The
Captive Insurance J O U R N A L
1st Quarter 2013
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Page 2 President’s Message
Page 3 2013 Committee Members
Page 4-5 2013 SCCIA Convention: Wild Dunes, Isle of Palms
SCCIA Member Spotlight OrthoForum Insurance Company (a Risk Retention Group) An Interview by Anne Marie Towle, CPA and Senior Captive Consultant with the Willis Global Captive Practice with Glenn Sumner, CEO of OrthoTennessee and OrthoForum Insurance Company board member, Charles May, CEO of Jewett Orthopaedics and OrthoForum Insurance Company board member. Background of the OrthoForum
Page 6 SCCIA’s 2013 Keynote Speaker: Frank Abagnale
The idea for the OrthoForum was spawned in 2000 through conversations initiated by Glenn Sumner, CEO of OrthoTennessee with two other orthopaedic practice administrators. Mr. Sumner was involved with American Association of Orthopaedic Executives (“AAOE”) and was seeking additional avenues to benchmark and compare his orthopaedic practice to other large, physician owned orthopaedic practices across the country. Mr. Sumner contacted several practices in the Midwest and Southeast and invited them to an exchange of relevant information. In 2001, the Asheville Forum was born with nine founding practices. Since that time the OrthoForum has grown to four regional forums including the Amelia Island, Asheville, Reynolds Plantation and Western Forums consisting of 76 practices in almost 30 states. Each regional forum is composed of 15-20 groups and is engaged in the sharing of practice data including revenue and expense by practice and physician, ancillary services statistics, surgery counts, etc. as well as the sharing of pertinent ideas and strategies. The exchange and benchmarking of data provide each
member the ability to grow and learn best practices from other groups in similar settings and with similar approaches. In 2008 the OrthoForum began investigating how it could leverage the size and reputation of the member groups to purchase services and products including durable medical equipment, medical and office supplies and insurance. To pursue these opportunities several task forces were formed including a Group Purchasing Alliance, an Alternative Risk Financing vehicle for medical malpractice insurance and a Political Action effort. The Alternative Risk Financing task force contracted with Willis for the investigation of either a captive or risk retention group for their professional liability. The trust built among the practices over the years provided the ideal platform to commence discussions regarding retaining more of their own risk versus transferring it all to the commercial marketplace. Formation of Captive AMT: Glenn, please describe the motivating factors in the investigation of alternative risk financing for the OrthoForum? continued on page 8
The Captive Insurance Journal First Quarter, 2013
President’s
Message Managing Editor Andi Rawl Design/Graphics Florence Design, Inc. Editorial and Advertising Office PO Box 1763 Columbia, SC 29202 855-CAPTIVE
SOUTH CAROLINA CAPTIVE INSURANCE ASSOCIATION 2012 DIRECTORS & OFFICERS Chairman of the Board Thomas A. Brumgardt Nelson Mullins Riley & Scarborough, LLP President Andrea Bartlett Bartlett Actuarial Group, Ltd. Treasurer/Corporate Secretary Chris Stormer Bauknight Pietras & Stormer, PA Directors Randy Collins Koppers Assurance, Inc. Michael Coulter Aon Insurance Managers (USA) Gavin Foggon Marsh Management Services Inc. Robert Schmid Energy Insurance Services Executive Director Andi Rawl
© Copyright 2013 SC Captive Insurance Association
Welcome to a GREAT year with the SCCIA. 2013 is turning out to be a very exciting year with many new ventures for the SCCIA. First of all I want to welcome our two new board members, Gavin Foggon and Rob Schmid, commend Margie Heggie who is leaving the board for her work in the past two years and thank the remaining board members for their service, Tom Brumgardt, Chris Stormer, and Randy Collins.
The convention in 2013 will be a memorable event. Linda Danna (Marsh) has worked tirelessly with her committee to increase nationwide awareness of the benefits of domiciling a captive in SC. This committee’s efforts include writing an article thatwas published by the Captive Review, producing this newsletter, sponsoring the Reinsurance Seminar in June and working closely with the Conference Committee to advertise our convention this year.
Our membership has become energized and excited about expanding the role of the SCCIA and developing new benefits for members. Many of our committees have doubled in size and the members have made a number of contributions to the success of the domicile and to the association. It would be difficult to recognize all who have contributed, but let me mention a few. First of all kudos to Steve Dyer and Tom Brumgardt from Nelson Mullins and Gwen McGriff at the Department of Insurance for their work on our ICC legislation, Bill #3797. This bill has been approved by the House Labor and Commerce Committee and (at this printing) is now being reviewed by the Senate Banking and Insurance Committee. Our hope is to have it become law before the summer. We also want to thank Annie Wilson and Richard Davis from Capitol Consultants who have been shepherding our bill through the legislature.
