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February 5, 2024 • Vol. 102 No. 2

Contents News & Markets

Special Report

Idea Exchange

10 Largest Auto Insurers Each Raised Rates by Double Digits in 2023

Spotlight: Majority of Underwriters Predict Cyber Risks Grow ‘Greatly’ in 2024: Survey

3 Areas for Agents to Focus Growth Efforts in 2024 As the Hard Market Continues

Spotlight: Cyber Threats Top Global Business Risk Concern for 2024: Allianz

California’s Homeowners Insurance Shift: Population, Inflation and Admitted Insurer Exits

8 8

Another View: Yes, P/C Industry Underwriting Profit Will Be Back in ’24

USGS: Nearly 75% of US Could Experience A Damaging Earthquake

Travelers’ Q4 Net Income Skyrockets as Personal Lines Reverses Underwriting Loss

12 No Sugarcoating:

Special Report: What’s to Come in 2024: Hard Market, AI Expansion, More Catastrophes, Network Consolidation

Special Report: 2023 Agents of the Year

Availability Before Affordability, California Regulator Says

40 42 45

Minding Your Business: Performing Your Agency Report Card

The Marketing Connection: The Growing Influence of LinkedIn on the Insurance Industry

Closing Quote: The Time to Modernize Building Codes Is Now

Reinsurers’ Casualty Appetites Varied, but Capacity Was ‘Ample’ During 1/1 Renewals

Southwest Wins Appeal in Cyber Excess Coverage Dispute With Liberty

Secondary Perils Drive Global Insured Losses to Estimated $123B in 2023: Gallagher Re

Survey: Connectivity Top of Mind for Agents

Departments 6 Opening Note 4 | INSURANCE JOURNAL | FEBRUARY 5, 2024

10 Figures

11 Declarations

16 Business Moves

18 People

27 My New Markets

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Opening Note Write the Editor: awells@insurancejournal.com

Chairman of the Board Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Hard Market Prices Continue

hile not news to independent agents, commercial lines renewal rates rose again in the fourth quarter of 2023 — another sign that the hard market is here to stay — at least through 2024. According to the Ivans Index, the average premium renewal rate increased year-over year for all major commercial lines except workers’ compensation, but every line of business averaged rate increases at renewal during the last three months of 2023, compared to the prior quarter. The monthly index provided by insurance software company Ivans, showed four lines of business — business owner’s policy (BOP), general liability, commercial property, and umbrella — reached year-end highs on renewal rate through the last quarter 2023. Workers’ compensation reached its highest rate, above zero, in November, Ivans added. “As we begin 2024, we’ll be watching the data to see how the hard market trends of 2023 carry into this year and understand the macroeconomic factors impact on renewals and where markets are investing to create the greatest return,” said Brad Boyer, chief product officer at Ivans, in a statement. Commercial property led all lines of business with an average premium renewal rate increase of 10.34% during Q4 2023 compared to nearly 10.1% in Q3 2023. In December, renewals were up 10.67% — the highest monthly average rate renewal movement of the year for the line. BOP and general liability also saw the highest monthly rate renewal increases for 2023 in December, up 9.72% and 6.16%, respectively. BOP premium renewal rate increased an average of 9.12% in Q4 2023 versus 7.74% in Q3 2023. For general liability, rates were up in Q4 5.83% — slightly over the average increase of 5.43% the prior quarter. Umbrella renewal rate continued to rise in Q4 by an average of 6.39% versus 5.29% in Q3 2023. For commercial auto, Q4 2023 average premium renewal rate averaged 8.79%. The average increase was just over 7% the quarter before. In workers’ comp, average premium renewals were up for the first time all year in November at 0.15%. Premium renewal rate change in workers’ comp averaged -0.64%, up from Q3 2023 at -0.99%. Personal lines customers are also feeling the effects of the hard market. According to MarketScout, the composite rate increase for personal lines insurance across the U.S. was plus 4.75% for the fourth quarter and plus 4.61% when examining the entirety of 2023. The largest rate increases are found in the high value homeowners sector. “We continue to see the largest composite rate increases in homes over $1,000,000 in Coverage A value, most likely because this includes all of the large homes in catastrophe-exposed locations,” Richard Kerr, CEO of Novatae Risk Group, said in a press release. “While the composite rate for large homes was 5.9% for 2023, some homeowners in tough areas or with prior losses are experiencing rate increases as high as 50%.” MarketScout shared that homes under $1 million in Coverage A value averaged a rate increase of 4.32% for 2023. Auto insurance and personal articles were up 5% and 3%, respectively. V.P. of Content

‘As we begin 2024, we’ll be watching the data to see how the hard market trends of 2023 carry into this year ...’

Andrea Wells

6 | INSURANCE JOURNAL | FEBRUARY 5, 2024

Chief Financial Officer Terry Freeburg | tfreeburg@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

V.P. of Content Andrea Wells | awells@insurancejournal.com Executive Editor Emeritus Andrew Simpson | asimpson@wellsmedia.com National Editor Chad Hemenway | chemenway@insurancejournal.com Southeast Editor William Rabb | wrabb@insurancejournal.com South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor L.S. Howard | lhoward@insurancejournal.com Content Editor Allen Laman | alaman@wellsmedia.com Assistant Editor Jahna Jacobson | jjacobson@insurancejournal.com Copy Editor Stephanie Jones | sjones@insurancejournal.com Columnists & Contributors Contributors: Mark Berven, Elizabeth Blosfield, Mikhail Gorshunov, Susanne Sclafane Columnists: Tony Caldwell, Kristen Nevins, Mary Newgard, Catherine Oak

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez | rvaldez@insurancejournal.com Kelly DeLaMora | kdelamora@wellsmedia.com South Central Sales Mindy Trammell | mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA, CT) Howard Simkin | hsimkin@insurancejournal.com Midwest Sales Lisa Whalen | (800) 897-9965 x180 East Sales (NY, PA and CT only) Dave Molchan | (800) 897-9965 x145 Advertising Coordinator Erin Burns | eburns@insurancejournal.com Insurance Markets Manager Kristine Honey | khoney@insurancejournal.com Sr. Sales & Marketing Coordinator Laura Roy | lroy@insurancejournal.com Marketing Administrator Alberto Vazquez | avazquez@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

V.P. of Design Guy Boccia | gboccia@insurancejournal.com Web Team Lead Josh Whitlow | jwhitlow@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Jason Chipp | jchipp@wellsmedia.com Digital Content Manager Ashley Cochrane | acochrane@insurancejournal.com Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com

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News & Markets 10 Largest Auto Insurers Each Raised Rates by Double Digits in 2023 By Chad Hemenway

ccording to S&P Global Market Intelligence’s RateWatch, Farmers Insurance instituted double-digit rate increases in 43 states in 2023 for a weighted average rate increase of 17.6% — and its private-auto insurance peers in the U.S. did the same. All 10 of the top auto insurers in the U.S. raised rates double digits in 2023, with all but two — GEICO and Allstate — ending the year with higher rate increases than the prior year. The duo were among insurers that raised auto rates the most in 2022. American Family was very close behind Farmers when it came to rate increases in 2023, with 17.5%. USAA hiked auto rate 16.9%, with Nationwide, Liberty Mutual and State Farm also increasing rates at or above 16%, according to S&P GMI. U.S. auto insurers had a tough time in 2023 as rate increases failed to keep

up with jumps in claim frequency and severity. A previous report from S&P GMI observed that increases in severe auto crashes have resulted in a rise in litigated claims, and severe weather and a surge in vehicle thefts resulted in higher losses in comprehensive coverage. 2023 was the second year in a row that nationwide rate changes were above an average of 10%, pushed by increases above that mark in 43 states and the District of Columbia. The nationwide rate hike for 2023 averaged 14% after an average increase of 11.4% for the U.S. in 2022.

S&P GMI found that Nevada had the largest rate increase in 2023, at 28.3%, followed by Minnesota and Washington at nearly 20%. Hawaii, North Carolina and Colorado each saw increases of less than 5% for the year.

Another View: Yes, P/C Industry Underwriting Profit Will Be Back in ’24

ot all analysts think an underwriting profit is out of reach for 2024. While a recent forecast from Fitch Ratings puts the 2024 combined ratio above 100, a report by Swiss Re Institute projects both 2024 and 2025 to have a combined ratio of 98.5 for the U.S. property/ casualty industry. Like analysts at Fitch, economists from Swiss Re Institute estimate a 2023 combined ratio of roughly 103. But not only do the Swiss Re economists believe 2024’s combined ratio will come in 1.5 points under breakeven, they also forecast a return-on-equity for the U.S. P/C industry of 9.5% in 2024 and 10% in 2025, according to Swiss Re Institute’s U.S. P/C Outlook report. In contrast, Fitch expects the industry 2024 return-on-surplus to come in at about 5% — below the longterm historical average of 7.5%. The Swiss Re Institute outlook report reviewed key financial measures through the first nine months of 2023 and noted 8 | INSURANCE JOURNAL | FEBRUARY 5, 2024

that industry profitability had favorable momentum. “In the third quarter, net premiums earned increased 9% while net claims incurred rose only 6%. We expect this differential to persist in 2024,” the report says. What will not persist, according to the report, is the gap between personal and commercial lines loss ratio results. While the industry direct personal lines loss ratio through nine months in 2023 (78.2) was nearly 21 points above the comparable commercial lines loss ratio (57.3), “personal lines premiums are growing faster and easing economic inflation primarily benefits personal lines claims costs.” At the same time, social inflation continues to impact commercial lines, the report notes. “We see a risk that social inflation could negatively impact industry ROE by weakening favorable reserves development,” the report says, noting that reserve releases during the first nine months of 2023 only shaved 0.7 points off the combined ratio.

The 0.7 point figure is “the weakest since 2004,” the report says. The Swiss Re Institute report includes a table with line-by-line direct premiums for the first nine months of 2023, yearover-year direct premium growth, direct loss ratios and loss ratio changes. The chart shows that for all commercial lines taken together, premiums grew 6.6% and personal lines premiums grew 13.4%. The Swiss Re economists are forecasting 7% growth in direct premiums across all lines in 2024, and upward revision from a prior estimate of 5.5%. They cited momentum in personal auto for the change. Looking ahead to 2025, they forecast that premium growth will drop to 4.5%. The report also discusses the impacts of economic disinflation on claims costs and higher investment yields on investment income. INSURANCEJOURNAL.COM

USGS: Nearly 75% of US Could Experience A Damaging Earthquake

early 75% of the U.S. could experience damaging earthquake shaking, a recent U.S. Geological Survey report shows. A USGS-led team of more than 50 scientists and engineers in the latest USGS National Seismic Hazard Model created a color-coded map that pinpoints where damaging earthquakes are most likely to occur based on insights from seismic studies, historical geologic data and the latest data-collection technologies. The NSHM update, which was requested by Congress, was created as a tool to help engineers and others mitigate how earthquakes affect the most vulnerable communities by showing likely earthquake locations and how much shaking they might produce. The update identifies nearly 500 additional faults

that could produce a damaging quake. The latest iteration, the first 50-state comprehensive assessment, was updated from previous versions published in 2018 (conterminous U.S.), 2007 (Alaska) and 1998 (Hawaii). Changes in the new model show the possibility of more damaging earthquakes along the central and northeastern Atlantic Coastal corridor, including in the cities of Washington D.C., Philadelphia, New York and Boston. In addition, there is a chance for greater shaking in the seismically active regions of California and Alaska. The new model also characterizes Hawaii as having

greater potential for shaking because of observations from recent volcanic eruptions and seismic unrest on the islands. Key findings from the updated seismic hazard model include: • Nearly 75% of the U.S. could experience potentially damaging earthquakes and intense ground shaking, putting hundreds of millions of people at risk. • 37 U.S. states have experienced earthquakes exceeding magnitude 5 during the last 200 years, highlighting a long history of seismic activity across the country. The model will inform the future of building and structural design, offering critical insights for architects, engineers and policymakers on how structures are planned and constructed across the U.S. The full findings of the scientific assessment were published in the journal Earthquake Spectra.

Travelers’ Q4 Net Income Skyrockets as Personal Lines Reverses Underwriting Loss

et income at The Travelers Cos. for the last quarter of 2023 about doubled compared to the same time in 2022, to $1.6 billion on lower catastrophe losses and a return to profitable results in the personal insurance segment. The $1.6 billion net income for fourth quarter 2023 was compared to $819 million during the same period the prior year. Catastrophes net of reinsurance for Q4 2023 was $125 million compared to $459 million in 2022. In personal lines, Travelers returned to an INSURANCEJOURNAL.COM

underwriting gain of $499 million in the fourth quarter 2023 compared to a loss of $209 million in Q4 2022. The quarterly catastrophe losses in the segment were $79 million compared to $325 million in 2022. Segment income was $520 million compared to a loss of $61 million in Q4 2022. The combined ratio improved to 86.8 from 105.3 the prior year. Overall, Travelers recorded a combined ratio of 85.8 in Q4 2023 compared to 94.5 in Q4 2022. In the business insurance segment, the combined ratio improved three points to 86.5. Consolidated net premiums grew by 13% to nearly $10 billion during the final three

months of 2023. For the full year, net income increased to about $3 billion from $2.8 billion a year ago, but underwriting income was down $370 million to $966 million. The combined ratio for 2023 was 97 compared to 95.6 in 2022. Work still needs to be done in returning underwriting income in personal lines to the black. The segment finished 2023 with an underwriting loss of $817 million compared to a loss of $738 million the year prior. The personal lines combined ratio for the year was 104.8, with an income loss of $128 million. The 2023 combined ratio was nearly identical to that of 2022. FEBRUARY 5, 2024 INSURANCE JOURNAL | 9

Figures

$16 Million

Kansas Insurance Commissioner Vicki Schmidt said the Kansas Insurance Department recovered more than $16 million for Kansans in 2023, the largest single-year recovery in the department’s history. The KID recovered a total of $7.6 million in the previous year. Funds considered “recovered” are calculated when department staff assists individuals in need of support during their insurance claims process.

$1 Million

17.6% The weighted average rate increase for private auto insurance instituted by Farmers Insurance in 43 states in 2023, according to S&P Global Market Intelligence’s RateWatch. All 10 of the top auto insurers in the U.S. raised rates by double digits in 2023, S&P found. All but two — GEICO and Allstate — ended the year with higher rate increases than the prior year. GEICO and Allstate were among insurers that raised auto rates the most in 2022.

