Welcome to the first edition of your Charter Partner's newsletter!  The newsletter content will include information regarding the captive overall, insurance and risk management-related information, Vermont captive regulatory information and news about you and your businesses. We w ould love to share your news, including special anniversaries of years in business, new ventures and other noteworthy information. Please send us news and stories about your organization. Please send this information to Pattie Cowley.   Thank you!

Welcome to the First Edition of the Charter Partner's Quarterly Newsletter!

Safety Culture Increases Performance at Russell Reid

Since 1964, Russell Reid Waste Hauling & Disposal Service Co, Inc. /Mr. John, Inc. have provided non-hazardous wastewater management solutions as well as portable restroom services throughout New Jersey, New York, Pennsylvania and beyond.  Russell Reid has been an owner in the captive since its inception in 2007.  David Dam, Executive Vice President is a Director and Chair of the Finance Committee on the Board of the Cooperative Partnership Insurance Company (CPIC). 

In 2008, the organization was experiencing very strong growth.  One of the goals developed late in the 3rd quarter was to earn a worker's compensation experience modification credit factor in NJ, but ultimately in all states where applicable.  They began their journey by sharing a clear vision of what their organization could look like from a safety standpoint.

After conducting an initial Decision Based Safety Assessment in conjunction with PMA Management Corporation and Charter Partners, Gary Weiner, President, committed Russell Reid to a culture of safety which involved significant financial resources as well as time and commitment of the management team, to implement throughout the entire organization.

They started the journey with a NJ workers compensation experience modification of 1.212.  They also  were experiencing 103 work-related indicates, representing almost $2 million in claims, not including all of the soft costs which included the cost of hiring and training replacement personnel, loss of revenue, employee morale and more.
After several years, their incidents dropped to the 60's, the 50's and for the past several years have remained in the low 30's while revenue and employee counts continued to steadily increase.  Currently, their New Jersey workers compensation experience mod is .721 and in New York it's .890.  Congratulations to the entire Russell Reid organization on your commitment to providing a safe workplace for your employees and for achieving the lowest experience modification for all employers domiciled in New Jersey with the same workers compensation class.  This is truly a significant accomplishment!

Director of Insurance Operations

Happy 90th Anniversary to 
Wilson Oil & Propane!

We would like to extend a "warm" congratulations to David O'Connell and his team on their 90th business anniversary.  

Wilson Oil and Propane is a full-service, family-owned home comfort company that serves the residents of southeastern Pennsylvania.  Their commitment of delivering real value for their customer's fuel dollar by helping them use less fuel with energy-efficient products and home performance evaluations.  They install and service a wide range of products, including boilers, furnaces, duct sealing, generators and air conditioning systems.

David is the President of Wilson and serves as a Director on the CPIC Board.  When asked about why David is in the captive, he responded:  "I like the captive environment because it provides stability in both hard and soft insurance markets. I like the process of having a say in our claims and overall risk management. In addition, I enjoy the community of like-minded business owners and the sharing of ideas that help make our businesses more efficient, safe and profitable."

Below is a link to a recent newsletter from Wilson Oil & Propane which outlines their long history of bein g in business.  


A Few Bad Apples Get You on the IRS Dirty Dozen List

Captives, or more specifically micro-captives, are once again on the IRS dirty dozen list for 2017. 

First, let me quell any concerns, the captives the IRS is reviewing are not related to our CPIC captive. The types of captives that they are specifically focused on are due to alleged misuse of the IRS tax code section 831b. This tax code allows businesses to use a captive in defined size parameters to insure exposures related to their specific businesses. They are still expected to meet the basic requirements to qualify as a captive insurance company. As is often (or at least sometimes) the case, the tax code was created with good intentions and in fact was recently expanded by Congress. The problem is that overzealous estate planners, tax attorneys and some CPA's begin to use the 831b code to create micro-captives to shelter money and assist in multi-generational wealth transfer, rather than covering true insurable exposures.  As an additional measure of scrutiny the IRS also added 831(b) captives to its "listed transactions" late in 2016.  This means that many of those using the tax status and their tax advisors must file additional materials with the IRS, including identifying the tax benefits received from using such a captive.
Captives being on the IRS dirty dozen list has nothing to do with the way CPIC is structured and will have no direct impact. We were created with a specific insurance-focused objective. In fact, CPIC turned away several 831b opportunities that we felt were not qualified candidates as insurance did not appear to be the primary objective.
Sadly, there will be some indirect impact, like creating additional fear and a general black eye to captives that may negatively influence potential captive participants from opting in out of misunderstanding of what the IRS is reviewing. It also comes at a time when captives are growing and expanding to assist businesses cover new and emerging exposures, like cyber coverages, that can truly help their businesses. 

In 2016, the 831b tax code premium limitations were expanded making it a more useful tool, so let's hope the IRS seeks out those extreme abuses, the few bad apples, and continues to support the broad value that captives provide. If you have any direct questions, or when talking to someone about captives and they bring up this IRS perspective, please feel free to call us or send them our way.

Survey Says!

Thank you for participating in the recent survey of captive owners initiated by the CPIC Member Services Committee.  The following is a summary of the results: 
  • 100% of respondents agree the information is understandable and frequent enough.
  • 100% of respondents would like to receive a quarterly newsletter.
  • 57% of respondents are "very satisfied" with risk management and claims handling; 43% are "somewhat satisfied".
  • Top 5 benefits to you and your business overall, in order of importance:
    • Stabilizes cost
    • Sharing best practices
    • Having a voice - control & influence
    • Ability to influence claim outcome
    • Networking opportunities with other business owners
Zero Safety App Update

We created a mobile app to help keep your employees safe.  It took us a few years, but we think we got it right, and it's ready for you.

We were fortunate enough to attract some interested parties along the way.  To that point, we recently partnered with Everest Insurance to form a joint venture to take this risk management tool to the next level.   

We welcome you to check it out!

Upcoming CPIC Events

Annual Member Meeting 
June 15, 2017 2:00 PM 

Annual Board Meeting
The Taconic, Manchester, Vermont
August 6-7, 2017 
Charter Partners USA, Inc. | 610-438-3535 | www.charterpartners.com