CNN_SOTU_logoJoin me on November 20th for an informative and timely update on VCIA legislative activities on behalf of our members and the industry. The session is free, for VCIA Members only, and is not to be missed!

I will be joined by David Provost, Deputy Commissioner for Captive Insurance at the Vermont Department of Financial Regulation, and Jim McIntyre, VCIA’s representative in Washington DC for an overview of new and pending regulations in the state and in Washington D.C. and the NAIC.  Between these two guys, they hold enough knowledge on captive insurance to fill an old UNIVAC 1107 mainframe computer (OK, admittedly an iPhone holds tons more data, but we old mainframes have to stick together)!

Learn about VCIA’s activities on your behalf, and the status of important current issues like:

  • What’s happening in Washington, DC
  • TRIA Reauthorization
  • Cannabis Safe Harbor Act
  • IRS Letters to 831(b) Captives
  • Update to the Liability and Risk Retention Act (LRRA)
  • Activities and updates from the NAIC, including the RRG Task Force
  • Non-domiciliary state actions: Washington State, Johnson & Johnson decision
  • Vermont’s captive 2019 bill and what’s ahead for Vermont’s 2020 captive bill
  • DFR legislation creating an insurance “sandbox” to test innovative technology or insurance models.
  • Vermont Department of Financial Regulation updates

I hope you will be able to attend this Members Only event.  If you aren’t already a VCIA Member, this would be a great time to join! Click here for more information and to register.

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

Rich Smith
VCIA President

On The Road Again…

Richie-NelsonVCIA is on the road again, coming to Boston on November 14 at the Seaport Hotel & Conference Center for our “world famous” VCIA Captive Road Show, where we preach the gospel of captive insurance in cities across the U.S. (and will even be presenting in Mexico City next year!)

The VCIA Road Show is an excellent chance to learn about captive insurance and enjoy a great reception afterwards, to connect with others in the industry.

The educational session will feature representatives from two captive programs, who will share their experiences.  Tracy Hassett, SPHR, is President and CEO of Educators Health, LLC where she played a key role in the launch of edHEALTH, a unique entity, a first of its kind consortium of colleges and universities with the mission of reducing health care costs while enhancing consumer knowledge of options, plan design, disease management and wellness programs. Gail Newman, Vice President of Risk Management for Bright Horizons Family Solutions is our second captive owner panelist. Gail’s program excels in providing best-in-class family-care solutions across North America, United Kingdom, Netherlands, and India. Gail is passionate about business process improvements and creating risk mitigation strategies that not only support healthy financials and the “right” insurance program, but also keep employees and clients of the business safe. With the inception of Bright Horizon’s captive (APEX) in 2017, the business has been able to realize better flexibility and financial health for their insurance program and innovate insurance coverage strategies that are unique to the business.

Others all-stars presenting that day will be:  Michael O’Malley, managing director for Strategic Risk Solutions; Dave Provost, Vermont’s Deputy Commissioner of Captive Insurance; and Ian Davis, Director of Financial Services for the State of Vermont.

If you are in the Boston area, I hope you will be able to join us! Click here for more information and to register.

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

Rich Smith
VCIA President

It’s Your Reputation on the Line

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On Monday, August 19, a group of high-powered American executives, including seven of the large commercial insurers, published a statement on the role of shareholders in corporate governance that departs sharply from tradition.  The “Statement on the Purpose of a Corporation” put forth by the Business Roundtable asserts that corporations have greater obligations beyond generating profits for shareholders. In short, they are responsible for creating better lives for all their stakeholders.  Putting these parties first and treating them ethically is ultimately what keeps businesses going and the economy growing.

Shareholders have long been corporations’ top priority because disappointing them means withdrawal of their investment at best, and at worst, the potential for securities class action lawsuits. Businesses now operate in an environment of heightened reputation risk that has a tangible impact on income statements. Loss of customer loyalty and diminished brand value are real consequences of social irresponsibility, and these ultimately impact revenue and profit.  As important as the change in priority might be overall, it will add to the growing reputational risk profile of every organization.  That is one of the main reasons VCIA is hosting a webinar on reputational risk and how captive programs can help mitigate it, on October 23rd.

It can be said that reputation is a product of expectations. Often misunderstood and inadequately addressed, reputation risk is the peril of economic harm from leaving stakeholders disappointed and angry. Negative media and social media coverage are often a byproduct, amplifying that disappointment and anger. When reputational crises occur, they impact businesses commercially and financially, and their leadership personally. The August 2019 Business Roundtable declaration raises the stakes.

A captive program can be an effective vehicle for insuring reputational risk. A captive is in the unique position of being able to fund potential losses associated with stakeholder anger and disappointment, and by doing so signal to key stakeholders (employees, creditors & analysts, and regulators) that the company’s governance apparatus is very aware of the peril, and is confident that it is managing the risk well. And if the captive is at least partially reinsured in the open market, it then also demonstrates that an objective third-party has reviewed the company’s practices and is essentially “warrantying” the company’s governance.

So, join us on October 23rd for our webinar featuring Dr. Nir Kossovsky, CEO of Steel City Re, a leading source of integrated reputation risk mitigation solutions and insurances, and Machua Millett, Chief Innovation Officer for FINPRO U.S. and the General Partner Liability Product Leader at Marsh.  Ably moderated by Maigh Wright, an associate actuary with Milliman, this webinar is guaranteed to burnish your reputation!

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

Rich Smith
VCIA President

May the FASB with you

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Look, the Empire of Accounting has many draconian rules and regulations, but if you are unprepared with Force of knowledge you will be thrust into the Dark Side of your ledger.