10 | INSURANCE JOURNAL | FEBRUARY 5, 2024

The policy limit on homes eligible to be insured by Florida’s statebacked Citizens Property Insurance Corp. would be increased from $700,000 to $1 million under a bill approved by the Florida Senate’s Banking and Insurance Committee. The bill, sponsored by state Sen. Ed Hooper, R-Palm Harbor, would do away with the glidepath, which has limited Citizens’ premium increases to no more than 15% per year, for homes and condominium units in that value range. It also would place a surcharge on the policies of $2,500 or 25% of the premium and require actuarily sound rates.

2.15 The number of fire departments per 100,000 people in California, according to a report commissioned by firecashbuyers.com, which shows that California is tied with Florida for the dubious honor of being the state with the fewest fire departments. Nevada (2.8) ranked second and Arizona (3.3) ranked third, according to the report. North Dakota (41.9) had the most fire departments in U.S. per 100,000 people, the report showed. INSURANCEJOURNAL.COM

Declarations

Natural Catastrophe Challenges

Grubhub Settlement

North Dakota Regulation

“We continue to witness an increase in the severity and high-impact frequency of natural catastrophe events. These effects bring multifaceted and complex challenges to the re/insurance industry, as the importance of blending today’s view of risk with the anticipated downstream implications of tomorrow grows more critical.” — Said Chief Science Officer Steve Bowen in a statement, after Gallagher Re’s release of its annual Natural Catastrophe and Climate Report. The report showed that non-peak (secondary) perils and record-setting weather and climate events drove global insured losses from natural catastrophes to an estimated $123 billion in 2023, the fourth consecutive year to exceed $100 billion.

“Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry.” — Massachusetts Attorney General Andrea Campbell said, announcing a $3.5 million settlement with the online food delivery service platform that resolves a 2021 lawsuit brought by Campbell alleging Grubhub illegally overcharged fees to Massachusetts restaurants in violation of a state fee cap put in place during the COVID-19 public health emergency. Under the terms of the settlement, Grubhub will pay a combined total of over $3.5 million to impacted restaurants, Campbell said. Grubhub will also pay $125,000 to the state.

“Insurance regulation is fundamentally a state-driven process, and I am committed to ensuring North Dakotans’ perspectives are heard and valued at the legislature and on the national stage. … Despite the increasing threat of federal oversight, it is crucial to continue the work of being a champion of our state-based regulatory framework and safeguard the interests of our citizens.” — North Dakota Insurance Commissioner Jon Godfread said in a statement announcing he intends to run for re-election in 2024. Godfread, a Republican, is seeking his third term in office. He was elected commissioner in 2016, winning 64% of the vote. He ran unopposed in 2020.

Car-Attacking Dogs

Protecting Artists’ Voices

Racial Profiling

“We have never seen something like this — dogs attacking cars and causing damage.” — Commented Gaby Fakhoury, sales manager at G Motors, a Houston used car dealership where a pair of stray dogs were caught on video causing more than a quarter-million dollars’ worth of damage to vehicles on the dealership’s lot. The dogs were captured on surveillance video scratching the paint and tearing the bumpers off of vehicles. They caused an estimated $350,000 in damage.

INSURANCEJOURNAL.COM

“Tennessee will be the first state in the country to protect artists’ voices with this legislation. … And we hope it will be a blueprint for the country.” — Said Tennessee Gov. Bill Lee, unveiling new legislation designed to protect songwriters, performers and other music industry professionals against the potential dangers of artificial intelligence. The legislation comes as states across the country and federal lawmakers wrestle with the challenge of curbing the dangers of AI.

“We must now turn to the hard work of ending profiling by bringing all the stakeholders to the table to ascertain and change the policies and the practices that enable it.” — Said Andrea Guerrero, co-chairperson of California’s Racial and Identity Profiling Advisory Board and executive director of Alliance San Diego, commenting on a report compiled by the advisory board, showing that Black people accounted for nearly 13% of traffic stops in California in 2022, far above their 5% share of the state’s population. In a statement Guerrero said the “scale of data that California is collecting allows us to say definitively that profiling exists, it is a pervasive pattern across the state.” The report for the first time included data from all law enforcement agencies in the state. FEBRUARY 5, 2024 INSURANCE JOURNAL | 11

News & Markets No Sugarcoating:

Availability Before Affordability, California Regulator Says

By Susanne Sclafane

f the old adage “As California goes, so goes the nation” is true, then 2024 will be another year of industry retooling as insurers and regulators set a path for the future of the U.S. P/C property insurance market. Homeowners in the nation’s most populous state will likely be waiting until 2025 to start seeing rate relief as regulatory modernization takes shape, California 12 | INSURANCE JOURNAL | FEBRUARY 5, 2024

Insurance Commissioner Ricardo Lara told state lawmakers at an Assembly Insurance Committee hearing in mid-December, reiterating a December 2024 target date for completing the regulatory reforms set forth in the department’s “Sustainable Insurance Strategy,” announced in September 2023. “I’m not going to lie. It’s going to still be expensive,” Lara told Assemblymember Avelino Valencia, D-Anaheim, one of several lawmakers concerned with what he

should tell constituents in wildfire-prone areas of the state facing skyrocketing insurance property insurance premiums. “What is to be expected in this transition? In your assessment, do you think that the rates will increase? Do you think the situation will worsen moving forward? And if so, have we discussed or planned any potential softening for consumers — payment plan systems or a tiered implementation of these new rates?” Valencia asked Lara directly after the commissioner INSURANCEJOURNAL.COM

outlined plans to have insurers increase market share in wildfire-distressed areas and depopulate the FAIR plan in exchange for the ability to include reinsurance costs and indications from catastrophe models in insurance pricing. Lara responded: “We’re never going to get to affordability, Assemblymember, if we don’t have availability. If insurance companies keep exiting the market or contracting their footprint, we’re never going to get to affordability. The first action of this plan is to get insurers to write back — to write in these communities themselves. “It’s going to be tough, I want to say, for the next couple of months. But hopefully you’re going to start seeing the market start stabilizing itself. I know it’s not what you want to hear, but I also don’t want to sugarcoat that. We are living in unprecedented times,” Lara said. Offering some reasons for optimism, the commissioner stated that “the signals” CDI is sending to insurers about its understanding of the need for “massive changes” and about putting those changes on the 2024 agenda are already having positive impacts. They are spurring “changes in the

California Insurance Commissioner Ricardo Lara INSURANCEJOURNAL.COM

outlook of insurance companies looking at us again.” He added: “You’re going to see next year, hopefully some balancing out of the market,” and praised CDI staff for opening up a dialogue with insurers — an activity that he said has not happened in the past. “We continue to be vilified because we’re actually having conversations with the entity that we regulate, which makes no sense to me. We should be talking to the entity that we regulate,” he asserted. “What do we tell our constituents?” Assemblymember Jim Wood, D-Healdsburg, asked Lara at a later point during the hearing. “People that are being canceled now, being forced onto the FAIR plan … They want to know when are we potentially going to see some relief — a range, a period. Is it a year? Two years? Is it five years, because they have to plan their lives out.” Lara used the word “hopeful” multiple times in responding about milestones possible in 2024 and 2025. “Hopefully by the beginning of next year, some of these insurance companies, hopefully, are starting to write new business as we’re expediting and really working hard to finish [reviewing] rate applications,” Lara said, referring to a backlog of 95 rate and rule filings that CDI needs to work through apart from working on the modernization effort. He also reiterated his idea that allowing California-only reinsurance costs and catastrophic model results to boost rate indications is “already

sending the signal that California is going to modernize, finally,” to insurers poised to expand or return to write business they have been shunning in 2023. “Nobody wants to leave California; we’re the largest market. But it’s come to the point that because we’re so archaic with these rules,” insurers were forced to exit. Staying put was an option “back in the day, when there was one catastrophe … Now, [there are] multiple catastrophes, particularly since 2017. And then you have an increasing amount of reinsurance to cover the catastrophic losses happening around the world,” Lara said. Coming back to address the question, he said, “I’d tell your constituents that hopefully we start seeing some relief by next year as we look at these rates. And [then] I would say by hopefully 2025 we start seeing some sort of the market fixing itself. That’s definitely my hope.” Wood worried aloud that things will get worse for his constituents before they get better. “I will tell you that my biggest fear is that we have another 2017 or 2018 that unravels this agreement,” Lara said, referring to years of significant wildfire losses. Still, putting that prospect aside, he added, “I don’t think it’s going to get worse,” suggesting that insurance businesses, like homeowners, “need certainty. They need to know that we’re moving in the right direction,” he said. Now, they have some sense of that direction. “Even the conversations we’re having have improved our opportunity to be able to keep and maintain insurance growing. You can ask the insurance companies yourselves,” he suggested.

Why Is This Taking So Long?

Echoing a repeated refrain from insurers, who routinely list extensive delays in

continued on page 14 FEBRUARY 5, 2024 INSURANCE JOURNAL | 13

News & Markets continued from page 13

getting rate filings approved in California among the reasons they’re abandoning distressed parts of the state’s homeowners market, 2023 Assembly Insurance Committee Vice Chair Bill Essayli, R-Corona, asked Lara why it would take so long to get all the components of the Sustainable Insurance Strategy completed. “I agree with the strategy. It is just more on the timeline,” Essayli said. “Just so I understand better why you said you hope to have these elements in place by December of 2024, can you just walk me through why does it take that long? Are we talking about issuing rules? Regulations?” Lara pointed to a talent shortage in the department and explained the need for three branches of the department — a legal team, rate regulation team and a climate team — to be involved with different facets of the modernization process before everything comes together. “We’ve had record amounts of folks, since the pandemic, retire,” Lara said, thanking the lawmakers for giving CDI the budget to hire analysts and actuaries needed to plow through 95 outstanding filings. He also walked lawmakers through the steps involved with making reforms a reality. “I recognize that time is of the essence … but this is not something that can happen overnight,” referring specifically to the intricacies of incorporating cat model output into rates. “The process is really a complicated one, as I’m quickly finding out, and involves multiple branches of my department to work together on a solution,” he said, reporting that the CDI legal team needs to examine how the introduction of models to the rate approval process will meet the public inspection requirement set forth in Insurance Code Section 1861.07. “It is important to consider California’s public inspection requirement and the extent to which the inner workings of catastrophic models can be publicly disclosed.” The CDI climate team, he said, is working on how the department will engage with experts to strengthen its understanding of wildfire modeling factors, and is “also using a data-driven process to define 14 | INSURANCE JOURNAL | FEBRUARY 5, 2024

what will constitute a distressed area for the purpose of meeting an insurance company’s commitment to increasing their market share in these areas.”

‘We can’t operate under outdated regulations that no longer reflect the risk that we’re living in,’ Commissioner Lara said at a Dec. 13 hearing before California’s Assembly Insurance committee, stressing the need to incorporate catastrophe modeling and reinsurance costs in rate determinations going forward. In addition, the rate regulation team is working on the regulatory text, which will set forth how the models are going to be used in rate applications. “The current rulemaking process formula is not structurally set up to accept the modeled losses,” Lara said, noting that once all the regulations are finished, before year-end 2024, the Office of Administrative Law must approve them — and then insurance companies can come in with their new rate filings.

that a complete rate application must be submitted to the department before the clock on reviewing the application begins. Let me tell you in the past we have allowed insurance companies to submit their application without the complete data needed,” Lara said. Going forward, CDI will provide insurers with “the right reconciliation tool to assist them” in providing complete filings, he said. “Similarly, we will allow third-party intervenors in a rate application to only raise issues that are relevant in the application. Raising unrelated or irrelevant issues only serves to slow down the process, which has a direct impact on consumers and insurance availability,” he said.

Wait. What?

Wood requested more specifics on the baffling idea that an insurance company would submit an incomplete rate filing application. “What we discovered when I came in was that this was just par for the course,” Lara insisted. “Submit an incomplete application, have it start with the analyst, and then you’re working back and forth, which also creates this backlog and really just exacerbates the time that you need.” Carriers would ask, “‘What’s happening with my rate application?’ I can tell you, 80% of the time,” according to CDI

No More Games

At other points during the hearing, Lara suggested that insurers themselves delayed approvals with incomplete rate filings in the past, and also made reference to delays caused by intervenors empowered to represent the interests of the public by a decades-old law, Proposition 103. CDI will demand that both tighten their processes to improve timelines, the commissioner said. “For insurance companies, we intend to enforce the requirements INSURANCEJOURNAL.COM

analysts, “we still haven’t received information. We’re waiting on them [carriers] to respond [with] the information that we need.” Recalling his early days as a new insurance commissioner back in 2019, Lara said he was as mystified as Wood when CDI approved a rate, and the insurance company getting the rubber stamp on its rate filing immediately submitted another. More often than not, the new filing “was incomplete, creating this animosity once again with our department, which really has no time to start second-guessing these numbers,” Lara said. (Editor’s Note: On earnings conference calls, carrier executives often note that their companies typically file for multiple 6.9% rate increases in California, even though they need higher jumps. The 6.9% requests escape the lengthy intervenor process, which kicks in for reviews of rate filings with indications higher than that threshold.) As part of the negotiations to allow carriers to include cat model output and reinsurance costs in ratemaking going forward, “both parties came together and said we’re no longer playing this game,” Lara said, referring to a “domino effect” that past practices had on Wood and his constituents. “You can’t find insurance. You can’t sell your home. It lowers property values. Then guess what? The local government doesn’t have the resources to actually pay for firefighters, right? “It is just this evil cycle that happens … By the time we’re finishing this backand-forth, the risk is going up. But the rate is still staying flat because we’re still negotiating a complete application. So, we’re never going to close that protection gap and we’re never going to get to be able to have the adequate risk being reflected in these rates” unless the process is tightened up, Lara said.

Diverse Intervenors

At several points during the session, Lara also described intervenor routines that have delayed rate filing approvals, reporting that intervenors aren’t always ready on Day 1, as required by Proposition INSURANCEJOURNAL.COM

103 — the law that allows public participation in the rate review process — and often just “cut and paste” objections raised by CDI experts.

‘By the time we’re finishing this back-and-forth, the risk is going up. But the rate is still staying flat because we’re still negotiating a complete application.’ Referring to the most active intervenor group, Consumer Watchdog, Essayli insisted that Lara should support elimination of the intervenor process. “You are the consumer watchdog. You are elected by the majority of voters in the state. You look out for the consumer,” the assemblymember said. In Lara’s view, intervenors, which are unique to California, play a pivotal role working with CDI. “What we need to do is make sure that it’s not just one organization that’s doing the intervening — that we actually allow for diverse intervenors, people that come from the communities that are suffering, that want to understand the rate process,” he said. That’s a tall order, admitted Chief Deputy Commissioner Michael Martinez, who noted that nonprofits that CDI has encouraged to take intervenor roles in the past are hampered by the costs involved with engaging analytic staff, and by the fact that compensation for intervenors (ultimately paid by insurers) comes after the fact, requiring approval of an administrative law judge.

