More Affirmation

Not a surprise to those of us in the captive insurance industry to see the 2021 Captive Benchmarking Survey from Aon highlighting that captive insurance growth is occurring at a level not seen in two decades.  Price increases in primary insurance markets over the past two years have led captive insurance company owners to retain more risk as they look to maintain appropriate levels of coverage while controlling costs.

You only need to talk to the many VCIA members providing services to captives to see how busy they all are. And talking to Dave Provost at Vermont’s Department of Financial Regulation confirms the report. Last year saw a big spike in captive formations and it looks like they are on track for a bigger year for 2021.

Aon’s report said that since 2018 they have seen a 73 percent increase in premium retention among the captives it manages. The types of risk covered have grown to include risks that are difficult to place or emerging perils, such as cyber and environmental.  According to the report, over the past 5 years Aon has seen a 650 percent increase in cyber-insurance premiums in captives, while environmental risks have seen a 400 percent premium increase since 2018.

In addition, AM Best released a report in August showing that the operating performance of rated U.S. captive insurance companies continued to surpass that of their commercial market peers in 2020. The captive insurance industry has shown its colors in these trying times over the past few years. It will only pay dividends for their owners in the years to come.

I look forward to seeing many of you at our in-person VCIA Mixers and other events beginning this October.  Until then, stay well!

Rich Smith, President, VCIA

The Closer

Don’t miss the VCIA Conference Aug 10 – 12! Panelists for the ‘Hot Topics with Dave Provost’ session, from L to R: Tracy Hassett, Steve Legg, Sandy Bigglestone, Ellen Charnley and Dave Provost

OK, enough with the procrastination! The VCIA Annual Conference starts August 10th, and because it is virtual, folks tend to wait until the last minute to sign up. I understand! But online registration for the event closes Monday at noon – so NOW is the perfect time!  

Besides all the great educations and networking opportunities, the one event during the conference that everyone waits for is Hot Topics with Dave Provost. For those few of you who don’t know Dave, he is the preeminent captive insurance regulator in the world (don’t take my word for – ask anyone) and his knowledge, experience, and sense of humor, provides just the right closing to our much-anticipated captive conference.

The distinguished group joining Dave (see photo above) are Sandy Bigglestone, Vermont’s Director of Captive Insurance (and Dave’s right hand woman).  In 2018, Sandy was a recipient of the Women to Watch Award for her leadership, expertise, and accomplishments in the captive insurance industry by Business Insurance. Ellen Charnley, President of Marsh’s Captive Solutions Practice, is recognized as a global leader in the captive industry. And, Steve Legg, who has been with Starbucks since 1997, serving as director, risk management since 2006. Aptly moderated by VCIA board member, Tracy Hassett, President and CEO of edHEALTH, 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.

This epic group will get you totally up to speed on current developments in captive regulation, key issues facing the industry, future initiatives, increased interest in captives as a response to challenging markets, and much more. You can even ask them questions and provide comments of your own. Don’t miss it!  

So, take this moment to register for VCIA 2021!  Join these experts  and other audience members and share your experience and insight to make the conference even better. YOU are what makes this event incredible!  Check it out here and Register Now!

I look forward to seeing you next week!

Rich Smith, VCIA President

Can We Talk?

As I mentioned last week, collaboration is at the core of what makes VCIA so important to the broader captive insurance industry.  Understanding that, we’ve scheduled several semi-structured, interactive Discussion Groups  during the upcoming VCIA Conference  open to all attendees to allow the captive community a chance to converse with one another around topics of interest.

One group, whose focus is Getting Comfortable with Change, asks questions like ‘how do we accept and learn to even embrace change, and how do we assist our colleagues and clients in embracing change?  What opportunities and risks are developing because of recent events in our world?’ They will also explore how  companies are utilizing  captive programs to mitigate risks and enhance corporate wellness programs.

