Back to work!

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Thank you to everyone who joined us in beautiful Burlington, Vermont, a couple of weeks ago for the VCIA Annual Conference! Without a doubt, it was a terrific 2 ½ days with great programs, networking and events. With over 1000 attendees from 44 States (plus the Virgin Islands) and 9 countries, where roughly 23% were captive owners and 18% first-timers, our annual gathering in August has grown to be THE captive insurance forum!

The conference had great energy – people liked the fresh format changes and extra touches, and, as one attendee stated “the enthusiasm for the captive industry shone throughout all aspects of the event.”  The learning formats and interactivity of the event were also held in high standing.  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 to work again looking out for the captive industry. In case you missed it, we hosted a webinar Wednesday on the recent Avrahami decision regarding the use of the 831(b) tax election for small captives. Chaz Lavelle, Partner at Bingham Greenebaum Doll LLP, and Dan Kusaila, Tax Partner at Crowe Horwath LLP, provided terrific analysis not only on what the opinion says, but also what it means. Avrahami is the first court case involving a captive taxed under section 831(b).   If you missed it, you can purchase a recording of the webinar through VCIA’s Captive EDU.

Other VCIA webinars on the docket include Short Duration Contracts coming up on September 14, State of the Union for Captives October 18 with Jim McIntyre and I summarizing all things legislatively current, Reinsurance Marketplace Trends in November and our annual Captive Taxation Update webinar December 14.  Notices will be sent by email once registration is open, or check our site.

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

Rich Smith
VCIA President

Berlitz Phrasebook for Vermont

vermont-festivals4fun-imageI know most of you are busy preparing for next week’s VCIA conference – remember to pack comfortable shoes! – so I thought I would share a few tips on “Vermont-isms” that you may hear while you are here (and, yes, they sound a lot like “Maine-isms”, but don’t say that to a Vermonter):

Jeezum Crow – Commonly used in a state of anger or surprise, but it’s less offensive than yelling “Je$@$ Ch^!$&!”

Dooryard – This is the main entry way area into the house for people. Or rather, it hasn’t been taken over by the farm and used by animals.

Mounain – Not “mountain,” it’s “mounain” (pronounced without the “t”).

By the Jesus – Often said in a state of amazement, this is another way of saying “You betcha!”

Djeet? – A quick way of asking “Did you eat?”

Creemee – Forget Ben & Jerrys! When you are in Vermont this is ice cream (although it means a soft serve).

Upta – As in “Are you going upta the mountain?”

Yahd Aht – Or “Yard Art”. You’ll find all sorts of interesting things in yards in Vermont…

Flatlander – Someone (anyone) who wasn’t born in Vermont.

Woodchuck – A guy who lives and thrives in rural Vermont. Oh, and he can probably fix just about anything.

Keow – Those are the black and white animals that provide Ben & Jerry’s their cream.

I won’t be posting for a few weeks as I will be conferencing and then going on a nice, long holiday with the fam. I look forward to seeing many of you next week, by jeezum!

Rich Smith, VCIA President

Sometimes it Works!

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There are too many horror stories about dealing with government bureaucracies, but here is a “shout out” to the State of Virginia as well as an important lesson to always keep trying.

VCIA and NRRA wrote letters regarding the proposed changes to the Virginia Fair Claims Act. The Act threatened to effectively eliminate any ability to write coverage on a “claims-made and reported” policy form and would have negatively impacted RRGs doing business in the state. Our letters addressed the fact that the language of the proposal could have been interpreted to include a requirement that all insurers must demonstrate prejudice in order to deny coverage based on the insured’s failure to comply with time-limited policy notice provisions.

Somewhat surprisingly, the letters generated a personal call to me from the Virginia State Corporation Commission the following day, and we were invited to work with them to fix the issue.  Drawing on the expertise of VCIA members Joe Holahan, Jon Harkavy, Kathy Davis and Skip Myers, we suggested a slight change to the proposal that satisfied the state’s needs while protecting RRGs. It’s heartening to me when a state responds quickly and openly to comments, and it’s a good reminder on just how vigilant we need to be!