Urgent and Deliberate Actions

Lawmakers also asked for some specifics on how CDI could come up with a workable formula for California-only reinsurance costs and cut down the complexity involved with greenlighting cat models. On the cat model front, Lara disclosed some news — that CDI is examining the use of both private and public cat models. “We are going to be pursuing both tracks,” he reported, noting that creating a public model is a goal because such a model can

be used as a benchmark. “One thing is clear — we can no longer rely on historical data to determine the risk, right? So, we eliminated that immediately. Now we’re looking and working with our counterparts throughout other states, in particular, the western half of the country … How are they protecting consumers?” As for reinsurance, Lara said he has stressed to reinsurers that California is the largest market in the country and fourth in the world and has asked them whether a California’s-only reinsurance formula can be developed. “They’ve all come back and said there’s absolutely something we can do,” he said, noting that the process of introducing this needs to be done through a public forum. “I guarantee that will be one of the toughest things that we do, and we’re committed to getting it done by 2024 in December. It’s all hands-on deck for us,” Lara said. During his opening remarks, Lara reported that seven of the top 12 property insurance groups had paused or restricted new business in California in the past year. “For many people who cannot obtain insurance at any price except from the California FAIR plan, this is truly an insurance emergency,” he stated, asserting a rising number of policyholders in the FAIR plan threatens the solvency of insurance companies in the voluntary market. “If the FAIR plan experiences a massive loss and cannot pay its claims by law, insurance companies are the ones on the hook for the unpaid FAIR plan losses. While this assessment on insurance companies hasn’t happened in nearly 30 years, it’s the uncertainty that is driving insurance companies to further limit coverage to at-risk Californians,” Lara said. “We are moving with urgency and deliberately based on facts, and we won’t be pressured by entrenched groups seeking to defend a broken status quo that puts their interest ahead of the public,” he said.

Sclafane is the executive editor of Carrier Management, a Wells Media Group Inc. publication covering the property/casualty insurance company sector. Email: ssclafane@ carriermanagement.com. FEBRUARY 5, 2024 INSURANCE JOURNAL | 15

Business Moves Patriot Growth, Blueprint Benefit Advisors

East

Arthur J. Gallagher, Hughes Insurance

Arthur J. Gallagher & Co. acquired the Queensbury, New York-based independent insurance agency, Hughes Insurance Agency Inc. From its headquarters in Queensbury and an office in Albany, Hughes serves the Glens Falls, Lake George Saratoga Springs corridor, as well as Albany, Troy, Latham, Clifton Park and Malta. Hughes is headed by Linda Abodeely, president, and Joe Koncikowski, vice president, and represents national and regional insurance carriers offering personal and commercial insurance, as well as life and health. The agency team will continue to operate out of its current location as part of Gallagher Agency Alliance under the direction of Jen Tadin, managing director of Gallagher’s Global Small Business practice. Gallagher Agency Alliance is a merger and acquisitions model partnering with agencies that specialize in small business property/casualty insurance and employee benefits. Arthur J. Gallagher & Co. is a global insurance brokerage, risk management and consulting services firm, headquartered in Rolling Meadows, Illinois.

World Insurance Associates, Exchange Underwriters

Insurance broker World Insurance Associates has agreed to purchase the personal and commercial insurance agency Exchange Underwriters Inc. from CB Financial Services Inc., the holding com16 | INSURANCE JOURNAL | FEBRUARY 5, 2024

pany for Pennsylvania-based Community Bank. Current leadership and direct employees of Exchange Underwriters are expected to join World. Richard Boyer is president of Exchange. The agency has its office in Washington, Pennsylvania. Community Bank purchased Exchange Underwriters in 2014; in 2018 it relocated to Washington and merged with Beynon Insurance Agency. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers retail and commercial lending and deposit services and provides commercial and personal insurance brokerage services through Exchange Underwriters. World Insurance Associates is headquartered in Iselin, N.J.

IMA, EBS Insurance Brokers

Denver-based insurance brokerage IMA Financial Group expanded its employee benefits practice nationally with the acquisition of EBS Insurance Brokers of Newton, Mass. EBS and its 30 employees offer health and welfare plan administration, executive and international benefits and financial services. Paul J. Rooney is an EBS founder and managing partner. EBS Insurance Brokers will become EBS, an IMA Company, and its leadership team and associates will continue to operate out of the company’s headquarters in Newton. Majority employee-owned IMA Financial Group Inc. is a national financial services company.

Pennsylvania-based Patriot Growth Insurance Services acquired Blueprint Benefit Advisors of Hamden, Connecticut. Blueprint provides employee benefits, human resource support, benefits technology, and compliance services. This deal expands Patriot’s footprint in the New England region, which currently consists of more than 20 agencies offering risk management, property/casualty, and employee benefits insurance solutions. Blueprint is led by Greg Coyne, Joseph Bucci, Michael Coppola, and Matt Luciani. It was founded in 2016 by combining Group Insurance Associates and Group Benefit Administrators of Connecticut. Founded in 2019, Patriot is a national insurance services firm with more than 1,800 employees in 132 locations across 26 states.

Midwest

World Insurance Associates, American Trust Insurance

World Insurance Associates LLC has acquired the business of American Trust Insurance LLC (ATI) of Huron, S.D. ATI was founded in 2004, and now has eight offices within South Dakota. They provide personal and commercial insurance, health and life insurance, and specializes in crop/agricultural/farm insurance.

Higginbotham, Botson Insurance Group

Fort Worth, Texas-based Higginbotham has acquired Botson Insurance Group of Avon, Ohio. This move extends the Texas firm’s presence across Ohio, as Higginbotham last year formed a similar collaboration with western Ohio’s Community Insurance Group Ltd. Botson offers personal and business insurance. The agency offers special business insurance programs for trade contractors, trucking companies, landscapers and equipment dealers.

Arthur J. Gallagher, Hunt Insurance

Arthur J. Gallagher & Co. acquired Palos Heights, Illinois-based Hunt Insurance INSURANCEJOURNAL.COM

Agency Inc., dba Hunt Insurance Group. Hunt Insurance Group is a retail property/casualty agency specializing in labor unions and their associated benefit funds across the Midwest. Larry Hunt, Matt Hunt and their team will remain in their current location under the direction of Ryan Isaacs, head of Gallagher’s Midwest region retail P/C brokerage operations.

South Central

ReSource Pro, Helix Agency Services

ReSource Pro, an operations provider to insurance organizations, acquired Texas-based Helix Agency Services LLC, a provider of managed technology services for insurance agencies and brokers in the property/casualty marketplace. Helix’s capabilities include system administration, data reporting and conversion, automation, and carrier password management. Resource Pro offers advisory services, business process management optimization and data and technology solutions.

ALKEME, Flor Insurance Group

ALKEME acquired Flor Insurance Group, a multi-line independent insurance agency located in El Paso, Texas, and serving the entire United States. Founded in 2010, Flor Insurance Group is focused on commercial trucking operations with a particular niche focus on international freight transportation. Flor also offers coverage for life and health, home and auto, and commercial.

Southeast

Oakbridge, M D Iverson Group

Oakbridge Insurance Agency has acquired M D Iverson Group, an Atlantaarea agency and brokerage that focuses on commercial products and high-net-worth individuals. M D Iverson will continue to operate its Fairburn, Georgia, office. Mike Iverson is principal of the agency.

Oakbridge, Akin Insurance Agency

Oakbridge Insurance Agency acquired Akin Insurance Agency, with offices in INSURANCEJOURNAL.COM

Vienna and Cordele, Georgia. Akin specializes in agribusiness insurance and has been a family-run operation since 1954. It was founded by Edith Akin and was purchased by Shannon Akin in 1967. The agency grew through sales, mergers and acquisitions, including the 1981 purchase of Hall-Rainey Agency in Cordele. Shan Akin, the current president, joined the firm in 2008. Atlanta-based Oakbridge was founded in 2020.

Risk Strategies, Setnor Byer Insurance & Risk

Risk Strategies, a specialty insurance brokerage, has acquired Setnor, Byer, Boganoff Inc., which does business as Setnor Byer Insurance & Risk, a Fort Lauderdale-area brokerage and risk management firm. Founded in 1981, Setnor Byer provides commercial and personal lines products. Anita Byer, the managing principal, will remain in her current leadership role. The brokerage is licensed to do business in all 50 states and has international clients. Risk Strategies is headquartered in Boston.

Brown & Brown, Caton-Hosey Insurance

Florida-based Brown & Brown Insurance has acquired Caton-Hosey Insurance, a personal and business-lines agency in Port Orange, Florida. The agency was founded in 1948 and has been led by Rex Caton and John Hosey since the 1990s. The firm will continue operations in Port Orange. The publicly traded Brown & Brown, headquartered in Daytona Beach, now has more than 500 office locations and agencies around the globe.

King Insurance Partners, Partners Insurance Agency

King Insurance Partners, an insurance brokerage based in Gainesville, Florida, acquired Partners Insurance Agency in Gainesville. Sheila Williams is listed as general lines agent for Partners Insurance. She joined

the agency in 2008. The agency offers personal auto and home products, along with commercial and construction coverage. King Insurance Partners was founded in 1974. Malcolm King is CEO.

West

Alliant, PBC Insurance

Alliant Insurance Services acquired the employee benefits division of Eugene, Oregon-based PBC Insurance. The PBC employee benefits team will join Alliant and continue serving clients from its Eugene headquarters. PBC also offers property/casualty, life, and financial services, which are not part of the acquisition.

Alliant, Aldrich Benefits

Alliant Insurance Services acquired Oregon-based employee benefits firm Aldrich Benefits LP, a member of the Aldrich group of companies. The Aldrich companies will continue to provide financial, wealth, tax, and business transition strategies and services to its clients. The Aldrich Benefits LP team will join Alliant. Aldrich established its employee benefits business in 2003, and serves construction, manufacturing, healthcare, telecommunications, utilities, and professional services companies, among others. Irvine, California-based Alliant is a distributor of diversified insurance products and services that operates through a network of specialized national platforms and local offices.

Johnson & Johnson, Mid Valley General Agency

Johnson & Johnson Inc. will expand its footprint into Oregon, Idaho, Montana and Washington by acquiring the assets of Mid Valley General Agency LLC based in Salem, Oregon. Mid Valley is a family-owned managing general agency that specializes in providing serviced to retail insurance agents with hard-to-place risks. Johnson & Johnson is a managing general agency based in Charleston, South Carolina. FEBRUARY 5, 2024 INSURANCE JOURNAL | 17

People National

president and head of U.S. retail property. He is based in New York. Hagerty joined the company’s corporate underwriting team in 2021 and was most recently Everest Insurance’s chief underwriting officer for U.S. property.

Event Solutions. Current President Bill Churney retired effective Dec. 31, 2023. Newbold joined Verisk in 2002 as a risk consultant and most recently served as executive vice president and chief operating officer, Extreme Event Solutions. Churney is retiring from Verisk after 21 years with the company.

Roshan Navagamuwa joined American International Group Inc. (AIG) as

FM Global appointed Laurel Rudnick senior vice president,

Everest Insurance appointed Patrick Hagerty senior vice

executive vice president and chief information officer. Navagamuwa Roshan Navagamuwa joins AIG from CVS Health, where he was EVP and CIO. Rose Marie Glazer, who has served as interim general counsel at AIG since October 1, has been named general counsel, overseeing AIG’s legal, compliance, regulatory and government affairs functions. Glazer remains an executive vice president and a member of AIG’s executive leadership team.

Cover Whale Insurance Solutions Inc. hired Darryl Siry as chief operating and

technology officer. Before joining Cover Whale, Siry most recently served as chief technology officer at SiriusPoint.

Verisk,

headquartered in Jersey City, N.J., named

Rob Newbold president of Extreme

Rob Newbold

Commercial property insurer

division manager for AFM, FM Global’s middle market insurance division. Rudnick most recently served as operations senior vice president, New York operations manager for FM Global. She joined FM Global in 2006 as a field engineer in Los Angeles.

W. R. Berkley Corp., headquartered in Greenwich, Conn., appointed Mark Schuermann president of Berkley Entertainment, a Berkley company. He succeeds Cindy Broschart, who has been named chair of the business. Schuermann joined Berkley Entertainment as chief operating officer in 2021. Broschart was named president of Berkley Entertainment upon its formation in 2004. Church Mutual Insurance Co. S.I. promoted Alan S. Ogilvie from president to

president and chief executive officer. Ogilvie assumed the role from Rich Poirier, who has retired after 12 years of service to the company. Ogilvie held positions at Wausau Insurance Companies, Caliber One Indemnity, Godfrey & Kahn S.C. and

18 | INSURANCE JOURNAL | FEBRUARY 5, 2024

Capitol Insurance Companies before joining Merrill, Wisconsin-based Church Mutual in 2015. He was promoted to president of Church Mutual in January 2023.

World Insurance Associates LLC, headquartered in Iselin, N.J., hired Joe Klein as an

executive vice president of its national accounts practice. Klein, based in Chicago, comes to World with more than 35 years of leadership experience at broking giant Aon Risk Services.

East

W.R. Berkley Corp., headquartered in Greenwich, Conn., appointed Christopher H. Balch president of Berkley Technology Underwriters. He succeeds Matthew A. Mueller, who has been named chairman of the business. Balch joins Berkley Technology Underwriters with nearly 20 years of experience, including various technical and management roles at a leading national insurance company with a particular focus in the commercial insurance market. Mueller joined Berkley as president of Berkley Technology Underwriters when it was formed in 2011. DeCotis Specialty Insurance,

headquartered in Providence, Rhode Island added Lori Lyle as senior commercial lines account manager, and Jay Downie as commercial

Lori Lyle

Jay Downie

lines insurance broker. Lyle joins DeCotis after spending nearly four decades on the commercial insurance retail side. Most recently, she served as client executive at Cross Insurance. Downie started his insurance career nearly 17 years ago. Most recently, he was a territory sales manager for The Hanover Insurance Group.

Convelo Insurance Group, headquartered in Tinton Falls, N.J., hired Andrew “Andy” Borst as president. Borst has 25 years of insurance industry experience, most recently serving as president of E&S and international programs. Borst also served as an executive officer at Argo Group and held senior roles at OneBeacon Insurance Group. Dan Shea, Convelo’s former president, moves into the newly established executive vice president and chief marketing officer role. Shea has more than 30 years of experience in the insurance industry. Donegal Insurance Group, based in Marietta, Pennsylvania, named Dan DeLamater executive vice

president and chief operating officer. DeLamater has nearly 30 years of insurance industry experience, with two decades at Donegal, most recently as senior vice president and head of field operations. DeLamater also serves as president of Southern Mutual, a member of Donegal Insurance Group. Noland Deas succeeds DeLamater as senior vice president of field operations and national accounts. With three decades of industry experience, including 18 years INSURANCEJOURNAL.COM

at Donegal, Deas served as regional vice president of the Virginia/North Carolina region and became senior regional vice president in May 2022. He is based in Donegal’s Glen Allen, Virginia, office.

