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

Vermont Gets an A+… so come see us next week for Legislative Day!

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VCIA Members: Join us January 24th at the historic Statehouse in Montpelier, VT for Legislative Day!

According to a new report by the R Street Institute’s 2017 Insurance Regulation Report Card published recently, Vermont again has the best insurance regulatory environment.

Vermont has been named as having the best regulatory environment for the fourth straight year and the fifth time in six years and the report cites developments such as Gov. Phil Scott signing H. 85 to expand the state’s captive insurance regulatory regime to cover agency captives last May.  Vermont earned the only A+ in this year’s report card! Congratulations to DFR Commissioner Mike Pieciak, Deputy Commissioner Dave Provost and their team.

What greater impetus is needed, then to join VCIA on January 24th for our annual Legislative Day in Montpelier, Vermont, the coolest state capital in the country? Legislative Day is a chance for our members to meet the State’s top political leaders and hear about the issues that are facing Vermont in the upcoming year. It’s also a great chance for the captive industry to say “thank you” for the over 30 years of support from politicians and policy leaders from all stripes: Democrats, Republicans, Progressives and Independents.

This special event, for VCIA Members only, includes the VCIA Quarterly Board Meeting, lunch with Vermont Lt. Governor David Zuckerman, Commerce Secretary Michael Schirling and  special guest speaker Jeff Carr, Vermont’s State Economist.

There will be meetings with legislative leaders and presentations to House and Senate committees. And don’t miss the Q&A opportunity with Dave Provost and the DFR Team after lunch! The event concludes with a fabulous evening reception where legislators, elected and appointed officials and VCIA Members mingle and exchange information about Vermont’s captive insurance industry and make plans for its continued success in 2018.

So, if you haven’t done so already, register here for a great day!

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

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

Welcome Home!

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Some good news for Vermont was announced right before the New Year a week ago: the University of Vermont Health Network will move its captive from Bermuda to Vermont!

The network’s Board of Directors unanimously approved the move of VMC Indemnity Co. Ltd., a captive that provides medical malpractice insurance coverage, according to a statement by the six-hospital system issued Friday.  UVM Health Network established their captive back in the late 80’s, when Vermont’s captive insurance industry was just getting off the ground, and one of the few domiciles that made sense for many healthcare captives was Bermuda.

A nonprofit corporation will be established to become the network’s captive insurer and it will seek approval from the Internal Revenue Service to operate as a tax-exempt organization.  The UVM healthcare system has more than 1,000 physicians and 2,000 nurses and other clinicians in Vermont and New York.

Needless to say, we are very pleased to have VMC Indemnity redomesticate to Vermont!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Happy Holidays and See You in 2018

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I just wanted to wish all of you Happy Holidays as we head out of 2017 and into 2018. It’s been another busy years in captives, that included a horrific hurricane season, the decision of the Avrahami case on 831(b)s, the specter of continued cyber security issues with the hacking of Equifax (among others), and the soon-to-be-passed Tax Reform bill – all of which impact our industry.

That being said, captive insurance is growing and remains a robust part of the world’s risk management sector. Vermont broke through the 1000 captive license mark and looks to add around 25 new captives before year’s end. With challenges and opportunities that lie ahead such as healthcare, drones, (more) cyber risk, and AI (artificial intelligence – get used to it), captives will show how entrepreneurial and innovative our industry can be!

Thank you all for another great year and Happy New Year!

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

Come Hell or High Water

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Back in July I wrote a blog about the possibility of some sort of border tax being proposed by Congress as part of a broader tax reform bill that could have a negative impact on the captive insurance industry.  Well, as I write this blog the House and Senate have passed versions of tax reform that both have an effect on our industry.

Now, here’s the deal with this bill: Congress is so desperate to pass a bill that shows they achieved something that this bill isn’t on the fast-track, it’s on a rocket with limited guidance control! So there will be a tax reform bill on the President’s desk by Christmas. Using the streamlined “budget reconciliation” process, the GOP needs only a simple majority in the Senate rather than the standard 60 votes, and because Republicans currently control 52 seats, victory seems assured provided defections are be minimized.

Its politics over policy, I am afraid. And though it seems certain that there will be a reduction in the corporate tax rate to 20%, both houses are looking for place to “pay for” these cuts in other areas, and insurance is a pretty easy target. Domestic reinsurers and specialty insurers would be the primary beneficiaries of tax reform, along with insurance brokers and standard commercial insurers, but captives with off-shore reinsurance agreements will be paying more. Relevant to the P&C insurance industry are provisions affecting net operating losses, discounted loss reserves, and, for P&C carriers with a diverse portfolio, the provisions affecting amortization of policy acquisition expenses.

Luckily for you all, VCIA will be presenting a webinar next week to try and make sense out of this chaos. On December 14th, a group of noted captive tax specialists will  also explore the recently introduced Tax Reform bill, its impact on captives, and the process it will go through to get passed by Congress.

Panelists include Daniel Kusaila and Thomas Jones, each of whom have been recognized by Captive Review as well as receiving numerous other industry awards, as well as Charles Boustany, Jr., MD, former U.S. Congressman on the influential House Ways and Means Committee and former chairman of the Subcommittee on Tax Policy.  Charles is currently a partner with Capitol Counsel LLC, a Washington law firm with expertise on taxation and insurance issues. His insight will bring great value to this session.

Click here to register today!

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President