It was a sizzling conference!

2018collagefinalThanks to all who joined us in Burlington, Vermont, earlier this month for another great VCIA captive insurance conference.  More than 85% of conference survey responses rated our conference the best or better than most. With over 1000 attendees from 44 States and 9 countries, where more than 25% were captive owners, our annual gathering in August has grown to be THE captive insurance forum!

The conference had great energy – people liked the fresh format changes and extra touches, and, as one attendee stated the conference is “the best congregation of the captive industry in the U.S.” while another stated it was “the perfect environment for meeting the alternative risk and captive community”.  Many thanks to our sponsors and exhibitors without whom we could not put on such an event, as well as to the hundreds of volunteers who make it happen.

Now after a little break, we are back to work again looking out for the captive industry. We have a bunch of webinars being planned for the rest of the year, including Regulatory Compliance on September 20th, Captive Benchmarking on October 17th, State of the Union for Captives on November 15th with Dave Provost, Jim McIntyre and me summarizing all things legislatively current, and our annual Captive Taxation Update webinar on December 13th so keep your eyes on our website!

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

Rich Smith
VCIA President

Time’s a Tickin’

 

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Hey, you! Yes, you! If you haven’t registered for the World’s Best Captive Conference™ yet, it’s time to get to it!  The Early Bird Rates for VCIA’s Annual Captive Conference expire this Saturday, June 30 and we don’t want you to miss out on the savings.

Top 10 Reasons to Come to VCIA!   Register Now!

  1. The VCIA conference is a great source forcaptive career development and networking; earn CPE / CLE / ICCIE credit
  2. We offer sessions with focus areas for those new to captive insurance, those in accounting / finance, operations, and risk management. Professional development sessions are offered as well. Sessions are interactive and fun.
  3. Nearly 100 companies exhibit at the conference, featuring the newest industry product and service developments.
  4. The event will have two excellent keynote speakersJack Uldrich is a renowned Global Futurist and award winning author; he will speak on trends transforming tomorrow. Joel Cohen is an Emmy award winning writer and producer for “The Simpsons.”  He is a hilarious speaker and will discuss the Simpsons, creative process, group dynamics & innovation.
  5. Risk management tour for captive owners. Captive owners are welcome on a special outing to tour Green Mountain Power, Vermont’s largest utility, and hear from their Risk Managers.
  6. Panelists who are captive owners from some of the most prestigious organizations in the world teach at VCIA. All the industry’s key players will be at the VCIA Conference!
  7. For attendees guests or spouse, there is a fun Vermont outing available.
  8. Global collaborationmake connections with professionals in all areas of captive insurance!
  9. VCIA is great for those new to the industry, or long-time participants. Educational offerings for all levels.
  10. VCIA is a great opportunity to relax, learn and have fun with industry peers!

So get on it! We look forward to seeing you in Vermont in August.
Thank you all very much!

Rich Smith
VCIA President

Vermont has built an ARC (Affiliated Reinsurance Company)

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At a cyber security roundtable hosted by Vermont’s Department of Financial Regulation on May 17, Vermont’s Gov. Phil Scott signed a bill creating a new reinsurance option for U.S. companies affected by a key provision of the U.S. tax overhaul.

The half-day roundtable provided a discussion of emerging cybersecurity regulatory regimes of the banking, insurance and securities industries.  VCIA board member, Anne Marie Towle, Executive Vice President for JLT Insurance Management and the Captive Practice Leader, served on a panel that explored Innovation and Developments in the Cybersecurity Insurance Market and Risk Management Alternatives with a number of other experts, including Fred Eslami, Associate Director with the alternative risk transfer group at A.M. Best. It was an excellent presentation in the inaugural DFR series seeking to provide the insurance and financial services industry in Vermont with education and resources.

The bill the Governor signed (H.719) offers an onshore affiliated reinsurance alternative to insurance companies affected by the Base Erosion Anti-Abuse Tax on reinsurance ceded to offshore affiliates.  The BEAT provision included in the tax reform package adopted in December aims to circumvent profit movement overseas by imposing a minimum tax on certain deductible payments made to a foreign affiliate, including payments such as management fees and royalties, but excluding costs of goods sold, beginning in tax years after Dec. 31, 2017. It applies a minimum tax of 10% of taxable income.

It started when Ed Koral, Specialist Leader at Deloitte Consulting (and recent VCIA board member – see, we are all over the place…) approached the State of Vermont with a need for an onshore alternative for those reinsurers offshore that will be impacted by BEAT.  The concept is very similar to the Special Purpose Financial Captive, without the requirement for a securitization transaction. One of the key provisions of the law is the investment flexibility it provides companies. Unlike more prescriptive investment rules, these new affiliated reinsurance companies will develop an investment policy that addresses diversity and liquidity concerns, and the Department of Financial Regulation will work with the company to approve it.

This new law once again represents Vermont’s ability to adapt quickly to regulatory changes in support of the financial services industry.

At the upcoming VCIA Annual Conference August 7-9 there will be terrific education for captive professionals, including Hot Topics with Dave Provost, who will undoubtedly talk about this new legislation. Other sessions include Innovative Spotlight: Financing Unique Risk, Economic Headwinds and Tailwinds Impacting Captives, Owner Lessons Learned in Establishing a Captive, and The Cognitive Captive: Artificial Intelligence for Smarter Insurance. Register soon at http://www.vcia.com to get the best rates! Early rates expire June 30th.