US Regulatory Realm is a Discussion Group that will give insight into what the NAIC is working on and its impacts on captives.   Lead by Vermont’s Director of Captive Insurance, Sandy Bigglestone, and Zaw Win, a director in DRM’s Business Law and Captive Insurance groups (and chair of VCIA’s Legislative Committee), this is an opportunity to look at the industry from a state regulatory view, allowing the group to discuss and consider a more uniform approach to working through key items as a collective unit.

One group of experts will provide some background on a proposed federal backstop for business interruption and event cancellation claims that occur because of a pandemic or public health emergency. The Pandemic Risk Insurance Act (PRIA), mirrors many of the fundamental mechanics of the Terrorism Risk Insurance Act (TRIA) which was established in the wake of September 11, 2001, to help provide adequate terrorism coverage in the United States. Will PRIA be good for captives? Are there other options? Will it pass? Come  join in the discussion to find out.

The certainties of life: death, taxes, and collateral. That is what Ed Koral of BDO, and Jeff Packard of PMA will serve up through a lively exchange of war stories, cautionary tales, and common-sense tips on how to navigate your organization through difficulties with reinsurance or self-insurance collateral requirements. Collateral Without Damage highlights steps you can take to ensure that you are better prepared for contentious negotiations and equipped with more leverage.

Everyone in our industry knows we need to attract and foster the next generation of professionals who will take captive insurance to new heights. Finding a Mentor is perfect for those new to the industry and looking to make their mark, as well as those who are long-standing members of the industry, looking to share knowledge, help someone along, and find a renewed purpose. 

Totally Cellular, Dude! You guessed it, the growth of new cell and sponsored captive formations across all domiciles will cover a brief background on cell/sponsored captives and explore recent developments, innovative uses, reporting and general evolution.

Talk amongst yourselves! The VCIA Annual Conference will be held online August 10 – 12th, which is fast approaching. Take a moment now to check out all the details here and Register Today! Thank you and I look forward to seeing you soon!

Rich Smith
VCIA President

Three…Two…One…Ignition

Last week I spoke about the increased interest of parametric insurance in the captive space as evidenced by the number of Ignite Talks coming up at our virtual conference focused on this emerging specialty. However, that is only one of the many topic areas being covered with Ignite Talks by the captive industry at VCIA’s 2021 Annual Conference coming up in three weeks.

We informally polled some of our captive owners to ask them what some of the challenges are that their captives have recently faced. We then asked our members to respond to those challenges (or those they have focused on) and present them in our Solution Labs at the conference. Ignite Talks are short, “TED-Talk” style presentations on these solutions.

Some of the challenge areas besides parametric insurance that will be covered include cyber regulation, captive strategic planning, third party risk, tax strategies, employee benefits, premium payment options, use of InsurTech, cell structures, legacy solutions, mentorship, managing volatility, risk distribution, predictive modelling for workers comp, finance and investment strategies, actuarial impact of the pandemic and situational awareness. Quite an incredible line-up!

The VCIA Annual Conference will be held online August 10 – 12th, which is just 3 weeks away so check it out here and Register Now!

Thank you and I look forward to seeing you soon. 

Rich Smith
VCIA President

Time to Gear Up!

As we all have heard over the past year or more, the captive insurance market is booming. I can’t tell you how many of our members I have spoken with  in the past few months who’ve mentioned how busy they are  setting up new captives, or helping clients expand current captive programs.  Dave Provost from Vermont’s Department of Financial Regulation reported  that Vermont has already licensed over 20 new captives – a “normal” year for Vermont is about 24,  and we are not even halfway through the year!

So, that said, this is the perfect time to open registration for the VCIA Annual Conference! The event will be held virtually August 10th – 12th and registration officially opens June 15th. There will be plenty of top level education  for newbies to get a better handle on this new risk tool they have just established,  and plenty on how best to optimize captive programs that have been around for a while.

Sessions include setting up new captives, reinsurance programs that are available and appropriate for captives, and a discussion of whether risk retention groups are a mature industry.  In addition, this year’s VCIA conference will include education focused on  captive taxation issues and captive investment portfolios.  The conference will conclude with a session in which Dave Provost and his stellar team  will discuss captive “hot topics” with the top risk manager for Starbucks.  Educational sessions will continue to discuss up to the minute emerging and current risks, and how captive programs relate to those risks.

