VCIA
Celebrating its 35th year in the captive business, Vermont is set to host a varied and informative conference. Vermont Captive Insurance Association president Richard Smith reveals what’s in store for attendees
Has Vermont’s captive insurance market experienced a successful 2016 so far?
The outlook for captives in Vermont this year looks good. Since the beginning of the year, Vermont has licensed seven new captives, three pure, two risk retention groups (RRGs) and two sponsored, with more in the pipeline. However, it’s still early to see how the year will go, as many captives are formed at year’s end to get them on the books.
Last year, Vermont licensed 33 new captive insurance companies, made up of 12 pure captives, seven RRGs, seven sponsored captives, four special purpose financial insurers, two industrial insured captives, and one association captive, as well as 11 redomestications. That is the largest number of redomestications to ever occur in a single year in Vermont. Growth in 2015 was up significantly from 2014 when 16 companies were licensed.
Seven new RRGs were licensed in Vermont, bringing the active total to 89. Vermont continues to hold a dominant market share with over 60 percent of all RRGs premium volume being written by Vermont companies. Six of the 11 redomestications to Vermont were by RRGs.
New captives were licensed in insurance, healthcare, construction, real estate, professional services, education, transportation, agriculture, retail, and others. The strong diversity of licences was highlighted with seven in the healthcare sector. The new 2015 licensees bring Vermont’s overall total licences to 1,062 with 588 active captive insurance companies. Growth is impressive, especially when you consider the prolonged soft market and added competition by other US states. Vermont’s focus will always be licensing quality companies and regulating them in an appropriate manner commensurate with their risk.
Why is it important to update captive legislation annually?
It is important to update Vermont’s captive legislation annually for two main reasons. First, Vermont wants to lead the captive insurance marketplace in providing the best rules and regulations to keep up with this ever-evolving industry. Captives are by nature flexible and entrepreneurial.
Second, bringing legislation to the state legislature every year allows our policymakers a chance to shape this important industry in Vermont. The legislation makes Vermont more attractive and sends a strong message to the industry that we are committed to always improving our captive insurance law.
What can attendees expect from this year’s annual conference?
The Vermont Captive Insurance Association (VCIA) conference, with the theme of ‘Lights, Camera, Captives!’, will feature leading experts in the captive insurance world. Many panellists are captive owners with unique insights and case studies to share. In total, more than 70 key captive professionals will lead two and a half days of learning in Burlington.
VCIA is set to host nearly 1,100 people. Attendees will have access to any level of learning, from the basic to the advanced. Professional education credits are also offered (CPE, CLE and ICCIE) to those who attend the sessions.
VCIA is equally well known for its high-quality education and its opportunities for people to connect with other captive professionals. Whether you are new to the industry or have many years of experience, there is something for you to learn and someone for you to meet at VCIA.
Many of our panellists are captive owners, allowing you to learn from their first-hand expertise. They represent organisations including Tyco, Global Rescue, Verizon and Agri-Services, to name a few.
Sessions are offered with focus areas for those new to captive insurance, those involved in accounting or finance, operations, and risk management.
Engaging, fun session formats include a game show, a mock trial, a TED talk-style session, sessions with interactive technology, and several sessions using case studies for illustration.
If you are new to the industry the conference is the perfect way to meet and learn from others, and boost your captive education.
What are the main topics that speakers will cover?
David Pogue, author and founder of Yahoo Tech, will be our keynote speaker at lunch on 11 August. He is a world known technology culture expert, and will share his great insight on ‘Disruptive Tech: The Unrecognisable New World of Tech and Culture’.
Wearable tech, the cloud, drones, the quantified self, the ‘internet of things’, self-driving cars, and augmented reality: the tech of our world is changing more and more quickly. But the most fascinating aspect that Pogue will talk about is the effect this is having on the society and culture we once knew.
Charles Davis, CEO of Stone Point Capital, will speak at the general session on 10 August, and will share insight on the broader financial services and insurance marketplace, including the flow of capital, new capital sources, mergers and acquisitions, and how the impact of technology investment is likely to affect the insurance industry.
Stone Point Capital is a financial services-focused private equity firm based in Greenwich, Connecticut, targeting investments in the global financial services industry. Stone Point has been active in the creation of many insurance and reinsurance companies, including being the lead sponsor in the formation of ACE (now Chubb), XL, MidOcean, Harbor Point, Paris Re, AXIS and others.
What sessions are you most looking forward to?
I like to jump around to as many of the sessions as I can get to during the conference. On 9 August, ‘The Original Employee Benefit Captives: Where Are They Now?’ session will be interesting as we re-visit the pioneers of benefit captives and discover their lessons learned and benefits gained. Attendees will learn the interesting history of the past decade of using captives to fund benefits, and see where the industry is today.
On the same day, ‘Captive Re-Feasibility Studies: Remake of a Classic’ will explore the options available to perform a re-feasibility study of your captive; to recognise successful diversification options including unrelated risk in your captive; and to be aware of new ways in which a captive can be used to lower costs of the organisation.
On 10 August, ‘Addressing Cyber Risk with a Captive Solution’ will focus on the trending vulnerabilities and the current state of the cyber market. Our panel includes a risk manager who has implemented cyber coverage into her captive and will share that experience, and an actuary who will discuss pricing mechanisms for these evolving risks.
At the ‘Vermont Captive Quiz Show’ session, attendees will have game-show type experience where they will learn about Vermont’s captive insurance history, usage, management and benefits.
And a mock trial entitled, obviously, ‘Mock Claims Trial: You Be the Jury’ will allow attendees to show captive owners how the claims made within their captive translate into a jury trial and the potential pitfalls of trying a case.
Finally, I always look forward to ‘Hot Topics with David Provost’. Provost is a wealth of knowledge and wit, and will host this dialogue to share with participants news and views on recent developments in captive regulation and practice. I could list a dozen others but I think that gives a good flavour of the topics that will be presented during the conference.
Is there anything new and exciting happening in captive space for Vermont? And are there any plans for the rest of 2016?
This year marks the 35th anniversary of Vermont’s landmark 1981 captive insurer statute. The state continues its longtime status as the largest captive domicile in the US and the third largest in the world.
Although not the first to pass captive insurance legislation, Vermont prides itself on creating a law far more attractive to buyers, with far lower captive capitalisation that did not require prior approval for rates and forms.
VCIA continues to look to increase the number of webinars we do every year, and recently hosted two: ‘How to Ace Your Next Captive Exam’ on 17 March, and ‘Cyber Coverage and Captives’, tentatively, on 27 April. Both had good turnouts and received positive feedback from the surveys.
We have three more we are planning this year: ‘Asset Liability Matching for Captive Structures’ in September, and a tax update in December. In addition to this, Provost and Jim McIntyre have agreed to participate in a roundtable discussion with me on legislative issues facing captives sometime in October, which we will broadcast via webinar or other technology.
VCIA takes the industry lead in monitoring and responding to events emanating from Washington DC and elsewhere. We are continuing our quest to set right the Non-Admitted and Reinsurance Reform Act passed in the US Dodd-Frank Act a few years ago, as well as working with our captive association partners on another of other fronts.
