The results of the most recent Lawsuit Climate Survey conducted for the U.S. Chamber Institute for Legal Reform were just released and Vermont gets another set of high marks. The poll explored how fair and reasonable the states’ liability systems are perceived to be by U.S. businesses. These perceptions matter because they can be influential in business decisions about where to conduct, expand, and constrict business operations or sales.
Vermont ranked #2 in the 2017 Lawsuit Climate Survey: Ranking the States, staying consistent with the 2015 Survey. The state came in first in the key element categories of scientific and technical evidence and judges’ impartiality. I think this is just another example of the high standards we set for ourselves and our industries here in Vermont; standards that are also reflected in the recognized Gold Standard status of our captive insurance industry and regulation.
I will be out in Seattle next week for one of our world famous Captive Road Shows! Featuring the Risk Managers from Microsoft Corporation and Starbucks Coffee Company, attendees will learn the why’s and how’s of captive insurance, as well as hear their experiences in forming and operating and all about the captive climate and regulatory requirements in Vermont. Go to www.vcia.com/Events to see more. I hope you will join us if you can!
Not a surprise for anyone remotely following the news these days to understand the year we have had regarding natural disasters. For the first nine months of 2017, the United States has endured 15 disasters that each cost $1 billion or more and collectively claimed 323 lives, all linked to weather and climate, according to the latest data from National Oceanic and Atmospheric Administration.
2011 set the record for billion-dollar disasters with 16 by year’s end, the National Centers for Environmental Information reported. With 15 major natural disasters this year, 2017 is on par with that record-setting year and shows no sign of slowing down. Clean-up and recovery efforts after one of those major hurricanes continue in Puerto Rico three weeks after Hurricane Maria roiled over the entire island for more than 12 hours. And maybe I should not have been, but I was surprised to hear that there are still clean-up efforts from when Hurricane Katrina struck Louisiana 12 years ago.
Nationwide, one of the biggest gaps in preparation and recovery is whether or not states have long-term recovery plans. Most states don’t, according to a PBS report. After first responders have saved all they can save, few states have a plan in place to rebuild. And despite years of predictions from climate change experts who warn that rising sea levels will produce higher storm surges creating more devastating floods and damage, few U.S. homebuyers take disaster risk into account when they want to settle down. According to a February 2017 survey from the National Association of Insurance Commissioners, only 22 percent of Americans thought about natural disasters when they thought about where to buy a home.
As an industry that focuses on risk mitigation and insurance financing, it is difficult to digest this unsettling statistic.
As many of you know, VCIA hosts a couple of educational sessions in different cities across the country to espouse the virtues of captive insurance. We call these our World Famous Road Shows, well, because the Ringley Brothers Barnum & Bailey Circus is no more! It is an afternoon that focuses on the basics of captive insurance companies, including the reasons for formation, the feasibility process and key issues in putting a successful captive program together. A brief overview of Vermont as a captive domicile is also discussed.
It hit us late last year that we have never brought our Road Show to our Homeland – the Great State of Vermont! So next Wednesday, October 25th at the Burlington Hilton we will presenting the Road Show for companies in Vermont (and neighboring regions), as well as enticing finance, business and accounting students from local colleges to come learn about this great industry in their backyard.
We will have Vermont’s chief regulator, Dave Provost on a panel with Rusty Young, a Shareholder at Burlington law firm Primmer Piper Eggleston & Cramer, PC. The panel will be moderated by Ian Davis of Vermont’s Department of Economic Development. I will host the second panel of two of the industry’s experienced captive owners. Jan Klodowski is vice present of Agrisurance Inc. and is responsible for developing and administering their successful Captive/Alternative Risk Financing programs. She manages Agrisurance, Inc., a Vermont-domiciled Sponsored Captive focused on service the farming and agricultural industry. And Wilda Seymour, the corporate director of Professional Liability for the University of Pennsylvania Health System and vice president, Franklin Casualty Insurance Company, their Vermont-domiciled captive.
Hope you can join us to get a better idea why Vermont is the #1 captive domicile in the United States!
One last thing – we need your input! Today is the deadline to submit topics for VCIA’s annual conference next August. Please click link below to submit a conference topic suggestion:
Every year VCIA hosts a webinar for our members that provides an informative and timely update on VCIA legislative activities on behalf of our members and the industry. We call it “Captive State of the Union” because, like the President’s address to Congress every January, this is a chance for our members to hear just what’s going on in Montpelier, Washington, and across the world. I will be joined by Dave Provost, Deputy Commissioner for Captive Insurance at the Vermont Department of Financial Regulation, and Jim McIntyre, VCIA’s representative in Washington for an overview of new and pending regulations in the state and in Washington D.C. and the NAIC. The webinar is for VCIA Members only and is free of charge!
