Last week I spoke about the increased interest of parametric insurance in the captive space as evidenced by the number of Ignite Talks coming up at our virtual conference focused on this emerging specialty. However, that is only one of the many topic areas being covered with Ignite Talks by the captive industry at VCIA’s 2021 Annual Conference coming up in three weeks.

We informally polled some of our captive owners to ask them what some of the challenges are that their captives have recently faced. We then asked our members to respond to those challenges (or those they have focused on) and present them in our Solution Labs at the conference. Ignite Talks are short, “TED-Talk” style presentations on these solutions.

Some of the challenge areas besides parametric insurance that will be covered include cyber regulation, captive strategic planning, third party risk, tax strategies, employee benefits, premium payment options, use of InsurTech, cell structures, legacy solutions, mentorship, managing volatility, risk distribution, predictive modelling for workers comp, finance and investment strategies, actuarial impact of the pandemic and situational awareness. Quite an incredible line-up!

The VCIA Annual Conference will be held online August 10 – 12th, which is just 3 weeks away so check it out here and Register Now!

Thank you and I look forward to seeing you soon. 

Rich Smith
VCIA President

Your Signature (Series)

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.

Click here to register today!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Happy Holidays and See You in 2018


I just wanted to wish all of you Happy Holidays as we head out of 2017 and into 2018. It’s been another busy years in captives, that included a horrific hurricane season, the decision of the Avrahami case on 831(b)s, the specter of continued cyber security issues with the hacking of Equifax (among others), and the soon-to-be-passed Tax Reform bill – all of which impact our industry.

That being said, captive insurance is growing and remains a robust part of the world’s risk management sector. Vermont broke through the 1000 captive license mark and looks to add around 25 new captives before year’s end. With challenges and opportunities that lie ahead such as healthcare, drones, (more) cyber risk, and AI (artificial intelligence – get used to it), captives will show how entrepreneurial and innovative our industry can be!

Thank you all for another great year and Happy New Year!

Rich Smith
VCIA President

Mr. Smith Goes to Washington


You may have heard about Richard Smith being grilled in Congress this week over a huge data breach that exposed millions of Americans’ personal information. I just want assure you that I am not THAT Richard Smith!

I think our industry has been very focused on cyber security for some time now, both in their businesses and as an opportunity to craft a captive solution for their clients – and I have certainly blogged it to death so enough said. That still has not stopped the NAIC from proposing to adopt a Data Security Model Law this year. If you have not seen it you can download it here:

Data Security Model Law (click here to view)

And although it becomes another “thing” to deal with in our industry, there is no doubt that a cybersecurity plan is a necessary element of any good captive management plan. I give Vermont’s insurance commissioner, Mike Pieciak, and his dauntless captive team high marks for keeping the NAIC’s model act as manageable as possible.

In the meantime, this Mr. Smith will be heading to Washington this fall to meet with congressional staff and leaders on the hill about issues impacting captive insurance.  Hopefully, I will get a little warmer welcome than my namesake!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Sustainability + Risk Management = Resiliency


I recently read a Forbes article of risk management and sustainability I thought made much sense.

It was an interview with Dr. Leo S. Mackay, senior vice president at Lockheed Martin, and he was describing a reorg at Lockheed that puts enterprise risk and sustainability under common reporting, since ERM and sustainability are both principally focused on the identification and prioritization of risk.

Considering risk and sustainability together is part and parcel of the same thing because sustainability in strategic terms is about building in resilience and efficiency into the business.  “Rather than have separate silos where discussions or disaggregated thinking around what are the existing and emerging risks, that now is a coordinated effort,” Dr. Mackay says “Those things are tantamount to risk mitigation and the control of risk.”

To me what Lockheed is building in their business is resiliency – perhaps an over-used word these days, but as good a descriptor as any. With organizations facing increased risks from cyber security to climate change, captives can lead the way to help create that resiliency, especially as many captives already work across silos if they cover diverse risks such as property and employee benefits. So as captive practitioners you can get the process started – by coming to VCIA’s Annual Conference to get some good education with sessions such as Expanding Your Captive Business Plan and Optimizing Your Captive’s Risk Profile and Reinventing Your Captive for Maximum Results.

