I Own My Insurance Company… Now What?


One of the benefits to moving your risk from the traditional insurance marketplace to a captive is that you own the data that normally a carrier would collect and keep. This data is keenly important to how you manage risk and begin what is hopefully a virtuous circle of loss prevention.

VCIA will be hosting a webinar next Wednesday, “Making the Most of Loss Data“, that will draw insights from an entity’s loss data to identify loss trends impacting the entity and illustrate how to implement a successful risk management program based on this analysis. Two case studies will be presented, a pure captive and a Risk Retention Group, to show  how we can utilize industry loss trends to benchmark against an entity’s loss data, evaluate the loss trend, and employ software tools to draw further insights from loss data.

Speakers include Sammi Jones, Senior Captive and Finance Analyst for Cummins’ captive Dynamo Insurance Company, and Valynda Laird, who provides healthcare risk management consulting services to the Tecumseh Health Reciprocal Risk Retention Group which provides insurance to hospitals and medical centers in Indiana and Oklahoma. This session will be moderated by Steve McElhiney, who has joined Artex Risk Solutions through the purchase of EWI Re, and who has a significant level of experience with captives, risk management and reinsurance issues.

Please join us to gain meaningful tools to mitigate risk by utilizing loss data.  Go to www.vcia.com and register today.

Thank you and I look forward to hearing from you!



It’s a little unfortunate that months and years of good work to close the gap at the NAIC, and with others, on the misconceptions of the regulation of Risk Retention Groups can be set back in what amounts to an instant.

As many of you know, with the hard work and leadership of Sandy Bigglestone and Christine Brown of Vermont’s Department of Financial Regulation, and Sean O’Donnell of the DC Department of Insurance, Securities and Banking, there was much progress on creating a common regulatory approach to RRGs and educating non-domiciliary states to that end under the auspices of the NAIC’s RRG Task Force.

Over the past year, the Task Force has been working diligently to provide additional guidance to both state insurance regulators and industry regarding the registration process for RRGs in non-domestic states. The process started last year with a letter from the National Risk Retention Association (NRRA) citing concerns regarding fees and delays in the review of registration forms, supported by a letter from the VCIA. The discussion that followed also raised concerns from non-domiciliary states, such as incomplete registration forms or potentially non-compliant RRGs. As a result, a drafting group was formed to develop frequently asked questions (FAQ) and best practices documents, and updates to the NAIC Uniform Risk Retention Group Registration Form, which made great progress toward the goal.

Unfortunately, in response to a bill that would expand the Liability Risk Retention Act to allow certain, narrowly defined, RRGs to provide property, zombie tropes about how well RRGs are regulated rose again from the grave. The NAIC sent a letter opposing H.R. 4523, the Nonprofit Property Protection Act, and stated in the letter “RRGs have historically had a higher insolvency rate when compared to admitted insurers.”  The letter was signed by the current NAIC president-elect, Ray Farmer, Director of South Carolina Department of Insurance, among others.

As a joint response from VCIA, CICA and NRRA pointed out, this is simply untrue.  According to a study conducted by the Risk Retention Reporter, which uses data from A.M. Best for the period 1987 to 2017, RRGs had a yearly insolvency rate of 1.2% as opposed to 1.5% for the entire property-casualty and life and health marketplace.  In brief, RRGs during this 30-year period were less likely to become insolvent that traditional carriers.

It is noteworthy that the NAIC did not cite any authority for its conclusion.  And at the actual hearing for the bill this week Chlora Lindley-Myers, Director of the Missouri Department of Commerce & Insurance, repeated the claim – again with no backup data!  RRGs are subject to a different regulatory regime than traditional insurers, but that does not mean that the standard is “lower”. RRG regulation by the domiciliary state is subject to the accreditation process by the NAIC itself.

I hope this does not mean a complete move backward at the NAIC regarding RRGs. I have immense faith in Vermont’s regulators, and other allies in the industry, to keep pushing forward – and finally burying these long-discredited zombies.

To view a copy of the joint letter click here.

Thank you and I look forward to hearing from you!

Rich Smith
VCIA President