Normally at this time, I would be looking forward to travelling to one of the great cities in the U.S. to take part in the mega-insurance event known as RIMS. Even though we will not be luxuriating in a convention center while pining for a breath of the outdoors this year, the State of Vermont, VCIA and our members will be staffing the virtual Vermont booth starting next Monday.
Brittany Nevins is captaining our ship, that includes Dave Provost, Sandy Bigglestone, Dan Petterson, Christine Brown, and others from Vermont’s DFR; Janice Valgoi and myself from VCIA HQ; and a smattering of captive professionals from Vermont. Normally, over 10,000 attendees stalk the cities hosting this behemoth, but with RIMS going virtual, there is still an opportunity to meet with Dave, his team and the rest of us.
We will be hanging out in our virtual booth so come on by if you are attending. Sure, there won’t be the dinners and receptions, but we are still a lot of fun!
I just received my first shot of the COVID vaccine yesterday, and it provided a real boost of optimism that we are heading out of this weird nightmare. I would never have guessed how excited I’d be about getting a jab in the arm with a sharp needle!
Governor Scott of Vermont, who has been incredibly disciplined about taking necessary precautions, has said he expects the state to be more or less open by July 4th. As we start to head into nicer weather up here in the Great North, that is good news. Still a lot to be worried about when I scan the news from around the world: huge spikes in Brazil, slow rollout of vaccines in Europe, the fact that many in the developing world won’t see vaccinations until next year.
COVID is indeed an international issue – not only is there a truly humanitarian issue at stake, but the pace of vaccinations around the world will impact us all. That’s why it was interesting to hear about the new Global Health Risk Facility (GHRF). The GHRF is a highly collaborative undertaking that insures the transportation and storage of COVID-19 vaccines, and other critical health commodities, for the benefit of low, middle, and upper-middle-income countries. The GHRF has been developed by Parsyl, a Lloyd’s Lab alumni, in close partnership with AXA XL, Ascot and McGill and Partners. AXA XL will lead the risk management and local policy implementation.
What’s also interesting (though maybe not a big surprise) is that many of the pharmaceutical companies involved with the development and manufacturing of the vaccines chose to base their captives here in Vermont. How cool is that?! Pfizer, Johnson & Johnson, and AstraZeneca all domicile their captive insurance companies here, for good reason.
I look forward to learning more about how captives were utilized in these extraordinary times. Which is exactly what will happening as part of the VCIA Signature Series, this coming Tuesday, April 13th! One of our sessions is on disaster (and unforeseen event) preparedness and recovery. We will learn from captive owners whose programs have navigated the treacherousness of the pandemic, sure to be fascinating. Also in the line-up for that day is a great session about cyber-risk and it’s ever-expanding nature of threat. The day ends with a private forum for captive owners to get together, see each other (via camera), share ideas and collaborate. Should be a great day and it’s not too late for you to register! More info at http://www.vcia.com.
Join VCIA for its Inaugural Signature Series Event on April 13th! The Signature Series is an online event consisting of two Captive Education Sessions, each followed by Guided Discussion Groups hosted by Industry Experts. The day also features a Captive Owners Forum.
The first session will be the dramedy “Disaster! – What’s the Plan?” exploring the reactions, interactions, and strategies to prepare your company and captive program for the next unforeseen event. We’ll illustrate real time issues companies and captives faced in the wake of the declaration of the COVID-19 Pandemic and how to better prepare your company for future disasters and other major business challenges. Our cast of thespians will examine the importance of a disaster preparedness plan, its key components and how to craft such a plan for your company. The stars of this dramady are Julie Bordo, President & CEO of PCH Mutual Insurance Co. Inc. (RRG), Hugo Crawley, Chairman of TigerRisk Partners (UK), Gail Newman, Vice President of Risk Management for Bright Horizons Family Solutions, and Michael O’Malley, Managing Director of Strategic Risk Solutions. It may be so good we take it into syndication!
Our second session will look to answer many questions around cyber risk and captives. As cyber-attacks become more frequent and increasingly harmful, are you prepared? What risk financing and management techniques are you using today to handle your cyber risk? Are you familiar with regulation and governance required to manage cyber exposure for your organization? How do you design a program which provides appropriate coverage cost-effective price, along with the associated vendor costs, to prepare if a cyber event occurs in your organization?
