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

Tough Mudder

Business Insurance recently ran a story “Extreme sports test liability protections” (Feb 17) which described the challenges extreme race organizations have with potential liability issues.

“Drowning,” “near-drowning,” “animal bites,” “permanent paralysis” and “death” are all listed in waivers for these events. Signage posted by the organizers of race Tough Mudder — a major name in the sport — famously tells participants sweating through the obstacles to “remember, you signed a death waiver.” Yikes!

According to the article, in parallel with the rising popularity of the events are a growing number of lawsuits alleging organizers are liable for injuries incurred on the courses of the events.  The article goes on to say several companies in the industry are suffering financial problems, although it is unclear whether liability issues are contributing to their troubles.

After reading the story, two things come to mind.  First, these organizations should take a page from the U.S. Hang Gliding and Paragliding Association. In 2016, the Association formed a risk retention group (RRG) domiciled in Vermont. With a risk retention group, many people, companies or organizations pool their money and insure themselves collectively. The key requirement is that they are like entities — in this case hang gliders and paragliders — but it could be extreme racing organizations just as well.

“Working with Vermont was wonderful,” Tim Herr, secretary and risk management officer for Recreation Risk Retention Group Inc., (RRRG) said. “They understand the small niche insurance market. The first meeting is always filled with trepidation, but we showed them our plans and they understood what we needed and wanted to do.”  RRRG now has 29 member groups covering the flights of more than 9,000 USHPA members, 83 USHPA chapters, and more than 30,000 hang gliding and paragliding students annually.

The second thing that comes to mind upon reading the BI story is this:  did you know that some members of Vermont’s very own Department of Financial Regulation captive staff participate in these crazy races?! Deputy Commissioner Dave Provost himself, and Director of Examinations Dan Petterson have regularly put themselves at great bodily harm in these extreme obstacle course events.  And I think Sandy Bigglestone, Director of Captives, has tried it at least once too!

So, our two takeaways today are:

  1. Vermont regulators have personal knowledge of risks associated with extreme sports, and are willing and able to assist with unique risks from organizations of all sorts; and
  2. Don’t mess with Vermont (or at least, Vermont’s DFR)!

Thank you and I look forward to hearing from you!

Rich Smith
VCIA President

And We Are Off!

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Thanks to all of you who joined us for another successful VCIA Legislative Day this week at Vermont’s State House in bustling Montpelier! Our members, including many who came from afar, got to hear from Vermont’s new Secretary of Commerce Lindsay Kurrle, as well as Vermont’s Commissioner of Financial Regulation Mike Pieciak during our luncheon. Later in the day our members met and heard from Vermont’s Lt. Gov. David Zuckerman, speaker of the House Mitzi Johnson, and House Minority Leader Patty McCoy. Although these dignitaries 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 luncheon, special guest economist Jeff Carr unveiled a recently completed economic contribution study of the captive insurance industry in Vermont. Suffice it to say that this industry is a tiny powerhouse here in Vermont! Immediately following, the folks from DFR provided a Q & A session for our members on recent updates and activities at the department. We provided a live stream via Facebook for our members.

In the afternoon, we testified before the House Commerce Committee, where Vermont’s Director of Financial Services, Ian Davis, and I gave updates on VCIA and the state of the industry. New VCIA Board Member, Tracy Hassett, President of EdHealth, did a terrific job describing her organization and the reasons they formed a captive in Vermont. In Senate Finance, Ian and I repeated our testimony and Deputy Commissioner Dave Provost concluded with a review of this year’s captive bill, S-255.

The great news is that the following day, Senate Finance voted out the bill 7-0 clearing the first hurdle in the legislative process. There are several sections of the bill, including lowering the minimum capital for sponsored captives from $250,000 to $100,000. The bill also proposes to expand to sponsored cell captives what we passed last year to all captives: provide flexibility in investments by giving companies the option to follow the old rules or develop a plan for DFR approval. Finally, the bill proposes to clarify disclosure requirements for agency captives – we may have been too prescriptive in the disclosure requirement built into the statute when passed last year.

Please click here to access a copy of the bill.

Thank you again to all of you who participated, and I look forward to hearing from you!

Rich Smith
VCIA President

The Numbers Are In

2019 proved to be another successful year for Vermont’s captive insurance industry with 22 new captive licenses added, bringing its total to 1,159 with 585 active captive insurance companies. This is roughly the average number of new captives licensed yearly in Vermont over the past 10 years or more, regardless of the marketplace, highlighting the resiliency of both the captive marketplace and Vermont as a domicile.

The new formations were made up of 14 pure captives, 4 sponsored captives, 2 Risk Retention Groups (RRGs), 1 special purpose financial insurer and 1 industrial insured captive, with an estimated Gross Written Premium of $24.8 billion.  A healthy mix of sizes, types and industries, ranging from healthcare, manufacturing and financial services to religious institutions, entertainment and nonprofits, are all represented. As David Provost, Vermont’s Deputy Commissioner of Captive Insurance, always says, Vermont’s focus will always be licensing quality companies, not chasing numbers.

