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Digital EditionThe Very Real Benefits of an In-Person Vermont Captive Board Meeting
Do you remember “required reading” in school? Whether it be the classics or a favorite pick of your English teacher, these books were selected for a reason: They added value to the curriculum, expanded young minds and (hopefully) brought about interesting conversations.
Vermont has a requirement that aims to do something similar: Bring captive representatives to the state for an annual board meeting, in an effort to enhance communication and promote information sharing between all parties.
When choosing to set up a captive in Vermont, captive owners agree to this fundamental requirement to meet each year in the state. But the benefits of an annual board meeting go well beyond checking the to-do box; the information gleaned can benefit a captive over its lifetime.
“By joining the annual meeting in Vermont, you’re assembling your team, including your Vermont manager, captive attorney, risk management and other critical participants in the process,” said Jim DeVoe-Talluto, assistant director, Captive Insurance Division, Vermont.
“You’re doing this to ensure you’ve got an appropriate breadth and depth of insurance knowledge to conduct the operations of your company.”
Putting Your People in the Same Place
Some might be asking themselves if the cost of travel is worth the benefit of meeting in-person every year. Zoom has its place, certainly, and can connect with as many people in a matter of minutes.
But Zoom does not bring the nuances of human interaction the way an in-person event can.
“This face-to-face interaction helps people focus on the matter at hand. When everyone is seated around the table, it frees us from distractions,” said Benjamin Gould, director, Paul Frank + Collins P.C.
Jim DeVoe-Talluto, Assistant Director, Captive Insurance Division, Vermont
“There’s also something to be said for the fact that a sit-down, in-person board meeting gets these members of your team to release their other job duties for the day and put on their captive hat,” he added. “They are there solely for the matters pertaining to the captive, sharing ideas for the captive, listening to others and making the captive a centerpiece for the board meeting.”
“At edRISK, we … look forward to our annual meetings in Vermont,” said Tracy Hassett, president and CEO, edRISK. “It’s energizing to convene and think creatively in the largest captive domicile in the world. It’s also an opportunity for our whole team, board members, staff and service providers to be together in person.
“We get to spend quality time enjoying each other and all that Vermont has to offer, and to get really important work done,” she continued.
Insurance itself is an industry built on relationships and trust. Communication and collaboration are at the heart of any good relationship, and in-person events open the door for better understanding.
“As regulators, we love to meet with companies. And when we’re meeting with a company as part of their board meeting, that relationship enables us to have the hard conversations when there might be a challenge facing the captive,” DeVoe-Talluto said.
Getting First-Hand Regulatory Updates
Benjamin Gould, Director, Paul Frank + Collins P.C.
Though meeting with the regulators is not required, perhaps one of the biggest benefits of an annual in-person board meeting is the first-hand access to regulatory updates.
“The greatest benefit of holding our board meeting in Vermont is the engagement with our regulatory team. The accessibility to both leadership and key team members handling regulation of our RRG is extraordinary,” said Julie M. Bordo, president & CEO, PCH Mutual Insurance Co.
Vermont is committed to supporting captive insurance companies through adequate regulatory staffing. Its team of regulators and in-house examiners dedicated solely to captives remains vigilant, making key decisions to help aid the success of the industry.
That means consistently reviewing regulations and updating accordingly.
“Every year at our board meetings, we have discussions about Vermont’s legislative bills and regulatory changes being made,” said Jesse Crary, shareholder, Primmer Piper Eggleston & Cramer PC.
“One of the common topics of discussion for regulators when we attend a meeting is around industry updates and analysis of trends,” DeVoe-Talluto said.
The lessons go both ways. By focusing on regulations and discussing them with captive owners, Vermont regulators also have another opportunity to hear what these companies are up to and apply it to future regulatory decisions.
“We’re able to distill from our conversations with the board what direction companies are going in and where their pain points and challenges are,” DeVoe-Talluto said. “That’s valuable. That gives us in-depth perspective not only of the captive program, but also on the corporation as a whole.”
For Deyna Feng, director of captive programs, Cummins Inc., access to Vermont regulators is a key benefit of the board meeting: “We have the chance to meet Vermont regulators to understand regulatory requirements, new trends of [the] captive industry, and challenges the industry is facing, and to provide more information about our parent company and captive with business growth, new business plans, and financial strength.”
“We have the best regulators, who understand us and who want to hear from us with open minds,” Feng said.
Bright Futures for Captives
Jesse Crary, Shareholder, Primmer Piper Eggleston & Cramer PC.
Captives are a great tool for companies looking to retain and insure some of their own risks, especially when faced with tightening terms and conditions or rising premium rates.
The annual in-person Vermont board meeting has proven essential to the success of many captives.
“These meetings enable more strategic, more in-depth discussions regarding the insurance challenges faced by the captive owner,” Crary said. “The magic happens when the captive owner and its team of insurance experts sit down in a room and we start to brainstorm the ways we can transform and modify the captive business plan over time to meet these challenges.”
“The most successful captives are the ones that lean into this relationship with Vermont and get educated and become engaged, building relationships with regulators,” he said.
Board engagement and a focus on the captive go a long way toward strong corporate governance as well.
“One piece of the puzzle is coming together and working to develop a strategy,” DeVoe-Talluto said. “When service providers, the captive financial experts, the board and regulators come together, it supports the business and shows a strong commitment to good corporate governance.” &
