2017 Vermont Report

Eight Questions for Dan Towle  

Risk & Insurance® speaks with Dan Towle as he departs from his long tenure as director of financial services for the State of Vermont.
By: | April 7, 2017 • 5 min read

R&I: How did the captive industry in Vermont evolve during your 17 years there?

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When I first started in 1999, the captive insurance landscape was very different. Being “on-shore” meant Vermont or Hawaii and the “off-shore” jurisdictions held much more of a dominant position in the marketplace. We spent more time explaining to risk managers what a captive insurance company was and why you might want to form one. There were only a small number of captive insurance conferences, and there was plenty of business to go around.

Fast forward, and every year new states were passing captive insurance laws and the captive marketplace was much more competitive. The fact that we now had dozens of domestic domiciles trying to grow their business elevated the captive insurance knowledge base to a broader audience. The marketplace was changing and our messaging had to evolve and sharpen for us to continue to differentiate ourselves.

Daniel D. Towle, former director of financial services. agency of commerce & community development, State of Vermont

I truly believe that the “new entrants” to the domicile marketplace were good for the industry.

The state made some big investments to effectively differentiate ourselves in the marketplace. We invested significantly in our overall market research and branding efforts. That sent a message to the marketplace that Vermont was not slowing down or becoming complacent, but instead was working hard to reinforce our value proposition.

My role changed quite a bit during that time. I grew into not only being our chief marketer, but also one of strategist and as a leader along with my colleagues. We are more effective with more leaders echoing the same messages, which reinforced the “deep bench” we have in Vermont.

It has been a great experience working here. I had the opportunity to work under four different governors and alongside legends Leonard Crouse and David Provost. I have learned from them all and am grateful for their hard work and commitment to building our captive insurance industry in Vermont.

R&I: Any idea what the number of licensed captives in the state was when you started and where that number stands now?

When I started in 1999, our year-end number for captive insurance companies licensed was 460, our 2016 year-end number was 1088.

I have been with the state for more than 600 of our captive insurance companies licensed, which is more than half of all the captives licensed in Vermont’s history. When I first started, our total gross written premium was $4.2 billion, now it is more than $27.5 billion.

R&I: One of the keys to Vermont’s success as a captive domicile has been the relationship between state government and its elected officials. What do you feel are some key reasons and lessons learned?

We have always worked hard to make sure that the governor’s office and legislature understand the value the captive insurance industry brings to the state. We partner annually with the VCIA to go to the legislature and make sure that they understand what our industry means to the state’s bottom line. We also meet with legislative leaders to make sure they understand about captive insurance and how important an industry it is to our state. We also introduce and pass new captive laws every year.

The bottom line is that we are all in this together and are successful because we are all stakeholders.

Forming a captive can help prevent losses and saves a company money and they can reinvest their savings into preventing future losses.  That is what needs to be shared more consistently.

R&I: Have Vermont’s elected officials had an important impact on its captive industry?

I have been fortunate to work closely with many hard working government officials. A good example of this comes from the very top.  In my role, I would invite the governor to attend events important to the captive industry, or meet with a prospective captive or perhaps meet with an existing captive owner and their boards of directors.  During my time with Govs. Howard Dean, Jim Douglas and Phil Scott, they accepted every meeting request that I have ever put forward to them. That is quite extraordinary and speaks volumes to their commitment to Vermont’s captive insurance industry.

R&I: What accomplishments are you most proud of?

I am proud of our collective work and despite all the competition, Vermont still maintains its top position. I think I am most proud that for 17 years I was still passionate about my work, my colleagues and my clients.

I am also proud to be recognized alongside my colleagues Dave Provost, Sandra Bigglestone and former colleague Len Crouse, in the “Power 50” ranking. The “Power 50” recognizes the most influential and powerful individuals in the global captive insurance industry as voted on by industry peers.

R&I: What are some of the more nagging misconceptions about captive insurance?

Our industry collectively needs to better tell the story about why we form captives and how they benefit their companies. We need to effectively communicate how improving risk management is the primary driver and how having a captive can help a company better manage their overall risk. Forming a captive can help prevent losses and saves a company money and they can reinvest their savings into preventing future losses.  That is what needs to be shared more consistently.

