Space…The Final Frontier

Rich-KurkVery cliché, I know, but still so true.

The fact that we now have a burgeoning space industry opens up opportunities for the insurance world. Most insurance companies offer some type of Space and Satellite Insurance which covers things like satellite launch and in-orbit, contingency, in-orbit third party liability, or some combination thereof.  But with space tourism becoming a reality in the not-too-distance future, captive insurance has an opportunity to play a role in the risk management of our last frontier.

The global banking firm UBS believes there will be very lucrative ramifications from the space flight efforts currently led by Virgin Galactic, SpaceX and Blue Origin, and stated that in a decade high-speed travel via outer space will represent an annual market of at least $20 billion and compete with long-distance airline flights. Space tourism will be a $3 billion market by 2030, UBS estimates.

UBS pointed to SpaceX’s plans to use the massive Starship rocket it is building to fly as many as 100 people around the world in minutes. SpaceX said that Starship would be able to fly from New York to Shanghai in 39 minutes, rather than the 15 hours it takes currently by airplane – pretty cool.  And even though space tourism is still nascent, UBS said they believe the sub-sector will become mainstream as the technology becomes proven and cost falls.

The legal risk of orbital space tourism is uncharted territory, and the liability risks to these companies could be huge.  Under current regulation, commercial passengers will have to sign an “informed consent” form to confirm that they recognize and accept the risks. This provision has been enshrined in US law by the Commercial Space Launch Amendments Act 2004. Such liability waivers remain untested in the courts.

Although there are large insurance firms looking at space tourism, it seems that there is a yawning gap for the liability coverage of the space firms. Captives have always done well with filling this void with targeted, bespoke coverage. So, brush off your old Star Trek DVDs and let’s hope that we have a panel at the VCIA conference in the next ten years devoted to the extraterrestrial!

For all you Trekkies out there we have the next best thing to Captain James T. Kirk: for our closing luncheon on Thursday at the VCIA Annual Conference the week of August 5th we have former astronaut Mike Massimino as our special keynote. He is a recurring character on The Big Bang Theory, a professor at Columbia University, the first person to tweet from space, and a New York Times best-selling author.  Mike will speak of pursuing his passion and tell incredible stories about his experiences in outer space manning space missions. Having one of the most dangerous jobs in the world, Mike will speak of the teamwork and problem-solving skills needed to train for and accomplish one of NASA’s most difficult space missions. Don’t miss this fun closing event!

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

Rich Smith
VCIA President

Cool Captives from Vermont

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I just returned from Chicago where I was a guest of the folks from Strategic Risk Solutions at their annual client symposium. It was a great 1 ½ days of education and networking with the captives, service providers and staff of SRS (many Vermonters, of course!).

I was asked to speak on a panel with regulators from a variety of captive domiciles on the way Vermont regulates captives, specifically the examination process. Hardly my expertise, but as you all know, I am always game!

At the lunch on Wednesday, SRS President & CEO Brady Young recognized three of their clients for the innovation they all employed in their captives. All three were Vermont captives naturally! They were Agrisurance Inc., whose parent company is Dairy Farmers of America (DFA), the largest co-op in the country and fourth largest worldwide; Maple Red Insurance Company, captive for Turner Construction, one of the largest construction management companies in the United States; and ProMutual Solutions/Axial Benefits Group cell programs. 

Congratulations to you all, and congratulations to SRS for a very successful event!

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

Rich Smith
VCIA President

Playing Well in the Insurtech Sandbox

Concept of Insurance policyLegislation to enable insurtech experimentation and innovation in Vermont is on its way to the Governor’s desk for his signature. In the next week or so, Governor Phil Scott is expected to sign the insurance and securities bill (S-131).  Among other things, this bill creates an insurtech “sandbox” which will allow more R&D in this area with specific guidelines. It also updates Vermont’s surplus lines laws.

The regulatory sandbox in S-131 will provide the flexibility necessary to accommodate new concepts at the same speed as insurance technology develops. It does so by lowering or eliminating the hurdles facing this sector in bringing developments to market amid an insurance regulatory landscape that does not always accommodate such development. Not everyone will be able to play in the sandbox environment, as eligibility criteria limits the number of clients and a limited time period for the developers is part of the package. Overall, though, it’s a great step forward.

Earlier this year, Commissioner of Financial Regulation Mike Pieciak and Secretary of State Jim Condos signed a memorandum of understanding outlining their collaborative efforts to explore emerging blockchain technology and its use in the digital recordkeeping practices of the captive insurance industry.  They jointly issued a Request for Information (RFI) to identify vendors that may work with the State to launch a pilot program allowing new captive insurance companies to register with the Secretary of State using blockchain technology.  The pilot program will help the state identify areas where the use of blockchain technology in regulatory and other government business may increase data security and reduce costs for residents and those doing business in Vermont.  There were more than 20 submissions which the department is currently reviewing.