This August we will be offering more ways for small groups to connect in video chat rooms. The event will feature  Ignite Talks,  Solution Labs, Morning Coffee and great keynote speakers. CPE, VT CLE and CRE credits are available to those who participate in the virtual conference webcasts. 

So keep an eye out for conference details and  registration opening next week, and prepare yourself to gear up!

Thank you and I look forward to seeing you soon.   

Captive U

Law Quadrangle, University of Michigan

One of the great things about being 100% virtual for our conference in August is that students can more easily attend when they don’t need to get flights and hotels and spend time traveling to Vermont this summer.

Every year we invite students from risk management programs around the country, but the travel costs and logistics are an impediment. This year, with the help of many of our friends in the captive industry, we threw open the proverbial doors and have a great mix of students and their professors who will join us this August for the best captive insurance education available!   Not only are there great  sessions for folks new to the intricacies of the captive industry, but with sessions like Evaluating Your Online Presence and Digital Transformation & Opportunities, as well as a Young Professionals forum and The Impact of Emotional Intelligence on Risk Management we think there is a lot to appeal to students and younger professionals alike – OK, and to some of us “older” professionals as well.

Joining us are students and professors from institutions including Roosevelt University in Chicago, Temple University, Georgia State, Appalachian University, Texas A & M, University of Georgia, University of Houston, and St. Mary’s University in Houston. We are incredibly pleased to see these names on our attendee list!

Please let me know if you know of any interested students in any risk management programs; we would love for them to join us!   I look forward to seeing you all virtually in just 2.5 short weeks at VCIA Virtual! View all the details and register for the event here.

The Doctor is in the House

Hartwig, Robert photo 2020 smaller

Dr. Robert Hartwig will be a Keynote Speaker at the VCIA Virtual Annual Conference August 11th

I will be stating the obvious here in when I say we are living in unprecedented times. Trade wars, political turmoil, and the beginnings of a hardening market last year has kept the captive industry on its toes with shifting economic trade winds.  On top of that a world-wide pandemic and social unrest in this country, and it’s a wonder how risk managers sleep at night.   We have invited back a keynote to VCIA Virtual 2020 who addressed our conference about 10 years ago to analyze some of the economic effects facing the insurance industry today, and beyond.

I remember Bob saying he had about 90 or slides to get through in his presentation back then but not to worry – he would make good time.  Sure enough, he ran through the slides effortlessly and I had so many members tell me how much they appreciated his keynote.

Dr. Robert Hartwig is clinical associate professor of finance and director of the Risk and Uncertainty Management Center in the Darla Moore School of Business at the University of South Carolina, and the former president and economist for the Insurance Information Institute in New York.

Over the years, Dr. Hartwig has focused his work on improving understanding of key insurance issues across all industry stakeholders including media, consumers, insurers, producers, regulators, legislators, and investors.  At the University of South Carolina, he teaches courses in risk management, insurance, and corporate finance.  He mentors students and serves and serves as a liaison between the university and the private insurance industry. Bob appears frequently in all major media, speaks internationally, and has testified before many Congressional and state committees on a wide variety of insurance issues.

At VCIA Virtual 2020, Bob will speak on the current state of affairs, and the transitioning insurance market, incorporating themes such as the impact of COVID-19 pandemic on the industry that will resonate through the rest of the conference. So, come join us for what will be a truly innervating talk!

I look forward to seeing you all in August at VCIA Virtual! View all the details here.

The F.B.I.

fbi FThose of us of a certain age can remember with absolute clarity the start of the popular show in the late 60’s and early 70’s. The announcer, in a strong, determined voice would introduce, “The F.B.I… starring Efrem Zimbalist, Jr.” and then we would have an hour-long drama whereby the eponymous organization would hunt down one bad guy after the other.

