By CYRIL TUOHY, managing editor of Risk & Insurance®
Richard Smith, president of the Vermont Captive Insurance Association, was appointed to lead the organization last September. In May, he spoke with Risk & Insurance®
Managing Editor Cyril Tuohy about his first months on the job. The following is a partial transcript of their conversation.
Q: Name a couple of initiatives on which you've fought hard in the past year since you've been president of the VCIA?
A: This year's bills were mostly a tweak of existing bills. One of the provisions in one of the bills allowed for smoother mergers and acquisitions among captives to take place. There were also some technical clarifications with regard to amending powers of attorney and a reduction in the minimum capital requirement for association captives.
Q: Vermont licensed 39 new captives in 2009, which even in a hard market can be considered a banner year. How was Vermont able to do that given the softness in the market?
A: There's been a lot of energy toward setting up captives even at a time when the economy is recovering. The insurance industry is still in a soft market, but you are seeing risk managers looking to gain more control over their costs and their risk. We have seen an increase in activity with smaller and midsize captives, as well as growing interest in healthcare risk placed into captives.
Q: What are you doing to keep Vermont competitive to draw captive managers to the state?
A: We're going to continue to do the things to maintain that standard, but there's plenty of competition out there. We have to be out there and let people know Vermont is open for business, and when people start to think about forming a captive, we have to make sure Vermont is on the list.
Even in these tough times, we're not going to miss a beat. Vermont is not going to cut staff at the state Department of Banking, Insurance, Healthcare Administration, the folks who regulate captives. In fact, they've added staff. We're focusing on a lot of tough financial issues.
Q: In the past, you've worked with Sen. John Kerry, D-Mass., and former Vermont Gov. Howard Dean, before joining the state administration. What has taught you to navigate and deal successfully with the state and regulatory sides of the playing fields?
A: My takeaway from working in statewide political campaigns is that you can't take anything for granted. What I learned from both (Kerry and Dean) is that they didn't rest on their laurels and fought tough campaigns, even if they didn't have the strongest challengers.
Q: As deputy commissioner in the Vermont Department of Economic Development, you were responsible for helping keep businesses from leaving Vermont. Later, a utility regulator, you found yourself on the opposite side of the fence. You were responsible for representing the interests of ratepayers. How did you manage to maintain this balancing act?
A: I saw businesses struggle, and it was an eye-opening experience. Business owners are Vermonters, too, and most want what's best for the state yet they struggle with regulations and other issues like businesses everywhere. For me, being a good regulator was about protecting what needs to be protected while letting business thrive. It's not an easy balance. It takes a lot of work on both sides.
The interesting part of the captive world is that captives are seeking and welcoming strong regulation. They are in Vermont because they want strong, steady regulation. The regulators, of course, want strong regulation but have to be flexible and available at the same time.
August 1, 2010
Copyright 2010© LRP Publications