Liz Flood (Merrill Lynch) is the Chairperson of our newest committee, the Education Committee. The Education Committee is developing many new avenues to not only increase member benefits but to support the insurance industry. The Reinsurance Seminar will be held in June. An educational webinar is planned for later in the year. The SCCIA is also developing a scholars program with the University of SC where we sponsor students to attend the convention as well as do research for the captive insurance industry.
Many thanks to Bryan Hudson (Bauknight, Pietras and Stormer) for his leadership of the Conference Committee. Our convention will be at a new venue this year, the Isle of Palms. This beachfront property and beautiful golf course is familiar to many vacationers to SC and will add low country flair to our convention. The Conference committee has put together a very creative and knowledge rich program for attendees.
And finally, the Membership Committee (Laura Roemer, Strategic Risk Solutions (SC), LLC) has expanded its membership and is working hard on programs to increase our membership. Members of all of our committees are listed in this newsletter. We are looking forward to a great year for captives in SC. We welcome all who wish to participate in growing our domicile to join the South Carolina Captive Insurance Association.
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The Captive Insurance Journal First Quarter, 2013
2013 Committee Members CONVENTION COMMITTEE: Bryan Hudson, (chair) Bauknight Pietras & Stormer, P.A Kelly Bourne Aon Risk Solutions Michele Calderon Johns IU Health Risk Retention Group RRG Ronnie Dennis Dennis Johnson Folline King Group/ Merrill Lynch Amy Evans Western Litigation Chappell Halstead Performa Limited (US), LLC Brian Johnson Bartlett Actuarial Group, Ltd. Ron Krebs South Carolina Department of Insurance Jason McMillan Marsh Board Liason: Gavin Foggon Marsh Management Services, Inc.
EDUCATION COMMITTEE: Liz Flood, Chair Dennis Johnson Folline King Group/ Merrill Lynch
Kirk Mooneyham Wilmington Trust
Derek Martisus Performa Limited (US), LLC
Sherry Ricker Willis VT/SC
Faith McDavid Marsh Management Services, Inc.
Jeff Tkacz Johnson Lambert – SC
Phillip Padgett Johnson Lambert & Co.
Board Liason: Mike Coulter, ARM Aon Risk Solutions
Julia Ridley Jarrard, Nowell & Russell, LLC
GOVERNMENTAL AFFAIRS COMMITTEE:
William Russell Jarrard, Nowell & Russell, LLC
Steve Dyer, Chair Nelson Mullins Riley & Scarborough, LLP
Arthur Salvadori Saslow Lufkin & Buggy, LLP
Bill Bartlett Bartlett Actuarial Group
Anne Marie Towle Willis Management
Adam Forstot USA Risk Group of South Carolina
Board Liason: Chris Stormer, CPA Bauknight Pietras & Stormer, PA
Chris Gorski Kane (USA), Inc.
MEMBERSHIP COMMITTEE:
Mollie McTeer Johnson Lambert & Co. Robert Schmid Energy Insurance Services Board Liason: Tom Brumgardt Nelson Mullins Riley & Scarborough, LLP
Laura Roemer, Chair Strategic Risk Solutions (SC), LLC Brett Belt Marsh Management Services, Inc. Pamela Green USA Risk Group Miles J. Hopkins Kane Group
MARKETING COMMITTEE:
Kim Bloomer USA Risk – SC
Linda Danna, Chair Marsh Management Services, Inc.
Sarah Z. Stubbs Johnson Lambert & Co. LLP
Cory Brown Total Captive Solutions
Jean Adams AGI Services
Matthew Watson Advantage Insurance Management (USA), LLC
Vy Doan Bartlett Actuarial Group
Virginia Adrihan, CPA, ACI Marsh Management Services, Inc.
Ben Glenn Bauknight, Pietras & Stormer, PA
Thomas Anderson Wells Fargo Bank, N.A.
Ron Krebs SC Department of Insurance
Tonia Epps Marsh Management Services, Inc. 3
Committee Liaison: Andrea Bartlett Bartlett Actuarial Group, Ltd.
The Captive Insurance Journal First Quarter, 2013
South Carolina:
A Captivating View DONATE
NOW
As part of the SCCIA’s legislative efforts moving forward, CIPAC (Captive Insurance Political Action Committee) was formed in order to be collectively represented as an industry as it relates to legislative matters. For more information and Pledge Form go to our website www.sccia.org or contact the Association Office at 1-855-CAPTIVE.