We look forward to seeing you in Vermont in August. Thank you all very much!

Rich Smith
VCIA President

VCIA Spring Fling – Thank you Johnson Lambert!

 

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It was a beautiful evening in Burlington, Vermont for the VCIA Spring Mixer! From left to right: Christine Brown and Sandy Bigglestone from the Vermont Department of Financial Regulation, VCIA Board Chair Jan Klodowski and Dawne Ware from Marcum LLP

One of my favorite VCIA events of the year is our annual Spring Mixer in Burlington, where 100 or so of our members join us for a little education, a little networking and a lot of fun! This year’s event on May 16 was no exception.

At the VCIA Board of Directors open meeting, an overview of the upcoming VCIA Annual Conference was presented to members. The conference, taking place August 7 – 9, is our 33rd annual conference and the theme is “VCIA: Where the Captive World Comes to Meet!” This is an apt description of our annual event, which highlights the power of collaboration among people from all sectors of the captive industry.  This year, special focus has been placed on professional development as well, with sessions such as Presenting to Board/Management, Building Better Relationships and a new young professionals forum.

Ian Davis, Director of Financial Services for the State of Vermont, then gave an update on the State’s captive insurance activities, including the fact that Vermont has already licensed 11 new captives in 2018 with more in the pipeline. Dave Provost, Sandy Bigglestone and Christine Brown from Vermont’s Department of Financial Regulation (DFR) gave a report on their ever attentive zeal on making the regulatory process for captives in Vermont efficient and cost effective.  Dave also announced the Governor signing the DFR bill this week, which includes a change to the captive statute that will offer an onshore affiliated reinsurance alternative to insurance companies affected by the recent imposition of the Base Erosion Anti-Abuse Tax on reinsurance ceded to offshore affiliates. An affiliated reinsurance company is an insurance or reinsurance company that reinsures risks only from its parent or affiliates, and is subject to a financial solvency regulatory system separate from that generally applicable to traditional insurers and/or reinsurers in the ceding entity’s domestic jurisdiction.

And finally, the part of the day we all wait for (and deserve!): the cocktail mixer under beautiful blue skies on the patio of the Hotel Vermont/Marriott Courtyard. Our thanks to our great friends at Johnson Lambert for sponsoring this wonderful event!  Not only do our Vermont members show up en masse, but friends from New York, Connecticut and even South Carolina joined us for a great evening of friendship and comraderie.

We look forward to seeing you in Vermont in August. Thank you all very much!

Rich Smith
VCIA President

I Kind of Like the Swamp…

rich-swamp-2I am down in Washington for a couple of days meeting with various Congressional staff people about moving the Captive Clarity Bill forward, slowly but surely.

The Captive Clarity Bill is seeking to clarify (hence the name!) an issue passed in legislation a number of years ago.  Within the Dodd-Frank Act was passed the Nonadmitted and Reinsurance Reform Act (NRRA), which was intended to streamline the regulation and taxation of surplus lines insurance. However, some of the definitions in the Act are so broad that questions have been raised about its effect on captive insurance. If captive insurance is considered “nonadmitted insurance” under the NRRA, captive insureds may be required to pay a premium tax to their home state in addition to their captives paying domiciliary state premium taxes, and be partially regulated by the insured’s “home state.”

Currently, captives are taxed and regulated in the state that they are domiciled regardless of where their corporate owners’ headquarters may be located. Under NRRA, the home state could assert the right to tax the self-procured insurance premiums written within the captive entity even though the state of domicile already charges the captive a premium tax.  It would suddenly penalize many companies by double taxing them for being domiciled in a state that is not their home state.  Although the Act does not give states any additional taxing authority, the prospect of nondomiciliary states accessing additional insurance transactions to tax has increased the risk of states attempting to impose new taxes on captive insurance. On the other side of that coin, domiciliary states may be at risk of losing their ability to collect premium taxes and regulate certain aspects of captive insurance.

Ian Davis, Director of Financial Services for the State of Vermont, and I will be meeting with our Vermont contingent, Patrick Satalin with Rep. Welch (D-VT), and Erica Chabot and JP Dowd with Senator Leahy’s Office. We will also be meeting with key Congressional staffers, including John Hair with Rep. Sean Duffy (R-WI) – Chairman of the Housing and Insurance Subcommittee, Saat Altey with Senator Tim Scott (R-SC) – Member of the Senate Banking and Insurance Subcommittee, Brandon Beall, Professional Staff for Insurance, Senate Banking Committee, and Amanda Fischer, Director of the Democrat/Minority Policy for the House Financial Services Committee. Finally, I will be meeting with Richard Ifft in the Federal Insurance Office at the Treasury Department. Phew… I need a break just looking at the list!

Jim McIntyre and I will be providing a full legislative report during the VCIA Annual Conference to VCIA Members attending the  Annual Meeting, so come on by and find out more!

We look forward to seeing you in Vermont in August. Thank you all very much, and I look forward to hearing from you soon.

Rich Smith
VCIA President

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