National Risk Retention Association

chicagoThe National Risk Retention Association hosted their annual conference last week in Chicago and I always enjoy going out there for it. The conference brings some of the leaders and brightest from the world of RRGs together for a few days to discuss hot topics in the industry and get “learned up”.

Executive Director Joe Deems has shaped NRRA to be a pivotal player in risk retention insurance; a place to exchange valuable and timely information regarding the RRG industry. NRRA has a long history of successful legal and regulatory representation of the interests of risk retention and purchasing group liability insurance programs, as well.

A few interesting sessions at the conference include Conducting a Cyber Liability Audit of Your RRG, obviously a hot topic for anyone in the financial services industry these days. Innovation in Risk Management and Taking a Hit – Strategies for Recovering from Bad News were also of interest. A member of DFR’s illuminati, Sandy Bigglestone, provided her outlook of the RRG industry on a panel called Raising Eyebrows: The Regulators’ Perspective on the Signs an RRG is Headed for Trouble. And yours truly participated on the panel Cultivating the Next Generation of Captive/RRG Leaders, another important issue facing captives and RRGs.

Since Vermont is home to almost half of all RRGs licensed, it was a little like old home week in the Windy City. Many of the panelists are Vermonters or have strong connections to VCIA, such as Joe Carter of United Educators, Clare Bello of VCM, Christine Brown of Vermont’s DFR, Nancy Gray of Aon, Tina Truax McCuin of TD Wealth, Anne Marie Towle of JLT Insurance Management (and VCIA Board member!), and Matt T. Gravelin of Johnson Lambert.

Thank you and I look forward to hearing from you.

Richard Smith
VCIA President

The Numbers Are In!

powerball hostCongratulations to the State of Vermont on licensing 33 new captives in the State in 2015!  The list is made up of 12 pure captives, 7 Risk Retention Groups (RRGs), 7 sponsored captives, 4 special purpose financial insurers, 2 industrial insured captives, and 1 association captive.  Growth in 2015 was up significantly from 2014 when 16 companies were licensed.  This growth is impressive especially when considering the prolonged soft market and added competition by other U.S. states.

What I thought was really impressive was that there were 11 ‘redomestications’, which is when an existing captive moves from another captive domicile to Vermont.  That is the largest number ever to occur in a single year in Vermont. The redomestications came from the following jurisdictions: South Carolina (3), Arizona (3), Bermuda (2), Cayman Islands, Nevada, and Kentucky.  This has more to do with Vermont providing a firm, fair, efficient and consistent regulatory environment than anything else.

Seven new RRGs were licensed in Vermont, bringing the active total to 89.  Vermont continues to hold a dominant market share with over 60% of all RRGs premium volume being written by Vermont companies.  Six of the 11 redomestications to Vermont were by Risk Retention Groups.  New captives were licensed in insurance, healthcare, construction, real estate, professional services, education, transportation, agriculture, retail, and other.

Besides the newly licensed captives in healthcare, notable captives in the class of 2015 include PricewaterhouseCoopers LLP; Syracuse University; Cummins, Inc.; Marubeni Corporation; Willis Management (Vermont), Ltd.; National Life Insurance Company; Wilbur-Ellis Company; Zurich Insurance Group; and 17 Universities/Colleges.

2015’s new licensees bring Vermont’s overall total licenses to 1062 with 588 active captive insurance companies. Compared to Cayman (22), Bermuda (22), South Carolina (21), Vermont’s 33 is proof there is no place like it for captives. One day we will rule the world (did I say that out loud?)…

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

Rich Smith
VCIA President

Don’t call it Chi-Town

legacy.skyscrapercenterI just returned from the National Risk Retention Association (NRRA) national conference in Chicago this week. Just like “Frisco” is frowned upon by the denizens of San Francisco, natives of the Windy City look askance at folks who call their great city “Chi-Town”.  Lessoned learned.

Joe Deems and his crew had a good turnout for the conference. Vermont always has a good attendance for this conference, which is no surprise seeing that over a third of all active RRGs are domiciled in the Green Mountain State. Besides Dave Provost, Sandy Bigglestone and Dan Towle representing the State of Vermont, other Vermonters taking part included Nancy Gray from Aon, Kate Boucher from American Excess Insurance Exchange, Mitch Cantor from ICCIE, Len Crouse and Dustin Partlow from JLT Towner, Christina Kindstedt from Willis,  and John Prescott and Brad Klein from Johnson Lambert.  A panel of RRG owners and VCIA members Tim Padovese of OMIC and Siri Gadbois of EIIA, along with Nancy Gray, spoke to the importance of proactive leadership both within their organizations and outside to strengthen the RRG and captive community. And Lynn Crisci of HAI Group participated on a panel covering cyber security.

Skip Myers of Morris Manning & Martin (and another VCIA member!) provided a refreshing outlook on where the National Association of Insurance Commissioners (NAIC) focus is regarding RRGs. After many years of scrutiny that included the adoptions by states of model laws and regulations, and governance standards, it looks like the NAIC has run its course and has diverted its attention to other sectors of the broader captive insurance market (will it never end!).

Senator Ben Nelson, the CEO of the NAIC was the keynote speaker at the conference. While I applaud Senator Nelson’s willingness to address the industry, it was clear there is still misunderstanding at the NAIC regarding the role and importance of the RRG industry.  His basic take on RRGs is that they have a very limited scope that should not be broadened. Although he hinted that the market circumstances in the future may provide the impetus to expand the role of RRGs in the insurance market.  Hopefully the willingness to enter into a more open dialog can begin to break down misconceptions and bring better change to the RRG industry.

I will be back in Chi-Town (er, Chicago) this month for one of VCIA’s world-famous Road Shows on October 13th. Go to www.vcia.com for more information – hope you can join us. Thanks and keep in touch!

Rich Smith
VCIA President

Brian Donovan of STICO

1136_happyretirementpartystreamersballoonGreat article in the Risk Retention Reporter on the impending retirement of Brian Donovan of STICO at the end of the summer this year. Brian formed STICO in Vermont in the late 80’s to deal with the difficulty of finding pollution insurance for steel tank manufacturers, and transformed it into an RRG in 2002. Brian served on the board of directors of VCIA and was a major force in the growth of the association over the years. His son, Colin, who has been with STICO since 1998, will assume Brian’s position on his retirement.

One of the interesting things Brian told me at this year’s CICA conference, and was also mentioned in the story, was the fact that he never started out to get into the insurance business (you can’t swing a dead cat in a meeting of insurance people without hitting someone with a similar story), but it has been quite a ride!  For those of you who know Colin, you know he will keep the same steady hand on the tiller during his tenure at the helm. And with his own brand of wry humor. Farewell, Brian – and good luck, Colin!

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

Richard Smith
VCIA President