Signers National, a specialty insurance agency group focused on commercial real estate, nonprofits and human service organizations, headquartered in New York, N.Y., hired Chris Parkinson as chief information officer. Parkinson most recently served as senior vice president of global technology and operations at AmTrust Financial Services. After more than 35 years with the New York Municipal

Insurance Reciprocal (NYMIR),

including 17 years as executive director, A. Kevin Crawford retired from NYMIR on Dec. 31, 2023. Peter A. Baynes has been named NYMIR executive director. Baynes previously served as the executive director of the New York State Conference of Mayors (NYCOM).

Marsh named Patrick Hennessy as zone leader for its

eight Northeast offices. Based in New York, Hennessy brings 30 years of insurance brokerage, consulting and management Patrick Hennessy experience to the role, having spent his entire career with Marsh, most recently serving as the Northeast zone risk management leader. Hennessy succeeds Chris Roak, who assumed the newly INSURANCEJOURNAL.COM

created role of U.S. strategy and execution leader.

Anthony Lively joined Alliant Insurance Services as

senior vice president within its employee benefits group. He is based in Boston. Lively previously served as area vice president at Gallagher and senior partner at Lively Insurance, an Alera Group company. Alliant is headquartered in Irvine, California.

ShoreOne Insurance Managers Inc., a coastal home

and flood insurance provider headquartered in Dedham, Mass., appointed Russell Carlson as chief financial officer. ShoreOne offers homeowners and flood coverage in a single policy. It sells in Massachusetts, New York, New Jersey and South Carolina. Carlson brings 20 years of financial services and insurance expertise to ShoreOne.

Midwest

Central Insurance has promoted new members to its executive leadership team. Jessica Seymour, formerly vice president of risk and capital management, has been named chief financial officer. Chad Glenn, formerly chief actuary, will serve as chief distribution officer. Jocelyn Pfeifer, former senior vice president of underwriting, will serve as chief insurance officer. Central Insurance is based in Van Wert, Ohio.

RT Specialty, headquartered in Chicago added Jessalynn Suda to RT Binding Authority’s leadership team.

Suda brings 15 years of underwriting experience to RT Binding Authority. She most recently served as vice president, underwriting for HW Kaufman, Atain Specialty Insurance Companies, Burns & Wilcox.

Unison Risk Advisors,

headquartered in Cleveland, Ohio, hired

Andrew Maisano

as senior vice president of corporate development. Maisano most recently worked at TravelCenters of America as vice president of strategy and M&A. Unison Risk Advisors is the holding company for Oswald Companies of Cleveland, Ohio; Baltimore, Md.-based RCM&D; and Miami, Fla.-based NSI Insurance.

Atain Insurance Companies, headquartered in Farmington Hills, Mich., hired Cara Delestienne as vice president and head of binding authority. Delestienne has over two decades of insurance industry experience, most recently serving as vice president operations at MacNeill Group Inc. Society Insurance,

headquartered in Fond du Lac, Wis., named Ryan Haase vice president — change management and marketing, and Dennis Saldana vice

Ryan Haase

Dennis Saldana

president — chief sales and underwriting officer. Haase joined Society Insurance in 2004 and previously served as the company’s director of change management. Saldana joined Society Insurance in 2003. He most recently served as the company’s director of underwriting.

XPT Specialty, headquartered in New York, N.Y., hired Ben Swift as an underwriter/broker specializing in commercial binding accounts for Midwest retailers. Before joining XPT, Swift served as a senior commercial underwriter at Chubb Insurance. Swift is based at XPT’s Indianapolis office. Alliant Insurance Services, hired André Davis as vice president within its employee benefits group in the Kansas City metropolitan area. Before joining Alliant, Davis was a corporate and community engagement executive for Built Interior Construction and vice president and business development officer at Sunflower Bank. Aspen Insurance Holdings Limited,

headquartered in Hamilton, Michael Tate Bermuda, appointed Michael Tate to the newly created role of inland marine — head of product and underwriting. Tate is based in Chicago. Before Aspen, Tate served as chief underwriting officer

continued on page 20

FEBRUARY 5, 2024 INSURANCE JOURNAL | 19

People continued from page 19 at Berkley Fire & Marine.

South Central

Lockton Dunning,

headquartered in Kansas City, Mo., named

Steve Idoux

president. Idoux joined Lockton Dunning in March 2007 as vice president and became a Lockton partner in 2019. In 2021, Idoux was promoted to president of the Dallas office.

Standard Lines Services

named Joshua Lakey division leader. Standard Lines Services is a division of Graham-Rogers Insurance, based in Bartlesville, Oklahoma. Lakey has 18 years of insurance experience and previously served as senior territory manager at Safeco Insurance. The Texas Surplus Lines Association Inc. elected the

following officers for 2024: President Kimmi Cantwell, McGowan, Donnelly & Oberheu LLC senior vice president of Operations, Austin; Vice President Robert McEwen, MBA, CIC, The Parks Group Inc. president, Austin; and Secretary/Treasurer Terence Babler, vice president, property broker Brown & Riding, Dallas. New TSLA directors elected for three-year terms are Randy Doss, CRC Group, Houston; Joe Taylor, RT Specialty, Houston; and Morgan Whitt, Towerstone Inc., Dallas.

Elevate Risk Solutions CEO Jerry Messick stepped

down from the position but continues to serve the firm as a consultant. With the transition, Elevate’s Managing Director Ryan Ralston was appointed president, and Serena Lintker was promoted from director of Finance to COO. Ralston is an industry veteran in risk management and insurance, with experience developing and implementing global risk management strategies at Whirlpool, Koch Industries, The Boeing Company, among other prominent organizations. Based in Oklahoma City, Elevate Risk Solutions provides captive insurance solutions for a variety of businesses.

Matthew Posey has been appointed deputy commissioner of Operations and External Relations at the

Texas Department of Workers’ Compensation.

Posey most recently served as government relations manager for Texas Aggregates & Concrete Association. He previously served as a chief of staff in the Texas House of Representatives for more than 10 years under Rep. David Cook and former Rep. Bill Zedler.

Southeast

Wiglesworth-Rindom Insurance Agency, based

in Stuart, Florida, named Linda Cathey vice president of agency Linda Cathey operations. Cathey previously was the managing director for Squeeze, an online insurance agency and quote comparison site. She also served as director of personal

20 | INSURANCE JOURNAL | FEBRUARY 5, 2024

lines at Marsh McLennan for more than 20 years. The Liberty Company Insurance Brokers, head-

quartered in Gainesville, Fla., promoted Adam Baillie to chief operating officer. Baillie joined Liberty in 2014 as a producer and later became a managing partner. He most recently served as chief strategy officer.

Massachusetts-based underwriting and wholesale brokerage group XS Brokers named Adam Geiss as vice president, based in Charlotte, North Carolina. Geiss has spent 15 years in the excess and surplus lines market, including senior roles at Hull & Co.

Alliant Insurance Services

named Burney Hutchinson, of Jackson, Miss., a vice president for its Americas Division. Hutchinson has extensive experience in the industry, including providing commercial coverage for large accounts in the Southeast.

West

INSTANDA, headquartered in London, England, hired Geoff Keast as its new vice president of sales. He is based in Denver. Before joining INSTANDA, Keast held senior roles with Fiserv and ABnote North America. San Franciscobased

Symphony Grow, the

specialty Michael Sampson business of Symphony Risk Solutions, appointed

Michael H. Sampson as senior

director of legal affairs and risk management. Sampson joins Symphony from Leech Tishman Fuscaldo & Lampl, where he co-led the law firm’s cannabis industry group and led the insurance coverage group.

PCF Insurance Services, headquartered in Lehi, Utah, appointed current CFO and COO Felix Morgan as its new CEO. Peter C. Foy is transitioning from founder, chairman and CEO to founder and chairman. Morgan has more than 20 years of leadership experience and previously served as CFO at Cotiviti and CFO of Population Health Technology at Aetna. Foy has more than 35 years of experience, having founded Peter C. Foy & Associates in 1987. kWh Analytics,

headquartered in San Francisco, Isaac McLean named Isaac McLean as the company’s chief underwriting officer. McLean has more than 18 years of insurance experience, previously serving as head of property insurance at kWh Analytics.

Dan Berry has joined Alliant Insurance Services as venture

capital leader and executive vice president with Alliant M&A. Based in San Francisco, Berry previously served as private equity and venture capital group leader at Woodruff Sawyer. INSURANCEJOURNAL.COM

News & Markets Reinsurers’ Casualty Appetites Varied, but Capacity Was ‘Ample’ During 1/1 Renewals By L.S. Howard

einsurers had varied appetites for casualty reinsurance during the January 2024 renewals; while capacity was sufficient, they still maintained underwriting discipline, according to reinsurance brokers’ renewal reports. “Some reinsurers adopted a tougher stance ahead of the January 2024 casualty treaty renewals, against a backdrop of prior-year reserve deterioration and concern for adverse litigation trends. Others recognized the earnings potential of improving primary casualty pricing and higher interest rates,” Aon said in its market report, “Reinsurance Market Dynamics – January 2024. “Reinsurers demonstrated a mixed appetite for growth amid concern around loss trends, broadly dependent upon their respective positions during the 2015-2019 years. Reinsurers with less exposure to those soft market years were poised for growth at 1/1,” Aon said, noting that buyers saw favorable outcomes despite these varied reinsurer risk appetites. Similar viewpoints were provided by Marsh, Gallagher Re and Howden in their respective reports. “While property renewals were the focus a year ago, casualty faced more scrutiny this year,” said Marsh in its renewal commentary, “January 1, 2024, Reinsurance Renewals Reflect a Motivated Market With Increasing Capital.” “While negotiations were nuanced and bespoke, capacity was ample once market clearing terms were met.” Gallagher Re’s 1st View report, “What a Difference a Year Makes,” said: “Casualty, notably but not exclusively US casualty, was no longer the valuable currency that was used to support property catastrophe capacity this time last year.” Howden’s January renewal report, “A new world,” said sufficient capacity and market discipline characterized casualty reinsurance renewals at Jan. 1, 2024. “Certain markets are growing their INSURANCEJOURNAL.COM

portfolios in what they perceive to be an attractive marketplace whilst others are reducing, reflecting their view that the market continues to require underlying rate increases,” the report noted. Aon said casualty insurers achieved “a fair outcome” during the Jan. 1 renewals, “driven largely by sufficient reinsurance capacity despite reinsurer concerns around prior-year reserve development and adverse litigation trends. While the renewal cycle began with many reinsurers making strong statements regarding casualty market dynamics, the 1/1 renewals were ultimately completed in an orderly manner compared to prior years.” Reinsurers were less confident in third-party liability lines, “despite very significant increases in primary market pricing and limit reductions since H2 2019,” said Gallagher Re. In the weeks leading up to renewal negotiations, Howden said, certain reinsurers “talked up the need to push for wholesale action to address economic and social inflation” and the associated risks to reserve adequacy. However, renewal outcomes “ultimately reflected more discerning underwriting informed by loss experience, underlying rate change and prior-year development across individual portfolios,” Howden added. “Underlying prior-year loss development and social inflation trends have affected U.S. markets more than international carriers, which was reflected in reinsurance placements.”

Casualty reinsurers continue to differentiate between individual insurers rather than applying a broad approach, said Aon. “Reinsurers that attempted to broad brush the market did not succeed.” Aon also noted that reinsurers were again focused on prior-year development, underlying rate changes and social and economic inflation.

D&O Decreases Continue

Howden said prices in the directors and officers market continued to drop and there are signs of softening in other casualty classes, but underlying rates for most long-tail lines are still at “historic highs.” Howden added that “investment portfolios are also now yielding significantly improved returns following rapid interest rate rises.” Aon said “most liability reinsurance classes were stable at 1/1,” adding that capacity, program structures and terms remained largely unchanged. “The one exception is directors and officers, where lower direct rates have led to reinsurers becoming more cautious and risk selective,” Aon continued, noting that its public D&O pricing index for Q3 2023 dropped 16.3% year-over-year, representing six consecutive quarters of pricing decreases. Gallagher Re said underlying rates in the U.S. for public D&O decreased, “but there are indications that decreases are moderating.” FEBRUARY 5, 2024 INSURANCE JOURNAL | 21

Spotlight: Cyber Majority of Underwriters Predict Cyber Risks Grow ‘Greatly’ in 2024: Survey By Elizabeth Blosfield

nderwriters who thought the growing cyber risk landscape of the past several years would level off soon might want to think again. Woodruff Sawyer’s annual survey of cyber insurance carriers found all underwriters surveyed believe cyber risk will increase in 2024. The survey, included as part of Woodruff Sawyer’s 2024 Looking Ahead Guide, sought underwriter perspectives on the current risk environment, risk appetite and future pricing expectations from a range of insurance carriers including domestic carriers, Lloyd’s syndicates and startup managing general agencies. In fact, more than half — 56% — of underwriters surveyed said they believe cyber risk will increase greatly in 2024. While the survey found 2024 is bringing a shift in concern for underwriters, with privacy violations and data breaches drawing more concern than last year, ransomware remains the most significant threat — 63% ranked it their No. 1 threat for 2024. “Carriers started sounding the alarm as early as the second

quarter of 2023, and by the end of the year, the trend was clear — ransom claims had risen to 2021 levels, the highest year of ransom claims on record,” the report said, adding that an increase in attacks relying on data exfiltration was also seen in 2023. “Attackers are exploiting a reality that many companies have discovered: Data is often most valuable to the company from which it is stolen.” Other concerns noted in the survey include business email compromise and generative artificial intelligence. Indeed, Woodruff Sawyer predicted more companies will incorporate AI technologies into their internal processes or external products in 2024. While AI can introduce efficiencies for carriers, the report warned that carriers should proceed with caution as it can also introduce opportunities for error. “Similarly, AI-powered cybersecurity tools will be used to protect organizations. Hackers will leverage AI to further their own causes,” the report said. “The battle will continue as it does today — with each side having an upper hand at different times.” Woodruff Sawyer stated in

