Connection to Purpose

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Captive insurance has had a bit of a rough ride lately. Whether it’s the news about 831(b)s or the “extra-judicial” tax grabs by non-domicile states, it seems that we are in a continuous rearguard action regarding the efficacy of our industry.

That’s why, now more than ever, the captive industry needs to start telling OUR story. The true story of the many ways that the existence of captive insurance creates good in the world. Of course, we know that captive insurance provides a risk financing mechanism for organizations to save money; but lesser told is often what good is done with the money saved. These cost savings have a direct impact on saving lives in hospitals; helping prevent life-altering accidents for farmers, truckers and construction workers; allowing low-income housing authorities to provide safe living spaces for their clients; and helping college protect their students and provide more support for their educational mission.

There is a great article right now in Risk & Insurance exemplifying this connection to purpose. The article is focused on the lives saved at The University of Oklahoma Hospital System, where VCIA board member Heather McClure is interviewed about its captive insurance company, Academic Physicians Insurance Company.  Heather is the Chief Operating Officer at APIC, and she gives terrific and moving examples of how the captive has played such an important role to the university and community. You can read the article by clicking here.

You will be hearing more about the industry’s connection to purpose from VCIA and other captive organizations in the near future.  It’s imperative that our story get out there and be told. What’s your story?

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

Rich Smith
VCIA President

Captive Immersion

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Every year VCIA looks for new ways to provide content and updated information to our members at our annual conference. This year we are trying something new: we have scheduled a half-day on Monday afternoon, August 5th, right before the conference gets started for what we are calling Captive Immersion.

VCIA’s Captive Immersion is designed to familiarize individuals who are new to the captive industry (or who just want to understand captive roles more fully) on the key services that are needed during captive feasibility study, formation and management. These services include legal, auditing, management, actuarial, investments, and captive regulation. Industry experts will give newcomers a complete sense of the various components and their importance in the overall captive picture. The afternoon begins with lunch and concludes with a cocktail networking reception for participants of Captive Immersion, the session speakers, VCIA board members, Platinum sponsors and invited captive owners.

Upon completion, participants will be able to better understand key stakeholdings in the captive insurance industry; obtain a higher-level understanding of the captive insurance industry; learn how and when to engage the services of a particular service provider; understand the roles and responsibilities of each service provider group.  A lifetime’s worth of knowledge all in one afternoon (with drinks at the end to boot)!  So, keep a lookout for more information, including our official May 1st conference kick-off day.

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

Rich Smith
VCIA President

It’s time we stop being ostriches…

 

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How much longer is our industry (and by that, I mean the general insurance industry) going to keep ducking one of the most (if not THE most) important risk issue of our time: climate change?

Regardless of what your philosophical or political beliefs may be, the evidence is clear that we are facing unprecedented changes in the earth’s climate – well at least going back a few thousand years. And still, the one industry that is supposed to be out in front on risk management has its head in the sand.

As late as last year, Business Insurance reported that “the majority of insurers, particularly in the United States, do not integrate climate change into their risk management practices despite historic flooding in many communities”. Reinsurers, on the other hand, seem to have had a better response to climate change-related financial risk, according to the study by the University of Waterloo called Insurance and Climate Change Risk Management: Rescaling to Look Beyond the Horizon.

As reported in Gloria Gonzales’s article in BI, most insurance companies assumed the risk to property from extreme weather is static and based their premiums on historical data. Insurers have not adjusted as extreme weather events have increased in severity, frequency and unpredictability, according to the study.

“As extreme events become more frequent, insurers that ignore climate change will not put away enough money to cover their claims,” Jason Thistlethwaite, a climate change economist at the University of Waterloo, said in a statement. “To recoup those losses, they’ll have to raise rates or pull coverage from high-risk areas. When this shift happens, thousands of people will lose coverage or it will be unaffordable.”

“Some insurers are better at understanding climate change than others,” Mr. Thistlethwaite said. “These organizations will survive and likely be able to sell climate services to their counterparts struggling to understand the problem. Those that don’t will fail.”

