An Industry that Gives: Learn the Truth About Commercial Insurance’s Charitable Side

Insurance industry financial resources and human capital are stalwart contributors to social wellbeing.

By: Abi Potter Clough | April 1, 2022

Topics: Insurance Industry | Mar./Apr. 2022 Issue

At its heart, insurance is a system designed to help people in need. When the worst possible things have happened in history, people have come together to survive and help each other thrive. This very basic human value is entrenched in what insurance does every day — whether it’s responding to a catastrophe or providing coverage for more day-to-day exposures.

“The insurance industry designs products and services to assist people in a time of need, and philanthropy is a natural extension of this work,” said Bill Ross, CEO, Insurance Industry Charitable Foundation (IICF). “On an even larger scale, our industry provides the backbone for innovation, growth and creativity that drives growing and successful economies. When you’re confident that your risk is managed, greater creativity results and fuels innovation.”

“The U.S.’s insurers provide financial security and peace of mind to millions of Americans while also being one of the U.S. economy’s most significant employers, investors, and taxpayers. On top of everything else, insurers allocate more than half a billion dollars annually to charitable causes,” said Sean Kevelighan, CEO of the Insurance Information Institute.

During this pandemic, that included premium refunds to drivers who drove less, and food insecurity drives that netted millions for hungry children around the world. As of June, 2020, the Triple-I estimated that insurers donated $280 million to the fight against Covid. That number has surely grown in the interim.

Philanthropy as a Core Value

Most major carriers have established a charitable foundation to channel their efforts. In many companies, employees are encouraged to volunteer time and talent through paid volunteer days and matching donation programs.

“At Amwins, we raised more than $6 million and donated more than 71,000 volunteer hours for charitable causes through our 2021 Summer of Service program, an initiative encouraging staff from across the nation to give back through volunteering projects and fundraisers,” said Barbara Bufkin, a senior advisor with Amwins.

Bufkin, a former IICF International Board of Governors Chair, provided a thumbnail sketch of its philanthropic work: “With philanthropy as a north star guiding our industry, we have been able to make a real difference and improve lives through volunteerism, scholarships and charitable donations.”

Sometimes corporate charitable giving programs even align with risk management strategies, like using natural ecology to reduce the impact of floods.

Laura Crossin, senior vice president of human resources at Philadelphia Insurance Companies, said: “We’ve been partnering with the Arbor Day Foundation to plant 80,000 trees each year in forests and communities in need since 2015. Since the beginning of the partnership, we’ve been able to fund the planting of 480,000 trees.”

The IICF was established in 1994. By combining the efforts of various organizations into one large collective, the IICF has contributed $42 million in community grants and over 300,000 in volunteer hours to charitable causes.

With year-round volunteer opportunities and its annual Week of Giving, the IICF presents unique and valuable ways for insurance professionals to give back.

Ross said, “IICF provides a broad platform for the insurance industry to unite to make an even greater collective impact on societal issues and amplify our work in the community. We want everyone in the industry to become IICF supporters, making the greatest impact possible through the strength of so many companies and individuals contributing together.”

Philanthropy in a Pandemic

The pandemic changed everything in our world, including the way we volunteer and give back. Lockdowns and public health restrictions made it impractical to volunteer in person.

“In the early stages of the pandemic, nonprofit organizations were not hosting volunteers as they had in the past and many companies had a work-from-home policy. As a result, companies developed virtual volunteering activities,” said Melissa MacDonnell, president, Liberty Mutual Foundation.

“In fact, in an effort to further these efforts, the IICF compiled a list of resources to volunteer from afar.”

In addition to going virtual with volunteer opportunities, some organizations turned their lens to local communities during the pandemic.

“Along with a greater emphasis on virtual activities, we also worked to build awareness of the persistent issues in our communities, such as food insecurity and homelessness,” said Jim Shevlin, chair, IICF Atlanta Chapter and EVP and regional executive officer for Chubb’s Southeast Region.

Shevlin continued, “Part of this effort has been focused on directing the IICF giving initiatives toward nonprofit partners based in our local communities, where IICF grants make a significant and positive impact to them, and help these organizations serve a greater number of community members in need.”

While some parts of the world have returned to in-person events, charitable giving and volunteer opportunities may remain a hybrid mix of live and virtual opportunities. The local focus many organizations adopted during lockdown may continue as the benefits of helping communities where employees live and work are numerous.

Philanthropy’s Talent Angle

New college graduates and younger workers have more job options and opportunities than ever. And one thing they are looking for is meaningful experiences at work.

To be an employer of choice means providing more than a competitive salary and benefits package. Employers need to commit to advancing important social issues.

MacDonnell said, “We live in an environment where employees care deeply about a company’s commitment to social issues, with younger generations wanting more from their employers. According to the 2022 Edelman Trust Barometer, 60% of all employees choose a place to work based on their beliefs and 64% invest based on their beliefs and values.”

Philanthropy isn’t just good for our communities; it’s a good business investment.

Most companies have diversity, equity, and inclusion (DEI) goals and initiatives—and philanthropy is one way to support DEI goals. By supporting charities with time and money, companies show commitment to advancing DEI initiatives.

“So many of our industry’s philanthropic initiatives play an instrumental role in advancing DEI. The apprenticeship programs are just one example where companies are looking outside traditional sources for talent, introducing new individuals to a career in insurance and offering resources to develop the skills needed to advance,” said Ross.

