Liability capacity shortfall prompted Bright Horizons captive

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July 27, 2022

Liability capacity shortfall prompted Bright Horizons captive

A lack of capacity for specific liability coverages ultimately led to Boston-based childcare company Bright Horizons launching its Vermont-domiciled captive back in 2017.

Speaking in an exclusive interview on GCP #69, Gail Newman, vice president of risk management at the company said: “One of the primary drivers of creating our captive was because we started to realise the challenges with the specific type of liability coverages.”

Newman also said that the lack of liability capacity stemmed from issues relating to well-publicised child abuse cases over the past few years.

“While those situations are somewhat different than the nature of our business, it still had a significant impact on capacity availability,” she explaind.

Newman noted that while it’s not “an easy topic to talk about”, being able to obtain and maintain abuse and molestation coverage, is “what we need to run our business”.

“And also because we have a strong list of clients who contractually require it,” she added.

The company has ultimately been able to sustain various excess limits of coverage because its captive has given it more direct control over the risk.

When discussing the potential for the company to use its captive for cyber and D&O in the as premiums rise, Newman said it’s an ongoing consideration.

She said that the decision to use the traditional insurance market comparative to the captive was a “delicate balance” that the company continually evaluates.

Newman added that although the “markets are challenging and premiums are rising,” importantly, the company is still currently able to transfer the risk. However, Newman said that cost savings are “definitely on the radar”.

She also said internal conversations around the company’s captive have delved into exploring how it can be used as a way to innovate within the business “as we grow and take different paths to deal with current economic challenges”.

“And what I mean by that is, we may be entering into new service lines that are new or unfamiliar to the traditional insurance markets and the industry,” Newman added.

GCP #69: VCIA Preview with Gail Newman, Kevin Mead, Phil Vorreiter and Scott Mildrum

Podcasts

Luke Harrison

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July 26, 2022

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In episode 69 of the Global Captive Podcast, supported by legacy specialists R&Q, Richard Cutcher is joined by several captive professionals attending and speaking at the VCIA annual conference, which returns to Burlington, Vermont on Monday, August 8.

We hear first hear from Gail Newman, Vice President of Risk Management at Bright Horizons, and a VCIA board member, on how her company has utilised a captive for the past five years.

Richard’s fellow panelists for a session on the Economic Landscape and Captive Portfolios – Performa’s Scott Mildrum and Philip Vorreiter, Vice President of Finance at MCIC Vermont LLC – join to preview their presentation.

And Kevin Mead, President of VCIA, provides an update on conference planning, suggests some highlights and what to look forward to.

GCP Short: Improving supply chain sustainability with your captive

Podcasts

Richard Cutcher

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July 25, 2022

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In this GCP Short, produced in collaboration with Zurich Insurance, Richard is joined by four experts to discuss the current disruptions to supply chains, why ESG and sustainability is increasingly entering this discussion, and the current state of the supply chain insurance market. We also go on to address the role captives have to play in this area.

Our guests are:

Andreas Ruof, Head of Proposition Development & Senior Captive Services Specialist at Zurich

Otto Kocsis, Principal for Business Interruption & Resilience, also at Zurich

Udo Kappes, Head of Property, Casualty & Employee Insurances & Reinsurances at
Airbus

And Constantine Limberakis, Senior Director of Product & Solutions Marketing at riskmethods.

Cannabis industry paying 5-10 times more than other insureds – Brayden York

News

Luke Harrison

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July 10, 2022

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Cannabis companies are paying 5-10 times more in premium than a “regular” insured, according to Brayden York, insurance and risk manger at Aurora Cannabis.

Aurora Cannabis is a Canada-headquartered integrated cannabis company which describes itself as a “pioneer in medical cannabis”.

“The Cannabis industry has probably the highest rates amongst any classification of insurance,” York said in an exclusive interview on GCP #68. “I think globally most cannabis companies are paying, I’d say 5-10 times what a regular insured would pay.”

He added that even though the cannabis plant has been around for a long time, it still has “crazy” insurance prices, especially when compared to traditional pharmaceutical companies.

Utilising a captive, he explained, was ultimately an opportunity to save on insurance premiums and initiate a self-funding strategy.

He noted that the company had set up both a single parent captive domiciled in British Columbia, Canada, as well as a segregated cell in Bermuda.

“We’ve initiated both strategies with a captive and a segregated cell to supplement our insurance programs in different ways,” he said. “And that’s both for our P&C insurance, as well as our D&O liability insurance.”

York said the company decided to domicile the pure captive in British Columbia as it is one of the only places in Canada that had captive legislation.

Bermuda has proved a popular destination for corporations to utilise a cell to self-insure D&O, while its legislation allows businesses to write cannabis-related risk if it is federally legally where the business is operation. Cannabis has been legalised at the federal level in Canada.

York said that cyber and liability are lines he is considering insuring through the captive, particularly as liability cover is a particularly “touchy topic” for the cannabis industry as there are often of exclusions around health hazards.