As I blogged more than a year and a half ago, the insurance industry, including captives, needs to step up and lead on this issue. No industry is better placed to clear-headedly explain the risks and provide much-needed leadership on mitigation and sustainability. It’s what we do!

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

Rich Smith
VCIA President

The Gospel of Captives and Temple

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As I mentioned in my last blog, we were in Philadelphia last Tuesday for one of VCIA’s famous Road Shows serving up our sermon on the gospel of captives to a group of around 100 attendees. My heartfelt thanks to all the participants and our sponsors: Trion-MMA, Old Republic PMA, Kroll, and the State of Vermont.

Jeff Packard of Old Republic PMA acted as our MC, introducing the panels while providing entertaining (and educational) anecdotes of his many years in the captive industry. Our panelists were terrific as well! Kirk Watkins, Captive Practice Leader of Trion-MMA, walked through the basics of captives including types, lines and the process of setting one up. Then Ian Davis, Director of Finance, and Sandy Bigglestone, Director of Captives, provided an overview on regulation and licensing of captive insurance in the State of Vermont.

The second panel included two of Vermont’s captive insurance owners, Gary Langsdale, University Risk Officer for The Pennsylvania State University which owns Nittany Insurance Company, and Phil Leaman, COO of Resource Partners and Peace Church Risk Retention Group (A Reciprocal). Both provided excellent information from their many years of experience in operating captive insurance companies.

Gary outlined the complexity of his captive which covers 8 million sq. ft. of floor surface in 700 buildings, a 107,000-seat football stadium, 45,000 students, 16,000 faculty and staff, 1900 owned motor vehicles, two large hotel and conference centers, and, my favorite, a nuclear reactor sharing a driveway with the child care center!  Phil talked about how his captive covers Quaker, Mennonite, and Church of the Brethren facilities serving the aged and other assisted living populations.  With approximately 140 organizations and 16,843 insured units, Peace Church has gross written premiums of $55,433,689.

But most of all, we had around 30 students from Temple’s Fox School of Business studying risk management or actuarial sciences who joined us that afternoon. This extremely poised, intelligent group of young adults asked the best questions and provided all of us great hope for the future of the captive industry. My sincere thanks to Michael Zuckerman, Assistant Professor at the Fox School of Business and Management’s Dept. of Risk, Insurance and Healthcare Management, for bringing such an inspiring group of students!

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

Rich Smith
VCIA President

Philadelphia Freedom!

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Heading to Philadelphia next Tuesday for one of VCIA’s famous Road Shows where we dazzle the crowds with an overview of the captive insurance industry. The afternoon includes two educational seminars featuring captive owners and captive professional panelists who share their companies’ experiences in forming and operating a Vermont captive. The afternoon wraps up with a networking reception for all.

Held at the Le Meridien Philadelphia hotel on 1421 Arch Street in downtown Philadelphia, the first half of the afternoon will focus on the basics of captive insurance companies; the reasons for formation, the feasibility process and key issues in putting a successful captive program together. In the second half, two distinguished captive owners from two different types of captive insurance companies will share their experiences and why and how they created their captive programs.

Gary Langsdale serves as university risk officer for The Pennsylvania State University with responsibility for Enterprise Risk Management including operational, hazard, and strategic risks. Gary is president of the university’s captive insurance company, Nittany Insurance Company. He has over 40 years of experience in the insurance and risk management field, has co-authored white papers for the University Risk Management and Insurance Association (URMIA), and participated in the 2010 development of the ASME standard on risk assessment for institutions of higher education. In 2009, he was recognized by Business Insurance magazine as a member of their Risk Management Honor Roll, and in 2016 he received URMIA’s highest honor, the “Distinguished Risk Manager” designation. Gary will share his experience with us.

While serving as CEO and COO of Resource Partners over the past 15 years, Phil Leaman, our second captive owner panelist, helped direct the launch of three Vermont based captives providing for the liability, workers compensation, medical benefits and risk management needs of its faith-based, not for profit, aging services and health & human services member organizations. During this time Phil was part of the organizational team and served as a founding board member of the Center for Aging Services Risk Management which confers the professional designation of Certified Professional in Aging Services Risk Management (CPASRM) to individuals who complete its educational program in the discipline of aging services risk management. Phil serves on the VCIA Legislative Committee.

