Summer’s here and it’s Grillin’ Season

 

I know last week I said summer has finally arrived here in Vermont after a tough spring with 80 degrees and sunny, well that’s nothing to the 90 degrees we had the past couple of days. And like I said that means it’s grilling season.

That reminds me that I am looking forward to my grilling of Vermont’s Commissioner of Financial Regulation, Mike Pieciak! Well, not that I am planning on a “grilling”, perhaps just a light “sautéing” instead. Mike is going to join me at the end of the first day of VCIA’s Virtual Conference to discuss.

Commissioner Pieciak will join me in a conversation with me on major issues impacting the captive insurance industry in Vermont, at the NAIC and beyond. We will hear Mike’s thoughts on transformative changes due to the COVID-19, the current regulatory environment, and other things I plan to spring on him.

Now Mike is a very smart guy and pretty unflappable, but I am going to do my best Mike Wallace on him (for all of you old enough to know the famed 60 Minutes reporter). More information to follow – I hope you can join us this August!

Rich Smith
VCIA President

There’s More to the Story…

panelA key component in a captive program’s success is its ability to adapt to changing market conditions, economic turbulence, new & emerging risk and even the recent changes in the definition of employment. Even in the midst of this dangerous pandemic, underlying issues impacting the captive industry were emerging.

VCIA will be hosting a webinar next Thursday, May 14th, that will explore ways to shift captive strategy to respond to the business needs of your parent company and optimize your program in our changing market.  Our presenters will demonstrate captive success with emerging risks, illustrate current challenges and keys to achieving a positive outcome, and explore what questions to ask to create a successful pathway to deal with such unforeseen events such as COVID-19.

Our speakers will be four leading thinkers in the captive industry:  Andrew Baillie is the Program Director, Global Insurance for The AES Corporation, a global power producer and distributor, where he supports risk management oversight and the procurement of insurance, as well as managing the company’s large, Vermont-based Captive Insurance Company; Steven Bauman works for AXA XL serving as Head of Global Programs and Captive Practice in North America; Ed Koral is a managing director with BDO’s Insurance Risk Advisory group; and Christine Brown is Assistant Director with the Vermont Department of Financial Regulation – Captive Division, where she directly supports the Director of Captive Insurance and Deputy Commissioner of Captives with licensing, industry outreach and strategic planning.

Join us to learn how to remain agile during these challenging times. Go to www.vcia.com and register today.

Thank you and I look forward to hearing from you!

Rich Smith
VCIA President

Team VCIA + Team DED + TEAM DFR = Team Vermont

2You may ask yourself (and others) just how is VCIA going to pull off a successful 100% virtual captive insurance conference this August. Well, we are still working out the details, but one BIG reason I feel confident it will be great is the support and brainpower we get from our colleagues at the State of Vermont’s Department of Economic Development (DED) and Department of Financial Regulation (DFR).

Often, when I go to captive insurance conferences, people talk to me as if I were a regulator from Vermont. Not surprising, many folks conflate our distinct organizations because we coordinate so well with each other. I will then explain that, no, I am not a State employee but staff the captive trade association. And even though we are separate organizations with our own missions, we absolutely work in tandem for the good of Vermont’s captive industry.

Now is one of those times I am truly proud of that essential teamwork. VCIA staff met yesterday via Zoom with Ian Davis from DED and the captive leadership from DFR: Dave Provost, Christine Brown, Dan Petterson, and Sandy Bigglestone, to discuss ideas on the best ways to make the VCIA Virtual Conference truly awesome. The State folks brought excellent ideas, innovative thinking, and, most importantly, terrific enthusiasm to the process. Their professionalism and broad perspectives underscored just how lucky we are to have their partnership.

So, keep an eye out for details. We plan to bring you a terrific conference – and could not have done it without Team Vermont!

Thank you and stay safe!

Rich Smith
VCIA President

Go Big!

going-virtual

As you may have heard, VCIA decided this week to move our Annual Conference in August to a 100% virtual event.

This decision definitely was not made lightly. VCIA Board, staff and Conference Task Force members labored over the facts, sought outside advice, and kept you all foremost in our minds through all the discussions. Though the full social and economic impact of the pandemic is still unfolding, we believe it will require recovery time to get back to “normal” for all of society, including our industry.

Going to a fully virtual conference is consistent with the uncertainty the next few months brings and the need to put public health first, and it also ensures the industry will have an opportunity to share important and critical information – especially regarding future pandemic risk management.

The response from our members of going virtual has been very positive.  I know there are folks who think we may have made the wrong decision or that we should have waited longer before making the decision, and I understand their feelings. However, we knew if we were to bring you the best conference possible in a new virtual space, we needed to get out of the gate quickly.

By starting now, we are confident that VCIA will deliver a virtual event that satisfies your needs for top-level education and networking, our exhibitors needs to have their products and services seen, our sponsors desires to be associated with a leading enterprise, and the public health system’s need for social distance and caution. Presenting in a virtual space may also open up the conference to those who may not have been able to travel this summer. With corporate travel and finances being currently of concern, we hope this can be a helpful shift.

There will be much more information to come on conference specifics. For now, please bear with us and trust that VCIA has taken into account your needs. Your continued support will be key to the success of the conference, just as it has been for the past 30+ years.  We are successful in large part due to the enthusiastic and committed involvement of you, our members.

When times are tough, the captive industry has a way of adapting. We are fortunate to be among such innovative professionals, like you. We will all get through this together.

Thank you and stay safe!

Rich Smith
VCIA President

Mixy Business

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Many thanks to all you who joined us Wednesday night for VCIA’s annual Holiday Mixer. We had around 120 of nearest and dearest friends attend at the Hilton taking time to greet and socialize with fellow VCIA members on a cold and ultimately snowy Vermont evening.

