Rich Smith’s Last Blog Post as VCIA President

Bon Voyage, Rich!

“Goodbye Always Makes My Throat Hurt” – Charlie Brown

This is my last blog as President of VCIA. I can’t tell you all what a delight and how meaningful the last 12 years has been for me. I have worked with such wonderful people and made truly great friends in the captive industry.

I remember in my first year as President the marvelous Tom Jones came up to me at an event. With his wry smile and baritone voice, he said to me, “Rich, the only thing you need to be aware of is that there is a ‘no a-hole’ rule in the captive industry.” I immediately laughed out loud but recognized over the years how true that is (OK, it’s not quite universal, but close enough!).

I have worked with such wonderful people and made truly great friends in the captive industry

Outgoing vcia President Rich Smith

With a deep sense of relief, I confidently know I am leaving VCIA in excellent hands. Kevin Mead brings a wealth of association experience along with great common sense and a wonderful sense of humor – all tools that will make VCIA continue to shine.

Rich and Vermont Governor Phil Scott

I want to thank all of you that have provided me with your wisdom, guidance, and friendship. It has meant the world to me. That is especially true of the 36 board members, past and present, that have given their time and energy to this great association – thank you so much. You are the superstars of the captive universe!

To have worked with the outstanding regulators at Vermont’s Department of Financial Regulation these past 12 years has been an honor and a pleasure. The team lead by Dave Provost, Sandy Bigglestone, Dan Petterson, and Christine Brown is the reason Vermont is THE top captive domicile in the world. This may sound like bluster, but I am quoting what my colleagues representing other domiciles told me on a regular basis. Not only that, but Vermont DFR is certainly the nicest and fun-loving group of regulators you have ever met.

Rich and colleagues at the US Capitol Building

Most of all, a warm thank you to all the wonderful VCIA staff over my tenure that have made the Association the stellar organization it is (and made me look good to boot): Diane Leach, Peggy Companion, Janice Valgoi, Megan Precourt, Dave Rapuano, Elizabeth Halpern, Julie Brown, Barbara Casanova, and newcomer Francis McGill – you all rock!

I look forward to watching the Association thrive over the next many years. Please feel free to reach out to me to say “hi’ once in a while and I will do the same. My new email address is mykasmithvt@gmail.com.

Thank you all and I look forward to hearing from you.

Roger Phelps

Roger Phelps passed away a few days ago. It is slightly overused, I suppose, but Roger was one of the founding fathers of Vermont’s captive insurance industry – including VCIA. We have lost a number of early captive innovators in the past few years.

Roger was a very creative person – you had to be to get both the industry and VCIA off the ground from the beginning. He even created VCIA’s first logo! Roger got ALCOA’s captive (Three Rivers Insurance Company) started in 1983 – license #8. Three Rivers is one of the few parent companies with a captive employee intentionally located in Vermont.

Our hearts go out to his family and friends, and the many people he touched in the captive community. He influenced many.

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Cowbell Cyber

More Cowbell! The Rise of Cowbell Cyber, now with an Agency Captive Domiciled in Vermont

We all know that cyber has grown to be one of the top insurance issues facing organizations for the past five or so years. Captives have led the way in many cases providing personalized cyber risk policies for their owners that have been difficult or expensive to find in the traditional insurance market.

Now there is another arrow in the quiver in the captive cyber market. Cowbell Cyber, a cyber-insurance provider who has developed the first continuous underwriting platform, recently formed a Vermont-domiciled agency captive insurance company. An agency captive is a reinsurance company controlled by an insurance agency or brokerage. Through a reinsurance agreement with a traditional insurer, the agency captive receives a share of the premiums written and is obligated to pay its share of claims. Vermont legalized agency captive formations in 2017.

Cowbell Cyber, Closing the Cyber Insurability Gap

With an agency captive based in Vermont, Cowbell Cyber has the capacity to meet the exponential demands for cyber insurance. The company will surely stand out from its competition, based on cutting-edge A.I. software which comprehends actuarial models and inside-out data sources. You cannot get better than real time updates and customized assessments, which is what Cowbell Cyber provides. As it says on their About Us page, what makes them different is that “Cowbell factors benchmark enterprise risk exposure against a risk pool of millions of businesses.”

You cannot get better than real time updates and customized assessments, which is what Cowbell Cyber provides.

The InsurTech firm uses artificial intelligence to assist in risk selection and pricing as it underwrites cyber-insurance coverage for small-to-medium enterprises. Last September, it launched the industry’s first cyber risk marketplace, Cowbell Rx, giving the company more flexibility in addressing the expanding demand from its growing distribution network of 2,000 agencies and 12,000 producers nationwide.

Why the name Cowbell? No, it’s not in homage of the iconic SNL skit, but the company traces its name back to the livestock bell and its timeless practice of ringing out when the animal herd is in distress. The cowbell is a warning signal that alerts the farmer to any abrupt change, and Cowbell Cyber alerts enterprise risk managers to the fluctuating hazards and remediations to mitigate potential losses for its clients.