He revealed that he had looked into the formation of a group captive, in order to help establish supplementary coverages, and is also exploring the idea of setting up a third structure to support policy areas where there is “no market coverage”.

GCP #68: Insurwave CEO David Power and Brayden York, of Aurora Cannabis

Podcasts

Luke Harrison

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July 9, 2022

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In episode 68 of the Global Captive Podcast, supported by legacy specialists R&Q, Richard sits down for an extended chat with David Power, CEO of Insurwave, to discuss the development of the platform since its pilot launch as a marine insurance blockchain platform in 2018 with Maersk. Richard and David also discuss the opportunites for captives and insurance buyers to embrace technology more broadly.

Our captive owner interview is with Brayden York, Risk and Insurance Manager at Aurora Cannabis, a Canada-headquartered integrated cannabis company with two active captive structures already in place.

GCP Short: David Provost, Sandy Bigglestone and succession planning in Vermont

Richard Cutcher

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July 5, 2022

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In this GCP Short, produced in collaboration with the State of Vermont, Richard is joined by the outgoing Deputy Commissioner of Captive Insurance in the state, David Provost, and his successor Sandy Bigglestone.

Dave has announced he would be retiring at the end of the summer, and Sandy, who is currently Director of Captive Insurance at the State of Vermont’s Department of Financial Regulation will be taking the reins.

In this 20 minute episode, Dave, Sandy and Richard focus on the topics of succession planning, the direction of captive insurance and Sandy’s own priorities when she takes the reins at the end of the summer.

Kite Realty Group comfortably able to take 85% of losses via its captive

News

Luke Harrison

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June 23, 2022

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Real-estate investment trust Kite Realty Group is comfortably able to take 85% of its losses via its captive according to Theresa Severson, vice president for insurance & risk at the company.

In October 2021, Kite merged with Retail Properties of America (RPAI), which led to the formation of the fifth largest Real Estate Investment Trust (REIT) in the country. She explained that both REITs had separate captives prior to the merger.

RPAI had a reinsurance captive domiciled in Vermont which was fully fronted and took on the first $100,000 of all liability claims.

“On the property side, it only took a million dollars of cat per occurrence and in aggregate,” Severson said in GCP #67. “For the all other perils, it took $150,000 of each loss and eventually we increased that to $250,000.”

Prior to the merger, Kite had 83 shopping centres and a total of 12 million square feet. It also had a Tennessee-domiciled captive.

“Currently we have 185 open air shopping centres with three million square feet, and 40% of that portfolio is based in Florida and Texas”, she added.

She said that her prior insurance programme had “very little” catastrophe exposure but now 40% is in a cat zone.

“We are going to continue with the Vermont-based captive, and we’re in the process of closing down the Tennessee captive,” Severson revealed.

She added that the company transferred exposures that were in the legacy Kite captive into the Vermont captive, and highlighted that the goal at 1.12 renewal is to take a look at the rest of the programme and ultimately combine it.

Severson highlighted that when she was managing the old RPAI portfolio, she had the advantage of having the first $50m of the tower underwritten by the same carrier.

“This really allowed us some stability in what we were purchasing in the market,” she said. “So really, we kept the status quo with regards to what we were putting in the captive.”

GCP #67: Theresa Severson, London & Capital investments update and Jiten Halai

Podcasts

Luke Harrison

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June 22, 2022

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In episode 67 of the Global Captive Podcast, supported by legacy specialists R&Q, Richard is joined by Theresa Severson, Vice President of Insurance & Risk Management at Kite Realty Group in the US. Theresa discusses how she has reviewed and restructured the company’s captive strategy after a recent merger at parent level.

We also have a quarterly investments update from Chris Dalziel and Roger Jones, at Friends of the Podcast London & Capital.

In the second half of the episode, Jiten Halai, Head of Structured Risk Solutions in the UK at AXA XL, joins to discuss alternative risk transfer options for cyber coverage.

GCP Short: How to choose a captive domicile

Podcasts

Richard Cutcher

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June 12, 2022

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In this GCP Short, produced in partnership with the Captive Insurance Companies Association (CICA), Richard is joined by three experienced captive consultants to debate how to choose a captive domicile.

Jason Flaxbeard, of Brown & Brown, Anne Marie Towle, from Hylant, and Gary Osborne, from Risk Partners, discuss what factors go into choosing a domicile for your captive, when that debate should take place, how some of the priorities have changed and the impact of new regulations and legislation.

GCP Short: Establishing a European captive

Podcasts

Richard Cutcher

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June 6, 2022

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In this GCP Short, produced in collaboration with AXA XL, we discuss how companies go about establishing a captive in Europe.

Richard is joined by Marine Charbonnier, Global Programmes and Captives Regional Director for Europe at AXA XL, and making his first appearance on the podcast, Maxime Schons, Managing Director for Europe in Finance & Compliance at Strategic Risk Solutions.

Marine and Max provide an update on European formation activity, the process of establishing a captive, the different players and roles and expectations.