Don’t forget that next week on January 22nd VCIA is hosting its annual Legislative Day in the Vermont State House in Montpelier, Vermont.  This totally unique event underscores the excellent relationship that our captive industry has with Vermont’s policymakers. Register today to join us to meet with Vermont’s legislators, captive industry peers, and hear remarks over lunch from State Economist Jeff Carr who will be presenting the recently released economic impact study.  Go to www.vcia.com and register today!

Thank you and I look forward to hearing from you.

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

 

CNN_SOTU_logoJoin me on November 20th for an informative and timely update on VCIA legislative activities on behalf of our members and the industry. The session is free, for VCIA Members only, and is not to be missed!

I will be joined by David Provost, Deputy Commissioner for Captive Insurance at the Vermont Department of Financial Regulation, and Jim McIntyre, VCIA’s representative in Washington DC for an overview of new and pending regulations in the state and in Washington D.C. and the NAIC.  Between these two guys, they hold enough knowledge on captive insurance to fill an old UNIVAC 1107 mainframe computer (OK, admittedly an iPhone holds tons more data, but we old mainframes have to stick together)!

Learn about VCIA’s activities on your behalf, and the status of important current issues like:

  • What’s happening in Washington, DC
  • TRIA Reauthorization
  • Cannabis Safe Harbor Act
  • IRS Letters to 831(b) Captives
  • Update to the Liability and Risk Retention Act (LRRA)
  • Activities and updates from the NAIC, including the RRG Task Force
  • Non-domiciliary state actions: Washington State, Johnson & Johnson decision
  • Vermont’s captive 2019 bill and what’s ahead for Vermont’s 2020 captive bill
  • DFR legislation creating an insurance “sandbox” to test innovative technology or insurance models.
  • Vermont Department of Financial Regulation updates

I hope you will be able to attend this Members Only event.  If you aren’t already a VCIA Member, this would be a great time to join! Click here for more information and to register.

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

Rich Smith
VCIA President

On The Road Again…

VCIA is on the road again, coming to Boston on November 14 at the Seaport Hotel & Conference Center for our “world famous” VCIA Captive Road Show, where we preach the gospel of captive insurance in cities across the U.S. (and will even be presenting in Mexico City next year!)

The VCIA Road Show is an excellent chance to learn about captive insurance and enjoy a great reception afterwards, to connect with others in the industry.

The educational session will feature representatives from two captive programs, who will share their experiences.  Tracy Hassett, SPHR, is President and CEO of Educators Health, LLC where she played a key role in the launch of edHEALTH, a unique entity, a first of its kind consortium of colleges and universities with the mission of reducing health care costs while enhancing consumer knowledge of options, plan design, disease management and wellness programs. Gail Newman, Vice President of Risk Management for Bright Horizons Family Solutions is our second captive owner panelist. Gail’s program excels in providing best-in-class family-care solutions across North America, United Kingdom, Netherlands, and India. Gail is passionate about business process improvements and creating risk mitigation strategies that not only support healthy financials and the “right” insurance program, but also keep employees and clients of the business safe. With the inception of Bright Horizon’s captive (APEX) in 2017, the business has been able to realize better flexibility and financial health for their insurance program and innovate insurance coverage strategies that are unique to the business.

Others all-stars presenting that day will be:  Michael O’Malley, managing director for Strategic Risk Solutions; Dave Provost, Vermont’s Deputy Commissioner of Captive Insurance; and Ian Davis, Director of Financial Services for the State of Vermont.

If you are in the Boston area, I hope you will be able to join us! Click here for more information and to register.

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

Rich Smith
VCIA President

Give Peace (Church) a Chance

My 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

Great News: VCIA’s captive bill passes… but you knew that was going to happen

Thanks to the expert testimony of Deputy Commissioner Dave Provost, this year’s captive bill passed the House and Senate and is on its way to the Governor for his signature. Unless there is a calamity, the Governor will sign it into law within the next week.

Here is a quick outline of what it will do:

  • Allows non-profit protected cells can issue dividends to its owners.
  • Eliminates the requirement for an attorney-in-fact bond of a reciprocal RRG in most circumstances.
  • The commissioner currently can waive the three-year exam period, but with the maturity of many of Vermont’s captives, it made sense to revisit the timeframe. This section makes default exam period 5 years, but commissioner can shorten if determined to be prudent.
  • Allows any type of entity recognized by the Secretary of State to be formed as a captive.
  • Allows groups and agencies to either comply with current statutory investment requirements OR come up with an acceptable plan (which DFR will keep confidential). Section 3463a – valuation methodology – still applies.
  • Re-writes the RRG independent director section for clarity.
  • Makes NAIC statutory accounting the standard for the new affiliated reinsurance company or ARCs.  Vermont didn’t need to meet accreditation standards, but wanted to avoid a repeat of the AXXX/XXX fights.

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

Philadelphia Freedom!

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