Its spring… so let’s party

 

2017-spring-mixerVCIA hosted a Board meeting and our Spring Mixer at the beautiful Hotel Vermont this past Wednesday night. We had a great turnout and a great evening outdoors with friends from the VCIA community.

At the board meeting, I provided an update on our activities since the beginning of the year and reported on legislative activities VCIA is heavily involved with at the State and Federal levels. Ian Davis, the newish Director of Financial Services for Vermont’s Department of Economic Development gave what I would call “the first 100 days” report and thanked all in the industry who have welcomed him and provided guidance and support. We all look forward to working with Ian going forward!

Dave Provost and Sandy Bigglestone from Vermont’s Department of Financial Regulation (DFR) hosted a Q & A with members where they covered topics ranging from the provision in the newly enacted updates to Vermont’s captive statute that allows agency captives to be licensed, to how quickly we might see a captive licensed for the emerging marijuana industry – just a hint: not that soon.

Then it was cocktail hour (or so) with our members, old and new, on the outside patio of the hotel Vermont overlooking the lake – a perfect way to end a busy day!

I look forward to hearing from you.

Rich Smith
VCIA President

Happy Cinco de Mayo!

Rich-CincoMay has been a very good start for us here in Vermont. First, and foremost, spring is here and we all start getting pretty excited about warmth and sunshine.

But, second, VCIA’s registration for our August conference opened officially on May 1st!  Our theme this year is Mission Possible! So, whether you are new to captive insurance or have many years of experience, there is something for you to learn and someone for you to meet at VCIA.  Register today at our website www.vcia.com to join us in August for great captive education and opportunities to connect with risk professionals from around the world!

Third, but not least, on May 1st I joined Governor Phil Scott as he signed new legislation passed in the 2017 session strengthening Vermont’s captive legislation in a variety of areas including adding agency captives to the portfolio of captives types allowed in Vermont. An agency captive is a reinsurance company controlled by an insurance agency or brokerage. Through a reinsurance agreement with a traditional insurer agency captives create a long-term relationship between the agency and the insured, where interests are aligned: risk appetite, selection, pricing, loss control, claims management, etc. Besides the agency captive provision, changes to Vermont’s captive law allows broader accounting systems, expands dormant captives and clarifies risk retention governance standards among other things.

Now you see why we are celebrating! Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

RIMS 2017

RIMS-2017The Vermont booth at the annual RIMS conference this week was quite the hive of activity. A number of representatives from organizations both here and abroad came by the booth to talk about setting up a captive in Vermont. I personally met with over 20 people interested in captives AND in the VCIA conference this August – and there were usually 6 or 7 of us Vermonters around answering questions and hawking the domicile. Even though there are over 10,000 attendees to the conference, Vermont continues to stand out as the place to go to talk captives.

Ian Davis, who recently took over the Director of Financial Services job from Dan Towle, did a terrific job in his first RIMS herding us cats. And it was great seeing Dan in his new role as President of CICA, as well as many other old friends from the broader captive community. Next year – San Antonio!

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

Rich Smith
VCIA President

City of Brotherly Love… at booth #1817

RIMS-2017

Just a quick blog too say I am heading down to Philadelphia this weekend for the annual RIMS conference.  Although RIMS is “yuge” (over 10,000 attendees they say), Vermont still is able to attract a good crowd to the Vermont booth every year.

We get a number of folks from Vermont’s captive community who go down to RIMS and represent the Vermont captive industry at the booth. This year Ian Davis is taking the reins with DFR staff, Dave Provost, Sandy Bigglestone, Dan Petterson, Jonathan Spencer, Stacy Alden, Lance Tourville and Christine Brown. Also there will be KeyBankers, Jordan Mosher and Mat Robitaille, Steve Killoran from Maple Capital, Bill Riley from Paul Frank + Collins, and Mitch Cantor from ICCIE. Oh, yeah, and I will be there as well!

