VCIA 2019: Regulatory Sandboxes, Cyber Risk Impact and More at This Year’s Can’t-Miss Captive Event

Almost 100 companies will be showcasing their latest product and service developments to around 1,100 captive and risk managers, service providers and other industry professionals at the VCIA 2019 event.
By: | July 30, 2019

Cyber security and association health plans are among the major risks at the top of the agenda for captive owners and risk managers right now.

And they will be a key talking point at the Vermont Captive Insurance Association’s (VCIA) annual conference held at the Double Tree by Hilton in Burlington from Tuesday, August 6 through Thursday, August 8.

Almost 100 companies will be showcasing their latest product and service developments to around 1,100 captive and risk managers, service providers and other industry professionals at the event.

“What’s front of mind for captive owners is future-oriented issues such as blockchain, Insurtech, cyber security and other emerging risks, and the ways in which captives can help to mitigate against them,” said Ian Davis, Vermont’s director of financial services.

“The VCIA and the conference taskforce committee have done a great job of identifying the most pressing issues for the industry at the moment and coming up with unique, interactive, innovative and educational sessions around those issues.”

Wednesday’s session on association health plans (AHPs) will focus on how the new federal regulations governing AHPs differ from the previous ones, the biggest challenges and opportunities associated with them, including legal issues and domiciles, and using a captive for self-insurance and funding medical stop-loss.

Spring Consulting Group’s Healthcare Cooperative will be used as an example to show how they can work in practice.

Ian Davis, director of financial services, Vermont Department of Economic Development

Cyber Risks

Assessing cyber risk internally, deciding when to have an independent cyber audit, learning how companies have handled data breaches and understanding the regulatory examination process will be the main topics of debate at Thursday’s seminar on managing cyber security risk.

The session, moderated by Christine Brown, assistant director of Vermont’s captive division, will also look at possible new cyber regulation and law.

Also on the cutting edge will be Tuesday’s panel discussion on drones, sensors and artificial intelligence, examining how they can be used cost effectively and safely for risk assessment, control/mitigation and to provide claims evaluation data.

Panelists, led by moderator Peter Jagger of Aon Risk Solutions, will consider the key benefits and limitations of using such technology to perform complex analytics, generate 3D models, evaluate insured exposures and assist in claims assessment, particularly when access to a property or site is restricted because of structural or environmental hazards.

How captives can be used to solve new political, technological and ecological problems will be the theme for another debate on Wednesday, centered on using insurance programs to quantify and insure emerging risks for the parent company, newly-implemented innovations and the effect of judicial, tax and legal changes on the new product.

This session will also study how captives can be applied in the place of traditional coverage, and the primary opportunities and challenges involved.

In the same vein is Thursday’s topic on innovative uses for captives, looking at new ways to solve problems, manage risk and measure innovation within an organization. The discussion will uncover methods for using data more efficiently and adopting metrics to measure profitability, as well as providing an insight into rating agencies’ methodologies and risk measures.

Vermont’s Regulatory Sandbox

Only in June, the State of Vermont launched its own insurance regulatory sandbox, enabling captive managers and insurers to develop and test their new products and services in a reduced risk environment.

The sandbox, which came into force last month (July), was formed in response to traditional carriers struggling to meet ever-evolving and niche consumer demands and being encumbered by regulation.

Many incumbents want to create a subsidiary, find an innovative way to deliver products or test a new product. Solving this problem, the sandbox allows users to sell or offer a product to up to 10,000 Vermont residents per year, enabling the State to monitor how the product performs, as well as claims and consumer experience.

It broadly follows the same approach by the Bermuda Monetary Authority, which rolled out its innovative regulatory sandbox regime in July of last year and has since granted its first license to AkinovA, an electronic marketplace for transferring and trading re/insurance risks.

Sandy Bigglestone, director of captive insurance, Vermont Department of Financial Regulation

The State of Kentucky also passed a new law in June establishing an insurance regulatory sandbox, and U.S. District of Columbia mayor Muriel Bowser has set up a council to look at the feasibility of implementing a financial services regulatory sandbox in Washington DC.

The key benefit of Vermont’s new offering for consumers is that they are protected by a statutory deposit put down by the selling company to cover any expenses arising from an event that causes them harm. If it goes according to plan, the state can approve the new product or service, enabling insurers to bring it to market with full licensure.

“It really provides companies the opportunity to come in and tell us what it is about our regulatory process that’s preventing them from offering a particular product in Vermont,” said Sandy Bigglestone, Vermont’s director of captive insurance.

“It allows us then the flexibility to waive those requirements for a limited period of time and for a limited number of our Vermonters while the program is piloted.”

Reaching for the Moon

New to this year’s conference will be captive immersion sessions introducing newcomers to the captive industry, to the main players, and services required when forming and running a captive, with input from legal, audit, actuarial, investment, regulatory and captive management experts.

Also, fitting in with the innovation theme is opening keynote speaker Laura Drabik, group vice-president for business innovation for Guideware Software, talking about the intersection between insurance and technology.

And 50 years on from the first moon landing, former NASA astronaut Mike Massimmo will be the closing keynote, telling stories about his space missions and the training and skills required to accomplish them.

How far man’s space exploration goes in the next 50 years remains to be seen, but it’s a safe bet to say that Vermont will still be at the cutting edge of innovation by then. &

Alex Wright is a UK-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]

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