All Hat… No Cattle

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I always loved this Texan saying, and it is so appropriate as I am heading off to San Antonio to the humongous RIMS conference there next week and I have neither hat nor cattle.

A small, but intrepid, Vermont contingent heads to the RIMS conference every year where we proselytize on the magnificence of captives to the passing hoard (usually about 10,000 or so folks). Ian Davis will be our valiant captain as a bunch of us hang out at the cool Vermont booth for the conference. And Dave Provost and a number of the DFR champions will join us as well. So if you are going to be down there, please swing by the booth and grab a bowl of Ben & Jerry’s or pure Vermont maple syrup!

Speaking about the opposite of All Hat, No Cattle, Business Insurance handed out a couple of their 2018 US insurance awards to risk management programs recently, and one of our outstanding members picked up a trophy.  The honor for 2018 Risk Management Team of the Year went to global electrical power company AES Corp., American International Group Inc. and Marsh L.L.C. for their innovative approach of embedding terrorism and resultant damage cyber coverage within AES’ existing global captive property program, eliminating potential gaps between policies, providing additional limits and expanding cover to all AES insured assets. Andrew Baillie, program director of global insurance for AES, is the facilitator at our session of captive owners looking at international issues at VCIA’s annual conference this August.

Registration for the VCIA Annual Conference opens May 1st. We look forward to seeing many of you there for another excellent program!   Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Corporate Responsibility…. And a Good Wage

career-goalsOne of the biggest issues facing the captive insurance industry, indeed the entire insurance industry, is filling in our next generation of workers and leaders. I was listening to Bob Hartwig of the Darla Moore School of Business, University of South Carolina, talking on A.M. BestTV on recommendations on how the insurance world can and should attract the next generation workforce to our broader industry.

His number one piece of advice was to articulate a clear path for candidates looking far down the road on what is expected and what opportunities lay out there – even ten years out. Students are really looking for what opportunities lay open to them, including wages and benefits. That isn’t to discount corporate responsibility: young people today are looking to work for an organization with a positive mission and workspace, and take into consideration corporate responsibility, whether locally or globally.  Just understand good wages, benefits and opportunities for advancement are as important to newer entrants into our industry as it was to us all those many years ago!

Other good advice from Bob included:

  • Use relatively new colleagues in your particular company as an ambassador for new entrants to see how they got to where they are now, as well as give advice on the pathway. Students in risk management programs can relate and identify with that person and allows them to see where they might be in the same timeframe. Companies that bring these ambassadors into the classroom tend to get a lot of resumes very quickly.
  • Get an early start – some of the best students often have jobs six months before they graduate! With a strong employment rate, it’s very competitive for good candidates.
  • Institute a formal training program for new hires. Show them they will be give the training and guidance they need to do a good job and advancement.
  • Institute an internship program, even for sophomores becoming juniors, as those students are clearly showing early interest and will be more likely to convert to employees.
  • Support risk management and insurance (RMI) education through direct recruitment at the programs, but also through scholarships and donations to the programs themselves.
  • Look outside your immediate geographic area for promising candidates. Many insurers limit recruiting to narrow geographic regions and don’t expose new hires to a full range of opportunities, nationally and internationally

All good advice to get the flow of candidates flowing!

Registration for the VCIA Annual Conference opens May 1st. We look forward to seeing many of you there for another excellent program!   Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Weather or Not

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It was recently reported that Strategic Risk Solutions Europe (SRS) has introduced a carbon emission risk program to be run in conjunction with Carbon Risk Solutions.  The program will initially involve a series of workshops where sustainability directors and risk managers are invited to learn how they can identify, manage and finance the carbon emissions risks their firms face in the transition to the low carbon economy with a range of insurance-linked solutions, including the use of captives.

Stuart King, president of SRS Europe, echoed what many have said of the broader insurance industry in confronting climate change and its associated risks: “The insurance market has been rather slow to respond to carbon risk transfer solutions for multinationals. We see an opportunity to develop these programs within captives and cells, while the commercial market develops and becomes more comfortable with this emerging risk.”

I think this bodes well for our mighty little industry. As I stated in a previous blog, captives are well placed to deal with the vagaries of climate change and risk, and that those who wait too long may be too late.

VCIA continues to address and explore this issue with a number of sessions at our Annual Conference this coming August 7-9.  Our session Natural Catastrophes and their Impact on Risk Management will feature experts  sharing information on the potential impact of natural catastrophes on  risk management from a variety of viewpoints including  academic, actuarial and risk management.

The expert panel for this session includes:

Gillian Galford, an Earth Systems Scientist at the University of Vermont and lead author of the Vermont Climate Assessment; Howard Kunst, Senior Modeler and Chief Actuary, at CoreLogic; Jason Shafer, Professor of Atmospheric Sciences at Lyndon State Colleges, who focuses on the valuation of weather information within the private sector; and Brad Waldron, ‎Vice President, Risk Management at ‎Caesars Entertainment Corporation.

Registration for the VCIA Annual Conference opens May 1st. We look forward to seeing many of you there for another excellent program!   Thank you and I look forward to hearing from you.

Another Year, Another Bill

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I want to thank all those VCIA Members who travelled to Montpelier last week during one of our ongoing snow storms to join Vermont Governor Phil Scott in signing this year’s captive bill into law.

