Richard Smith
Vermont Captive Insurance Association
Vermont Captive Insurance Association
As the Vermont Captive Insurance Association hosts its 30th Annual Conference, association president Richard Smith gives his take on the industry’s current talking points, and what to expect from the event itself
Vermont has made its name blazing a regulatory trail. What regulations is the state currently working on?
Every year, the Vermont Captive Insurance Association (VCIA) and state regulators bring new proposals to Vermont’s general assembly providing needed changes to Vermont’s captive statute to keep up with this ever changing industry. This year was no different. Governor Peter Shumlin signed new legislation passed in the 2015 session strengthening Vermont’s captive legislation in a variety of areas, including ground breaking changes to the investment guideline in the minimum capital requirement, and reducing the minimum capital requirement for sponsored cell captives.
The law changed the investment guidelines that will now allow for captive insurance companies to have greater flexibility by expanding their investment options to include marketable securities. This is a significant change that has already attracted considerable interest and is consistent with current investment guidelines for Vermont’s traditional insurance companies.
A summary of some of the changes in the law include the following:
Do regulations elsewhere, whether that is domestically, offshore or even in Europe, have any bearing on Vermont’s outlook or actions?
There are a number of challenges to the captive industry, which will likely continue over the next few years: (i) excessive regulation resulting from insufficient knowledge; (ii) the weakening of sound regulatory structures based on a desire to attract business; and (iii) efforts to impose new or increased taxes.
Our primary focus in the past few years remains issue arising in Washington DC. The VCIA will be working with the Vermont delegation, along with other resources, to clarify the Non-admitted and Reinsurance Reform Act (NRRA) issue in the Dodd-Frank Act. As everyone is painfully aware, there has been little action in Washington DC, but we are pleased to now have a bill introduced in Congress that perhaps can pass this year. We are always monitoring issues with the NAIC as well and, working closely with Vermont’s captive regulators, have had a positive impact on current discussions.
Many concerns remain on the horizon, including the proposed tax on reinsurance (also known as the Neal Bill), the impact of the Federal Insurance Office on the industry, and the continued attacks by the other regulatory officials. Increasingly, actions by international bodies that have limited understanding of captive insurance could create hurdles for the industry as a whole.
Is the captive industry still a priority for the state’s government? If so, what have they done in support of it lately?
Regardless of who sits in the governor’s office, or which party has the majority in the State House, the support to the captive insurance industry in Vermont has remained unwavering for more than 30 years. I mentioned the bill that was enacted into law earlier this year as one example. The governor and legislature continues to provide funds to help the VCIA to pursue the Captive Clarification Act in Washington DC, putting their money where their mouth is.
Most importantly, leaders and policymakers in Vermont consistently supply the resources for Vermont’s regulators to deliver sensible and knowledgeable guidance to this dynamic industry. Other domiciles may advertise they have the same laws on the books, but none have the depth and experience found in Vermont’s Department of Financial Regulation.
What do recent victories such as the reintroduction of the Captive Clarification Act do for the captive industry in Vermont and the wider US? Are they indicative of the tide turning in captive regulation?
It’s hard for me to say whether the tide is turning in terms of captive regulation in the US. I think recent victories in the courts on captive tax status, as well as decisions by the NAIC regarding certain aspects of captive and risk retention group regulation, are good news. However, I feel like the recent battles are more akin to fighting crime: you never defeat it, you only continue to mitigate and fight to reduce its impact.
That being said, with more than 35 states now having enacted captive insurance laws, it is likely that there will be more allies in this fight and perhaps we can reduce the number of fires we need to attend to on a regular basis.
What can delegates expect from this year’s conference? Will it differ substantially from previous years?
In celebration of the VCIA’s 30th Annual Conference, we will host a special reception on the shores of beautiful Lake Champlain. Shelburne Farms will be the venue with breath-taking lake and mountain views. This year, 21 seminars will feature more than 70 speakers providing attendees the opportunity to expand their knowledge of captives and connect with key players in the industry.
Topics have been selected with the guidance of our captive owner advisers and explore everything from employee benefits, healthcare, tax updates and big data, to managing international and challenging risks. A number of popular peer-to-peer forums will present captive owners with the opportunity to exchange their experience and knowledge on a one-to-one basis.
Companies and organisations that are sharing their expertise range from Fortune 500 companies to small, nimble entrepreneurial enterprises, all of them leading the way into new areas of opportunity.
Organisations such as Global Rescue, which provides medivac and crisis response services for hundreds of organisations during thousands of events worldwide, and iconic corporations such as Walgreens and Corning, are among our expert panellists this year.
Attendees at the Annual Members’ Meeting will hear remarks by Susan Donegan, commissioner of Vermont’s Department of Financial Regulation. Jim McIntyre, the VCIA’s legislative representative in Washington DC, will provide legislative highlights. Senator Patrick Leahy has been invited to welcome attendees at the general session, and Hank Watkins, president at Lloyd’s N.A. will be our keynote speaker.
New this year, at the time registration opened, social Q&A was set up for all sessions, allowing attendees to provide input during the content development stage. The 2015 conference app allows us to digitally provide all conference information, including seminar descriptions, speaker information, updated schedule/speaker changes, and seminar materials.
Vermont’s chief captive regulator, David Provost, will provide his ever popular look at hot topics that he sees for the industry. Our closing luncheon will spotlight keynote speaker Captain Richard Phillips on the topic of ‘Steering Your Ship through Rough Waters: Lessons on Leadership’. The subject of the award winning movie starring Tom Hanks, Vermonter Captain Phillips will deliver his unforgettable story to our attendees.
What prompted the VCIA to structure the conference and its content in this way? Do events in the wider industry play any part in how the sessions take shape?
The VCIA begins planning for our annual conference almost immediately at the end of the previous one. Starting in September, more than 35 volunteer members contribute their hard work and input into designing and producing the three-day event the following August. The content is based on an extensive member survey as to what issues attendees would like to see addressed, as well as events that are playing out in the broader insurance arena.
As always, the conference benefits from the ongoing support of our content advisors and captive owner advisors. Their important role is to ensure the timely, innovative and accurate content of the seminar presentations. This diligence, coupled with the keen eye of instructional design advisors, improves the impact of our conference presentations year after year.
The VCIA works hard to stay attuned to what keeps risk professionals up at night so that we can provide the most up-to-date and relevant information to the attendees. We pride ourselves on providing the ‘must attend’ conference in the captive insurance industry.