Many thanks to our sponsors of the event: our friends at Crowe right up the street, and the folks of NAMIC Insurance Solutions (NAMICO) who came all the way from Indianapolis! Tim Sullivan, Kristen Strasser, and Ted Doughman braved the “friendly” skies to join us.  It is one of my favorite nights of the year, when friends come together with no agenda except to enjoy each other’s company as we head into the holiday season.

I also want to congratulate David Guerino as SVP & Managing Director of KeyState Captive Management.  Dave was there with some of his fellow KeyState colleagues as well, Jeff Vigne and Alicia Huskes. KeyState is a relatively new VCIA member and just announced plans to establish an office in Burlington, Vermont in early 2020.

Thank you again and I look forward to hearing from you!

Rich Smith
VCIA President

 

Parametrics and Nat Cat

I participated on the SRS webinar recently about using a captive program for natural catastrophe risks (Nat Cat) and found it quite interesting. Most often, Nat Cat risk is insured with parametric insurance, a type of insurance that does not indemnify the pure loss, but rather issues a set payment upon the occurrence of an objective triggering event, such as an earthquake of a certain magnitude or a hurricane of a specific intensity.  The use of a parametric trigger has been around for some time, but there seems to be growing interest in the tool, especially with the number of natural disasters increasing exponentially every year.

Robert Nusslein, Head, Innovative Risk Solutions Americas, Swiss Re Corporate Solutions, effectively described how captives can play a role in parametric insurance.  With insurance markets looking like they are hardening, especially property in natural disaster-prone areas, a new approach needs to be contemplated. As Swiss Re explains, parametric insurance products are linked to reputable, objective third-party sources, which are used to determine an insurance payout. They are designed to provide catastrophe coverage and complement, but not replace, traditional insurance coverage. Using this structure, parametric insurance payouts are quickly determined, easily measured, and effectively eliminate loss adjustment hassles. The proceeds from a parametric insurance payout can be used at the buyer’s full discretion.

Captives can play a variety of roles in this type of scenario.  As Brady Young pointed out, captives allow corporate to transfer risk of its subsidiaries to the parent’s captive insurer. Also, subsidiaries retain risk in their comfort zone and are able to assume it with less negative impact to financial results from Nat Cat or weather events. The captive can assume an appropriate amount of risk, anywhere from 90% to as little as 10%, with a reinsurer behind the captive assuming the balance of risk. Risk can be split in primary and excess layer participations or a percent quota share participation between captive and reinsurer. Reinsurers provide underwriting, structure and pricing expertise for parametric Nat Cat covers and third-party arm’s length pricing verification for the captive and its regulator.

All of this helps captive owners capture some of the benefits of parametric insurance, such as breadth of coverage, speed of loss payments, and supplemental coverage to traditional insurance.  And with the growing risk from natural catastrophes due to climate change, it is important for captive owners to be ready!

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

Rich Smith,
VCIA President

We had a great time!

2019-conference-staff-photo

VCIA Staff left to right: Diane Leach, Rich Smith, Peggy Companion, Elizabeth Halpern, Megan Precourt, Isabelle Halpern (summer intern), Dave Rapuano and Janice Valgoi

Thanks to all who joined us in Burlington earlier this month for another great VCIA captive insurance conference!  As I tell everyone who asks me how the conference went, I have a great time meeting new people and reconnecting with old friends. And the entire VCIA staff feels the same way.

You seem to agree, too: more than 84% of conference survey responses rated our conference the best or better than most. With over 1000 attendees from 44 States and 10 countries, where more than 25% were captive owner and 19% first time attendees. Our annual gathering in August has grown to be the place “Where the Captive World Comes to Meet”!

The conference had great energy and people liked the format and extra touches.  As a few of the  attendees stated the conference is “where the best and the brightest in the captive world come together to keep moving the industry forward”; “a participative educational forum, fostering business and personal relationships that last a lifetime!”; “the place where everyone is willing to share ideas and learn from each other”; “the premier captive insurance conference on the calendar, given its size, its sophistication….if I could only attend one captive conference per year, it would be VCIA.”

Attendees especially liked the new Captive Immersion program that was held on Monday, our Learning Circles which enabled attendees to share ideas and experiences, the exhibitor reception with the special Vermont beer and spirits samplings provided, and our two excellent keynotes: Laura Drabik from Guidewire and astronaut Mike Massimino.

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. A special thank you to our Platinum Sponsors:

  • A.M. Best
  • Kroll Bond Rating Agency
  • Madison Scottsdale
  • Old Republic
  • Performa
  • Wells Fargo
  • State of Vermont

Now after a little break, we are back to work again looking out for the captive industry. We have a bunch of webinars being planned for the rest of the year so keep your eyes on our website!

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

10-Day Countdown

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!

If the Spirit(s) Move You

As you know (because of my constant pestering), the Great VCIA Annual Conference is coming right up! Well for those of you that are able to join us the week of August 5th, we have a little treat for you.

Come to VCIA’s Opening Reception in the Exhibit Hall on Tuesday and enjoy samplings of Vermont artisan brews and spirits. Look for the gold balloons throughout the hall to find these special beverages while connecting with great companies who are exhibiting, and industry peers from around the world.

Special samplings from the Alchemist (brewer of the world-famous Heady Topper), Zero Gravity, Boyden Valley, Caledonia Spirits’ Barr Hill Gin, Stonecutter Spirits, Lawson’s Sip of Sunshine, Whistle Pig Rye, Mad River Distillers and Stowe Cider.

So, come join us and enjoy your Vermont tipple! Click here to register today.

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