22 | INSURANCE JOURNAL | FEBRUARY 5, 2024

its report that it doesn’t see AI substantially changing cyber risk, but it does believe the technology could exacerbate the severity of cyber issues when they arise. “This will increase the importance of making an informed choice using data science and analytics when purchasing cyber insurance,” the report said. That said, the cyber insurance landscape is changing along with cyber risk, as many carriers are exercising greater scrutiny and premiums have continued to rise. The survey indicated 44% of carriers believe underwriting scrutiny will increase slightly during the next 12 months. “This may be bad news for insurance buyers already frustrated at the amount of information required to complete a cyber insurance application,” the report said. “However, it does prove the trend of higher scrutiny has staying power. With a risk as complex as cyber, higher underwriting scrutiny will become the norm.” Although the hard market of 2021 and 2022 brought stricter underwriting standards with it, the report found a silver lining as more insureds are investing in the maturity of their cybersecurity standards. This is paying off on the insurance side, according to the report. “Stronger cybersecurity controls strongly correlate to more carriers willing to offer insurance — creating the needed competition to drive premium savings,” the report said. On the back of this trend, stability and moderation are

likely on the horizon for cyber insurance coverage, according to the survey, with 75% of underwriters anticipating coverage to remain unchanged compared to 24% the previous year. A growing percentage of underwriters believe cyber insurance premiums will continue to increase slightly, however, up 22 percentage points from last year. Only 19% said they expect premiums to remain unchanged, while none anticipated a decrease, the survey said. “This suggests a notable industry shift toward higher premiums amid growing cybersecurity concerns,” the report said. Along with these concerns, risk mitigation is top of mind for carriers, according to the report. Half of those surveyed said they believe companies should be more aware of their cyber risk. The survey showed a decrease in emphasis among carriers on strengthening security, down to 38% from 59% last year, while improvement of processes and procedures remained a crucial measure for 50 % of carriers as the market continues to change. “The cyber insurance market continues to evolve — the industry constantly faces new and serious risks,” the report said. “External factors continue to affect the market, including wars, federal and state regulations, and the rise of artificial intelligence.” Blosfield is deputy editor for Carrier Management, a publication of Wells Media Group Inc. Email: eblosfield@ wellsmedia.com. INSURANCEJOURNAL.COM

Cyber Threats Top Global Business Risk Concern for 2024: Allianz

yber-related incidents such as ransomware attacks, data breaches and IT disruptions are the biggest worry for companies globally in 2024, according to the Allianz Risk Barometer. Business interruption ranked second, while natural catastrophes ranked third (up from #6) on business’ list of top concerns. “The top risks and major risers in this year’s Allianz Risk Barometer reflect the big issues facing companies around the world right now — digitalization, climate change and an uncertain geopolitical environment,” said Allianz Commercial CEO Petros Papanikolaou. “Many of these risks are already hitting home, with extreme weather, ransomware attacks and regional conflicts expected to test the resilience of supply chains and business models further in 2024.” The report notes that the same risk concerns unite businesses of all sizes but the resilience gap between large and small companies is widening, “as risk awareness among larger organizations has grown since the pandemic with a notable drive to upgrade resilience.” Smaller businesses, however, lack the time and resources to identify and effectively prepare for a wider range of risk scenarios. Fire and explosion and political risks and violence jumped the list to make the top 10, based on the insights of more than 3,000 risk management professionals. In the United States, cyber has replaced business interruption as the leading risk INSURANCEJOURNAL.COM

for the year ahead. Natural catastrophes rose to the third spot (up from #5 in 2023).

Expanding Cyber Threats

Cyber threats rank as the most important risk globally for the third year in a row — for the first time by a clear margin (5 percentage points) — and is now considered the top peril in 17 countries, including Australia, France, Germany, India, Japan, the UK, and the U.S. The threat of most concern are data breaches (59% of respondents), followed by attacks on critical infrastructure and physical assets (53%). The increase in ransomware attacks in 2023 led to increased insurance claims activity, up by more than 50% compared with 2022. “Cyber criminals are exploring ways to use new technologies such as generative artificial intelligence (AI) to automate and accelerate attacks, creating more effective malware and phishing. The

growing number of incidents caused by poor cyber security, in mobile devices in particular, a shortage of millions of cyber security professionals, and the threat facing smaller companies because of their reliance on IT outsourcing are also expected to drive cyber activity in 2024,” explains Scott Sayce, global head of cyber, Allianz Commercial.

Business Interruption; Natural Catastrophes

Business interruption retains its position as the second biggest threat in the 2024 survey, mainly due to the recognition of the interconnectedness of businesses and the reliance on supply chains for critical products or services. The Allianz report found that improving business continuity management, identifying supply chain bottlenecks, and developing alternative suppliers will continue to be key risk management priorities for companies in 2024. After a record-breaking year

in 2023, natural catastrophes (26%) is one of the biggest movers, up three positions.

Regional Concerns

Climate change may be a non-mover year-on-year at #7 but it is among the top three business risks in countries such as Brazil, Greece, Italy, Turkey and Mexico. The report found that “physical damage to corporate assets from more frequent and severe extreme weather events are a key threat.” The sectors most exposed include utilities, energy and industrial sectors. Ongoing conflicts in the Middle East and Ukraine, and tensions between China and the U.S. pushed concerns of political risks and violence (14%) up the list to #8 from #10. The shortage of skilled workforce (12%) is seen as a lower risk than in 2023, dropping from #8 to #10, though businesses in Central and Eastern Europe, the UK and Australia identify it as a top five business risk.

FEBRUARY 5, 2024 INSURANCE JOURNAL | 23

News & Markets Southwest Wins Appeal in Cyber Excess Coverage Dispute With Liberty By Ezra Amacher

he 5th U.S. Circuit Court of Appeals ruled in mid-January that Southwest Airlines can continue to seek reimbursement under its Liberty Mutual cyber risk policy for costs incurred during a 2016 massive computer failure. The appeals court panel disagreed with the district court’s conclusion in Southwest Airlines Company v. Liberty Insurance Underwriter Inc. that the costs incurred by Southwest were purely discretionary. The costs in question arose from a July 2016 computer failure that caused a three-day disruption of Southwest’s flight schedule. More than 475,000 Southwest customers experienced either a flight cancellation or a delay of two hours or more. Southwest calculated that it sustained more than $77 million in losses from the computer failure. Weeks before the computer crash, Southwest secured a cyber risk insurance policy from AIG for system failure coverage and a series of excess policies. Under the Liberty policy, the insurer provided excess coverage under the terms of AIG’s cyber risk policy for up to $10 million in losses. Liberty’s policy was above three other excess insurers and AIG, and was only implicated if Southwest’s system-failure-related losses exceeded $50 million. By March 2018, Southwest had collected $50 million from AIG and other insurers on the first three excess tiers. Liberty, however, denied Southwest’s claim by disputing five categories of the airline’s claimed losses. Without those claimed losses, Southwest’s covered losses would total less than $50 million and would therefore fail to trigger Liberty’s policy. Liberty argued that Southwest’s claimed losses in the form of promo codes, travel vouchers, cover refunds, Rapid Rewards points and advertising costs were a result of the airline’s subsequent business decisions and thus not covered. Southwest sued Liberty for breach of contract and bad faith. The district court ruled in favor of 24 | INSURANCE JOURNAL | FEBRUARY 5, 2024

Liberty, concluding that Southwest’s costs were not caused by the computer failure but rather were the result of “various and purely discretionary customer-related rewards programs, practices and market promotions.” The district court also ruled that coverage was barred under two policy exclusions. Southwest appealed. In reviewing Southwest’s appeal, the 5th Circuit said the district court erred in concluding that Southwest’s five categories of costs were all precluded as a matter of law because they were discretionary. The court found the categories met the causation standard for the policy’s system failure coverage provision. The court, however, avoided answering whether the system failure was the sole cause for each of the costs Southwest claims. The court said Southwest would need to explain, for example, how its claims for a week of advertising for a single-day interruption of its ad campaign would not grant the company a windfall. “[Costs] that Southwest incurred for mitigation may be recoverable, but recovery that would put Southwest in a better position than it would have occupied without the interruption would seem to be beyond the scope,” wrote circuit judge James E. Graves Jr. Liberty argued that even if Southwest’s claimed costs are covered, they are barred

under a policy exclusion that says the insurer is not liable for any loss arising out of consequential damages. The appeals court found Liberty’s interpretation of consequential damages too narrow in practice, stating that it may not cover much beyond the cost of technical repairs to Southwest’s computer systems. Liberty’s interpretation would “effectively wipe out entire portions of the policy,” Graves Jr. wrote, pointing out that it would not cover the cost of fines and penalties assessed against Southwest by civil authorities. Liberty presented a second exclusion stating the insurer will not pay for any loss arising out of liability to any third party, interpreting third party to include Southwest customers. The court disagreed with Liberty’s broad definition of third party, arguing that it would wipe out financial obligations to other third parties, including payroll obligations to Southwest employees and fines owed to regulators. “The term ‘third parties’ therefore does not apply to Southwest’s customers and, in turn, does not preclude costs related to Southwest’s payments to its customers,” the panel said. The appeals court remanded the case back to the U.S. District Court for the Northern District of Texas for further proceedings consistent with its opinion. INSURANCEJOURNAL.COM

News & Markets Secondary Perils Drive Global Insured Losses to Estimated $123B in 2023: Gallagher Re

on-peak (secondary) perils and record-setting weather and climate events drove global insured losses from natural catastrophes to an estimated $123 billion in 2023, the fourth consecutive year to exceed $100 billion, according to Gallagher Re’s annual Natural Catastrophe and Climate Report. The report said six of the top 10 costliest insured events were severe convective storms (SCS) — one of those secondary perils — in the United States. Of the total estimated insured losses, private insurers covered $110 billion while public insurance entities covered $13 billion. The global economic cost of all natural perils was estimated at $357 billion — the eighth consecutive year when global losses surpassed $300 billion, Gallagher Re said. When looking solely at climate and weather events, which excludes losses from earthquakes and other non-atmospheric-driven events, insured losses were estimated at $116 billion, while economic costs reached an estimated $301 billion. (Overall economic losses include insured losses.) “We continue to witness an increase in the severity and high-impact frequency of natural catastrophe events. These effects bring multifaceted and complex challenges to the re/insurance industry, as the importance of blending today’s view of risk with the anticipated downstream implications of tomorrow grows more critical,” said Gallagher Re’s Chief Science Officer Steve Bowen in a statement.

drive the highest individual event losses. However, the continued growth of damage from ‘non-peak/secondary’ perils, such as SCS, is changing the way we view and plan for natural catastrophe risk,” Bowen continued.

Protection Gap

The February earthquake sequence that affected Turkey and Syria was the most expensive event on an economic basis, with losses estimated at $46.2 billion, but insurance only covered $6.1 billion of the overall cost, Gallagher Re noted. This natural catastrophe was a significant contributor to the 66% worldwide protection gap — the portion of economic costs from events not covered by insurance. Other events that drove the year’s protection gap included the

Marrakech-Safi earthquake in Morocco, Typhoon Doksuri in China, and Hurricane Otis in Mexico. Additional findings from the report include: Globally, 2023 set records with 66 individual billion-dollar economic loss events and 34 individual billion-dollar insured loss events from all natural perils. Last year marked the warmest year on record (for the modern era dating to 1850) at 1.35°C (2.43°F) above the pre-historical baseline (1850-1900). The combination of anomalous heat and prolonged drought conditions aided in the worst wildfire season in Canada’s modern record. Hurricane Otis in Mexico became the costliest insured event on record for that nation. Typhoon Doksuri was preliminarily the costliest typhoon on record to impact mainland China.

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Severe Convective Storms

Diving into the drivers of the losses in 2023, Gallagher Re said the SCS peril was the dominant factor, making up an estimated 58% of global insured losses. This translates to a record-setting $71 billion, of which the U.S. accounted for $60 billion. “‘Peak’ perils are still anticipated to INSURANCEJOURNAL.COM

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News & Markets Survey: Carrier Connectivity Top of Mind for Agents

gents continue to favor carriers and MGAs that offer automation, ranking ease of doing business and time savings at the top of the list of value they get from connectivity, according to a newly released survey by Ivans. The annual agency-carrier connectivity report, “Agency Digital Technology Adoption Trends” emphasized the increased demand for a more connected insurance ecosystem to improve productivity for all stakeholders. Cost savings, increased productivity and the ability to serve clients faster, leading to more time to submit business were the top benefits of increased connectivity, according to the 1,000 agents surveyed. A majority of agents — 83% — said they would write more business with carriers

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if they provided real-time appetite and quoting within their management systems that made it easier to find markets. Sixty percent of agents reported spending more than 30 minutes submitting a quote to one carrier for a commercial risk. More than half of those surveyed reported submitting to more than four carriers per risk, translating to hours of lost time. “The majority of our respondents reported declination rates above 25% for small and 46% for mid-commercial risks,” the report stated, highlighting the need for carriers to update their risk profiles in real-time to save time and money. Nearly 73% of agencies said they often lose opportunities because they cannot find a market to quote. The most requested item from agent

respondents (55%) was additional tech capabilities in the commercial submissions process, specifically integrated quoting capabilities. The report outlined the top 10 ranked digital connectivity tools agents would like to see. Here are the top five: 1. Policy download 2. Digital document delivery 3. Digital inquiry 4. Digital commercial quoting and submission 5. Digital claims communication/ transparency The most preferred method of quoting was through an agency management system, with 70% of agents listing this as their preference and 22% currently using this method. The preferred method for accessing clients’ policy information is through download via their agency management systems, with 76% of agents reporting they save at least two hours a day per employee using download. How fast a carrier turned around a quote influenced how much business they might receive from an agent. This was especially true in the small commercial market lines. The future, according to Ivans, envisions agents spending less time on submissions while seeing lower declination rates. The latest API-enabled technology directly connects carrier quoting and submissions processes to agency-facing systems with integrated appetite to market, quote and bind business efficiently. “We have long known agent demand for connectivity through Ivans Download, but our latest survey really reinforces the growing demand for connectivity at each stage of the lifecycle, particularly quoting and new business submission,” said Reid Holzworth, chief executive officer, Ivans. “By embracing technology, carriers can provide the quick and easy digital interactions agencies are seeking, opening the door to more profits and better agency partnerships.” INSURANCEJOURNAL.COM

News & Markets Family of Slain California College Student Sues for Wrongful Death Nearly 30 Years Later

he family of a California college student who vanished nearly three decades ago sued the school, alleging it caused Kristin Smart’s murder through negligence. Smart, then 19, disappeared from California Polytechnic State University in San Luis Obispo on the state’s scenic Central Coast over Memorial Day weekend in 1996. Her remains have never been found, but she was declared legally dead in 2002. Paul Flores was arrested in 2021, convicted of first-degree murder in 2022 and sentenced last year to 25 years to life in state prison. Prosecutors say Flores killed Smart during an attempted rape on May 25, 1996, in his dorm room at the university, where they were both first-year students. He was the last person seen with Smart as he walked home with her from an off-campus party. Smart’s parents, brother and sister sued the university for wrongful death and negligence, alleging that officials could have prevented her death if they had properly dealt with university police reports filed by four other female students. Those students said Flores had stalked and harassed them in the months leading up to Smart’s disappearance. In one case, Flores allegedly tried to

break into a student’s apartment, according to the lawsuit. The reports should have prompted the university to investigate, and suspend or expel Flores, removing him from on-campus housing and sending him back home “miles away from Kristin and the dorm room where he murdered her,” the lawsuit said. “Had the university acted properly, conducted a thorough investigation into Flores’ past concerning behavior, and implemented appropriate disciplinary measures, Kristin would likely still be alive today. Instead, our family has been left to grieve her absence for 27 agonizing years,” a family statement said. The suit also contends that the university failed to pursue a proper and timely investigation into Smart’s disappearance, including failing to seal Flores’ dorm room and allowing it to be cleaned before it

was finally searched 16 days after Smart vanished. In an email, Cal Poly spokesperson Matt Lazier said the university had no comment because “this is a pending legal matter.” However, last May, university President Jeffrey Armstrong publicly apologized to the family for how it handled the investigation into her disappearance. “While it is a different administration now than was in place in 1996, we recognize that things should had been done differently — and I personally wish that they had,” he said. The family only realized Cal Poly’s alleged negligence after that apology because relatives didn’t have any access to the university’s investigative file, according to the lawsuit. “Even now, the Smart family still does not know what information, in the possession of Cal Poly’s president, and uniquely available to him and or Cal Poly, led him to make the apology,” the suit said. Copyright 2024 Associated Press. All rights reserved.