Other ways to grow DEI initiatives through philanthropy include Lloyd’s global Dive In Festival, INROADS internships, and affiliation groups like NAAIA.

Giving back and helping others are core values of every insurance organization. Philanthropy is one way insurance takes these values to heart through donations of time, talent and treasure.

The insurance industry’s commitment to philanthropy is something to be proud of and it can only expand in years to come. &

Abi Potter Clough, MBA, CPCU, is a keynote speaker, author and business consultant focused on Insurtech, leadership and strategy. She has over 15 years of experience at a Fortune 500 company with expertise in P&C claims operational leadership, lean management consulting, digital communications and Insurtech. As the past chair of the International Insurance Interest Group of the CPCU Society, Abi remains involved in many international initiatives and projects. She has published two books about change management and relocation. Abi can be reached at [email protected].

Consistency and Stability

Sandy Bigglestone, Deputy Commissioner for the State of Vermont’s Captive Insurance Division

With the commercial insurance market so unstable, companies are turning to captives to house their exposures. Vermont, a long-time domicile, is getting increased attention because of their strong reputation and their leadership as the top domicile worldwide.

“All stakeholders enjoy the stable political and regulatory environment Vermont has to offer to operate in,” Bigglestone said.

Of course, a lot of consideration goes into deciding whether or not a captive is the right choice for a particular company. Businesses need to assess their exposures and their books to make sure they can adequately operate a captive.

There are significant advantages, however. “For low frequency, high severity risks, captives can access the reinsurance markets directly, so it’s very attractive for businesses to put a captive in place,” Bigglestone said.

And carriers are more accepting of captives as part of a broader insurance program.

“Captives are changing the relationship businesses have with commercial carriers,” Bigglestone said. “Commercial carriers are wanting to see companies with skin in the game; therefore, the relationships have evolved to be less transactional and more strategic.”

Balancing Bureaucracy

With 76 global domiciles, companies have a lot of options when it comes to selecting a captive partner. “Captive insurance domiciles compete globally for the business,” Bigglestone said. “If you were to put all 7,000-plus captive insurance companies around the world, all in New York, it wouldn’t have the same economic impact as 700 captives in Vermont does. The captive insurance industry is very important to our state and we will continue to support it in any way we can.”

Businesses should look for domiciles that balance a need for quality regulations with a process that isn’t overly bureaucratic and is seamless for business owners to navigate.

“Companies are attracted to an environment with quality regulatory standards and a stable regulatory environment,” Bigglestone said. “Vermont sets the regulatory standard in terms of financial analysis and examinations.”

In addition to quality regulations, firms will want to seek out a domicile that is agile enough to license captive insurance companies that fit their unique needs. It is important that a domicile have firm but fair regulation and the experience to consider new ideas and implement them. Companies must consider a variety of factors when choosing a domicile and not everyone will be the right fit for every company.

“You have to consider the captive owner and the industry sector that that owner operates in, as well as the insurance risks that are going into the captive program,” Bigglestone said. “Captive laws and regulations have to have a reasonable degree of flexibility to accommodate all the varying needs of owners and then impose rules based on the merits of each captive program.”

She added that creativity is a critical part of the process: “The ability to vet concepts and ideas with trusted individuals is key to having quality standards,” Bigglestone said. “And it can make captives appealing to insureds who are tired of commercial carriers not meeting the needs of the business, and who desire more control over their insurance programs.”

“When you think about the commercial marketplace, commercial insurers are supposed to operate in each jurisdiction in a competitive manner. Commercial carriers often look the same. They sell auto coverage to anyone with a driver’s license. The rules and regulations imposed upon commercial insurance companies are designed to be more formulaic for that reason,” Bigglestone said.

“Uniform regulatory standards apply to commercial carriers for the protection of the policyholders. These are standards all insurance regulators focus on, and standards captive insurance regulators need to understand, but with a specialized focus.”

A Quality Domicile Built for the Future

A combination of experience, regulatory standards and talent make Vermont a top domicile for companies looking to form a captive. The longevity of licensing captive insurance companies for over forty years is a testament to the quality work they’ve provided in the past and will continue to provide for many years to come.

Vermont’s reputation has helped the state attract and retain top captive talent, ensuring the businesses it serves are in good hands. The state has 32 employees dedicated to captives, and their average employee retention is 15 years. The Vermont Captive Insurance Association, the largest captive insurance trade organization, also helps companies connect with professional services needed to make their captive successful.

“There’s a whole host of service providers with proven expertise right here in Vermont,” Bigglestone said.

Taken together, Vermont’s resources, expertise and talent make it a prime domicile. They’ve been on a growth trajectory over the last few years and that’s unlikely to change anytime soon. Companies can trust their captive will be in good hands when they choose Vermont.

“Vermont has always competed on quality,” Bigglestone said. “We do have a mission and that hasn’t changed in over 40 years. It’s to maintain a system, or domicile that attracts quality business to Vermont, to promote our reputation in the industry, and to uphold a regulatory framework to protect the solvency of the companies that choose to place their business here.”

To learn more, visit: www.vermontcaptive.com

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.

The State of Vermont, known as the “Gold Standard” of captive domiciles, is the leading onshore captive insurance domicile, with over 1,200 licensed captive insurance companies, including 48 of the Fortune 100 and 18 of the companies that make up the Dow 30.