The support of the insurtech sector and the blockchain pilot program are great examples of Vermont’s openness to technology trials and innovations in our State, and Vermont’s awareness that the insurance industry as a whole is ripe for innovation.

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

Rich Smith
VCIA President

Give Peace (Church) a Chance

 

boatsMy thanks to Phil Leaman and his board of directors at Peace Church Risk Retention Group (a reciprocal) for inviting me to join them for their meeting in Vermont last week. Phil is COO of Peace Church RRG, and spoke at VCIA’s recent Road Show in Philly.  Peace Church is part of a larger umbrella organization that provides services to approximately 140 organizations with programs for aging, disability and behavioral health.  Phil is also an active member of VCIA’s Legislative Committee and participates first hand in VCIA’s legislative and regulatory efforts.

I was on the panel with two absolute pros from Vermont’s Department of Financial Regulation captive insurance examination office, Dan Petterson and Heidi Rabtoy. We gave an overview of DFR’s regulatory regime, VCIA’s activities on behalf of our members, and how both organizations work cooperatively for the industry.  What a great opportunity for the State and VCIA to get directly in front of a captive board to report on our activities and take their questions! I think they left with an even better feeling of being domiciled in Vermont and being a member of VCIA than when they arrived – at least I know I did!

In speaking with Dan and Heidi afterward (and Deputy Commissioner Dave Provost), we all agreed we would welcome other opportunities to get before captive boards of directors.  So, keep us in mind for your next captive board meeting in Vermont. Having us there makes Vermont look good and can make you look good, too!

On another note, thanks to everyone who came out Wednesday afternoon and evening for VCIA’s Board Meeting and Annual Spring Mixer. The evening on the deck of the Burlington Sailing Center overlooking Lake Champlain was absolutely gorgeous. Add in good food and drink, and great friends, and it was a super event! Thank you to Johnson Lambert LLP for sponsoring the mixer.

 

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

Rich Smith
VCIA President

Registration Open

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May 1st means only one thing around Vermont (well, maybe our particular piece of Vermont): registration for VCIA’s Annual Conference is now open!

With 1100 attendees joining us last year, the VCIA conference is the largest and most comprehensive captive insurance conference in the United States. Nearly 30 educational sessions will cover topics from those new to captive insurance and industry veterans.

A couple of new features this year include Captive Immersion which takes place on Monday, August 5th.  Captive Immersion will educate those new to the industry on the key services of captives, in a condensed time frame. Includes lunch, an afternoon of education, and a cocktail networking reception.

Also new this year are Learning Circles. Sign up for a Learning Circle to connect with 6 – 8 other attendees and a conference ambassador, where you’ll make connections, get acclimated to the event, and learn from each other!

Our two keynote speakers are NASA Astronaut Mike Massimino and Laura Drabik, Group Vice President of Business Innovation at Guidewire Software.  Mike will share his firsthand account of his missions to the Hubble Space Telescope and tell incredible stories of what it’s like to have one of the most dangerous jobs in the world.  And Laura will provide keen insight on disruption, tech and innovation in the insurance industry. Her passion for insurance is rooted in purpose and her inspiring talk on August 6th is not to be missed!

Come join us this August to learn about captive insurance from the industry experts. Explore trends and strategies to use in your organization, collaborate with others, and earn credit from our thought-provoking sessions!

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

Rich Smith
VCIA President

Lights, Camera, Act(ion)!

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Governor Phil Scott signs Vermont’s updated captive bill on April 18, 2019. Behind him from left to right are Ben Gould (Paul Frank + Collins), Ian Davis (State of Vermont Department of Economic Development) and Mike Marcotte (Chair of the House Commerce Committee)

As I mentioned in my blog a couple of weeks ago, the Vermont legislature passed this year’s captive bill pretty quickly and all we were waiting for was the Governor’s signature to make it officially
an Act.

Yesterday, at the Governor’s ceremonial office in the State House, Governor Scott did just that! Surrounded by VCIA members the Governor signed this year’s captive bill into law strengthening Vermont’s captive regulation in a variety of areas. This year’s bill proposed several updates, including modifications to the captive examination schedule and improvements to the statute governing group captive investments. The enhancements included in this year’s bill highlight the state’s ability to work closely in partnership with Vermont’s Governor and state legislature to ensure its captive law remains the industry gold standard.

Along with State officials, those participating included VCIA legislative chair Ben Gould of Paul Frank + Collins, John James from Performa, Mat Robitaille and Connor Duffy from KeyBank, Steve Killoran and Rich Litchfield from Maple Capital,
Michelle Ambrose and Linda Elliott of Marsh, and Christina Kindstedt
from Advantage Insurance Management.

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

Rich Smith
VCIA President

 

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