Uninsured California Subcontractor Charged with 30 Felony Counts

he California Department of Insurance is urging business owners to verify the insurance coverage for any subcontractor or vendor they do business with after trucking company owner and operator Raymond Youash, 37, of Encino, appeared in court on 30 felony counts of unauthorized use of personal identifying information and forgery. INSURANCEJOURNAL.COM

The charges follow a CDI investigation, which found Youash allegedly created and distributed fraudulent insurance documentation to the businesses that employed him. The department launched the investigation against Youash after receiving a complaint from an insurance broker, finding that for nearly a year, Youash created at least 13 fraudulent certificates of insurance and submitted them to 12 different employers and/or pro-

spective employers. Each of the fraudulent certificates contained forged signatures of licensed insurance agents as well as false information regarding insurance coverage. Youash allegedly created and submitted the fraudulent insurance certificates to deceive businesses into believing he had the proper insurance coverage as required by law, put these businesses at risk of great financial loss. Youash appeared in court for a preliminary hearing. This case is being prosecuted by the Los Angeles County District Attorney’s Office. FEBRUARY 5, 2024 INSURANCE JOURNAL | W1

News & Markets California Reaches $1M Settlement with Cheesecake Factory, Janitorial Contractors

he California Labor Commissioner’s Office reached a $1 million settlement against the Cheesecake Factory Restaurants Inc. and two janitorial

contractors for reportedly underpaying 589 janitorial workers. The investigation began in 2016 after receiving complaints of possible wage

and hour violations of janitors who cleaned Cheesecake Factory restaurants in San Diego County. The workers were employed by Zully Villegas, dba Magic Touch Commercial Cleaning, which in turn was engaged by Americlean Janitorial Services Corp., dba Allied National Services, for Cheesecake Factory Restaurants Inc. These entities were cited in 2018 for unpaid minimum wages, unpaid overtime, liquidated damages and waiting time penalties, as well as meal and rest period premiums. All three entities were held liable under California Labor Code Section 2810.3.

All three entities appealed the citations, and the case settled before going to hearing. Under the settlement’s terms, contractors must provide information on prior wage claims as part of the bidding process with Cheesecake Factory, as well as provide annual wage and hour trainings to janitors. Cheesecake Factory can audit their contractors and agreed to train their managers and those overseeing janitorial contracts to ensure the law is followed. Janitors who worked at Cheesecake Factory restaurants in Brea, Huntington Beach, Irvine, Mission Viejo, Newport Beach, Escondido, San Diego-Fashion Valley and San Diego-Seaport District between Aug. 31, 2014 and Aug. 31, 2017 are being encouraged to contact the Labor Commissioner’s office at (619) 7672039 to see if they are entitled to owed wages and damages under the settlement agreement. 2023 JM Wilson Insurance Journal _v2.indd 3

W2 | INSURANCE JOURNAL | FEBRUARY 5, 2024

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My New Markets Commercial Towing - Pollution Liability

MGA providing best-in-class solutions for the contracting and consulting industries. The contractors pollution liability (CPL) product can be crafted to match the unique needs of the commercial towing/ hauling industry both over the road, and at the insureds fixed-site locations. Coverages include: contractor operations; mold matter; broad transportation; blanket nonowned disposal sites; pollution protective, site coverage for “your location”; communicable disease; and blanket additional insured/waiver of subrogation/primary and non-contributory where required by contract. Premiums and retentions as low as $1,000. Has pen; appointment required. Available Limits: Liability limits of up to $5 million available. Various defense options available, including outside the limit. Carrier: Accelerant Specialty Insurance Co.; non-admitted; rated A- IX by AM Best. States: Available in all states plus District of Columbia. Contact: Jen Staiber, submissions@ stravains.com, 623-473-6261.

for the habitational sector. The programs include apartments, condominium associations and homeowner associations. Can offer up to $15 million TIV per location with minimum premiums starting at $2,500. Claims considered (no open claims or habitability claims). Minimum of one unit or two habitational units plus mercantile (mercantile is measured by area and must be 50% or less of the total). Vacancy rate cannot exceed 25%. Swimming pools are acceptable, subject to underwriting. Five years of loss history is preferred; three years minimum. Roof must be updated after 20 years (except tile and slate). Electrical updates to building built before 1955. No aluminum wiring, glass fuses, Federal Pacific, Stab Lok, or Zinsco panels. Protection classes 1-5. Appointment required. Available Limits: Up to $15 million TIV per location with minimum premiums starting at $2,500. Carrier: Admitted; non-admitted. States: Available in Arizona, California, Nevada, Oregon, Washington. Contact: Eric Magee; emagee@evolutionpartnersins.com; 888-851-2022.

NEMT Insurance Direct

Solar Power Insurance Programs

Market Detail: STRAVA Specialty is an

Market Detail: NEMT Insurance Direct

offers quality insurance coverage for non-emergency medical transportation or paratransit companies. One carrier, all coverages — auto liability, auto physical damage, general and professional liability. A leading insurance specialist for non-emergency medical transportation, NEMT Insurance Direct offers a comprehensive program tailored specifically for NEMT businesses. Available Limits: Not disclosed. Carrier: Not disclosed. States: Available in Alabama, Colorado, Georgia, Mississippi, Missouri, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginia, Wisconsin. Contact: Kristin Losordo, klosordo@ nemtinsurancedirect.com, 800-926-6771.

Habitational Programs

Market Detail: Walsh Carter and Associates offers solar power insurance programs. WCA’s renewable energy practice has more than 20 years of experience in the insurance industry. Its marketing programs are aggressive and specifically client focused. Specialties include: builders risk; property and operations risk; loss of tax credits and rebates; loss of revenue; general and products liability; errors and omissions coverage. Our strategic goal is to provide optimum property/casualty insurance services to an industry that is both unique and progressive. Renewable energy

is a vital resource to our world’s total energy requirements and our commitment is to apply standard commercial principles to the blend of insurance requirements for the solar power industry. Walsh Carter has been working with solar developers, contractors, and hardware manufacturers since 2008. $200 million maximum premium; $5 million minimum premium. Available Limits: Not disclosed. Carrier: Non-admitted; rated A+ by AM Best. States: Available in all states plus District of Columbia. Contact: Christina Bowman-Jones, cbjones@walshcarter.com, 415-407-7736.

Admitted Dealer & Repair Insurance

Market Detail: Cochrane & Company offers insurance for dealers, mobile repair, service operations. Garagekeepers available limits: legal liability and direct primary available; in tow/on hook coverage available. Dealers physical damage coverage: high valued vehicles acceptable; multiple lots and high lot limits acceptable; false pretense coverage available. New ventures accepted; property coverage — building, contents and business income; sign coverage; auto dealers errors and omissions liability available; most vehicles that are used in the business are eligible to be scheduled; ability to include general liability related operations. Has pen; appointment required. Available Limits: Various. Carrier: Admitted. States: Available in Arizona, California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Texas, Utah, Washington, Wyoming. Contact: Tiah Barbero, tbarbero@ cochraneco.com, 509-838-0655.

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Special Report: Wishes & Predictions

By Andrea Wells

o one can predict the future, but insurance professionals are likely the best qualified when it comes to predicting risk. For this special report, Insurance Journal asked industry thought leaders their predictions for the property/casualty world in 2024 and what they’d wish for if they could have what they wanted. Here’s what they had to say.

‘Only a Matter of Time’

A look back at the severe weather events in 2023 paints a somewhat unusual picture where many catastrophe events broke records in regions that are not historically prone to such disasters. Heat waves were hotter and longer, flash flooding was more devastating, and wildfires burned more acres than ever before. Climate professionals maintain that climate change, evidenced by rising

28 | INSURANCE JOURNAL | FEBRUARY 5, 2024

temperatures, is one cause of worsening catastrophe trends,” says Jerry Theodorou, policy director, at the free market think tank R Street Institute in Washington, D.C., “The implications of the trend of more numerous and more destructive catastrophes should send a message that more frequent, and more powerful catastrophes can be expected,” Theodorou wrote in a December report titled, The Truth About Catastrophes.

“The knowledge that climate change is real and that it contributes to disasters means that individuals, communities, counties, states and the country must first recognize the risks, and then act to protect property, and — insofar as possible prevent losses.” Theodorou, who has held leadership positions in or around the insurance industry since the mid-1980s, says memories are short in property/ casualty insurance. INSURANCEJOURNAL.COM

The severe events of 2023 show that tail events are not as rare as they used to be. “While the focus of natural catastrophes has traditionally been on landfalling hurricanes in Florida and the Southeast United States, in 2023, we witnessed several rare disasters occurring in unexpected locations, including a California hurricane (Hilary) and Vermont flooding,” Theodorou said. The torrential Sept. 30, 2023, New York flooding event was also a lesson in potential flood magnitude. “And of course, who’s going to remember 1861, but in 1861 and into early 1862 in California, there was The Great California Flood where it rained for 40 consecutive days and nights,” Theodorou told Insurance Journal. “I mean, it sounds like something out of the Old Testament, The Great Flood,” he said. The event was so significant that it changed the economy of California from ranching to farming. The event covered 70% of the state and was so severe that Governorelect Leland Stanford traveled to Sacramento in a rowboat to his inauguration. “Scientists called that storm an ARK storm, ‘A’ for atmospheric, ‘R’ for river and ‘K’ for a thousand because it was thought that such a severe event could only happen once in a thousand years,” Theodorou said. “But we’re seeing more and more atmospheric rivers, and it’s only a matter of time before we have another storm of that kind of magnitude like we had in California.” This is why Theodorou wishes that in 2024, at least in California and Florida, that there is a slowdown in building INSURANCEJOURNAL.COM

in the riskiest regions. “What we need to see is a cessation of building in places that are catastrophe prone, such as those in the wildlife urban interface in California that’s exacerbated with wildfire losses,” he said. “And in Florida, which is a place that attracts people. Fort Myers, which was hit a couple of years ago by a hurricane, is attracting lots of new people. I mean, it’s lovely to see the ocean from your bedroom, what a beautiful sight it is. But when the ocean is actually in your bedroom or in your living room, it’s not so much fun.”

Playing Defense

According to Tony Caldwell, author, speaker and mentor to independent insurance agencies (and regular columnist in Insurance Journal), 2024 will be a year where agents will need to play defense more than ever before. Capital markets have changed permanently over the past few years and that has fundamental consequences for what’s going to happen to insurance, Caldwell said. Insurance companies were dealing with cost pressures before 2020, but those cost pressures dramatically increased in the face of deteriorating balance sheets as carriers were hit with record catastrophe losses in the past three years that they weren’t prepared for, Caldwell added. Add in inflationary pressure and the end result is something that will take many insurance companies years to “dig out from,” according to Caldwell. “And so, they’ve got to try to control costs while they survive.” That means reductions in agent commissions

and compensation will likely continue for the next two or three years, Caldwell predicts. “Agencies have to be prepared for some of that cost pressure to be taken out on them,” he said. Caldwell predicts that 2024 will deliver growth opportunities for aggressive agents, and carriers — more than in 2023. “We were so busy in 2023 trying to stay alive and trying to keep our customers insured … that a lot of people didn’t have time to go out and aggressively prospect for new business. 2024 could provide good opportunity for that prospecting.” But he warns both carriers and agents to be cautious in 2024, as well.

‘Fundamentally, focus on making money from operating income, not from contingencies and controlling expenses. “This isn’t the year to go out and make a bunch of investments necessarily, but it is the time to really focus on running the business. Fundamentally, focus on making money from operating income, not from contingencies and controlling expenses,” he said. “Then, continue to take advantage of the opportunity that really was there in 2023 and I think will be even greater in 2024, which is to go out and look for customers who are frustrated and tired of all these increases they’re having to pay.” That means agents and carriers both need to play really strong defense in 2024,

Caldwell suggests. “The first thing that I think agents should do, and often don’t do, is educate their customers on what’s happening to them in the market so that they have context for it,” he said. “Also reinforce that role of the trusted advisor that independent agents want to foster.” Second, Caldwell suggests that agents should make sure they are giving their customers choices, which is fundamental to the independent agency value proposition. “If a customer’s going to stay with their insurance carrier in ‘24, they need to at least see what their options are because if you don’t provide them (with options) as the incumbent agent, somebody else is going to and you might lose the business.”

