It’s 60 degrees here in Vermont today, not our usual weather by a longshot. I worked from home yesterday and was staring out at my woodpile sitting forlornly. Vermonters have a saying about wood stoves: it heats you twice – once when you stack it and once when you burn it (and for REAL Vermonters it’s four times – cutting, splitting, stacking, burning).

OK, I know what you are saying, how is he going to wrap this into a blog on captive insurance! Hopefully you know by now, I can get inspiration for captives from almost anywhere. Well, here it goes…

Captives are like woodpiles because they provide more than one benefit. Obviously, they are a risk financing mechanism that allows an organization to efficiently manage their risk through claims control, program design, access to reinsurance, manuscript policies, etc. But like a woodpile in winter it can “warm you twice” with other benefits including the opportunity to take advantage of favorable tax treatment and the ability to create a profit center with policies like extended warranties or premiums received from a controlled unaffiliated party, where a third party pays the premium. The third party could be an independent contractor, tenant, supplier or customer.

And just like the site of my woodpile gives me comfort as the snow begins to fall, a captive will give peace of mind to those who take the time and effort to build one. Maybe that’s why captives work so well in Vermont!

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

Rich Smith
VCIA President