40 Great Years… and Many More to Come

Seems like just yesterday, but this is the 40th Anniversary of the captive insurance industry in Vermont! In 1981, the Vermont Legislature passed the Special Insurer Act, which was designed to provide a unique and attractive statutory framework for captive formation. As most of you know, this landmark law and subsequent amendments and regulations have become the model of captive regulation.

As a way to kick off the 40th Anniversary, VCIA and the State of Vermont will be hosting the Members-Only annual Legislative Day on January 27, 2021, but instead of our members traipsing down to Montpelier, we will be hosting the event online. 

The event will start off with Dave Provost, Sandy Bigglestone, and their team at the Department of Financial Regulation (DFR) hosting a Captive Division update that will review any new or upcoming regulations, other DFR news, and answer any questions members might have.

Then, DFR Commissioner Mike Pieciak will host a one-hour webinar with Vermont legislators and members to celebrate the 40th anniversary of captive insurance with an overview of captives by Dave Provost and his team, a report from Vermont’s Captive Insurance Economic Development Director Brittany Nevins, a quick update on VCIA by yours truly, and then a presentation by Julie Bordo, President & CEO, PCH Mutual Insurance Co. Inc. (RRG), a Vermont-domiciled captive owner.

Our final event will be a Zoom meeting with Vermont’s political leaders. Members will get a chance to hear from these leaders, many new to their positions, on what their priorities are for the upcoming year. They will also be able to ask them all those questions they have been saving up just for this occasion!

And if all that hasn’t got you interested; the State of Vermont is providing an exclusive Legislative Day giveaway: all registrants will be entered to win an awesome Lake Champlain Chocolates Gift Basket – so what are you waiting for!

Please RSVP to megan@vcia.com if you can join us. I hope to “see” you there! Thank you and I look forward to hearing from you.

Rich Smith,
VCIA President

Brighter Days Ahead


It is certainly a relief to hear that the vaccines being developed to counter COVID are beginning to be rolled out. It has been a difficult year, and although we are not out of the woods yet, it’s nice to finally see the light at the end of this long, dark tunnel.  Not surprisingly, Pfizer, one of the vaccine developers has a captive in Vermont!

Looking ahead to January, VCIA will be hosting our annual Legislative Day, but instead of crowding in the committee rooms at Vermont’s State House, we will be working with Vermont’s Department of Economic Development, and Department of Financial Regulation to put on a Virtual Legislative Day for our members on January 27th.  It will include the usual Q&A opportunity with Dave Provost and his team, as well as introductions to the new leadership under the Golden Dome: Lt. Governor Molly Gray, Speaker of the House Jill Krowinski, and Senate President Pro Tem Becca Balint. More details to come soon.

Thanks, as always, for your continued support in these trying times. I look forward to hearing from you!

Rich Smith
President, VCIA

Black Swans for Thanksgiving

I, for one, am glad its Thanksgiving next week. First, I love the feast! Family and friends (well, er, no friends this year) gather for dinner and conversation – no gifts, no chocolates, no decorations. Just like me: boring but predictable. Second, like everybody I could use a break from the craziness that is 2020, and Thanksgiving does allow one the opportunity to take a reality “time out” at least for a day.

But as my mind drifted to turkey, another bird edged its way into my brain. The proverbial black swan that is at the top of mind for many of us in the insurance community. An article yesterday in the London Times by Alex Wright highlights how many in our world are working to create insurance solutions for things that historically have been labeled uninsurable, like the pandemic.

As Alex outlined in his article, traditionally, companies have mitigated against risk by taking out an insurance policy. Underwriters would spend hours poring over reams of historical data to determine the likelihood of the risk occurring before giving a quote.  But black swans don’t fit this mode well, as by definition they defy historical data – at least in the linear manner we usually think of.

The burgeoning world of artificial intelligence (AI) and machine-learning is looking to change that. The key benefit of AI in insurance is that it can quickly process large data sets and identify significant trends that mere mortals are unable to do.

Dr. Marcus Schmalbach created the VUCA (volatility, uncertainty, complexity and ambiguity) World Risk Index, a parametric index that uses machine-learning to gather data from a range of trusted and verifiable sources, many of which aren’t considered in traditional underwriting. That data is then rigorously analyzed alongside information the technology has gathered from previous experiences to look for patterns and links between events and determine the likelihood of a major event occurring. Among the areas his group has successfully modelled is business interruption loss in the event of a pandemic based on the data they crunched.

Climate change, natural disasters, political and trade conflicts, all could be better priced in the insurance world with new AI applications. AI can also reduce paperwork and the time taken to receive a quote or claim. Using parametrics, AI can also establish if an event has happened, thereby triggering payouts and avoiding any disputes.  Captives are well poised to take advantage of such innovation.

While nobody can predict the future with 100% accuracy, AI will allow insurers to detect anomalies that will help anticipate future events, like pandemics, and maybe better prepare us for the black swans. Perhaps roast black swan instead of turkey….