Technology Evolution

Connecting with technology vendors and carrier partners more easily and efficiently remains a top concern for independent agencies. A recent IVANS survey found that 83% of agents reported they would write more business with a carrier if that carrier provided real-time appetite and quoting within their management systems. How fast a carrier turns around a quote directly influences how much business that carrier might receive from an agent, the survey revealed. The hard insurance market has forced an uptick in remarketing of accounts, at very high volumes, during the last few years. This has been a significant driver in technology innovation and adoption, Taylor Rhodes, CEO of Applied,

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Special Report: Wishes & Predictions continued from page 29 told Insurance Journal. “That demand driven by consumers is forcing agencies and carriers to get more digital, and to act more like a modern entity — like something you might experience outside of the insurance industry,” Rhodes said. “Consumers demand that they must move faster.” He sees this continuing in 2024 and beyond. The use and development of artificial intelligence (AI) tools will also remain a hot topic in 2024, Rhodes predicts, even if it’s a bit of “hype” right now. Rhodes compares the AI focus today to that of early “cloud” technology in the past where suddenly every new tech called their products “cloud.” “Every company out there will start to ‘AI-wash’ their products just like in early cloud adoption,” Rhodes predicts, who previously served as the CEO of Rackspace, an early cloud pioneer that grew to a $2 billion organization. But he does see AI integration in insurtech maturing this year, with the next wave of insurtech investment focused on the AI lifecycle. “We will see a lot of startups this year changing their brand to ‘AI’ but in reality the more powerful AI capabilities will start to mature later in 2024 and beyond,” he said. Ultimately, AI tools for the industry will be a gamechanger. “They will change the way you do sales and marketing. It will change the way you do underwriting and will change the way that you drive productivity internally.” AI innovation is ideal for the P/C industry, he added, because there is so much data available for AI to build

from, he adds. “AI learns off very large data sets and spots patterns to create insights and recommendations and presents new content generated from studying that data,” he said. Rhodes thinks that the insurance industry has always held the promise of using data to find solutions. “Yet the industry has done a really poor job harvesting the power of that data,” Rhodes said. “Sometimes it’s because there aren’t data standards, sometimes it’s because it’s very costly with tools to go out and actually structure that data and make sense of it.” But AI is promising to be the next efficient and a highly effective way to turn data into products, insights and capabilities, he said. “Whether that’s at a point of renewal or it’s at the point of cross-sell and upsell, or account rounding, or what have you, AI offers the promise of doing things in new and exciting ways,” he said. “I wish I could say I think 2024 is not going to be as interesting a year as the past few,” Rhodes added. “I think it’s going to be another very fraught year, and that creates risk, but it also creates new business opportunities.”

Opportunity Ahead

Despite the past few years

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of hard market pricing, most agencies continue to grow both on the retention side and the new business side, says Doug Mohr, Vertafore’s vice president, industry relations and partnerships. “What’s really surprising is the volume of new business on personal lines,” he added.

‘What’s really surprising is the volume of new business on personal lines.’ Mohr believes a lot of that growth from his agency customers is coming from direct writers. “Because if you think about it, in a hard market when premiums go up, customers want to shop rates, but if you’re with a direct writer, you can’t shop, you’re stuck.” He said Vertafore “bestin-class agents” are using marketing tools like its Agency Zoom or Orange Partner or solutions like ClientCircle, Agency Revolution, Levitate, or Pathway to stay in touch digitally with their customers. “Our independent insurance agents build their business on relationships with their policyholders, but it’s the technology that allows them to extend and augment their physical or virtual relationship with that customer,” he said. This will continue because agents need it, he says. Marketing automation, electronic payments, e-signatures, digital phones, and seamless integration — everything that’s happening in the office should be able to extend to a virtual office environment, he said. “We saw increased adoption on all four of these areas after the pandemic hit in 2020, but

there’s still room for improvement,” he said. His wish for agencies in 2024 is that the adoption of such tech tools will continue and advance even further. His prediction for 2024: The hard market will continue.

Aggregation of Aggregators

Matt Masiello, CEO at SIAA, says this will be a year of transition for some agencies and their agency network partners. “The market will see (marginal) improvement with the second year of compounding rate increases — this assumes there is not some level of a recession whereby consumers cannot stomach the increases and opt for lower coverage options — premium increases are improving carrier results and the underpricing of the industry in many lines of business,” Masiello said. “The hardening market has been good (albeit painful) for the health of our industry,” he said. He cautions agents: “We need our carrier partners to be healthy with the ability to invest in innovative product and service capabilities. While we’ll begin to see profitability, agencies, networks, or organizations that haven’t proved they can support carrier profit initiatives will likely take longer to move into a favorable and growth-oriented position with other carriers.” This will cause a divide between successful and struggling agency networks, according to Masiello. This also means M&A activity should accelerate if inflation isn’t sticky and rate cuts are realized, he added. He predicts that carriers that were once opposed to doing business with an agency network will be more open to

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2023 AGENTS of the Year Welcome to Insurance Journal’s Agents of the Year report. This report features 20 agents who defined what it meant to be a successful independent agent in 2023. These agents are more than top sellers. While they have achieved impressive success in sales and demonstrated laudable business intelligence and entrepreneurial skills, they also have shown they have a passion for what they do and a commitment to professionalism and, in many cases, specialization. For them, being an insurance agent is more than a job. Insurance Journal’s Agents of the Year come from all regions of the country, live and work in cities or towns big and small, and know the importance of giving back. Information included in this report was voluntarily submitted online by agents and was supplemented by other public information sources. There are

Christina Downs Prestige Trucking Insurance Tamarac, Florida

David Clausen Coastal Insurance Solutions Rocky Point, New York

A specialist in commercial trucking insurance, in fewer than nine years Christina Downs has grown her company, Prestige Trucking, from a solo operation to one with more than 70 employees and she’s not stopping there. She added an office in Illinois in mid2023, and while most of her team is based in the Tamarac, Florida, home office, she has employees situated in locations across the United States. Her team strives “to bring truckers unbeatable prices and service,” Downs says. But they are also expanding into other lines of insurance, such as personal auto. Her goal is to become the “Disneyworld of Insurance!” Downs says. To be successful in the business, it’s important to not only know the products and services you provide, but also to “have confidence in what you sell,” Downs advises. “Make calls and be diligent about follow-ups.” Being able to provide the greatest service and prices for Prestige’s insureds is the most satisfying part of her job, she says. “I know we try our hardest to provide the best service and prices by shopping around diligently and providing real-world answers.”

David W. Clausen’s roots in the insurance world trace back to his early days at his family’s local agency, where he started with basic tasks like trash disposal. But his fascination with technology soon made him the go-to for tech-related issues at the agency. After college, he rejoined his family’s business as a full-time employee and soon became a top producer. In 2003, he launched Coastal Insurance Solutions in Rocky Point, New York, focusing on the high net worth market, including luxury home and flood insurance. He is the CEO at Coastal Insurance Solutions, and his passion for technology continues. Clausen has published over 300 articles and parlayed his technical savvy and innovative digital marketing strategies into a reputation as an expert in the insurance sector. Clausen said finding a niche and partnering with carriers who share that expertise is essential, but so is effectively reaching out to clients looking for those specific coverages. “I plan to stay ahead of the curve by aiming to adopt emerging technologies and innovative marketing tactics to keep my services relevant and accessible to a broader, yet still targeted, audience,” Clausen said. “This dual approach of niche specialization and advanced digital marketing will be key to not only maintaining but also expanding my position as a top agent in the coming years.”

many more agents who deserve mention than are profiled. For more information, contact Andrea Wells at awells@wellsmedia.com. 32 | INSURANCE JOURNAL | FEBRUARY 5, 2024

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2023 AGENTS of the Year Martin Fox-Foster Relation Insurance Services Walnut Creek, California

Cameron Annas Granite Insurance Granite Falls, North Carolina

Kimberly Perrine Perrine Agency Inc. Maple Grove, Minnesota

With more than 20 years of experience in the insurance industry, Martin Fox-Foster says he’s “passionate about guiding clients through the complexities of commercial insurance coverage to ensure that clients benefit from robust risk management advice and coverage tailored to their needs.” Fox-Foster began his career in the industry as an attorney at a Londonbased specialist insurance law firm and ultimately became affiliated with Relation Insurance Services through G2 Insurance Services, a boutique firm in San Francisco. He also previously served as an assistant vice president at Alliant Insurance Services in San Francisco. Fox-Foster says his deep knowledge of coverage developed during his early work as an attorney has served him in growing his book of business, and honing his skills and abilities to serve clients. Getting to know his clients and their businesses “is important to me,” FoxFoster says. He feels he brings to clients the “knowledge to help them make informed decisions about their insurance.” He would advise new agents “to learn the coverage that you are selling to clients. That is the basis of everything you do. Actually, understanding insurance and being able to communicate this and making clients confident you are taking care of them will give you a long-term sustainable book of business and career.”

Cameron Annas combines insurance with adventure and entertainment. The Granite Insurance CEO also serves as the national practice leader for the adventure and entertainment team, which over the past seven years has grown from just one client to over 400 throughout all 50 states from its headquarters in Granite Falls, North Carolina. Annas joined Granite in 2013 as a business risk consultant and quickly realized he wanted to narrow his focus. “Choose a niche in year one,” Annas advises. “If it doesn’t pan out, move to another niche. However, don’t be a generalist and get sucked into that trap. You’ll be 10 years into your career, still being a generalist, and not delivering huge value to a specific niche.” Annas said insurance and risk management solutions in the adventure and entertainment industry can be challenging. His book consists of unique risks ranging from amusement parts to zip lines. These risks often present challenging complexities when delivering the proper insurance and often come with high severity when claims do occur. But by specializing, Granite Insurance’s team is able to bring non-insurance solutions to the table, such as risk management, data and analytics, industry studies, and benchmarking, he says. While it can be difficult due to the nature of his specialty, Annas says the most satisfying part of his job is knowing he helped a client in a challenging market. The best thing about being an agent is “hearing a client say, ‘Thank you, you’ve helped us be more successful, and because of that, we are proud to partner with you.’”

When it comes to cannabis coverage, Kimberly Perrine was an early adopter. “Recognizing the growing significance of the cannabis industry, I strategically shifted my focus exclusively to this niche in 2018,” says Perrine. “This decision allowed me to stay at the forefront of industry developments and tailor insurance solutions to the specific needs of cannabis businesses.” Today, Perrine is the chief operating officer, and a commercial and personal producer, of the Perrine Agency in Maple Grove, Minnesota. Early on, she developed and implemented comprehensive risk management strategies for cannabis clients, ensuring compliance with evolving regulations and navigating the complex legal and regulatory landscape. She also collaborated with underwriters and carriers to create specialized insurance products catering to the cannabis industry. Six years later, she has strong relationships with businesses from startups to established enterprises. “Networking is crucial for my personal and professional development, and its importance extends across various aspects of life and career,” she says. “The power of networking lies in the potential for collaboration, growth, and support.” As the industry and its laws evolve, she plans to continue developing innovative and adapted coverage options to address emerging risks and stay ahead of industry trends. The best part of her job — helping others. “I would have to say the best part of the job is initial education on the complexities of insurance and why it is important to have options for your future.”

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2023 AGENTS of the Year Tony Hopkins The Horton Group Waukesha, Wisconsin

Cal Garretson Oakbridge Insurance LaGrange, Georgia

Ron Pascucci Woodruff Sawyer San Francisco, California

Tony Hopkins, senior vice president at The Horton Group, is an enthusiastic proponent of specialization in the insurance business. He says the best advice he “received for growing as an agent is the importance of specialization. It’s crucial to find a niche … and immerse yourself in it,” Hopkins says. His niche areas are gas and welding, and mergers and acquisitions, and he is an acknowledged expert in both. That specialization not only drives the growth of his book of business, it also differentiates him and his agency from the competition. The Horton Group’s “approach has been to specialize in niches that are not easily imitated. This specialization isn’t just a claim on our website; it’s a genuine, deep-rooted expertise,” Hopkins says. Part of that specialized service includes partnering with clients as an “outsourced risk management partner,” which at The Horton Group is seen as “a long-term investment for both clients and staff,” Hopkins says. He believes a comprehensive risk management strategy for clients goes well beyond simply buying insurance. “True risk management programs include ‘company killers’ issues, such as succession planning, organic growth, operational efficiency, diversification, innovation and corporate culture,” he says. Hopkins would advise new agents to find specific areas of focus where they can set themselves apart. “A good specialty is one where your knowledge and expertise can make a tangible difference ... This approach not only helps in building a solid client base but also in establishing yourself as an expert in a particular field,” he says.

Like many others in the sector, Cal Garretson didn’t begin his working career in the insurance industry. But a fallen business venture opened his eyes to the opportunity that the industry has to offer. “I came to the insurance industry after developing a restaurant franchise concept that ultimately failed. It was the process of filing an insurance claim that opened my eyes to the opportunities that effective risk management and superior customer service could provide,” Garretson says. “From that venture, I also learned the crucial value of building a team of highly capable, motivated professionals.” He entered the business of insurance in 2012 at Waites & Foshee in Macon, Georgia, which ultimately joined with three other Georgia-based independent agencies to form Oakbridge Insurance. Now a partner at Oakbridge, which is a Top 100 Independent Insurance Agency, Garretson was named the company’s producer of the year for 2023. He and his team of 12 risk management professionals focus on providing risk management solutions for site preparation companies in the utility construction sector. He says as a former business owner he’s keenly aware of the value of risk management, and so he and his team strive to “provide best-in-class customer service.” To a new agent, Garretson would say “just be yourself … know what you’re good at, focus on that. Seek out expertise to elevate your weaknesses.” It’s a hard lesson to learn but an invaluable one, he says.

Since joining California-based Woodruff Sawyer in 2015, Ron Pascucci’s primary focus has been on the life sciences and technology industries, particularly those navigating a journey toward an IPO. From his base in Massachusetts, Pascucci has cultivated a client base among these types of companies, for which the Boston/ Cambridge area is a hub. His book comprises an 80/20 client base split, with the emphasis on life sciences. His core specialty lies in management liability, with a particular focus on the IPO process, a specialization Pascucci has honed over the years. He also manages substantial product liability and cyber liability portfolios, particularly for companies in the life science/technology niches. His expertise serves as a valuable resource for companies approaching an IPO, where venture capital is involved. “I’m quite familiar with the demands of VC-backed enterprises. Our specialization in providing D&O, Cyber, and Product Liability coverage positions us as a trusted partner, meeting the unique insurance needs of these industries,” Pascucci says. To younger, less experienced agents, he would say: “‘Get out of the office.’ This simple yet profound advice has been a guiding principle in my business development. … Building relationships outside the confines of the office has proven to be a catalyst for business growth and meaningful connections.” That said, Pascucci acknowledges another key to growing his book of business has been the support of the “all-star team of experts alongside of me … I could not do this job without them.”