Donate online at www.sccia.org.
South Carolina: A Captivating View. No truer words can be said about the beautiful landscapes we have in South Carolina. From the mountains to the ocean, South Carolina’s views will take your breath away. The 2013 SCCIA Convention is changing its view and moving to Wild Dunes Resort on the beautiful Isle of Palms. The SCCIA convention committee put together an outstanding line up of sessions and speakers for our attendees. The keynote speaker for Tuesday’s lunch is Frank Abganale. Mr. Abganale was the main character of the movie Catch Me if You Can, and currently runs Abagnale & Associates, a financial fraud consulting company. New to the convention this year is a Monday Night Welcome Dinner out at the Grande Pavilion sponsored by Johnson Lambert, LLP and Kane (USA), Inc. Attendees will be able to take in the “Captivating View” of the Atlantic Ocean from the Grande Pavilion while we enjoy a Lowcountry Boil and other southern favorites. In addition to the Monday Night dinner, we have added breakout sessions on Wednesday morning and to close the conference, an exciting Medical Malpractice Mock Trial. For more information and to register for the convention, please visit www.sccia.org. MONDAY, SEPTEMBER 16, 2013 8:30 a.m.
Conference Golf Tournament
8:00 a.m. - 4:00 p.m.
Captive Academy
3:30 p.m.
Conference Registration
4:30 p.m.
SCCIA Annual Membership Meeting
6:30 - 8:00 p.m.
Welcome Dinner
Harbor Course
Grande Pavilion
TUESDAY, SEPTEMBER 17, 2013 7:15 - 8:00 a.m.
Networking Breakfast
8:00 - 8:30 a.m.
Welcome Remarks
8:30 - 9:30 a.m.
General Session 1 Domicile Showcase/ Regulatory Update
9:00 a.m. - 1:00 p.m.
Spouses Program: Boat Trip to Capers Island
9:30 - 10:30 a.m.
General Session 2 Showcase of Pure Captive
10:30 - 10:45 a.m.
Morning Networking Break
10:45 - 11:45 a.m.
General Session 3 Insurance Market Outlook
11:45 a.m. - 1:30 p.m.
Luncheon & Keynote Presentation Keynote Speaker: Frank Abagnale
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Palmetto Hall
The Captive Insurance Journal First Quarter, 2013
South Carolina:
A Captivating View 1:30 - 2:30 p.m.
(continued)
BREAKOUT SESSIONS Breakout Session 1 Selection and Monitoring Service Providers Breakout Session 2 Navigating Reinsurance Options
2:30 - 2:45 p.m.
Afternoon Networking Break
2:45 - 3:45 p.m.
BREAKOUT SESSIONS Breakout Session 3 Enterprise Risk Management (Focusing on 831B Micro-Captives) Breakout Session 4 Generational Differences in the Workforce
3:45 - 4:00 p.m.
Afternoon Networking Break
4:00 - 5:00 p.m.
ROUNDTABLES Roundtable 1 - Pure Captives Roundtable 2 - Risk Retention Groups Roundtable 3 - Service Providers Roundtable 4 - Fortune 500
5:00 - 6:30 p.m.
Networking Reception
6:30 - 9:30 p.m.
Bus Service to downtown Charleston
WEDNESDAY, SEPTEMBER 18, 2013 7:15 - 8:00 a.m.
Networking Breakfast
8:00 - 9:00 a.m.
Breakout Session 1 What in the Dickens? Investing in a Time of Great Expectations, Rotations and Liquidity Breakout Session 2 Tailoring Your Policy to Manage Risks
9:00 - 10:00 a.m.
Breakout Session 3 Demonstrating Captive Value Breakout Session 4 Case Study on Exit Strategies
10:00 - 10:30 a.m.
Morning Networking Break
10:30 - 11:45 a.m.
General Session 1 Medical Malpractice Mock Trial
11:45 a.m. - 12:00 p.m.
Closing Remarks
12:00 p.m.
Conference Concludes
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The Captive Insurance Journal First Quarter, 2013
Frank Abagnale Acclaimed Subject of the Book, Movie, and Broadway Play Catch Me If You Can Between the ages of 16 and 21, he successfully posed as an airline pilot, an attorney, a college professor, and a pediatrician, in addition to cashing $2.5 million in fraudulent checks in every state and 26 foreign countries. Apprehended by the French police when he was 21 years old, he served time in the French, Swedish, and US prison systems. After five years he was released on the condition that he would help the federal government, without remuneration, by teaching and assisting federal law enforcement agencies.
