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

Young at Heart

Young professionals

Young captive professionals at a recent VCIA event.

Recruiting and training the next generation of captive professionals is a paramount issue for our industry, as everyone knows. Both CICA and NRRA have programs designed to reach out to this group and draw them into the industry.  Fostering newcomers to join the field and eventually step into the roles of our current captive leaders and professionals is an initiative that VCIA takes to heart.

Over the past number of years, VCIA’s Annual Conference has created places and sessions where young professionals can learn from and network with both peers and seasoned professionals as they pick a pathway forward in the captive insurance field.  Besides our NEW Captive Immersion experience, which will familiarize those who are new to the captive industry on the key services, and our annual Captives 101 session that provides a basic overview of captive insurance companies and RRGs, other VCIA sessions designated for young professionals include:

Developing the Next Generation of Captive Industry Leaders, which will explore what is being done in the industry to attract and retain new talent.  According to the Pew Research Center, millennials were the largest portion of the workforce in 2016. As a group they are very connected, having grown up with the internet in their everyday life. In the workforce, they are eager to make a meaningful contribution to the workplace and the greater good. In many ways, this group is helping transform organizations.

Our Young Professionals Forum will provide a great resource particularly for those with fewer than 10 years of captive experience.  Three dynamic facilitators will lead small group discussions about sharpening your speaker skills, how to approach your early career years and work/life balance.  Afterwards, an open forum will occur for a fluid discussion on topics such as transitioning into the workforce, professionalism and meeting work demands in a sometimes-stressful environment.

On top of all that is just the best networking opportunities both “on campus” and “off campus” in the captive industry, so, I hope you all can join us! Click here to register for the VCIA Conference today.

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

Happy Fourth of July!

Wishing everyone a Happy (and SAFE) Fourth of July this week! I love how Montpelier (my home town) does their annual parade and fireworks at the State House every year. A real mix of traditional bands mixed with a crazy quilt of floats and causes – and sometimes a Presidential candidate (although I believe Bernie Sanders will be in New Hampshire this few days for some reason…).

Thanks to all of you who registered for VCIA’s Annual Conference before the end of June. We have over 800 captive professionals already registered to come to Burlington, Vermont, well on our way to hosting over 1000 attendees. Even more exciting, we have over 80 people signed up for our new Captive Immersion program happening on Monday, August 5th.

Captive Immersion will offer an afternoon of educational sessions designed to familiarize new captive industry professionals on the essentials of captive insurance.  The key services that are needed during captive formation and management will be presented by industry experts to give newcomers a complete sense of the various components and their importance in the overall captive picture. It’s not too late – sign up for the conference and Captive Immersion today by clicking here.

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

Great News: VCIA’s captive bill passes… but you knew that was going to happen

Thanks to the expert testimony of Deputy Commissioner Dave Provost, this year’s captive bill passed the House and Senate and is on its way to the Governor for his signature. Unless there is a calamity, the Governor will sign it into law within the next week.

Here is a quick outline of what it will do:

  • Allows non-profit protected cells can issue dividends to its owners.
  • Eliminates the requirement for an attorney-in-fact bond of a reciprocal RRG in most circumstances.
  • The commissioner currently can waive the three-year exam period, but with the maturity of many of Vermont’s captives, it made sense to revisit the timeframe. This section makes default exam period 5 years, but commissioner can shorten if determined to be prudent.
  • Allows any type of entity recognized by the Secretary of State to be formed as a captive.
  • Allows groups and agencies to either comply with current statutory investment requirements OR come up with an acceptable plan (which DFR will keep confidential). Section 3463a – valuation methodology – still applies.
  • Re-writes the RRG independent director section for clarity.
  • Makes NAIC statutory accounting the standard for the new affiliated reinsurance company or ARCs.  Vermont didn’t need to meet accreditation standards, but wanted to avoid a repeat of the AXXX/XXX fights.

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