Elisabeth Case, Managing Director at Marsh, John O’Neil, Corporate Insurance Risk Manager at MassMutual, Dan Petterson, Director of Captive Examinations for Vermont’s Division of Captive Insurance, and Uso Sayers, Managing Director at Johnson Lambert, will share knowledge of best practices, and what coverages you need to ensure for, both in and out of your captive, to protect your organization from this ever-expanding threat.
And finally, for our captive owners only forum, two captive owners will lead a dynamic discussion with other captive owners exploring current industry challenges, solutions, new ideas and industry best practices. Melinda Young of NC3 and Brian Johnson of Alliance of Nonprofits for Insurance, RRG, will corral the issues most on the minds of captive owners using interactive technology.
A couple of shout-outs this week to two great guys in the captive insurance industry.
Kevin Heffernan has announced his plans to retire from Artex in March of 2021. Kevin has been with Artex for 15 years in several operational and domicile management roles. For the past 14 months, Kevin has led captive operations across the United States as Executive Vice President. When I took on the role as President of VCIA a little over 10 years ago, Kevin was the chair of our finance committee. He was the ultimate steady hand on the tiller, providing excellent guidance and advice which was very important to a newbie like me. I wish Kevin well in whatever new adventure awaits him and hope to see him back in Vermont on occasion – even if it’s only in the summer!
No matter what captive conference I would go to, I always looked forward to seeing John Tally’s smiling face and his dry sense humor. John will be retiring from his role as captive program manager at the Missouri Department of Commerce and Insurance at the end of the month and will open a new business called TAL Consulting. John spent 25 years as a regulator, with 10 of those years regulating captive insurance companies specifically. He epitomizes the captive insurance community – friendly, willing to share experiences and discuss mutually beneficial issues with ease, and he’s just a good guy. I’m glad he is staying in “the family” and look forward to seeing him in Vermont as well (and maybe other captive conferences).
Just as we here in Vermont are starting to pack up our skis (not the hardcore, of course), the captive insurance industry is facing a new slippery slope.
Legislation approved March 9 by the Washington State Senate would set new requirements for captive insurance companies licensed in other domiciles but doing business in Washington State. Under the legislation, S.B. 5315, captives licensed elsewhere and operating in Washington would be required to pay an initial registration fee of $2,500 and be assessed an annual two percent premium tax on insurance provided to their parents or affiliates for Washington risks. Captives affiliated with public institutions of higher education would be exempt from the premium tax.
Besides being poorly drafted, the bill sets a terrible precedent whereby acquiescing some regulatory oversight by the Washington State insurance commissioner on captives domiciled in other states. This is the culmination of a battle over the past few years between Washington’s Office of Insurance (OIC) and reality. For whatever reason, the OIC has not liked that companies in Washington can set up captives to better manage the risks of their organizations. The OIC seems to have turned a blind eye on the benefits of captives to these organizations, and in turn to the State of Washington, and instead sniffly says “we don’t approve”.
For the companies and organizations headquartered in Washington, it has been frustrating I know. Finding a solution that gives some clarity to their operations as well as boundaries around taxes and potential fines forced a deal that neither helps the State of Washington, the companies doing business there, nor the broader captive community. At some point, this law if passed could discourage the use of captives by Washington State businesses and nonprofits. All it will do is limit control and add costs. Washington could have instituted a self-procurement tax like several other states – instead, the OIC chose pride over prudence.
Interesting story in February’s issue of Business Insurance on the growth of the InsurTech sector seen through the number of IPOs and M&A activity. Valuable InsurTech companies are being hoovered up by some of the insurance sector giants, while there is also an increasing appetite in growing the InsurTech firms themselves. The BI article quotes one InsurTech CEO saying the level of investment in the InsurTech sector is “profound,” with private equity firms investing in established InsurTech and venture capital investing in earlier stage startups, he said. “That’s why you’re seeing so much activity in the space — it’s well rounded.”
There many InsurTech solutions being tested and utilized in the captive sector as a spillover from the traditional market, of course, but few that I know of that have decided to stake their future on focusing almost entirely on our industry, which I think is a missed opportunity: captives have always been a great laboratory for innovation and new ideas to bring down costs, create efficiencies, and expand captive utilization.