I look forward to hearing from you.

Rich Smith
VCIA President

City of Brotherly Love… at booth #1817

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Just a quick blog too say I am heading down to Philadelphia this weekend for the annual RIMS conference.  Although RIMS is “yuge” (over 10,000 attendees they say), Vermont still is able to attract a good crowd to the Vermont booth every year.

We get a number of folks from Vermont’s captive community who go down to RIMS and represent the Vermont captive industry at the booth. This year Ian Davis is taking the reins with DFR staff, Dave Provost, Sandy Bigglestone, Dan Petterson, Jonathan Spencer, Stacy Alden, Lance Tourville and Christine Brown. Also there will be KeyBankers, Jordan Mosher and Mat Robitaille, Steve Killoran from Maple Capital, Bill Riley from Paul Frank + Collins, and Mitch Cantor from ICCIE. Oh, yeah, and I will be there as well!

So if you are going to be at RIMS this year, come by booth #1817 and say hi!
Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

Welcome, Ian

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Ian Davis, Director of Financial Services, State of Vermont

I hope you will all join me in welcoming Ian Davis as the next Director of Financial Services for the State of Vermont! The position is responsible for the marketing and business development for the State’s Captive Insurance Industry.  Ian has replaced Dan Towle, who moved on to become the new President of CICA recently.

Our staff and I have already been working with Ian over the past few weeks, and I can tell you he will be terrific! He’s bright, energetic, and a quick learner – already tackling a number of projects for the benefit of Vermont’s captive industry. We are all looking forward to working with Ian for many years to come – and all of us will be down in Philadelphia the week after next for the monster that is known as RIMS. For those of you that are going to be there come on by the Vermont booth and say “hi” and welcome Ian to the family!

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

President Trump

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I think most of us were surprised that Donald Trump won the election last week based on all the polling data that was out there. Just goes to show you that even in the risk management world with all its data, analytics, actuaries and experts, there was no figuring out this election!

That being said, just what might a Trump presidency mean for captives? Well, quite honestly, I would be surprised if captive insurance makes any list the transition team may be preparing right now; however, there may be some areas that could impact captives:

1. Dodd-Frank. Trump has said all along he wants to repeal the regulations set out in Dodd-Frank, but I think that is easier said than done. There are numerous interest groups on all sides who have a stake in the Act, and it will be slow going to push through reform even though the Republicans control Congress. That being said, House Financial Services Chair Jeb Hensarling outlined a bill earlier this year that would change some key provisions of the Act, without repealing the whole thing – provisions that might have a chance to pass. The Nonadmitted & Reinsurance Reform Act (NRRA) that was attached to Dodd-Frank when it was passed, is not in anyone’s crosshairs as far as I can tell, but VCIA’s work to seek clarification of the NRRA might move more quickly.

2. 831(b)s. It is no secret that Republicans have no love-lost for the IRS. Perhaps we will see a change in attitude regarding micro-captives (and all captives) once a new commissioner is confirmed.

3. FHLBs. Similarly, with a change in leadership at the Federal Housing Finance Agency (FHFA), perhaps we will see an acquiescence allowing captives to be able to “rejoin” the Federal Home Loan Bank program.

4. FIO. With a new Secretary of the Treasury, there will be wholesale changes throughout Treasury. The Federal Insurance Office within Treasury will most likely take more of a backseat to the NAIC on insurance issues, and probably let go of any concerns with the captive insurance industry it may be harboring. We may even see less cooperation between the US and Europe (and the rest of the OECD) on insurance regulation harmonization.

Now there are a whole slew of issues that President-elect Trump can and will affect in his tenure that can impact captives, from taxes to the economy to foreign policy, outside some of the more direct issues outlined above. Time for all you analytic gurus to get to work!

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