Frank W. Abagnale
Frank W. Abagnale is one of the world’s most respected authorities on forgery, embezzlement, and secure documents. For over 30 years he has worked with, advised, and consulted with hundreds of financial institutions, corporations, and government agencies around the world. Mr. Abagnale’s rare blend of knowledge and expertise began more than 40 years ago when he was known as one of the world’s most famous con men. This was depicted most graphically in his best-selling book, Catch Me If You Can, a film of which was also made, directed by Steven Spielberg with Leonardo DiCaprio and Tom Hanks. The Tony-Award winning musical, Catch Me if You Can, directed by multiple award winner Jack O' Brien, opened on Broadway at the Neil Simon Theatre in April 2011.
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Mr. Abagnale has now been associated with the FBI for over 30 years. More than 14,000 financial institutions, corporations, and law enforcement agencies use his fraud prevention programs. In 1998 he was selected as a distinguished member of “Pinnacle 400” by CNN Financial News – a select group of 400 people chosen on the basis of great accomplishment and success in their fields. In 2004 Mr. Abagnale was selected as the spokesperson for the National Association of Insurance Commissioners (NAIC) and the National Cyber Security Alliance (NCSA). He has also written numerous articles and books including The Art of the Steal, The Real U Guide to Identity Theft, and Stealing Your Life.
“Abagnale's lecture may be the best one-man show you will ever see.” —Tom Hanks
The Captive Insurance Journal First Quarter, 2013
About SCCIA The South Carolina Captive Insurance Association exists to enhance the captive industry within South Carolina and promote South Carolina as the leading domicile within the United States.
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The Captive Insurance Journal First Quarter, 2013
OrthoForum
(continued from page 1)
GS: As the Forum grew in the early 2000’s, most of our practices had experienced both hard and soft markets. They were asking how the OrthoForum members could stabilize their professional liability premiums for their physicians and ancillary staff and take control of this major cost item. It was felt that the same basis for sharing operational data could be extended to risk management allowing the member groups to wield collective purchasing power in the insurance marketplace versus each individual practice buying coverage on its own. AMT: Charles, would you describe the process and timeframe involved in forming OrthoForum Insurance Company? CM: We engaged Willis at the very beginning for a Phase I – initial indications review, which would provide clarity on whether it would make sense to move to a formal feasibility study for the OrthoForum practices involved. In 2009 -2010 Willis initially reviewed 20 of the 65 existing members. As a result of the findings, we found many practices were continuing to pay the same or slightly higher premiums with claims histories that showed little to no activity. The outcomes indicated it made sense to engage in a formal feasibility study with additional actuarial and legal work to identify an alternative structure to commercial insurance to retain more risk for the practices.
In early 2011the OrthoForum engaged Willis to conduct a formal feasibility study. During that time data were collected from 38 of 70 practices and an analysis was completed to develop an alternative structure with the risk retention group ultimately being selected. With practices in almost 30 states, the risk retention group provided the best structure to write the professional liability insurance in multiple states. The study which was completed in 2011concluded that there should be significant benefit for the OrthoForum to form a risk retention group to aid in the risk sharing of data, benchmarking and providing proactive risk management measures. In addition the smoothing of premiums could be achieved, and, if the historical experience continued with little to zero claims, the financial benefit to the practices could be advantageous. In late 2011, 14 of the 38 practices who participated in the study decided to proceed and form a Risk Retention Group. OrthoForum Insurance Company was licensed in April 2012. AMT: Glenn, what was the process which led you to form the RRG in South Carolina? GS: During the feasibility study, we investigated a wide variety of structures and domiciles. We quickly were able to narrow down the structure to an RRG. Once we had that structure identified, our next focus was to determine the domicile. Willis aided us in 8
coordinating meetings with several domicile regulators to discuss the group dynamics and the motivation for assembling an RRG for the professional liability exposures. Out of the states that we interviewed and visited, all were very knowledgeable and comparable from a cost perspective, but South Carolina seemed keenly interested in our organization and the potential for growth the large number of Forum practices presented. Our meetings with Jeff Kehler and Ron Krebs from the South Carolina Department of Insurance were very positive and they were both welcoming and receptive to the business needs of our RRG. AMT: Charles, now that you are approaching the one year anniversary of your license for OrthoForum Insurance Company in South Carolina, how would you rate your experience from a regulatory and ease of doing business in South Carolina? CM: We have found the South Carolina DOI to be extremely helpful and willing to work with us regarding the regulatory requirements for the OrthoForum Insurance Company. We are looking forward to a long term relationship with the DOI.
Special Thanks to Anne Marie Towle, Willis Global Captive Practice; Glenn Sumner & Charles May of OrthoForum Insurance Company.