Two firms focusing on the captive insurance market are AI Insurance and RYSKEX – very different models looking to shake up the industry. Cameron MacArthur is the founder and president of AI Insurance, and he comes right out of central casting: smart, young high-tech developer in Silicon Valley who recognized how artificial intelligence could be utilized to share information from insured and policy management, enabling automated end-to-end claims processing that is highly intelligent and dynamic, focused on delivering the captive’s ROI. He did this by digging down into the nitty-gritty around the processes and challenges captives and RRGs have as smaller (usually) self-insurance operations.
Marcus Schmalbach and his team at RYSKEX have a similar story, although located in Berlin instead of Silicon Valley. RYSKEX has developed a digital platform that allows a global network of leading investors to take on hard to insure emerging and systemic risks. It also enables captives to find the appropriate coverage using our parametric risk transfer solution and hedge their risks as securitized intangible assets, which can be traded transparently and securely using blockchain technology. Pretty cool.
Captives have played a valuable role as a laboratory for both these InsurTech solutions. I would not be surprised to see similar stories about these two firms in the next few years. Watch this space!
I attended the virtual World Captive Forum this week and it was great to see many friends over the two days. I was working the Vermont booth (remember those days…) so was not able to see all of it, but there was some good stuff on several sessions I was able to join.
The regulators panel with Vermont’s own Dave Provost, Deputy Commissioner – Captive Insurance, Vermont Department of Financial Regulation; Carl Culmer Jr., Manager – Policies and Practices, Insurance Commission of The Bahamas; and Travis Wegkamp, Director of Captive Insurance, Utah Insurance Department was ably moderated by Joe Holahan of Morris Manning & Martin LLP (and member of VCIA’s Legislative Committee). It was good to hear that each domicile was more or less in synch with each other as they discussed legislative and policy updates, new and emerging risks, and the outlook for the captive industry post-pandemic.
Dennis Silvia, Davies Captive Management and VCIA board member, did a super job with his panel, The Art of the Cell (very clever!), outlining the dramatic increase in the popularity of the use of cells and how they are currently being utilized in risk financing programs.
The topic of the hard market and evolving global risk landscape was of course a prominent area of focus throughout the conference. Another terrific panel highlighted the importance of captives in long-term risk financing and risk management planning. Deyna Feng, Director, Captive Programs at Cummins Inc.; Mike Maglaras, President of Michael Maglaras & Company; and Anne Marie Towle, Global Captives Insurance Leader of Hylant (another VCIA board member) discussed how companies are re-defining their risk appetite to take control of their own destiny by using captives to complement traditional insurance placements and fill coverage gaps. Anyone who has not yet had an opportunity to meet Christine Brown, Assistant Director of the Captive Division in Vermont’s Department of Financial Regulation, moderator of the session, should check out this rising star!
And speaking of the captive insurance firmament, the all-star panel of Sandy Bigglestone, Director of Captive Insurance at Vermont’s Department of Financial Regulation (Women to Watch winner 2018); Ellen Charnley, President of Marsh Captive Solutions (Women to Watch winner 2018); Karen Hsi, Program Manager- Captive Programs, University of California Office (Break Out winner 2020); and AmyEvans, Executive Vice President, Intercare (Women to Watch winner 2020) did an amazing job explaining why captives are well suited for crises such as a pandemic, hardening market and social unrest.
Great job all around!
An update from my blog on February 5th challenging you to identify the people in the 80’s era photo. Maria Young of Alcoa, who was present at the party, won the box of chocolates for identifying most of the group. She was an insider, but there was nothing in the rules that said the people there could not answer! Here is who was in the photo:
Diane Leach; Mary Wrenn (now Woodward); Gary O’Hare ; Maria Young; Cynthia Reer (now O’Connor); Sue Urie; Jeff Kenneson; Scott Whittemore; Kate Westover; Nikki Kuhn.
A true giant of the captive insurance industry has recently passed away. George Chaffee, Jr., founding director of VCIA, (shown above at the VCIA Annual Conference) died on February 6, 2021 in Vermont. Though he was a Harvard graduate with a degree in Engineering & Applied Physics, George worked in the insurance field all of his life, starting as an adjuster with Kemper Insurance in Boston in 1961. I remember him as being kind and welcoming to me as a newbie in the industry over 10 years ago.
