VCIA Newsy News

newsblogTwo quick pieces of news regarding VCIA members to bring forward.

First, congratulations to VCIA Board Member Anne Marie Towle, for being one of this year’s winners of Business Insurance magazine’s “Women To Watch” award!  Launched in 2006, the award recognizes women leaders doing outstanding work in risk management and commercial insurance. Nominated by readers based on their accomplishments, expertise, leadership, and future prospects, honorees are selected by a panel of editors.  Anne Marie is Hylant Global Captive Solutions leader, and joins Sandy Bigglestone, Director of Captive Insurance for the State of Vermont, who was awarded this prestigious honor last year.

And a warm welcome to Vermont goes out to Arsenal Insurance Management, which is opening a new office in Burlington. Arsenal, founded in 2006, is headquartered in Montgomery, Alabama, and joins the already considerable number (20!) of captive managers with Vermont offices. I had the privilege of seeing Arsenal president Norm Chandler on a panel at the National Risk Retention Association conference in Chicago a few weeks ago. He presented a session entitled RRGs in The Future of Healthcare Without Health Insurance alongside fellow VCIA members Tim Padovese, CEO of Ophthalmic Mutual Insurance Co., and Stephen Koca, Principal and Consulting Actuary at Milliman. Join me in welcoming Arsenal to VCIA and to Vermont!

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

Rich Smith,
VCIA President

It’s Your Reputation on the Line

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On Monday, August 19, a group of high-powered American executives, including seven of the large commercial insurers, published a statement on the role of shareholders in corporate governance that departs sharply from tradition.  The “Statement on the Purpose of a Corporation” put forth by the Business Roundtable asserts that corporations have greater obligations beyond generating profits for shareholders. In short, they are responsible for creating better lives for all their stakeholders.  Putting these parties first and treating them ethically is ultimately what keeps businesses going and the economy growing.

Shareholders have long been corporations’ top priority because disappointing them means withdrawal of their investment at best, and at worst, the potential for securities class action lawsuits. Businesses now operate in an environment of heightened reputation risk that has a tangible impact on income statements. Loss of customer loyalty and diminished brand value are real consequences of social irresponsibility, and these ultimately impact revenue and profit.  As important as the change in priority might be overall, it will add to the growing reputational risk profile of every organization.  That is one of the main reasons VCIA is hosting a webinar on reputational risk and how captive programs can help mitigate it, on October 23rd.

It can be said that reputation is a product of expectations. Often misunderstood and inadequately addressed, reputation risk is the peril of economic harm from leaving stakeholders disappointed and angry. Negative media and social media coverage are often a byproduct, amplifying that disappointment and anger. When reputational crises occur, they impact businesses commercially and financially, and their leadership personally. The August 2019 Business Roundtable declaration raises the stakes.

A captive program can be an effective vehicle for insuring reputational risk. A captive is in the unique position of being able to fund potential losses associated with stakeholder anger and disappointment, and by doing so signal to key stakeholders (employees, creditors & analysts, and regulators) that the company’s governance apparatus is very aware of the peril, and is confident that it is managing the risk well. And if the captive is at least partially reinsured in the open market, it then also demonstrates that an objective third-party has reviewed the company’s practices and is essentially “warrantying” the company’s governance.

So, join us on October 23rd for our webinar featuring Dr. Nir Kossovsky, CEO of Steel City Re, a leading source of integrated reputation risk mitigation solutions and insurances, and Machua Millett, Chief Innovation Officer for FINPRO U.S. and the General Partner Liability Product Leader at Marsh.  Ably moderated by Maigh Wright, an associate actuary with Milliman, this webinar is guaranteed to burnish your reputation!

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

Rich Smith
VCIA President

Captives and Debtors

bankcruptcyInteresting news about OxyContin maker Purdue Pharma seeking product liability insurance and general liability coverage by creating a captive insurer.  Purdue asked for permission to set up the captive insurer in federal court on Monday as part of the firm’s filing for bankruptcy protection, as it has been challenging for them to find a commercial solution with a third-party insurer, not surprisingly.  Purdue faces more than 2,600 lawsuits alleging that it helped fuel the U.S. opioid epidemic.

As VCIA Member (and recipient of VCIA’s 2019 Industry Service Award!), Chaz Lavelle of Bingham Greenebaum Doll LLP stated recently in a September 17 article in Business Insurance,  “We’ve had situations in the past where an operating company has gone bankrupt but the captive insurer which it has previously set up was fully solvent, continued to operate and pay claims notwithstanding the bankruptcy and the disposition of the company.”

It reminded me of the Vermont captive for the bankrupt firm Enron back in the 90s. Even though the firm was mired in bankruptcy proceedings due to the fraudulent leadership at the top, under the supervision of Vermont’s Department of Financial Regulation its captive remained solvent and paid out every one of its claims under its policies in full. Having the captive kept the policy claims separate from the bankruptcy proceedings. Even debtors require various liability, casualty, property and other insurance programs in the ordinary course of their businesses.