Providing just another way to meet the world’s risk mitigation needs, Vermont remains the domicile of choice for captive innovation.

Thank you and I look forward to hearing from you.

Welcome, Kevin!

Earlier this month you met our new Communications Director, Francis McGill. Now I would like to take the opportunity to introduce my replacement as President of VCIA, Kevin Mead!

Kevin Mead, new VCIA President

As you may have seen in our announcement earlier this week, Kevin brings a boatload of skills in association management and financial wherewithal based on his experience running a number of associations. (Click here for the official announcement.)

Kevin is a unique fellow: he lives in Vermont’s Northeast Kingdom (the most rural part of our rural state), has a British accent, and loves rugby. But more than that, I got to know Kevin over the past few months, and he is truly a nice, decent human being – someone who will fit right into the captive insurance family.

Holding two master’s degrees related to association management and finance, Kevin is the perfect candidate to lead VCIA, build out the captive industry’s flagship conference, increase VCIA membership and membership value, while evolving the organization amid the current pandemic and economic challenges. Above all, he is a true “people’s person.” Our staff is thrilled to have him on board and I know he will make many meaningful and productive relationships with our members.

Although his official start date is February 22nd, Kevin has been hard at work absorbing all things captive insurance and VCIA over the past few weeks. He will be traveling to Miami for the World Captive Forum with VCIA’s own Janice Valgoi and the incredible team from the State of Vermont, so, if you are going to be there, please take the time to reach out and introduce yourself.

Thank you and I look forward to hearing from you.

The Results Are In

You all saw it coming. The number of captives licensed in Vermont last year eclipsed 2020 – already a banner year. Sure, almost every captive domicile had a good year, but even with over 40 states establishing captive laws, Vermont stands head and shoulders above.

Here are the hard numbers: Forty-five new captive insurance companies were licensed this past year in Vermont, making 2021 Vermont’s 4th highest year of growth in its 40-year history. Vermont is now home to 620 licensed captives, consisting of 589 active and 31 dormant captives. Vermont’s 52 sponsored cell captives currently host nearly 500 cells and separate accounts, in addition to the licensed captive companies.

The new captives were licensed in 17 different industries, the main industries being healthcare, real estate, manufacturing, insurance, and transportation. At least 5 of Vermont’s new captives in 2021 were formed by companies with international roots, including Japan, Germany, Russia, the United Kingdom, and Australia. Vermont has been experiencing growth in the number of new cells within sponsored captives, at a similar pace as new company licenses, with nine of the 45 new companies formed this year being sponsored cell companies.

Vermont has licensed a total of 1,242 captive insurance companies since 1981 and remains, by far, the largest U.S. domicile for captive insurance and third largest in the world. With an active pipeline of prospective new captive insurance companies already underway for 2022, the state expects continued growth in the coming year.

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Welcome, Francis!

I want to take this opportunity to welcome Vermont’s new Communications Director, Francis McGill, to Team VCIA!

Starting earlier this month, Francis jumped right into the deep end of the pool and is off to a super start. He enjoyed virtually meeting some members during VCIA’s successful 2022 Legislative Day, and introduced himself to the Board of Directors during our quarterly meeting. Francis certainly has big shoes to fill, coming in after Elizabeth Halpern’s amazing 22-year run at the job, but he is ready to go! We wish Elizabeth the very best in her next endeavors.

Francis brings eight years of experience as a dynamic storyteller, brand ambassador, and communications strategist. His most recent position was the marketing and media coordinator for Vermont’s flagship retirement and long-term facility. His mettle was tested as the center was challenged over the past two years of the COVID pandemic. He lives on the roots of Mount Ellen, one of Vermont’s highest peaks, with his partner and brand-new baby boy.

Please take the time over the next few weeks to welcome Francis to the wonderful world of captive insurance! You can reach him at fmcgill@vcia.com.

Thank you for your support, and the whole VCIA team looks forward to hearing from you.

Rich Smith
VCIA President

Happy Holidays!

As we close out the year it is a great time to reflect on the last 12 months – or longer. It certainly has been a challenging year for all of us, but I can say without reservation how grateful I am to have been a part of this great industry for the past 12 years.

The friends I have made as head of VCIA are amazing. All of you have made my job joyful which is not something everyone can say, I know. You all know how fabulous the folks who work in the captive insurance space at the State of Vermont are – truly a pleasure to work with Dave Provost, Sandy Bigglestone, Dan Petterson, Christine Brown, Becky Aitchison, and Brittany Nevins.

VCIA’s Board of Directors day in and day out have provided their time, energy, guidance, and friendship through a year where they had to face many challenging decisions. My thanks to Andrew Baillie, Donna Blair, Joe Carter, Lawrence Cook, Tracy Hassett, Stephanie Mapes, Gail Newman, Jason Palmer, Dennis Silvia, Anne Marie Towle, and Derick White.