Thanks, as always, for your continued support in these trying times. I look forward to hearing from you!

Rich Smith
VCIA President

Boom Times!

Finally, maybe a little good news in this difficult year. As we all know, the hardening of the traditional insurance market has produced a surge in interest in the formation of captives by new entrants into our industry, as well as an expansion of types and amounts of risks in current captives.

Anecdotally, all my recent discussions with VCIA members have circled around how busy they have been with inquiries and expansion plans since the beginning of the year. Ellen Charnley, president of Marsh Captive Solutions, reported not long ago that Marsh has broken records in the number of captives formed this year. Marsh formed a record 76 new captive insurance companies between January and July 2020, an increase of over 200 percent compared to the same period in 2019 – amazing!

Here in Vermont, DFR Deputy Commissioner Dave Provost and his staff have echoed the reports. Vermont has licensed over 25 captives already this year. For comparison, twenty-five new captives for the entire year is considered a good year normally! And usually the fourth quarter is the busiest for our friends at DFR, as organizations seek to form their captive programs before the new year.

Looking ahead, it doesn’t look like there will be much abatement in captive growth. With a continued hardening market forecast into 2021, and the impacts of the pandemic continuing to unfold, organizations will continue to seek the financial stability and cost savings that captives can often bring to their owners. Let the boom roll on!

Thanks, as always, for your continued support in these trying times. I look forward to hearing from you!

Rich Smith
VCIA President

Welcome Brittany!

I want to say a HUGE welcome from the Vermont captive insurance community to Brittany Nevins. As many of you have heard, Brittany recently joined Vermont’s Department of Economic Development as the new Captive Insurance Economic Development Director. She will be taking over from the estimable Ian Davis, now over at Peoples United (but still in our captive community!).

Brittany will be responsible for the marketing and business development of Vermont’s captive insurance industry, working closely with the Department of Financial Regulation and VCIA to continue to strengthen the state’s reputation as the premier onshore captive insurance domicile.  We have already had several calls and zoom meetings with hew and she is going to be great!

Located in Texas for the last 2 plus years, Brittany served as a community and economic development specialist for Travis County, Texas, managing its property tax rebate program for businesses that sought to develop in the Austin region. Prior to that, she was a policy specialist for the Texas Health and Human Services Commission, where she provided support for a variety of agency regulatory programs.

On top of all that, having lived in Latin America for a little while, Brittany is also fluent in Spanish. And as VCIA and the State of Vermont continue to explore connecting the Vermont captive industry to the Latin American risk management marketplace, it will come in handy. Although, she did warn me translating our nomenclature, such as non-domiciliary reciprocal risk retention regulations, will not just flow off her tongue! And it coincides nicely with next week’s Online Captive Trade Mission with Mexico which VCIA and the State are hosting on September 30th.  By the way, this event is free for VCIA Members – details here.

So, please take a minute to say “hi” to Brittany and welcome her into our wonderful community, like you did for me ten years ago. Her email is brittany.nevins@vermont.gov.

Thanks, as always, for your continued support in these trying times. I look forward to hearing from you!

Rich Smith
VCIA President

Vermont = Competence

I was looking at a LinkedIn message from Tim McQuiston, the editor of the Vermont Business Magazine, the other day and it reminded me of how important the competence of both leaders and agencies in the State of Vermont is to its citizens.

Tim reminded us that Vermont has used a combination of strict health protocols and impressive compliance by students to keep COVID case counts down, despite 40,000 college students back in the state and tens of thousands of tests conducted.

Vermont COVID numbers are low per capita and have been from the beginning. Not that there haven’t been challenges here and there, but Vermont’s Governor, Health Commissioner, and overall team (along with the Vermont General Assembly) have remained cool, calm, and collected. And part of the leadership in the Governor’s team is Mike Pieciak, Commissioner of the Department of Financial Regulation (DFR) – which, as most of you know, includes captive insurance. The Governor relies on Mike and his team to assist with the modelling of the COVID numbers and analysis using actuarial science. The work and reports being generated by Mike’s team are being used to inform the Governor, Health Commissioner, and all Vermont citizens. With this useful pandemic knowledge and insight, we are all better equipped to make good decisions.

Vermont has a history of being practical. Even us flatlanders who came to Vermont from other places seem to adopt that attitude – maybe it’s the weather. That practicality permeates the state and provides a sense of quiet competence regarding our leadership.  And nobody does competence better than DFR – let us all take a moment to acknowledge the great work the DFR staff continues to do, no matter the circumstance.

Thanks, as always, for your continued support in these trying times. I look forward to hearing from you!

Rich Smith
VCIA President

Thank You!

Just a quick post to say a huge THANK YOU to all who participated in VCIA Virtual 2020!