Well, at this year’s VCIA 2020 Virtual we may not have such a dramatic opening, and the bad guys now hide in the dark web, but the thrill is still there. Joining us on August 12th will be FBI Special Agent Matthew Wabby, currently assigned to the white-collar squad in Albany, NY, investigating corruption, fraud, money laundering and related crimes.  With his panel, he will explore how companies should respond to an increasingly complex and changing set of rules as our business environment and society move ever more quickly into the digital sphere.

Special Agent Wabby will be joined by a group of highly placed cyber and captive insurance experts:

  • Chris Giovino, who leads a practice for Aon when clients have suffered a loss due to crime, employee malfeasance or fidelity related matters;
  • Heather McClure, JD, LLM, Chief Risk Officer, OU Medicine and Executive Director of Operations, OU Physicians, who leads their Vermont-based captive insurance company; and
  • Shiraz Saeed of Starr Insurance Companies, the national practice leader for Cyber Risk responsible for the strategic direction and expansion of the Cyber Risk products and services.

Cyber-attacks are becoming more sophisticated. Organized crime now uses former intelligence members for more sophisticated attacks, broadening the nature of their attacks, and increasing their frequency. An ever-changing set of regulations from governments around the global compounds the difficulty of managing against cyber risks.

Join us to learn some positive ways to shield against cyber-attacks and respond to breaches if they do occur.  I look forward to seeing you all in August at VCIA Virtual! Register by June 30th for the lowest rates! View all the details here.

A Dramedy Not to Be Missed!

dramedyspeakersLook, nobody wants to be caught in a crisis impacting their captive program and not be prepared. And as we are all dealing with the larger crisis of the pandemic, we can’t take our eye off the day-to-day issues that arise within a captive.  One of the education sessions at VCIA Virtual (our 100% virtual captive conference, if you haven’t kept up) will look at the steps in place to deal with a crisis situation, which can occur no matter how diligent we may be.

Instead of a dry dissertation on the elements of a good crisis management plan, our conference session, called “Crisis Management – A Case Study Dramedy” will explore the reactions, interactions, strategies, and machinations that are all set into motion when a captive or RRG has significant adverse development.  In this “dramedy”, which combines the elements of drama and comedy, the panel will illustrate a situation where adverse development leads to a material reduction in surplus that threatens the company’s stability rating and portends regulatory scrutiny. Various parties will respond to address the cascading circumstances, some more effectively than others.

The panel includes Julie Bordo of PCH Mutual Insurance Company RRG, as moderator, Tina Bukow of Kroll Bond Rating Agency, Gail Newman of Bright Horizons (a captive owner), Dan Petterson of Vermont’s Department of Financial Regulation, Kevin Seabury of Opus Investment, Robert Walling of Pinnacle Actuarial Resources, and Troy Winch of Risk Services LLC.  A great group of thespians to give you clarity through observing crisis management in action!

I look forward to seeing you all in August at VCIA Virtual! Register by June 30th for the lowest rates! View all the details here.

Rich Smith,
VCIA President

Open for Business!

final-art-city-square_1After weeks of high anticipation (well, by me anyway), the VCIA 2020 Virtual Conference is open for you to register!

“VCIA Virtual” is the first captive event since the shutdown and is a great opportunity to reconnect and discover what’s going on in the industry.  The event has been carefully designed to meet your needs – come and go as you please to make the event work best for you!

Register today for the August 11 – 13th event to learn, connect with others, earn professional education credit, visit exhibitors, see great keynotes and more. Continuing professional education credits are available through August 15th to watch what you missed. Since all the educational sessions are easily accessible, attendees may earn more credit than ever before during the event – a total of 21 credits are available.

Sure, you’re a little skeptical on how this virtual thing is going to work. Well, we have developed a “sneak peek” of how the conference will look and feel as an attendee for you to see. Click here to open your preview right now. I think you will enjoy the experience.

I look forward to seeing you all in August at VCIA Virtual! Register by June 30th for the lowest rates! View all the details here.

Rich Smith,
VCIA President