world of finance and insurance – including captives. The answer is, I have no idea.

Obviously, many UK captive domiciles, like Gibraltar and Guernsey will have to figure this out as this slow-motion train wreck unfolds. And of course, many captives and RRGs based in the US have reinsurance agreements with the likes of Lloyds. However, I like what Dave Provost suggested: Vermont would be glad to host a reinsurance marketplace here in our beautiful state. Instead of Lloyds of London it will be Lloyds of Lyndon (Lyndon, Vermont that is)!

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

Rich Smith
VCIA President

Captive Nation

I hope you can all join me next Thursday for my version of the Colbert Report, when I’ll have a chance to tell VCIA Members what VCIA is doing legislatively in Vermont, DC and internationally to keep the captive industry strong and thriving. I’ll be joined by Deputy Commissioner Dave Provost and VCIA’S DC counsel, Jim McIntyre, to inform our members on what’s happening at the state, federal and international level  with legislation and regulations potentially impacting captives.

We are calling it “Captive State of the Union” and it’s not too late to register to attend! The webinar will be held  October 13, from 2-3 p.m. EST, and will address  VCIA’s activities on your behalf, and the status of important current issues like:

  • The Captive Insurers Clarification Act of 2015 (the bill to clarify The Nonadmitted and Reinsurance Reform Act (NRRA))
  • The Department of the Treasury’s proposed rules to implement changes to the Terrorism Risk Insurance Program (TRIP or TRIA) required by the Terrorism Risk Insurance Program Reauthorization Act of 2015
  • R. 3794, The Nonprofit Property Protection Act which will allow nonprofit RRGs to provide property insurance to their members who are 501(c)(3) nonprofits with over $50 million in premium, in addition to the liability insurance they already provide
  • FHFA’s rule to exclude captive insurers from the Federal Home Loan Bank
  • Activities and updates from the NAIC
  • Vermont’s captive insurance bill, H-538, which was signed into law last spring
  • New leadership at the Department of Financial Regulation, as well as an update on State leadership races

Go to this link  to register online, but remember, it is for VCIA Members only – membership has its privileges!  We will take questions during the webinar and I will do my best to be as snarky as possible and keep to a very high level of “truthiness.”  : )

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

Rich Smith
VCIA President

School’s Back In!


jack-black-smith-2Just got back from a couple of conferences this week and it always gives me great perspective. First, I attended the Self Insurance Institute of America (SIIA) conference in Austin (cool city!) where the focus is primarily healthcare and workers comp. SIIA brings together all the self-insurance groups in these areas, but is seeing a growth in the captive arena as it pertains to stop-loss and workers comp.  VCIA’s Janice Valgoi, DFR’s Dave Provost, Primmer’s Jesse Crary and I did many hours of booth duty over the course of a couple days. We had a number of people come up to us and ask, “So what’s the State of Vermont doing here?”  After explaining Vermont’s role in the world of captives it became clear to them and they seemed eager to understand captive insurance as the next new marketplace, but it also became clear to me that it will be a lot easier for organizations that are already working in the captive space to add stop-loss or workers comp, than vice versa.

At the National Risk Retention Association (NRRA) conference in Chicago (another cool city!) later in the week, I participated on a panel that examined the Next Generation and diversity in the captive insurance industry. The cool thing was that there were a number of insurance students from some nearby colleges who were not shy about what they think the industry should do, including coming into the classrooms and doing a spiel on captives, as well as providing mentoring and internships.  I think one of the best lines about this came from our long-time friend, Michael Bemi. When addressing the issue about the perception that insurance is boring, he said in captives you aren’t selling insurance, you’re building insurance – has a nice ring to it, I would say!

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

Keep Moving Forward


A couple of quick updates from the President’s corner…

We are in the process of surveying our members and talking to captive leaders here in Vermont about potential changes to Vermont’s captive statute. After gathering ideas and vetting them internally, we meet with the leadership team at DFR and begin an iterative process that will ultimately produce a “captive bill” for introduction to the Vermont legislature in January. Coming in with a coordinated bill between the regulators and the industry gives us the clout to move a bill quickly to passage. If you have any good ideas (hey, even crazy ideas) send them my way – you never know!

Just a quick note to let folks know I will be attending the SIIA (Self-Insurance Institute of America) conference in Austin starting this Sunday and then heading directly to the NRRA (National Risk Retention Association) in Chicago on Tuesday night. SIIA is a member-based association dedicated to protecting and promoting the business interests of companies involved in the self-insurance and alternative risk transfer (ART) industry, including captive insurance. It’s a great opportunity to meet and talk to others in the self-insurance world. And NRRA’s conference brings together the leaders in the RRG industry annually to discuss the opportunities and challenges in the world of Risk Retention Groups. Vermont has more RRGs licensed than any other captive domicile.

And finally, I want to give a shout out to Bob Gagliardi from AIG (and VCIA Board Member) for his promotion. Bob was recently promoted to AIG’s Global Director of Captive Management and US Fronting. Our expectation is that AIG will need to build a new skyscraper in downtown Burlington to fit the whole operation.  Congrats, Bob!

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

Rich Smith, VCIA President

Back in the Saddle…


Thanks to all who joined us in beautiful Burlington, Vermont, a couple of weeks ago for VCIA’s annual conference. Without a doubt, it was a terrific 2 ½ days with great programs, networking and events. With over 1000 attendees from 41 states and 14 countries, our annual gathering in August has grown to be THE captive insurance forum! To quote from one of our attendees “All the important captive market players from North America and parts of Europe were in attendance.” And many thanks to our sponsors and exhibitors without whom we could not put on such an event, as well as to the hundreds of volunteers who make it happen.

Now after a little break, we are back in the saddle again looking out for the captive industry. Currently we are working with U.S. Treasury on changes to the TRIA data call for captives, fighting to pass the NRRA clarification bill, and generally looking out for the captive insurance industry. You got to be a tough hombre to keep the posse moving!

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

Rich Smith
VCIA President

Go, Len!


Len Crouse, shown here during his time as Deputy Commissioner of Vermont Captive Insurance

It’s officially summer in Vermont and things are getting hot – and I’m not necessarily talking about the weather. As most of you know, VCIA is hosting the “World’s Best Captive Conference” this week in Burlington (and yes, I have trademarked that!) and I am sure you are all making plans to join us.

I wanted to take the opportunity to congratulate Vermont’s own Len Crouse for making Best’s Review list of Key Influencers! As most of you know, Len was head of Vermont’s captive division during the heady days of growth for the State’s captive industry. As the piece rightly points out, he helped set the “gold standard” for Vermont and the industry as a whole when it comes to captive regulation. Len joins luminaries such as Hank Greenberg, Brian Deperrault, and Ajit Jain of Berkshire Hathaway. Congratulations Len – well deserved! And don’t miss Len speaking at the VCIA conference on the panel Group Captives Take Center Stage.

Thank you all very much, and I look forward to hearing from you and seeing many of you this week!

Rich Smith
VCIA President