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

Rich Smith
VCIA President

May the FASB with you

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Look, the Empire of Accounting has many draconian rules and regulations, but if you are unprepared with Force of knowledge you will be thrust into the Dark Side of your ledger.

OK, enough with the Star Wars rip-off. The Financial Accounting Standard Board (FASB) has been busy at work issuing a variety of new standards. If you have investments, especially equity investments that have been accounted for through Other Comprehensive Income (OCI), you’re about to see a big change as a result of Accounting Standards Update (ASU) 2016-01, Financial Instruments Recognition and Measurement, ASU 2018-03, Improvements to Financial Instruments and ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement.

Hopefully you can join us on September 25th at 2:00 p.m. ET for a truly instructive webinar on these changes as we walk through a case study and discuss the impact of obtaining a permitted practice to not adopt these new standards. Additionally, we will provide an update on ASU 2016-13, Financial Instruments – Credit Losses and ASU 2016-02, Leases.

Our panelists will be Sandy D. Griffith, Senior Vice President at Advantage Insurance, and Magali Welch, Partner with Johnson Lambert LLP. Ably moderated by Steve Garwood, Vice President, Treasurer and CFO of EIIA, which is the parent company of two Vermont based captives, with expert content advice from Rebecca James, Principal at Johnson Lambert LLP.

After completing this webinar, you will be able to: cite changes related to accounting for financial instruments; adopt best practice methods for properly accounting for the change in guidance; and identify some impacts (potential and known) of obtaining a permitted practice to not account for this guidance.  Register now, and may the Force of accounting knowledge be with you!

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

10-Day Countdown

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Just ten days until we open Burlington, Vermont to all you captive insurance professionals! If you have not already done so, please make plans to join us for a week of wonderful education, networking and friendship.

Here is just a smattering of some of the captive owners who will be presenting this year:

  • Andrew Baillie, AES of Global Insurance Company
  • Sean Barnes of United Educators
  • Julie Bordo of PCH Mutual Insurance Co., Inc., a RRG
  • Tracy Hassett of Educators Health Insurance Exchange of New England
  • Tim Herr of Recreation Risk Retention Group
  • Karen Hsi of the University of California
  • Jan Klodowski of Agri-Services Agency LLC & Agrisurance Inc.
  • Troy LePage of HAI Group
  • Heather McClure of Oklahoma University Medical
  • Bill Murray of Church Insurance
  • Tim Padovese of Ophthalmic Mutual Insurance Company (OMIC)
  • Joshua Reding of Life Time Captive Insurance Company
  • Paul Smith of National Insurance and Indemnity Corporation

I hope you all can join us! Click here to register for the VCIA Conference today.

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

Rich Smith

Young at Heart

Young professionals

Young captive professionals at a recent VCIA event.

Recruiting and training the next generation of captive professionals is a paramount issue for our industry, as everyone knows. Both CICA and NRRA have programs designed to reach out to this group and draw them into the industry.  Fostering newcomers to join the field and eventually step into the roles of our current captive leaders and professionals is an initiative that VCIA takes to heart.

Over the past number of years, VCIA’s Annual Conference has created places and sessions where young professionals can learn from and network with both peers and seasoned professionals as they pick a pathway forward in the captive insurance field.  Besides our NEW Captive Immersion experience, which will familiarize those who are new to the captive industry on the key services, and our annual Captives 101 session that provides a basic overview of captive insurance companies and RRGs, other VCIA sessions designated for young professionals include:

Developing the Next Generation of Captive Industry Leaders, which will explore what is being done in the industry to attract and retain new talent.  According to the Pew Research Center, millennials were the largest portion of the workforce in 2016. As a group they are very connected, having grown up with the internet in their everyday life. In the workforce, they are eager to make a meaningful contribution to the workplace and the greater good. In many ways, this group is helping transform organizations.

Our Young Professionals Forum will provide a great resource particularly for those with fewer than 10 years of captive experience.  Three dynamic facilitators will lead small group discussions about sharpening your speaker skills, how to approach your early career years and work/life balance.  Afterwards, an open forum will occur for a fluid discussion on topics such as transitioning into the workforce, professionalism and meeting work demands in a sometimes-stressful environment.

On top of all that is just the best networking opportunities both “on campus” and “off campus” in the captive industry, so, I hope you all can join us! Click here to register for the VCIA Conference today.

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

From Early Bird to Angry Bird

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For all you procrastinators out there (and I count myself as one of the best) listen up! VCIA’s Annual Conference “early bird” rates are about to expire on June 30th. That means, of course, you will be paying more to learn and network with 1100 captive professionals from around the US and the world. And none of us like doing that.

Don’t take my word on it – look, here it is in black and white:

Registration Type

Early Price

Late Price

Full Pass: Member $750 $825
Full Pass: Non-member $1300 $1380
Networking: Member $465 $515
Networking: Non-member $890 $940

So, before the early bird changes into an angry bird, get on it! Click here to register today.

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

Rich Smith
VCIA President