Each summer our team looks forward to returning to Burlington, Vermont for the annual Vermont Captive Insurance Association (VCIA) conference. Our Managing Partner, Karin Landry, is a long-standing member of the VCIA strategic planning committee and has been an active participant in the organization’s events for over a decade now. This past year a group of Spring colleagues congregated in Burlington where we learned, networked, presented and caught up with familiar faces.Vermont Captive Insurance Association

While the conference’s official theme this year was “Mission Impossible”, I noticed a few captive-related topical concepts that continuously emerged throughout the 3-day event: optimization, technology and legal and ethical considerations. In addition, Ben & Jerry’s ice cream was also a cornerstone of the conference 🙂

1. Optimization

Setting up and managing the day-to-day tasks of a captive are one thing, but getting the most out of your captive is another. No one knows this better than the industry veterans who flocked to Burlington, Vermont from all over the world, and the topic was central to several educational sessions.

One presentation called, “Getting the Most out of Your Actuary”, covered just that, discussing factors like loss studies, program design, cost allocation and TPA assessments. The Managing Director of Global Risk at Cummins, Inc. led a discussion on optimizing your captive’s risk profile, emphasizing realignment over time in terms of the different parties’ captive goals. A third session entitled “Reinventing Your Captive for Maximum Results” presented two case studies and focused on different tax cases and actuarial observations. All three sessions offered tips and best practices to attendees, and while I know a lot about captive optimization, I can’t say I didn’t learn a thing or two.

2. Technology

It’s 2017. Technology is everything and everywhere. But how does it play into captives specifically?

Well, one session focused on the oncoming of self-driving cars and presented the different risk and insurance consequences they pose, not to mention changes in regulation. Control and liability are likely to shift if autonomous vehicles actually become mainstream, and all sorts of policy, insurance and cost changes could affect the captive market.

In “Innovative Spotlight: Using Technology to Mitigate Risk”, a panel including the General Counsel from Cook-Illinois Corporation, who spoke of his own experience, outlined three areas for efficiency-based opportunities: data, human capital and software. The group discussed things like apps, social media, the elusive “Internet of Things” and mathematical models that companies should be considering in tandem with their captives. They also covered how to train and manage your people as they become familiarized with such technology.

Cyber Insurance

Lastly, “Cybersecurity and Captives” was a two-part presentation (our own Teri Weber led part 2) that explored cyber threats and attacks, different types of risk involved and trends in the marketplace. Teri presented proprietary Spring survey data on the landscape of putting cyber insurance into a captive – who’s doing it, who’s considering it, what are the different challenges or reservations, what are the benefits of cyber in a captive? Cyber attacks continue to happen every day, and hackers always seem to be one step ahead, but these sessions helped audiences feel more prepared and armed for what hopefully will never happen to their organization. But like they say, better safe than sorry!

3. Legal & ethical considerations

A panel including Mary Ellen Moriarty from the College Insurance Company and Dan Petterson of the Vermont Department of Financial Regulation led the discussion, “Captive Governance Best Practices: Ethics, Conflicts of Interest and More”. They talked about the importance of each role staying within their role – and when over different duties of directors. They highlighted ways to ensure captive compliance such as ownership structure, plan of operations and your Board of Directors, and discussed how things might differ depending on your captive type (i.e. group vs. pure).

Another session got more into the weeds and provided an industry tax update – crucial information for captive professionals to be on top of. Specifically, the group focused on the recent supposed crackdown on microcaptives, or 831bs by the IRS – what kinds of captives they’re after, what their red flags are and how to make sure your captive doesn’t end up on their list.

 

In summary, the 2017 Annual VCIA conference brought good weather, great ice cream, informative and important educational sessions, and myriad of networking opportunities. Our team was happy to be back, especially having kicked off the conference with an award from the US Captive Review! We are already looking forward to next year’s event. If you didn’t have a chance to stop by our booth or weren’t able to make it to the conference, please feel free to reach out with any questions, In the meantime, you might also enjoy this white paper: Funding Employee Benefits Through a Captive.

Actuarial Firm of the Year

by Reciprocity Studio

 

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Christine Culgin