This is a relaxed but informative hour where we will discuss issues like the potential impact of tax reform on captives, status of the Captive Insurers Clarification Act, the Vermont captive bill signed into law this past spring, and updates from the NAIC, including the proposed NAIC Insurance Data Security Model Law, XXX / AXXX regulations and proposal to collect expanded mid-year investment information, plus more. So join us on October 19th from 2:00 – 3:00 pm ET and become informed!
You may have heard about Richard Smith being grilled in Congress this week over a huge data breach that exposed millions of Americans’ personal information. I just want assure you that I am not THAT Richard Smith!
I think our industry has been very focused on cyber security for some time now, both in their businesses and as an opportunity to craft a captive solution for their clients – and I have certainly blogged it to death so enough said. That still has not stopped the NAIC from proposing to adopt a Data Security Model Law this year. If you have not seen it you can download it here:
And although it becomes another “thing” to deal with in our industry, there is no doubt that a cybersecurity plan is a necessary element of any good captive management plan. I give Vermont’s insurance commissioner, Mike Pieciak, and his dauntless captive team high marks for keeping the NAIC’s model act as manageable as possible.
In the meantime, this Mr. Smith will be heading to Washington this fall to meet with congressional staff and leaders on the hill about issues impacting captive insurance. Hopefully, I will get a little warmer welcome than my namesake!
I just returned from the annual NRRA conference in Chicago last night. I know, NRRA conference? I talk a lot about fixing NRRA in Washington (maybe incessantly) but this the “good NRRA” I am talking about: The National Risk Retention Association; not the Nonadmitted and Reinsurance Reform Act.
Since Vermont is home to almost half of all RRGs licensed, it is a little like old home week in the Windy City. Many of the panelists are Vermonters or have strong connections to VCIA, such as Dan Labrie, Clare Bello, Stephanie Mapes, Michael Bemi, Nancy Gray, Tina Truex McCuin and Tim Padovese. Yours truly moderated a panel of professors and students from two risk management programs in Chicago for a very interesting view on what the industry needs to do to attract (and hold) the next generation of RRG leaders. Of course, DFR luminaries Dave Provost and Sandy Bigglestone were on two different panels providing their sought-out thoughts and wisdom on a number of issues affecting the RRG world.
Congratulations to Michael Bemi who was awarded the Karen Cutts Visionary award. This award is named for Karen who was an inspirational leader and advocate for the risk retention industry and the founder of the Risk Retention Reporter. Michael recently retired as President and CEO of the National Catholic Risk Retention Group and truly lives up to the accolades of the award. Even though retired, the good news for all of us at VCIA is that he will be joining us next year at our conference as a recently minted Honorary Member of the association!
Does emerging artificial intelligence-focused insurtech provide more opportunities for captives? That’s a question confronting our industry with the growing trend of automated data analytics in insurance.
At the same time, Munich Re reported its US-based insurtech platform, Slice Labs, has launched its on-demand homeshare insurance product across 13 states. Slice’s insurance product is specifically designed for homeshare hosts who participate in platforms such as AirBnb or HomeAway, and covers the time period hosts rent their homes out. Machine learning, which is a branch of artificial intelligence that gives computers pattern recognition and computational learning capabilities, is gaining momentum in the insurance industry. Specifically, 54% of the almost 200 insurance executives surveyed said that their organization was using machine learning to support predictive analytical modelling functions. Furthermore, 70% of those who deployed the technology applied it to risk modelling, while 45% used it to develop demand models, and another 36% employed it for fraud detection.
As I am sure all of you remember in a past blog (you know, the one with the picture of me and Beyoncé – one of my faves) I took your valuable time to ramble on about this trend, focusing on a peer-to-peer insurance start-up called Lemonade. Lemonade, an artificial intelligence-focused insurtech company, more than doubled its clients in two months, according to its co-founder, from 6,000 customers at the end of March to about 14,300 by the end of May.
Having more insurance companies employ machine learning technology in their underwriting and modelling could mean more opportunity for organizations with risks that don’t fit the “emerging algorithm” to utilize captives. Not that captive insurers and service providers aren’t using the emerging insurtech technologies as well; just that the bespoke nature of captives could further differentiate them from traditional insurance as the robots take over!