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.

Captives and Debtors

Interesting news about OxyContin maker Purdue Pharma seeking product liability insurance and general liability coverage by creating a captive insurer.  Purdue asked for permission to set up the captive insurer in federal court on Monday as part of the firm’s filing for bankruptcy protection, as it has been challenging for them to find a commercial solution with a third-party insurer, not surprisingly.  Purdue faces more than 2,600 lawsuits alleging that it helped fuel the U.S. opioid epidemic.

As VCIA Member (and recipient of VCIA’s 2019 Industry Service Award!), Chaz Lavelle of Bingham Greenebaum Doll LLP stated recently in a September 17 article in Business Insurance,  “We’ve had situations in the past where an operating company has gone bankrupt but the captive insurer which it has previously set up was fully solvent, continued to operate and pay claims notwithstanding the bankruptcy and the disposition of the company.”

It reminded me of the Vermont captive for the bankrupt firm Enron back in the 90s. Even though the firm was mired in bankruptcy proceedings due to the fraudulent leadership at the top, under the supervision of Vermont’s Department of Financial Regulation its captive remained solvent and paid out every one of its claims under its policies in full. Having the captive kept the policy claims separate from the bankruptcy proceedings. Even debtors require various liability, casualty, property and other insurance programs in the ordinary course of their businesses.

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!

Thoughts and Prayers

Just wanted to add VCIA’s voice of concern to all those caught in hurricanes Harvey and Irma.  We often talk in abstractions about risk assessment and property damage and insurable risk in our business when natural disasters hit, but when you see the pictures of devastation and hear about the impact to people’s lives it puts into perspective the havoc these things bring.

A bunch of Vermonters were about to head to South Carolina next week for their captive conference and just got word that they had to cancel, which I am sure is the right decision. However, we understand what a difficult one it was and how disappointing to have to reschedule (to say the least) after so much planning and hard work. Our thoughts are with our friends Jay, Jeff and all others – stay safe, our Carolinian captive family!

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

Rich Smith,
VCIA President

One Part James Bond, One Part Sherlock Holmes, and One Part Bono

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I was reading an article on the globalization of risk just the other day, and it made me realize just how “glamorous” a risk manager is these days. Many new economic challenges are a result of the rise in societal issues around the world, and these instabilities will spill out and influence other risks, such as cyber-attacks motivated by the social unrest.  This was highlighted by John Drzik, New York-based president of global risk and specialties at Marsh, earlier this year.  With political and social unrest in many countries higher than seen in decades, captive owners need to look at how to be more resilient and mitigate risk where possible within their operations, he said. I couldn’t agree with him more.

Mr. Drzik recommends running scenarios to find changes that could be made to company resiliency plans. Vendors in your supply chain should be diversified, portfolio investments should be examined for risk in particular countries that could be affected by a food or water shortage or social unrest which could cause business disruption damaging a business or investments.

Captive uses are evolving in response to these new risks.  This is why, as a captive risk manager, you need to be a little bit James Bond to deal with international threats, a little bit Sherlock Holmes to dig deep through data to provide “elementary” analysis of whether the risk can be something captives can cover, and a little bit Bono because, well everyone should have a little bit of Bono in them!

VCIA will be in the Great White North of Minneapolis tomorrow, November 2nd, for one of our famous Road Shows, so if you are in the hood,  drop on by! Thank you all very much, and I look forward to hearing from you!

Rich Smith,
VCIA President

Brexit?? Verm-enter!

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I just hosted a VCIA Members-only webinar yesterday called “Captive State of the Union” where we explored what VCIA is doing legislatively in Vermont, DC and internationally to keep the captive industry strong and thriving. I was joined by the redoubtable Dave Provost, Deputy Commissioner of Captive Insurance for the State of Vermont, and the sagacious Jim McIntyre, VCIA’s veteran DC counsel.

Toward the end of the webinar, we had a chance to discuss a few international events that may impact the captive industry, including my favorite term of the year: Brexit. Lately, much of the news has been dominated by Britain’s vote to leave the EU, and especially how it might affect the world of finance and insurance – including captives. The answer is, I have no idea.

Obviously, many UK captive domiciles, like Gibraltar and Guernsey will have to figure this out as this slow-motion train wreck unfolds. And of course, many captives and RRGs based in the US have reinsurance agreements with the likes of Lloyds. However, I like what Dave Provost suggested: Vermont would be glad to host a reinsurance marketplace here in our beautiful state. Instead of Lloyds of London it will be Lloyds of Lyndon (Lyndon, Vermont that is)!

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

Rich Smith
VCIA President

School’s Back In!

