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.

Mick Jagger is in the House

Bald musician playing a guitar plugged into an amplifier

Okay, we know this isn’t actually Mick Jagger OR Dave Provost, but you get the idea…

Remember when you could travel to cool places and see all your captive industry friends at one of the main conferences that happened throughout the year? Yeah, the memory is beginning to fade in my mind as well.

However, I do remember the electricity when one of the captive industry’s most famous “rock stars” would enter the room at these events and everybody’s head would turn to get a look. Of course, that person was our own Dave Provost, Deputy Commissioner of Vermont’s Department of Financial Regulation (DFR) – it was like Mick Jagger entered (minus the entourage)!

For all you folks who know Dave, Mick doesn’t readily pop into mind. Dave is friendly, approachable, and has a singing voice like a screech owl (honestly, I have never heard him sing – he may sing like an angel). And let’s not even touch the hair. But captive insurance is the one place where a tiny state like Vermont is the big gorilla and Dave is at the pinnacle of Vermont’s captive world.

So even though you can’t come to Vermont in person this year for our conference, joining VCIA’s Virtual 2020 gives you an opportunity to see Mick, err Dave, in his element. The last event of our three-day conference will be Hot Topics with Dave Provost. Dave will be joined by other highly experienced panelists, for an engaging and interactive discussion on current hot topics impacting the captive insurance industry.

Moderated by Dan Reynolds, editor-in-chief of Risk & Insurance Magazine, panelists and audience members alike will share their experience and insight ensuring that attendees are well-informed about current trends in the captive industry. The panel includes Kent Broussard, President of Bluegrass Insurance Company, Inc., an 831-b captive formed in the State of Vermont in 2014 on behalf of Sazerac Company, Inc., one of the top alcoholic beverage suppliers in the world.

Rounding out the group is Dave Tatlock, a director at Strategic Risk Solutions Vermont Ltd. and is responsible for the management of a portfolio of single parent, group and sponsored captive insurance companies domiciled in Vermont and Connecticut.  And last, and certainly not least, is Sandy Bigglestone, Director of Captive Insurance at DFR, and Dave Provost’s righthand woman – hmmmm, perhaps Vermont’s own Lady Gaga?

Join us for this session which will tie together themes discovered during VCIA Virtual and say farewell on an energetic note!  I look forward to seeing you all in August 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

Memorial Day

Summer has finally arrived here in Vermont after a tough spring. 80 degrees and sunny – it makes me yearn for a barbeque this weekend.

As we all take time to be with our loved ones as best we can this weekend, we must also think about the folks on the front lines dealing with the pandemic on a daily basis. Everyone from  ER nurses and doctors (who went into their careers knowing these risks) to grocery store workers, hardware store clerks, social workers and public transportation workers (who have been thrust into unforeseen and at times impossible positions during this time). We owe each of them an enormous debt of gratitude. As I sit here safe at my kitchen table (now my executive suite), I recognize that I am privileged in this scenario, and that others are not.

If you haven’t done so already, reach out to those in your community who are on the front lines.  They might not be able to spend this weekend with loved ones, friends, and family. A sincere thank you to a minimum wage store clerk may be extra appreciated at this time. And, of course, reach out to your own family and friends and stay connected. Human contact, no matter how much social distancing is required, is more important than ever. And being appreciative of others who are in harm’s way to keep us all safe, is paramount.

Have a peaceful Memorial Day weekend. Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Now, That’s Dedication!

ed koral in closet

Note the VCIA Conference bag in the background : )

We are all working under trying circumstances these days as we work our way through this pandemic. But here is an example I think we can all agree goes above and beyond. This is an actual picture of Ed Koral, one of our intrepid panelists during yesterday’s VCIA webinar on Adapting your Captive Program to a Shifting Insurance Market. Talk about adapting!

Ed is a managing director with BDO’s Insurance Risk Advisory Group, a longtime VCIA member, former board member and recipient of VCIA’s vaunted Captive Crusader award in 2019. He is currently working from his home in New York City (COVID-19 ground zero) and has to share both physical and mental space with his wife and two children. Because of the noisy work going on outside his building he needed to use a closet as his studio for the webinar. As fellow presenter Andrew Baillie of AES said, it’s a little Harry Potteresque.

Thank you, Ed! And thank you Andrew, Steve Bauman of AXA XL, and Christine Brown from Vermont’s Department of Financial Regulation for a great presentation.

Thank you and I look forward to hearing from you!

The Numbers Are In

2019 proved to be another successful year for Vermont’s captive insurance industry with 22 new captive licenses added, bringing its total to 1,159 with 585 active captive insurance companies. This is roughly the average number of new captives licensed yearly in Vermont over the past 10 years or more, regardless of the marketplace, highlighting the resiliency of both the captive marketplace and Vermont as a domicile.

The new formations were made up of 14 pure captives, 4 sponsored captives, 2 Risk Retention Groups (RRGs), 1 special purpose financial insurer and 1 industrial insured captive, with an estimated Gross Written Premium of $24.8 billion.  A healthy mix of sizes, types and industries, ranging from healthcare, manufacturing and financial services to religious institutions, entertainment and nonprofits, are all represented. As David Provost, Vermont’s Deputy Commissioner of Captive Insurance, always says, Vermont’s focus will always be licensing quality companies, not chasing numbers.

Don’t forget that next week on January 22nd VCIA is hosting its annual Legislative Day in the Vermont State House in Montpelier, Vermont.  This totally unique event underscores the excellent relationship that our captive industry has with Vermont’s policymakers. Register today to join us to meet with Vermont’s legislators, captive industry peers, and hear remarks over lunch from State Economist Jeff Carr who will be presenting the recently released economic impact study.  Go to www.vcia.com and register today!

Thank you and I look forward to hearing from you.

Happy New Year

Hard to believe it is 2020! I hope you all had a wonderful holiday season and happy New Year. I am looking forward to another great year working with all of you in our fine industry. As usual, we are off to a fast start here at VCIA, and I want to remind you of a few events to look forward to in the first half of 2020.

First up, January 22nd is VCIA’s annual Legislative Day in Montpelier, Vermont’s capital. It’s a full day of meeting and hearing from Vermont’s political leaders on the captive industry and issues facing the State broadly. If you have a chance to join us in Montpelier, even for part of the day, please come – it’s the best opportunity for Vermont’s captive industry to put a great foot forward with our State’s leaders.

In March, VCIA will embark on its first-ever Captive Insurance Trade Mission.  The State of Vermont and VCIA will send a delegation of government, regulatory and industry representatives to Mexico to highlight Vermont’s leading captive insurance industry.  Working in collaboration with the U.S. Commercial Service, the trade and promotion arm of the U.S. Department of Commerce’s International Trade Administration, the delegation will lead captive insurance educational forums in Mexico City the week of March 23, 2020.  The goal of this trade mission is to increase awareness of Vermont as the leading U.S. domicile for captive insurance and underscore our state’s mutually beneficial trade relationship with Mexico.

On May 21st,  please join us for our annual Spring Member Mixer which will be held at Champlain College in Burlington, Vermont. This event will include a Q&A session with Dave Provost and his team from the Department of Financial Regulation, in conjunction with a VCIA Board meeting.

VCIA’s Annual Conference will be held August 10th – 13th. This exciting event is a virtual homecoming for the entire captive industry!

That’s just a smattering of events that will also include a number of our renown webinars, and other conferences which Team Vermont attends, such as RIMS, which will be held in May in Denver.  We look forward to connecting with you!

Go to www.vcia.com and register for VCIA Legislative Day today!

Thank you and I look forward to hearing from you.

Rich Smith,
VCIA President

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