It’s not too late to register to hear from these fine panelists! Click here for more info.

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

Rich Smith
VCIA President

Baldy Smith Rides Again!

baldy2Another successful VCIA Legislative Day this week at Vermont’s State House in bustling Montpelier. Our members, including many who came in from afar, got to hear from Vermont’s Lt. Governor, David Zuckerman, as well as Vermont’s Commissioner of Financial Regulation Mike Pieciak at our luncheon, and then later in the day from the Speaker of the House, Mitzi Johnson, the President Pro Tempore of the Senate, Tim Ashe, and finally from House Minority Leader Patty McCoy. Even though they represent different parties under the Gold Dome, what they do have in common is their unwavering support of the captive insurance industry in Vermont

At our lunch we heard from Phil Susmann, President of Norwich University which hosts the NU Applied Research Institutes (NUARI). Just a few miles south of Montpelier, NUARI serves the national public interest through the study of critical national issues and the development of related educational and training programs. Phil and his NUARI colleagues have been instrumental in helping U.S. banks and financial firms test and harden their resiliency against major cyber events.  NUARI’s simulation tools enable hundreds of players across the country—from broker-dealers, clearing firms, and stock exchanges to U.S. banks, regulators, and law enforcement agencies—to test themselves against lifelike simulated cyberattacks. The exercise has become the largest single-day event of its kind for the industry.

VCIA testified before House Commerce and Senate Finance in the afternoon. VCIA board member Heather McClure knocked it out of the park with her testimony connecting work of the Vermont legislature in support of captive insurance with patient lives at Oklahoma University Medical Center, where their APIC captive supports advances in patient care. Members of the two committees were visibly moved by the impact of her testimony!

Finally, for the first time we held our reception for legislators in the venerable Cedar Creek Room at the State House. And this is where the story of Baldy Smith comes in, for in the Cedar Creek Room hangs a recently acquired painting of the Civil War general. VCIA’s Diane Leach wondered if Baldy is an ancestor of mine, and although the likeness is uncanny, as far as I know Baldy is from a different branch of the Right Honorable Smith Family.

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

VCIA Legislative Day – Cyber-up!

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As we all know, cybersecurity is one of the main issues facing society today. From data breaches that expose personal information to malware that can infect computer systems, in our growing IOT (internet of everything) world it’s the problem of the day. The insurance industry, including captives, have focused on cybersecurity for some time now. Both to provide their clients with the proper mitigation policies and to protect their own data systems, our industry continues to be in the forefront.

Who would have figured that in our small state, Vermont hosts one of the top cybersecurity institutions in the nation! Located in Northfield, Vermont (just south of our State’s capital, Montpelier) Norwich University hosts the NU Applied Research Institutes (NUARI).  NUARI was federally chartered in 2002 to address cyber incident management challenges through research, training programs and technology development and has been a global leader for more than a decade in developing cyber war gaming, distributed learning technology, distributed simulation technology, critical infrastructure exercises, and cybersecurity curriculum.  Norwich provides a truly unique program utilizing state-of-the-art forensic tools unheard of at other institutions of this size.

We are honored to have the President of NUARI, Phil Susmann, address our members at next week’s VCIA Legislative Day in Montpelier. Phil will speak at lunch in the Capital Plaza Hotel on January 23rd along with DFR Commissioner Mike Pieciak and a welcome from Lt. Governor David Zuckerman.

Legislative Day is a chance for our members to meet the State’s top political leaders and hear about the issues that are facing Vermont in the upcoming year. It’s also a great chance for the captive industry to say “thank you” for the over 30 years of support from politicians and policy leaders from all stripes: Democrats, Republicans, Progressives and Independents.

There will be meetings with legislative leaders and presentations to House and Senate committees. And don’t miss the Q&A opportunity with Dave Provost and the DFR Team after lunch! The event concludes with a fabulous evening reception where legislators, elected and appointed officials and VCIA Members mingle and exchange information about Vermont’s captive insurance industry and make plans for its continued success in 2019.

So, if you haven’t done so already, register here for a great day!

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

Rich Smith
VCIA President