R&I: What are some emerging or dynamic risks that companies might want to be looking to captives to manage?

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Any hard to place line of coverage can be a risk that fits in captive insurance. Especially if they have limited availability, high cost and many exclusions. Things like cyber and medical stop loss are risks we are seeing more interest in going into captives.

R&I: If you had one piece of advice for your successor in Vermont, what would it be?

Stay the course. Our basic strategy has not changed over the last 36 years. That’s been to license quality companies and regulate them in a way commensurate with their risks.

My other piece of advice is to only chase quality, not sheer numbers and to stay true to the brand. It has served us well during my 17 years, and I expect will continue to serve us well for the next 17. &

Dan Towle will begin his new role as president of the Captive Insurance Companies Association on April 24.

_____________________________________________________________

2017 Vermont Report

A Perfect Fit

Life Time Fitness finds a captive home in Vermont.

Vermont Eyes Agency Captive

An agricultural consortium is one group taking a serious look at forming an agency captive in Vermont.

 

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Absence Management

Establishing Balance With Volunteers

It’s good business to allow job-leave for volunteer emergency responders, whether or not state laws apply.
By: | January 10, 2018 • 7 min read

If 2017 had a moniker, it might be “the year of the natural disasters,” thanks to a phenomenal array of catastrophic or severe events— hurricanes, tornadoes, wildfires, ice storms and floods.

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Combined with smaller-scale fires and other emergencies, these incidents tax the resources of local and state emergency services, often prompting the need to call volunteer emergency responders into action.

But as lean as most organizations are already running, volunteer activities can sometimes cause friction between employees and employers. Handling conflicts the wrong way can potentially lead to legal headaches, harm employee morale and batter a company’s reputation.

State by State Variations

Most employers are aware of the various federal and state leave laws protecting their employees, including family and medical leave, pregnancy leave and military leave. But leave laws that protect the livelihoods of volunteer emergency responders are more likely to fly under the radar of some HR managers and risk managers.

Such laws don’t exist in every state, but more than 20 states do have some type of law in place to protect volunteers including emergency responders, firefighters, disaster workers, medical responders, ambulance drivers or peace officers.

Marti Cardi, vice president of Product Compliance for Matrix Absence Management

The laws vary broadly. Nearly all specify that such leave be unpaid, and that employees disclose their volunteer status to employers and provide documentation for each leave. But there is a spectrum of variations in terms of what may trigger an eligible leave. Some, for instance, apply for any emergency that prompts a call from the volunteer’s affiliated responder group. Others may require a government declaration of emergency for the law to be triggered.

While many of the laws do not explicitly require employers to let employees leave work when called to an emergency during a shift, most specify that an employee may be late or even miss work entirely without facing termination or any other adverse employment action.

Some states mandate a maximum number of unpaid leave days that a volunteer can claim. But others may place more significant burdens on employers. In California, for instance, employers with 50 or more employees are required to grant up to 14 days of unpaid leave for training activities in addition to any leave taken to respond to emergency events. For multistate employers, keeping on top of what obligations may apply in each circumstance can be a challenge.

Significant Risks

Large or mid-sized employers may rely on absence management providers to keep them in compliance. For smaller employers though, it may be as simple as looking up a state’s law via Google to find out what’s required. However, checking in with the state department of labor or the company’s attorney may be the best way to get the correct facts.

“I would caution that just because you don’t find something [on the internet], it doesn’t mean it’s not there,” said absence management and employment law attorney Marti Cardi, vice president of Product Compliance for Matrix Absence Management.

For example, Cardi said, an obscure Texas law provides job-protected leave for volunteer ham radio operators called into service during an emergency.

Cardi said employers should task HR to investigate the laws in each state the company operates in, and to ensure that supervisors are educated about the existence of these laws.

“If a supervisor is told by one of his or her employees, ‘Sorry I’m not coming in today … I’ve been called to volunteer firefighter duty for the [nearby region] fire,’” she said, you want to be sure that the supervisor knows not to take action against the employee, and to contact HR for guidance.

“Training supervisors to be aware of this kind of absence is really important.”