It was quite an experience for us to transform our usual captive insurance conference into an online 100% virtual event. And although it was sad not to have been able to see everyone in Vermont this year, it was heartening to get so many nice comments from many of the participants.

I am proud of our staff and members for pulling this off in the short mount of time we hade to learn the ropes and make the conversion. To all our expert panelists who so gamely made themselves available to the attendees – thank you!

And a huge thanks to all our exhibitors and sponsors without which we would not be able to present all the great content that will now be available until the end of July next year. Special thanks to our Platinum Sponsors:

  • A.M. Best
  • Kroll Bond Rating Agency
  • Madison Scottsdale
  • Old Republic Companies
  • Performa
  • Sedgewick
  • and the State of Vermont

I look forward to seeing everyone in Vermont next year!

Rich Smith
VCIA President

Mick Jagger is in the House

Bald musician playing a guitar plugged into an amplifier

Okay, we know this isn’t actually Mick Jagger OR Dave Provost, but you get the idea…

Remember when you could travel to cool places and see all your captive industry friends at one of the main conferences that happened throughout the year? Yeah, the memory is beginning to fade in my mind as well.

However, I do remember the electricity when one of the captive industry’s most famous “rock stars” would enter the room at these events and everybody’s head would turn to get a look. Of course, that person was our own Dave Provost, Deputy Commissioner of Vermont’s Department of Financial Regulation (DFR) – it was like Mick Jagger entered (minus the entourage)!

For all you folks who know Dave, Mick doesn’t readily pop into mind. Dave is friendly, approachable, and has a singing voice like a screech owl (honestly, I have never heard him sing – he may sing like an angel). And let’s not even touch the hair. But captive insurance is the one place where a tiny state like Vermont is the big gorilla and Dave is at the pinnacle of Vermont’s captive world.

So even though you can’t come to Vermont in person this year for our conference, joining VCIA’s Virtual 2020 gives you an opportunity to see Mick, err Dave, in his element. The last event of our three-day conference will be Hot Topics with Dave Provost. Dave will be joined by other highly experienced panelists, for an engaging and interactive discussion on current hot topics impacting the captive insurance industry.

Moderated by Dan Reynolds, editor-in-chief of Risk & Insurance Magazine, panelists and audience members alike will share their experience and insight ensuring that attendees are well-informed about current trends in the captive industry. The panel includes Kent Broussard, President of Bluegrass Insurance Company, Inc., an 831-b captive formed in the State of Vermont in 2014 on behalf of Sazerac Company, Inc., one of the top alcoholic beverage suppliers in the world.

Rounding out the group is Dave Tatlock, a director at Strategic Risk Solutions Vermont Ltd. and is responsible for the management of a portfolio of single parent, group and sponsored captive insurance companies domiciled in Vermont and Connecticut.  And last, and certainly not least, is Sandy Bigglestone, Director of Captive Insurance at DFR, and Dave Provost’s righthand woman – hmmmm, perhaps Vermont’s own Lady Gaga?

Join us for this session which will tie together themes discovered during VCIA Virtual and say farewell on an energetic note!  I look forward to seeing you all in August at VCIA Virtual! View all the details and register for the event here.

The F.B.I.

fbi FThose of us of a certain age can remember with absolute clarity the start of the popular show in the late 60’s and early 70’s. The announcer, in a strong, determined voice would introduce, “The F.B.I… starring Efrem Zimbalist, Jr.” and then we would have an hour-long drama whereby the eponymous organization would hunt down one bad guy after the other.

Well, at this year’s VCIA 2020 Virtual we may not have such a dramatic opening, and the bad guys now hide in the dark web, but the thrill is still there. Joining us on August 12th will be FBI Special Agent Matthew Wabby, currently assigned to the white-collar squad in Albany, NY, investigating corruption, fraud, money laundering and related crimes.  With his panel, he will explore how companies should respond to an increasingly complex and changing set of rules as our business environment and society move ever more quickly into the digital sphere.

Special Agent Wabby will be joined by a group of highly placed cyber and captive insurance experts:

  • Chris Giovino, who leads a practice for Aon when clients have suffered a loss due to crime, employee malfeasance or fidelity related matters;
  • Heather McClure, JD, LLM, Chief Risk Officer, OU Medicine and Executive Director of Operations, OU Physicians, who leads their Vermont-based captive insurance company; and
  • Shiraz Saeed of Starr Insurance Companies, the national practice leader for Cyber Risk responsible for the strategic direction and expansion of the Cyber Risk products and services.

Cyber-attacks are becoming more sophisticated. Organized crime now uses former intelligence members for more sophisticated attacks, broadening the nature of their attacks, and increasing their frequency. An ever-changing set of regulations from governments around the global compounds the difficulty of managing against cyber risks.

Join us to learn some positive ways to shield against cyber-attacks and respond to breaches if they do occur.  I look forward to seeing you all in August at VCIA Virtual! Register by June 30th for the lowest rates! View all the details here.

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