H.764, introduced during VCIA’s Legislative Day in  January, quickly made its way through the legislative process and on to the Governor’s desk a week or so ago. Every year, VCIA and the State work to improve the ease of doing business in Vermont by proposing refinements to Vermont’s captive bill. This year’s bill included some common-sense changes to our annual filing date and reporting requirements which will help streamline processes and provide a new level of consistency for our regulated entities.

As Governor Scott said at the signing, “It is critical that we are responsive to the needs of the industry. These improvements to our captive legislation illustrate Vermont’s ongoing commitment to the captive insurance industry…  This bill will further advance Vermont’s reputation as the ‘Gold Standard’ of domiciles and will provide greater flexibility and consistency for our companies going forward.”

Joining the Governor was Department of Financial Regulation Commissioner Mike Pieciak, Deputy Commissioner Dave Provost, Director of Financial Services Ian Davis, and a number of DFR staffers. With me were VCIA Members Jonathan McKenzie from Alterna, Pattie Henderson from SRS, Dustin Partlow from JLT, Steve Killoran from Maple Capital (straight from maple sugaring – or so he looks in the picture!), Sandi Prescott from Performa, David White from AIG, David Angus from The Angus Law Firm, Keith Jones from National Life, Kristen Sharrow from Johnson Lambert, and Bill Mourelatos and Patti Pallito from Aon. Thank you all for coming on down!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Thank you and Congratulations!

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ICCIE-award-squareAs I wrote about in last week’s blog, VCIA hosted our annual Member’s Legislative Day in Vermont’s state capital, Montpelier, yesterday and it was a big success!

Our members, including many who came in from afar, got to hear from Vermont’s Lt. Governor, David Zuckerman, as well as Commerce Secretary Mike Schirling at our luncheon, and then later in the day from the Speaker of the House, Mitzi Johnson, the President Pro Tempore of the Senate, Tim Ashe, and finally from House Minority Leader Don Turner. Even though they 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 lunch the Vermont State Economist provided a view of the State and national economy for members. VCIA and ICCIE board member presented the second ICCIE Fellow designation to Vermont’s own Kate Boucher from Premier Insurance Management Services. Congratulations, Kate, much deserved!

VCIA testified before House Commerce and Senate Finance on the captive bill that was introduced this week and to provide an overview of VCIA and the captive industry. Joining me was Ian Davis, Director of Financial Services for the State of Vermont, VCIA’s board vice chair, and Jan Klodowski, vice president for Agri-Services Agency, LLC, a subsidiary of Dairy Farmers of America.  As usual, Ian and Jan did a great job!

And finally, under the sure hands of Dave Provost, the House Commerce committee passed out this year’s captive bill with an 11 – 0 vote.
For a copy of the captive bill, please click here

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

Rich Smith
VCIA President

Viva Las Ve-rmont!

Sure, it seems easy – especially when you are the largest and most sophisticated captive domicile in the US. But the work that Ian Davis, Dave Provost, Sandy Bigglestone and the rest of the State of Vermont team put into attracting so many new captives to license in the state should not be overlooked.Captive-Licenses-2017

What I am talking about here is the recent report that 2017 proved to be another highly successful year for Vermont’s captive insurance industry.  Vermont added 24 new captive licenses, bringing its total to 1,112 with 566 active captive insurance companies. This is almost exactly the average number of new captives licensed yearly in Vermont (roughly 25) regardless of the marketplace. There are now more than 40 states with captive laws on the book and with the current uncertainty of state self-procurement taxes that put a thumb on the scales in favor of “home states”, Vermont still excels.

The new captives were made up of 11 pure captives, 5 sponsored captives, 3 Risk Retention Groups (RRGs), 3 special purpose financial insurers, 1 branch captive and 1 industrial insured captive – as usual, a healthy mix of sizes, types and industries.  Risk Retention Groups account for three of the new licenses, bringing the active total to 90.  Vermont continues to hold a dominant market share with over 60% of all RRG premium volume being written by Vermont companies.  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 January 24 this year is VCIA’s annual Legislative Day in Montpelier, Vermont’s capital. It’s a full day of meeting and hearing from Vermont’s political leaders on the captive industry and issues facing the State broadly. Go to www.vcia.com and register today!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

A Nice Little Holiday Gift from Congress

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As reported by Business Insurance on December 13th, the House Financial Services Committee adopted legislation that aims to preserve the U.S. state-based system of insurance regulation and gives Congress greater oversight and transparency on international insurance standard negotiations.

As beneficiaries of the strong, state-based insurance regulatory framework, the captive insurance industry applauds the goal of this legislation. The bill was introduced in response to concerns expressed about the covered agreement signed by the United States and the European Union to address the U.S. lack of equivalency related to the bloc’s Solvency II directive for the insurance industry. Although we supported the covered agreement in terms of trying to create parity between jurisdictions, the NAIC objected to what they believe to be a lack of transparency and consultation with state regulators on the issue.

As reported in BI, the bill states that entities representing the United States may not agree to insurance-related international agreements unless they are consistent with and recognize existing federal and state law, particularly on the regulation of insurance. U.S. federal entities participating in negotiations would be required to coordinate and consult with state insurance commissioners, according to the bill.

Whether this bill gets enough immediate traction to pass in the next year remains to be seen. I think it does bode well that Congress reiterate the near supremacy in states regulating insurance (I say “near supremacy” because Congress can always change its mind!).

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President