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

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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…

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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!

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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

 

The Power of Risk Managers

blogcapitolEarlier this week, RIMS (the Risk & Insurance Management Society Inc.) held their annual “RIMS on the Hill” legislative summit in Washington DC. RIMS is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities of more than 11,000 risk management professionals.  At the RIMS 2016 Legislative Summit, members from across United States held 70 meetings with legislators and Congressional staff focused on three legislative initiatives: proposed legislation on cyber security, ADA protection and tax treatment for captives.

Thanks to the hard work of VCIA’s Washington counsel, Jim McIntyre, RIMS highlighted their support for the Captive Insurers Clarification Act, S. 1561, introduced by Vermont Sen. Patrick Leahy and South Carolina Sen. Lindsey Graham on the behalf of the captive insurance industry. As most of you know, the bill would officially omit captive insurers from the Nonadmitted and Reinsurance Reform Act. The act failed to explicitly exclude captives from the definition of “nonadmitted insurers,” which leaves insureds unclear on whether independent procurement taxes on the insurance purchased from their captive must be paid to their home state in addition to the captive domicile.

Having the preeminent risk managers organization make the captive bill one of their top three priorities is, well there is no other way of saying it, “HUGE”! Because they represent the risk managers from such a variety of important organizations, Congress listens. Let’s hope Capitol Hill will do more than pay heed; but act!

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

Rich Smith,
VCIA President

Come One, Come All!

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The VCIA Annual Conference is NOT just for VCIA Members and the folks here in Vermont. Last year we had nearly 1100 people in attendance, from 42 states and 8 countries, including several captive regulatory teams (and captives) from many of our favorite competing domiciles.

Around 28% of our attendees were captive owners, a fact that makes VCIA very proud. So if you want to hear from and network with the very best and brightest experts in the industry including captive colleagues from all around the world, you should sign up today for VCIA 2016! This event can’t be missed.

Come get educated, network, and enjoy the Vermont summer on the shore of Lake Champlain. Come one, come all! August 9 – 11, 2016!

 Thank you very much, and I always enjoy hearing from you.

Rich Smith,
VCIA President

Lemonade

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It’s just like the insurance industry to be up with the hipness of Beyoncé. As most of you have heard, Queen Bee just released “Lemonade”, her sixth studio album on April 23, and its originality and boldness have created quite the buzz. But preceding this pronouncement was the report a few months ago of some of the industry’s biggest players agreeing to back another “Lemonade”, the world’s first peer-to-peer (P2P) insurance company.  Berkshire Hathaway, Everest Re, Hiscox, Munich Re, Transatlantic and XL Catlin have all agreed to reinsure the start-up alongside two as yet unnamed syndicates at Lloyd’s of London.

What does either one of these things have to do with captive insurance?  Well, other than getting a chance to use Beyoncé’s picture legitimately for my blog, the P2P insurance company Lemonade might have a spill-over effect for captives. As traditional carriers get further squeezed by consolidations, non-existent returns, and now competition from this type of disruptive product, the more competitive they will become to capture (or recapture) business lost to the captive industry.

The company has been relatively secretive so far about the exact nature of its offering. But with its reinsurance partners now in place, a full consumer launch is  ready for the coming months.  They have been guarded on exactly how its offering will work–simply stating that it will harness the power of behavioral economics and the sharing economy, delivering to consumers an insurance experience that is instantaneous and un-conflicted.

The flip side of this challenge will be the potential opportunity of some of our more entrepreneurial captive folks to find a place for captives in this new model. The business will work by pooling the premiums of individuals in a similar way that a mutual or P&I club might work. And, in contrast to other peer-to-peer products that have been launched elsewhere, any policy will be guaranteed by the carrier, which will also have the ability to purchase reinsurance.  I know captives don’t get mixed up in the messy world of personal lines, but this may open doors at some level.

Either way, the world of insurance and risk management is continuing to evolve so be ready!

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

Rich Smith,
VCIA President