And to work with the great staff at VCIA in these tumultuous times has shown me just how wonderful they all are. Thank you so much Diane Leach, Elizabeth Halpern (who leaves us at the end of the year – sniff), Peggy Companion, Janice Valgoi, Dave Rapuano, and Meg Precourt for everything!

Even in these uncertain times, we are looking for a brighter future with 2022 and it gives me such comfort to know what good people there are out there.

Happy Holidays!

Rich Smith,
VCIA President

Hail to 40 Years!

Vermont’s 40th anniversary year of the inception of its captive industry is drawing to a close. Since 1981, Vermont has worked hard to be the top U.S. domicile and continues to strive for excellence. Currently, VCIA is working with Dave Provost and Sandy Bigglestone and their team at DFR to build another captive bill to be introduced into Vermont’s General Assembly.

Over the past two years of COVID challenges, the Gold Standard has never been so apropos as Vermont lead the captive insurance industry in incredible growth and resiliency. I could not be prouder to be a part of this great work.

Brittany Nevins, in her role as Captive Insurance Economic Development Director, has put together a terrific short film highlighting relationships, accomplishments, future goals—and really what it means to be part of the Vermont captive family. I hope you will watch and encourage you to share.

Stay well and see you soon!

Rich Smith,
VCIA President

Back to the Future… with VCIA’s Annual Tax Update!

I hope you all had a wonderful Thanksgiving last week and were able to spend it with friends and family. As we move into the continued uncertainty with COVID, it is always good to take a step back to appreciate and be with loved ones (or ones that at least like you).

One certain thing you can count on this time of year is VCIA’s annual captive tax update webinar, scheduled for December 15 at 2:00 ET. This year we present “Back to the Future” where our esteemed captive tax specialists review 2021’s most significant tax developments and explore the possible impacts of proposed legislative action by the current administration.

Our panel consists of Daniel Kusaila, Partner at Crowe LLP, Chaz Lavelle, Partner at Dentons Bingham Greenbaum LLP, and Brandy Vannoy, Partner at Johnson Lambert LLP. With the help from content advisors Stephanie Brassard of Johnson Lambert LLP and Dana Marino of Innovative Captive Strategies, the panel will provide an analysis of state and federal tax activity from 2021.

Our panelists will also provide an overview of recent, notable court cases and IRS actions. This includes a discussion on “lessons learned “ for large captives from small captive cases and a “fact or factors” segment highlighting key drivers that impacted the decisions made by the courts.

Our tax specialists will be monitoring the current tax landscape through the days leading up to this webinar to ensure the audience receives real-time updates on the state and federal tax environments.

Also, I want to say congratulations to Dave Angus, recently appointed as counsel to the captive insurance law practice at the firm of Paul Frank + Collins in Burlington, Vermont. Dave brings his captive insurance and transactional practice from The Angus Firm to PF+C’s captive insurance team and has been a long-time member (and twice chair) of VCIA’s Legislative Committee. Congratulations, David!

Stay well and see you soon!

Rich Smith,
VCIA President

COP 26

As the world’s leaders conclude their two-week summit in Scotland it is good to see some of the leadership in the insurance industry involved in the most critical issue facing all of us today. Many in the insurance industry are working positively to promote policies that will help mitigate climate change – or at least don’t add to the problem – such as new ESG guidelines for the company, looking at the impact of placing climate risks in their portfolios, new modeling, and reassessing where to invest the huge assets the insurance industry has under management. Reinsurers rank climate change as the top risk facing the global insurance industry, according to PwC’s latest survey.

Climate policy is a risk management system, and the industry needs to provide a comprehensive vision for risk sharing going forward. There are many complex issues to be worked out for both the insurers and their insured for sure, however, a cleared-eyed approach by all parties can get us there.

Innovations like from AXA XL which has launched a tool that maps current and future flood hazards resulting from climate change and integrates the protective benefits of coastal ecosystems into insurance risk models, is a great example of where the industry can lead.

There is a theory in the risk management world, however, that insurance can be seen as a barrier to the kind of innovation needed to tackle the hard nut that is climate change. Providing P&C insurance, or D&O insurance, to a client without concern for the long-term impacts climate change can bring can remove the responsibility from the clients. Adding to this, innovative changes to infrastructure, along with the recent technologies used to build resilience, can be hard to insure as they rarely have claims history. This makes it difficult for the insurance sector to price the risk.

I think the basic principle behind captive insurance will accelerate solutions. With captives, organizations take direct responsibility for their risks – they now own it. The data on how to mitigate climate risk comes from their captive which allows them to be more focused on pursuing resilience at all levels. No longer is there a large, anonymous insurance company obscuring leaders from understanding and acting to better protect their own properties, employees, supply chains, and ultimately shareholders. And captives are innovative. They have the ability to take specific risks for an organization that might be looking at pioneering ways to use new technologies to protect from the impacts of climate change.

I remain hopeful that with a comprehensive and coordinated effort from all facets of society and industry we can turn the corner on climate change. Captive insurance will be part of that solution.

Stay well and see you soon!

Rich Smith,
VCIA President