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An employer that does terminate a protected volunteer for responding to an emergency may be ordered to pay back wages and reinstate the employee. In some cases, the employee may also be able to sue for wrongful termination.

And of course, “you don’t want to be the company in the headlines that is getting sued because you fired the volunteer firefighter,” she added.

If an employer bars a volunteer from responding, the worst-case scenario may be a third-party claim. Failure to comply with the law could give rise to a claim along the lines of “‘If you had complied with your statutory obligation to give Jane Doe time to respond, my loved one would not have died,’” explained Philadelphia-based Jonathan Segal, partner at law firm Duane Morris and managing principal of the Duane Morris Institute.

“That’s the claim I think is the largest in terms of legal risk.”

Even if no one dies or is seriously injured, he added, “there could still be significant reputational risk if an individual were to go to the media and say, ‘Look, I got called by the fire department and I wasn’t allowed to go.’”

The Right Thing to Do

What employers should be thinking about, Segal said, is that whether or not you have a legal obligation to provide job-protected leave for volunteer responders, “there’s still the question of what are the consequences if you don’t?”

Employee morale should be factored in, he said. The last thing any company wants is for employees to perceive it as insensitive to their interests or the interests of the community at large.

“Sometimes employers need to go beyond the law, and this is one of those times,” — Jonathan Segal, partner, Duane Morris; managing principal, Duane Morris Institute

“How is this going to resonate with my employees, with my workforce, how are people going to see this? These are all relevant factors to consider,” he said.

There’s an argument to be made for employers to look at the bigger picture when it comes to any volunteer responders on their payroll, said Segal.

“Sometimes employers need to go beyond the law, and this is one of those times,” he said. “Think about the case where’s there’s not a specific state law [for emergency responders] and you say to a volunteer, ‘No, you can’t leave to deal with this fire’ and then people die. You as an employer have potentially played a role, indirectly, because you didn’t allow the first responder or responders to go,” he said.

The bottom line is that “it’s the right thing to do, even if it’s not required by law,” agreed Cardi.

“I feel that companies should have a policy that they’re not going to discipline or discharge someone for absences due to this kind of civic service, subject to verification of course.”

Clear Policy

While most employers do strive to be good corporate citizens, it goes without question that employers need to guard their own interests. It’s not especially likely that volunteer responders will try to take advantage of the unpaid leave allowed them, but of course, it could happen.

That’s why it’s important to have policies that are aligned with state laws. Those policies could include:

  • Notifying the company of any volunteer affiliations either upon hire or as soon they are activated as volunteers.
  • Requiring that employees notify a supervisor as soon as possible if called to an emergency (state requirements vary).
  • Requiring documentation after the event from the head of the entity supervising the volunteer’s activities.

If at some point it becomes excessive – someone has responded to emergencies five times in nine weeks, then it’s time to examine the specifics of the law and have a discussion with the employee about what’s reasonable, said Segal. It may also be time to ask specifics about whether the person is volunteering each time, or are they being called.

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In some cases, the discussion may need to be about finding a middle ground, especially if an employee has taken on an excessively demanding volunteer role.

“We encourage volunteers to pick the style that best fits their schedule,” said Greta Gustafson, a representative of the American Red Cross. “Disaster volunteers can elect to respond to disasters locally, nationally, or even virtually, and each assignment varies in length — from responding overnight to a home fire in your community to deploying across the country for several weeks following a hurricane.

“The Red Cross encourages all volunteers to talk with their employers to determine their availability and to communicate this with their local Red Cross chapter.”

Segal suggests approaching it as an interactive dialogue — borrowing from the ADA. “Employers may need to open a discussion along the lines of ‘I need you here this week because this week we have a deliverable on Friday and you’re critical to that client deliverable,’” he said, but also identify when the employee’s absence would be less critical.

No doubt there will be tough calls. An employer may have its hands full just trying to meet basic customer needs and need all hands on deck.

“That may be a situation where you say, ‘First let me check the law,’” said Segal. If there’s a leave law that applies, “then I’m going to need to comply with it. If there’s not, then you may need to balance competing interests and say, ‘We need you here.’” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]