George became Deputy Commissioner of the State of Vermont Banking & Insurance Department in 1977 and was appointed by VT Governor Richard Snelling as Commissioner of the department on March 21, 1980. This being the 40th anniversary of Vermont as a captive domicile, it is especially poignant to note that George introduced landmark legislation in 1981 creating the Vermont Captive Insurance industry, eventually ensuring that the State of Vermont would become a domicile for the captive industry. VT Governor Jim Douglas cited George for his significant contributions to the State of Vermont, and recognized that he was one of the world’s leaders in the captive industry, in addition to contributing in a major way to Vermont’s economic development. George was also the founding Director of the Vermont Captive Insurance Association and was instrumental in the growth and success of VCIA.
Throughout his life, George touched many people in Vermont and the captive industry. So many of the industry’s leaders today have strong connections to him. He will be deeply missed. George was also known for owning various motorcycles and enjoyed many trips with friends throughout Vermont and beyond. He was a licensed pilot and even built two of his own planes, both of which he flew avidly. There is at least one story of him landing one of his planes in a tree – unscathed of course!
All of us at VCIA send our heartfelt condolences to his wife, LouAnn, and his many loving family members, children, grandchildren, great-grandchildren and friends. Farewell, George.
Over the course of this 40th Anniversary of captive insurance in Vermont, I will share a photo or two from days gone by. The first photo is from Diane Leach’s first home office in 1987 where she ran VCIA before “upgrading” to a couple of office spaces throughout the years. Lots of clunky office equipment and Diane said the fax machine would ring all night! Funny, how we have come full circle now that we are all working from home – and we may never go back to an office again (or at least not full time).
Even better is this photo from 1987 celebrating Diane’s departure luncheon at ARM (now Aon). I recognize several folks in the photo – some still working in captives, others retired or passed. The guy standing to the right with the blue suit could have been me back then – just need to add parachute pants! I will offer a box of Lake Champlain Chocolates to the person who can name the most faces in the photo!
Great kickoff event for the 40th Anniversary of captive insurance in the State of Vermont this week. Each year in January, VCIA Members visit the Vermont State House for our annual Legislative Day. This special event highlights the successful working relationship between our Association and the State’s elected and appointed leaders.
This year, we switched to a virtual Legislative Day due to the pandemic and it was one of the most popular we have hosted! We started the day with a Q&A session from the leadership team at the Vermont Department of Financial Regulation’s Captive Division. They reviewed recent events and changes at DFR, as well as answered questions on what they saw on the regulatory horizon.
Midafternoon, DFR Commissioner Mike Pieciak hosted an hour-long captive industry review, highlighting 40 years of innovation and superlative regulation in Vermont. Mike also talked about how members of the Captive Division and others in DFR had taken on important roles in tackling the COVID-19 emergency in the State – the Governor drew on the expertise and competence of Mike and his department in modeling the pandemic as well as assisting in the distribution of COVID resources to Vermonters.
DFR’s Dave Provost and Sandy Bigglestone provided an overview of the captive industry in Vermont to legislators, members and guests attending, followed by Brittany Nevins, Captive Insurance Economic Development Director at Vermont’s Agency of Commerce, who gave the economic and market report. Yours truly did a quick summary of VCIA, before passing the baton to Julie Bordo, President & CEO, PCH Mutual Insurance Co. Inc. (RRG), who hit it out of the park with a presentation of her captive program and the important role Vermont has played in its success.
The final event was a zoom meeting with VCIA members and the new leaders under the gold dome. Lt. Gov. Molly Brown, Speaker of the House Jill Krowinski, and Senate President Pro Tem Becca Balint shared their valuable time with us talking about the issues and priorities they see ahead for the State of Vermont. The enthusiasm they all brought to our meeting with our members contributed enormously to the success of the day. Sen. Balint recounted the time as a new member of the Senate Finance Committee she reported out the captive bill on the Senate floor with a song! (Something she had to apologize to her colleagues for later 😊).
The cherry on top (literally) is that the State of Vermont provided a Lake Champlain Chocolate Thank You Gift Basket to a randomly chosen attendee of Legislative Day. The winner was our good friend Adam Dubuque of Johnson Lambert who has been in the industry for 18 years – almost half of the 40 years captives have been in business in Vermont! Yikes 😉
Thank you again to all of you who joined us this week. I look forward to hearing from you.