So if you are going to be at RIMS this year, come by booth #1817 and say hi!
Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

Welcome, Ian

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Ian Davis, Director of Financial Services, State of Vermont

I hope you will all join me in welcoming Ian Davis as the next Director of Financial Services for the State of Vermont! The position is responsible for the marketing and business development for the State’s Captive Insurance Industry.  Ian has replaced Dan Towle, who moved on to become the new President of CICA recently.

Our staff and I have already been working with Ian over the past few weeks, and I can tell you he will be terrific! He’s bright, energetic, and a quick learner – already tackling a number of projects for the benefit of Vermont’s captive industry. We are all looking forward to working with Ian for many years to come – and all of us will be down in Philadelphia the week after next for the monster that is known as RIMS. For those of you that are going to be there come on by the Vermont booth and say “hi” and welcome Ian to the family!

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

The Terminator

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It was reported not too long ago that a Tokyo-based personal insurance company announced it would replace 34 workers in its claims department with an artificial intelligence system based on IBM’s infamous Watson. The system “will be tasked with reading medical certificates written by doctors and other documents to collect information necessary for making payouts, such as medical histories, length of hospital stays, and surgical procedure names,” according to an English version of an article in the Japanese daily The Mainichi.

The future of Artificial Intelligence (or AI) in insurance, and indeed in the world as a whole, has created polar-opposite responses. Some view AI as a quantum leap in efficiency that should bring down costs and make the world a better place; while others believe it will be the doom of mankind, or at least of the insurance business as we know it.

More sophisticated systems are on the way and market researchers expect to see AI creeping into customer service and higher-level aspects of insurance. In an article published last year, Price Waterhouse Cooper predicted that the use of AI will make insurance more “personalized” by working in granular data about individual customers, with tracking, algorithms, easier filing, etc. Most importantly of all, more and more losses are and will continue to be prevented.

In another Bloomberg article entitled “Machines Will Save the Insurance Industry” stated that insurance companies are running out of ideas, and the only thing that will save them is investment in fintech, the financial services side of the burgeoning AI filed. Rock-bottom interest rates have sapped returns and forced insurers to cut costs. According to the article, big mergers may be the most tempting route to scale and cost-cutting opportunities but they’re often difficult to execute. Making underwriting and claims handling more automated will let insurers cut staff numbers, one of their biggest costs.  For insurance bosses, it’s technology that will bring the real edge in the long term.

The bigger story may simply be that computers are making insurance more precise, which sounds good, but less human, which sounds scary.  “That Terminator is out there! It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop… ever, until you are dead!”  Well, only if it is an actuary!

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

Rich Smith
VCIA President

Risky Business

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There have been a number of articles in the last year that have chronicled and validated the growing influence of risk management in the higher echelons of corporations and non-profits across the globe, a trend that will only continue to grow.

A report at the end of last year in Business Insurance showed that the role of the risk manager exerts greater influence across their organizations. According to the Ace study, 71% of risk managers in Europe believe their influence is greater now than it was three years ago, while 21% of that total believe their influence has risen “significantly.” This makes sense when you look at the results as reported in another Business Insurance report. Citing the annual Aon Risk Maturity Index, BI described a strong statistical correlation between progressive risk management practices and reductions in stock price volatility. The report says that the correlation “further validates the findings that advanced risk management practices are one of the factors that smooth our volatility in an organization’s stock price.” It continued on to say that “organizations with more advanced risk practices are more likely to have various and dedicated risk functions collaborate in executive risk-based processes through a defined, jointly executed risk assessment process.” The report also notes that organizations that demonstrated the best understanding of risk formally shared risk assessment results across the organization.

This implies a great trend for the captive industry: As organizations get more risk savvy and bring risk management closer to the top leadership in an organization, the option to start a captive seems like a clear choice. We already know that the understanding of an organizations risk profile is a key ingredient to a successful captive program. Once an organization “owns” its risks, it will be better able to mitigate them and that has a direct impact on the bottom line – whether you are a Fortune 500 company or regional non-profit hospital. As usual, the captive insurance industry is waiting and ready to serve!

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

Rich Smith
VCIA President