OK, enough with the Star Wars rip-off. The Financial Accounting Standard Board (FASB) has been busy at work issuing a variety of new standards. If you have investments, especially equity investments that have been accounted for through Other Comprehensive Income (OCI), you’re about to see a big change as a result of Accounting Standards Update (ASU) 2016-01, Financial Instruments Recognition and Measurement, ASU 2018-03, Improvements to Financial Instruments and ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement.

Hopefully you can join us on September 25th at 2:00 p.m. ET for a truly instructive webinar on these changes as we walk through a case study and discuss the impact of obtaining a permitted practice to not adopt these new standards. Additionally, we will provide an update on ASU 2016-13, Financial Instruments – Credit Losses and ASU 2016-02, Leases.

Our panelists will be Sandy D. Griffith, Senior Vice President at Advantage Insurance, and Magali Welch, Partner with Johnson Lambert LLP. Ably moderated by Steve Garwood, Vice President, Treasurer and CFO of EIIA, which is the parent company of two Vermont based captives, with expert content advice from Rebecca James, Principal at Johnson Lambert LLP.

After completing this webinar, you will be able to: cite changes related to accounting for financial instruments; adopt best practice methods for properly accounting for the change in guidance; and identify some impacts (potential and known) of obtaining a permitted practice to not account for this guidance.  Register now, and may the Force of accounting knowledge be with you!

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

10-Day Countdown

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Just ten days until we open Burlington, Vermont to all you captive insurance professionals! If you have not already done so, please make plans to join us for a week of wonderful education, networking and friendship.

Here is just a smattering of some of the captive owners who will be presenting this year:

  • Andrew Baillie, AES of Global Insurance Company
  • Sean Barnes of United Educators
  • Julie Bordo of PCH Mutual Insurance Co., Inc., a RRG
  • Tracy Hassett of Educators Health Insurance Exchange of New England
  • Tim Herr of Recreation Risk Retention Group
  • Karen Hsi of the University of California
  • Jan Klodowski of Agri-Services Agency LLC & Agrisurance Inc.
  • Troy LePage of HAI Group
  • Heather McClure of Oklahoma University Medical
  • Bill Murray of Church Insurance
  • Tim Padovese of Ophthalmic Mutual Insurance Company (OMIC)
  • Joshua Reding of Life Time Captive Insurance Company
  • Paul Smith of National Insurance and Indemnity Corporation

I hope you all can join us! Click here to register for the VCIA Conference today.

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

Rich Smith

From Early Bird to Angry Bird

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For all you procrastinators out there (and I count myself as one of the best) listen up! VCIA’s Annual Conference “early bird” rates are about to expire on June 30th. That means, of course, you will be paying more to learn and network with 1100 captive professionals from around the US and the world. And none of us like doing that.

Don’t take my word on it – look, here it is in black and white:

Registration Type

Early Price

Late Price

Full Pass: Member $750 $825
Full Pass: Non-member $1300 $1380
Networking: Member $465 $515
Networking: Non-member $890 $940

So, before the early bird changes into an angry bird, get on it! Click here to register today.

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

Rich Smith
VCIA President

Space…The Final Frontier

Rich-KurkVery cliché, I know, but still so true.

The fact that we now have a burgeoning space industry opens up opportunities for the insurance world. Most insurance companies offer some type of Space and Satellite Insurance which covers things like satellite launch and in-orbit, contingency, in-orbit third party liability, or some combination thereof.  But with space tourism becoming a reality in the not-too-distance future, captive insurance has an opportunity to play a role in the risk management of our last frontier.

The global banking firm UBS believes there will be very lucrative ramifications from the space flight efforts currently led by Virgin Galactic, SpaceX and Blue Origin, and stated that in a decade high-speed travel via outer space will represent an annual market of at least $20 billion and compete with long-distance airline flights. Space tourism will be a $3 billion market by 2030, UBS estimates.

UBS pointed to SpaceX’s plans to use the massive Starship rocket it is building to fly as many as 100 people around the world in minutes. SpaceX said that Starship would be able to fly from New York to Shanghai in 39 minutes, rather than the 15 hours it takes currently by airplane – pretty cool.  And even though space tourism is still nascent, UBS said they believe the sub-sector will become mainstream as the technology becomes proven and cost falls.

The legal risk of orbital space tourism is uncharted territory, and the liability risks to these companies could be huge.  Under current regulation, commercial passengers will have to sign an “informed consent” form to confirm that they recognize and accept the risks. This provision has been enshrined in US law by the Commercial Space Launch Amendments Act 2004. Such liability waivers remain untested in the courts.

Although there are large insurance firms looking at space tourism, it seems that there is a yawning gap for the liability coverage of the space firms. Captives have always done well with filling this void with targeted, bespoke coverage. So, brush off your old Star Trek DVDs and let’s hope that we have a panel at the VCIA conference in the next ten years devoted to the extraterrestrial!

For all you Trekkies out there we have the next best thing to Captain James T. Kirk: for our closing luncheon on Thursday at the VCIA Annual Conference the week of August 5th we have former astronaut Mike Massimino as our special keynote. He is a recurring character on The Big Bang Theory, a professor at Columbia University, the first person to tweet from space, and a New York Times best-selling author.  Mike will speak of pursuing his passion and tell incredible stories about his experiences in outer space manning space missions. Having one of the most dangerous jobs in the world, Mike will speak of the teamwork and problem-solving skills needed to train for and accomplish one of NASA’s most difficult space missions. Don’t miss this fun closing event!

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

Rich Smith
VCIA President