 

jack-black-smith-2Just got back from a couple of conferences this week and it always gives me great perspective. First, I attended the Self Insurance Institute of America (SIIA) conference in Austin (cool city!) where the focus is primarily healthcare and workers comp. SIIA brings together all the self-insurance groups in these areas, but is seeing a growth in the captive arena as it pertains to stop-loss and workers comp.  VCIA’s Janice Valgoi, DFR’s Dave Provost, Primmer’s Jesse Crary and I did many hours of booth duty over the course of a couple days. We had a number of people come up to us and ask, “So what’s the State of Vermont doing here?”  After explaining Vermont’s role in the world of captives it became clear to them and they seemed eager to understand captive insurance as the next new marketplace, but it also became clear to me that it will be a lot easier for organizations that are already working in the captive space to add stop-loss or workers comp, than vice versa.

At the National Risk Retention Association (NRRA) conference in Chicago (another cool city!) later in the week, I participated on a panel that examined the Next Generation and diversity in the captive insurance industry. The cool thing was that there were a number of insurance students from some nearby colleges who were not shy about what they think the industry should do, including coming into the classrooms and doing a spiel on captives, as well as providing mentoring and internships.  I think one of the best lines about this came from our long-time friend, Michael Bemi. When addressing the issue about the perception that insurance is boring, he said in captives you aren’t selling insurance, you’re building insurance – has a nice ring to it, I would say!

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

Keep Moving Forward

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A couple of quick updates from the President’s corner…

We are in the process of surveying our members and talking to captive leaders here in Vermont about potential changes to Vermont’s captive statute. After gathering ideas and vetting them internally, we meet with the leadership team at DFR and begin an iterative process that will ultimately produce a “captive bill” for introduction to the Vermont legislature in January. Coming in with a coordinated bill between the regulators and the industry gives us the clout to move a bill quickly to passage. If you have any good ideas (hey, even crazy ideas) send them my way – you never know!

Just a quick note to let folks know I will be attending the SIIA (Self-Insurance Institute of America) conference in Austin starting this Sunday and then heading directly to the NRRA (National Risk Retention Association) in Chicago on Tuesday night. SIIA is a member-based association dedicated to protecting and promoting the business interests of companies involved in the self-insurance and alternative risk transfer (ART) industry, including captive insurance. It’s a great opportunity to meet and talk to others in the self-insurance world. And NRRA’s conference brings together the leaders in the RRG industry annually to discuss the opportunities and challenges in the world of Risk Retention Groups. Vermont has more RRGs licensed than any other captive domicile.

And finally, I want to give a shout out to Bob Gagliardi from AIG (and VCIA Board Member) for his promotion. Bob was recently promoted to AIG’s Global Director of Captive Management and US Fronting. Our expectation is that AIG will need to build a new skyscraper in downtown Burlington to fit the whole operation.  Congrats, Bob!

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

Rich Smith, VCIA President

Back in the Saddle…

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Thanks to all who joined us in beautiful Burlington, Vermont, a couple of weeks ago for VCIA’s annual conference. Without a doubt, it was a terrific 2 ½ days with great programs, networking and events. With over 1000 attendees from 41 states and 14 countries, our annual gathering in August has grown to be THE captive insurance forum! To quote from one of our attendees “All the important captive market players from North America and parts of Europe were in attendance.” And many thanks to our sponsors and exhibitors without whom we could not put on such an event, as well as to the hundreds of volunteers who make it happen.

Now after a little break, we are back in the saddle again looking out for the captive industry. Currently we are working with U.S. Treasury on changes to the TRIA data call for captives, fighting to pass the NRRA clarification bill, and generally looking out for the captive insurance industry. You got to be a tough hombre to keep the posse moving!

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

Rich Smith
VCIA President

Go, Len!

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Len Crouse, shown here during his time as Deputy Commissioner of Vermont Captive Insurance

It’s officially summer in Vermont and things are getting hot – and I’m not necessarily talking about the weather. As most of you know, VCIA is hosting the “World’s Best Captive Conference” this week in Burlington (and yes, I have trademarked that!) and I am sure you are all making plans to join us.

I wanted to take the opportunity to congratulate Vermont’s own Len Crouse for making Best’s Review list of Key Influencers! As most of you know, Len was head of Vermont’s captive division during the heady days of growth for the State’s captive industry. As the piece rightly points out, he helped set the “gold standard” for Vermont and the industry as a whole when it comes to captive regulation. Len joins luminaries such as Hank Greenberg, Brian Deperrault, and Ajit Jain of Berkshire Hathaway. Congratulations Len – well deserved! And don’t miss Len speaking at the VCIA conference on the panel Group Captives Take Center Stage.

Thank you all very much, and I look forward to hearing from you and seeing many of you this week!

Rich Smith
VCIA President