Check it out:

And a quick follow-up to last week’s blog: I reported about my concerns with the proposal to add a border adjustment tax (BAT) to any tax reform that Congress might attempt this summer, as it might cause additional costs to the captive insurance industry utilizing offshore reinsurers. Jim McIntyre just reported to me that the White House and congressional GOP leaders said that they are no longer looking at a border-adjustment tax as they work to get tax-reform legislation enacted this year. Good news as it eliminates one uncertainty in Washington!

I look forward to hearing from you.

Rich Smith
VCIA President

Cyber Stars


We all know that Vermont’s captive regulators epitomize the Gold Standard the state embodies when it comes to captive insurance domiciles. Dave Provost, Sandy Bigglestone and the captive team at Vermont’s Department of Financial Regulation (DFR) are considered objectively as the best in the business. One reason for their star status is their desire to keep learning and moving ahead with the industry as it evolves. Being highly knowledgeable experts requires active learning.

This week, VCIA coordinated a ½ day educational session with the captive team from DFR (along with many of their colleagues from traditional insurance, banking and securities) on the subject of cybersecurity. VCIA board chair Heather McClure and Lynn Sessions from the law firm of Baker Hostetler lead the session on cyber liability, threats that create cyber exposure, regulatory scrutiny giving rise to claims and best practices when responding to these events. The goal of the session was to instill a depth and breadth of cyber knowledge in the Vermont staff that will be another benefit for Vermont captives.

Heather’s day job is executive director of operations at OU Physicians, and she is a licensed attorney in Oklahoma and Texas with an LL.M. in Health Care Law. She is also the Chief Operating Officer of OU Physicians’ captive professional liability insurer, Academic Physicians Insurance Company, which covers approximately 750 faculty physicians, 700 resident physicians and 700 medical students at the University of Oklahoma College of Medicine.

Lynn is a leading privacy and data protection attorney with Baker Hostetler with over 22 years of involvement in the healthcare industry. She has handled nearly 400 data breaches and over 100 regulatory investigations.  She was awarded a Burton Distinguished Writing Award at the Library of Congress for her article, “Anatomy of a Healthcare Data Breach.”

These two highly experienced professionals provided the DFR team with actual cyber liability claims and data breach responses, and provided a forum to ask questions of a leading privacy and data protection attorney and an insured who has experienced cyber incidents first hand.  The audience asked great questions and dug deep into what cyber policies should include and how best to regulate them for the good of the captive. Seeing this it is not hard to understand why Vermont remains the Gold Standard!

I look forward to hearing from you.

Rich Smith
VCIA President

Cyber Bully Pulpit


According to a report from a recent article, a full 50 percent of US firms do not have cyber insurance, despite the fact that 61 percent of US firms expect the volume of cyber breaches to increase in the next year. Further, more than a quarter of US firms say they are not planning to purchase cyber insurance. These findings come from a new survey from analytics firm FICO, which also reveals that even among those that have insurance only 16 percent said they have cyber insurance that covers all risks. This puts the United States well behind the United Kingdom and Canada in cyber protection, among other countries.

This corresponds to a report released at the 2017 Risk & Insurance Management Society’s (RIMS) Conference earlier this year. According to the 2017 Cyber Risk Transfer Comparison Global Report, written by the Ponemon Institute, most organizations spend four times more on insurance protecting their physical plants, properties, and equipment than they do their information-based assets. The report indicates that most organizations spend much more on fire insurance premiums than on cyber insurance, despite stating in their publicly disclosed documents that a majority of the organization’s value is attributed to intangible assets.

This is where captives make sense: the majority of survey respondents said that cyber insurance was inadequate to meet the needs of their organization, too expensive and has too many exclusions. That’s practically the mantra for captive formations!  Over time, the traditional insurance market will likely meet the need of many insureds with cyber policies, but it’s a little scary how unprotected we currently are – the time is nigh!

Come to the VCIA Conference this year and learn more about Cyber for captive with Cyber Security and Captives: How to Stay One Step Ahead (part 1 & 2). Click here for more information. This is just one of dozens of great captive topics being covered at VCIA August 8–10.  Hope to see you there!

I look forward to hearing from you.

Rich Smith
VCIA President