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2023 AGENTS of the Year Brent Allred Higginbotham Chattanooga, Tennessee

Justin Goodman Assured Partners Foothill Ranch, California

Learn something new every day and be up for a challenge. That’s the advice of Brent Allred, managing director at Higginbotham, heading up the company’s national trucking insurance specialty practice from his home base in Chattanooga, Tennessee. Allred began his career as a general commercial lines producer, but soon narrowed his focus to trucking. “I knew that in order to be one of the best in my area of focus, I needed to know more than the average producer I was competing against,” he says. He earned not only professional insurance designations, but also became involved in the trucking industry. He is one of only two insurance professionals serving as an active member on the American Trucking Research Institute. He also works closely with the American Trucking Association to help prioritize and publish research important to the trucking industry. A big part of his success stems from educating prospects and clients and steering insurance decisions away from just price. “Anyone can sell a cheap price at least for a little while, Allread says. “I am selling the prospects and clients long term stability.” Allred advises younger agents to work on learning something new every day. When things get hard most will give up and do what is easy, he says. “Insurance sales is not for the faint of heart, and no question you will be challenged every day in this career.”

Justin Goodman is part of an insurance legacy and eager to pass on everything he’s learned. Goodman started his career in 2002 as a third-generation insurance agent. In 2012, he launched his own agency, Goodman Insurance Services, with his brother. “I was fortunate enough to be mentored by my father with a focus on artisan contractors until his retirement a few years later,” he says. It was the optimal time to launch his own firm. “I was fortunate enough to scale the company leveraging digital marketing strategies that are now commonplace while also building custom programs for contractors in California.” In 2021, the brothers sold their company to Assured Partners. Today, Goodman is the area president at Assured Partners Foothill Ranch and CEO of Total CSR. For the last six years, he has spent much of his time educating and speaking at industry events. His training programs have been used by more than 20,000 new-the-industry hires. He advises new agents to work on building a strong network in the industry. “While we all compete against each other, everyone, and I mean everyone, is willing to invest in your growth if you just ask,” he says. “Your resources are not limited to just the agency you work for, and any agency that tries to tell you otherwise, should not be your employer.” For Goodman, the most satisfying part of his job is watching that “lightbulb go on in a new-to-industry hire where they realize they haven’t just found a new job, but rather a purposeful career.”

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Erika Wilson Goods Insurance Agency Inc., a PCF Partner Leola, Maryland Erika Wilson has kept on truckin’ for almost 31 years — insuring trucking that is. Wilson, a producer at Goods Insurance Agency, a part of PCF Insurance, in Leola, Maryland, got her love of trucks from her father, who was a heavy-duty truck salesman for 45 years. “I learned the love of honest, hardworking sales from him and followed in his footsteps,” Wilson said. She started as a secretary at a trucking insurance agency after high school and worked her way up to full-time producer. “To be a great trucking insurance producer, you need to know the trucking business,” says Wilson. “You must be 100% hands on and be prepared to answer any and all questions that affect their business.” She also runs her own small trucking service agency, helping clients who want to launch their own trucking companies. “The trucking industry is my family, and they know I eat, sleep and breathe their business,” she says. “I want them to know I have their backs and will make sure they are protected with a quality insurance company that will be there when they need it the most.” She would advise those new to the business not to be shy about their own successes. “Share your wins,” Wilson says. “We are part of a social media revolution, where over-sharing has become the norm. So, blend right in and share your wins. I have a huge presence on social media and when I share my wins, it always results in new business ... always.”

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2023 AGENTS of the Year John McConnell McConnell Insurance Murray, Kentucky

David Hale Hale & Associates, a PCF Insurance Services of the West partner Fairbanks, Alaska

Gerald Hemphill GFH Insurance Agency Inc. Richmond, Virginia

Giving back to the education sector has been a career mission for John McConnell of McConnell Insurance in Murray, Kentucky. The agency’s primary focus is insurance for schools and teachers. “We focused on the public sector as a way to give back,” McConnell says. “In Kentucky, our teachers are around 40th in the nation on pay scales. The products the team puts together will typically save a teacher enough to account for a 1% pay increase.” McConnell says his agency takes pride in how it services clients while also giving back to the education community. The 70-year-old agency was founded by McConnell’s uncle in the small, west Kentucky town of Marion. His uncle retired after 45 years in the business. In 2021, the agency joined PCF Insurance Services, which expanded its resources and connections across the county. While long-time relationships are critical for creating a solid foundation for business, his best piece of advice for those new to the industry is to keep putting yourself out there — meet new people and get involved in community and industry organizations, McConnell suggests. “To make those types of relationships work you need to be uncomfortable sometimes,” he says. Joining new associations, new organizations, and putting yourself in a place of influence are important to building a successful book. “Find that market you enjoy and needs your expertise. You can make it!”

Insuring construction in Alaska adds a whole new spectrum of challenges, said David Hale, president and principal of PCF Insurance Services of the West DBA Hale & Associates in Fairbanks, Alaska. “Working in Alaska has its challenges over the lower 48,” Hale said. “We are dealing with a short building season and extreme weather (-40 degrees) along with several months of darkness.” After a first career in plumbing, in 1986 Hale entered the insurance industry, joining Corroon and Black Dawson Insurance, which later became Willis of Alaska. Hale served as president and CEO of the Fairbanks and Anchorage operations until 2007 when he acquired the Fairbanks office book of business and formed Hale & Associates. Hale focuses on construction, government and nonprofit clients, and keeps busy outside of work by serving on boards for several industry and community organizations. He says his proudest moments have been when his children, Britany and Michael, joined the agency. Connecting to a wide range of people by being involved in various organizations, projects and sports activities has helped Hale build more than a book of business, he says. It helps his community and allows him to be a resource for clients and non-clients alike. “The most satisfying part of the job is being there for the client when in need (claim) and knowing you did your job correctly to make them whole again with little interruption to business,” Hale says. “Always do what best for the client,” he says.

Gerald Hemphill has been an insurance agent in the metro-Richmond area since 1993, and now serves as principal of his own agency, GFH Insurance Agency Inc., in Richmond, Virginia. Lori and Gerald Hemphill, G.F.H. Insurance Agency Inc.’s two principal agents, offer nearly 40 years of combined insurance industry experience. Hemphill represents all lines of insurance, specializing in commercial insurance risks. The company covers everything from home and auto to weddings and special events, farm/ranch and equine, manufacturing and funeral homes. It’s important to not only build trust with clients but to build a culture of trust and relationships within the agency. Long-lasting success requires keeping the relationship-based processes while adopting new technologies for the perfect balance of efficiency and the “person-to-person” experience, Hemphill says. “This is a relationship-based business, keep your eye on that ball,” Hemphill advises. “And the most important relationship is (your relationship) with your agency staff.” That makes the difference in the culture of an agency, he adds. Hemphill says there’s never been a better time to be an independent agent than today. It’s a career that offers many options. A good professional agent with competent insurance policy knowledge means that “direct and tech writers can’t compete.”

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2023 AGENTS of the Year Robin Barlow PeopleFirst Property Casualty Services, an Acrisure Company Easton, Pennsylvania For nearly 25 years, Robin Barlow has been actively engaged in insurance sales and consultation. Prior to joining PeopleFirst, Barlow worked as a senior account manager with Wachovia Insurance Services (Wells Fargo) and senior vice president of the community association division with Brown & Brown Insurance. She specializes in sales, consulting and renewal of insurance products and services for condos, HOAs, active adult resort communities and apartments in several states. Being able to offer mentorship and expertise is one of the greatest signs of success, according to Barlow, who is currently senior vice president at PeopleFirst P&C, in Easton, Pennsylvania. Barlow says that establishing a niche or segment of business has helped her become a top agent. She enjoys helping others grow in the business to achieve that same level of success. “Someone told me to plan your work and work your plan,” she says. “You have to be competitive but also need to be able to handle rejection.” She says: “While you may have a plan, working that plan can take time, so set personal goals, stay focused, and know that eventually you will succeed.” While persistence is critical, “it is also key to understand when to move on ... don’t let an account you may not win consume you.”

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Mike Robertson Premier Choice Insurance LLC Mesa, Arizona

Ryan Steinberg Texas Prime Insurance Agency LLC Houston, Texas

Mike Robertson and his wife, Jennifer, started their independent agency, Premier Choice Insurance, in 2015 with zero policyholders. They have since grown into one of Arizona’s fastest-growing and most highly rated insurance agencies. Premier Choice Insurance LLC in Mesa, Arizona, specializes in providing insurance and risk management solutions tailored to artisan contractors, encompassing fields such as electrical, plumbing and HVAC, as well as services such as pest control, auto repair, and transportation. “Our commercial team has several decades worth of experience to help our commercial clients be properly protected while maintaining an affordable rate,” Robertson says. Referrals come from happy customers and less likely sources, he adds. His recommendation to new agents — make friends with captive agents. “I would tell a new agent entering the business to network with captive agents. They can refer you clients that they aren't able to help,” Robertson says. “Over the last eight years building our independent agency, we have built many strong relationships with our clients, loan officers, captive agents and tradespeople,” Robertson say. “These connections have translated into a consistent referral source that has helped us grow exponentially year after year.” He said that watching his team grow, learn and serve clients is the most fulfilling aspect of the job. “Their commitment, empathy, and dedication to our clients are truly commendable.”

Ryan Steinberg had only worked in the insurance industry for a year when he knew it was time to start his own independent agency. In 2010, he founded Texas Prime Insurance, based in Bellaire, a small city within Houston, Texas. The agency specializes in high-value home, auto and umbrella bundles. Steinberg attributes much of the company’s growth to word-of-mouth referrals and recommendations from existing clients. “This is the best form of marketing, and we pride ourselves on it.” The most satisfying part of the job is being able to help clients who, when faced with a large claim, are relieved to have the coverage they need. “They are appreciative of the advice we gave them when selecting their policy terms,” Steinberg said. “We have truly gained the trust of our clients, and they value our opinions on everything.” The team’s dedication shone through when Hurricane Harvey hit Houston in 2017. “This was an extremely difficult time for many Houstonians, and we leapt into action for our clients the day of the hurricane,” Steinberg says. “Even without power in my own home and office, I was working remotely from family members’ homes to assist all of my clients in filing claims, reviewing policy details and simply being a shoulder to lean on. “I feel proud of what I provided for my clients during one of their most difficult times.”

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2023 AGENTS of the Year Michelle Sangster SJP Financial Group, LLC Broomall, Pennsylvania

Chase Carlisle Carlisle Insurance/Acrisure LLC Corpus Christi, Texas

Troy Sibelius The Buckner Company Denver, Colorado

Michelle Sangster never imagined starting her own agency at the age of 50. But in 2021, she launched SJP Financial Group LLC, based in Broomall, Pennsylvania. “My proudest moment was taking a risk, during a global pandemic, to launch my own insurance agency,” she said. Now celebrating 30 years in the industry, Sangster began her insurance industry career in the mail room at a globally known managing general agency. She subsequently worked as an underwriter, moved to the brokerage side, and worked her way up to the executive level. For more than two decades, she managed other agencies and helped them achieve their goals. She said the best career advice she received was to show up every day willing to learn and ready to outwork your opponents. “I would tell new agents that there is a great career path in insurance with so many disciplines to choose from. Research to find your interest, decide to commit, and do not take shortcuts to becoming successful.” Sangster’s greatest reward has been that several major clients she serviced for over two decades through two different agencies chose to partner with her new agency based on trust and exceptional customer service. “In addition, my colleague of 23 years also chose to join me in what we affectionately and humorously consider our ‘last act’ in the insurance industry,” she says.

Chase Carlisle is more than an agent to his clients, he’s a team member. He began his career as a commercial property adjuster for Travelers but eventually left to join the family agency as a fourth-generation insurance professional. Carlisle now is vice president at Carlisle Insurance/Acrisure LLC in Corpus Christi, Texas. The company merged with Acrisure in 2018 and he currently serves as the energy practice leader. Carlisle says the most valuable lesson he’s learned during his career is not only to put clients first, but to become a part of their team. “I always put my clients first and make sure no email or call goes unanswered on a daily basis,” he says. “We are a service-based industry, so I make sure that I provide excellent service.” It’s not enough to just sell a policy and wait for a call. “I also become part of their business team,” he says. “By helping them solve their problems they value me and trust me.” “Be an advisor and problem solver for your clients,” Carlisle says. “Figure out what they need help with and figure out a way to help. The money will follow if you do the right thing.” He adds: “I love being able to help people and feel part of their team.”

Troy Sibelius, executive vice president and producer in The Buckner Company’s Colorado office, has a plaque in his office that states: “Don't be afraid to ask dumb questions, they are easier to handle than dumb mistakes.” That’s because he knows how difficult it is not only to understand insurance but also to explain it to one’s customers. Sibelius says he learns new things about insurance coverages and risks “on a daily basis,” and enjoys helping other agents work out solutions to better serve their clients. Within his own book of business, Sibelius represents clients in multiple industries, but specialty areas include landscape architects and contractors, as well as a variety freight brokerage risks, like specialty shipping and transportation. He recently joined forces with another seasoned producer to team sell in the landscape niche, which “has been a very fun and new way to approach the sales process.” The insurance industry is “very competitive and extremely stressful, so we all have to figure out ways to make it fun,” he says. Participation in various trade industry associations has been instrumental in helping to grow and sustain his book of business, as has been the process of continuously educating himself and his clients on the particulars of insurance. Ultimately, Sibelius says, there’s “nothing better than having a client leave and then come back after they realize they like working with you and your team better. Your team is critical.”

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Idea Exchange: Ask the Insurance Recruiter Insurance Agency Client Service Hiring Trends For 2024

very year, I think of this annual first column as a crystal ball that shows trends in the insurance job market for the foreseeable future. In previous years my projections have been about “hot jobs,” like in “4 Progressive Jobs Insurance Agencies Will Hire in 2021.” This year, my gut read is that insurance agency hiring will be less about niche roles and more focused on solving problems created by recent talent shortages.

Regional Service Teams

Insurance agencies big and small alike struggle to find experienced insurance talent, which makes company size less of a factor than location. The bigger the zip code the easier it is to find more insurance candidates. I’ve seen a lot of firms that have acquired agencies in small and rural markets struggle to fill every level of client service role — CSR, account manager, and account executive. There simply isn’t enough insurance talent in these communities to easily replace veteran positions. That’s why I believe insurance agencies will start recruiting regional service teams. They can strategically target markets with large pools of experienced insurance talent. Employees centralized in one office support smaller agency locations within a reasonable driving distance to attend client and team meetings. Additional benefits of regionalization include controlling overhead, maintaining pay equity, stream-

lining training, improving efficiencies, and making it easier to manage service employees.

Dual Service Roles

Cross training is more common than you might think. Internship and newbie training programs expose young people to all facets of the agency’s divisions before ultimately deciding on a specialty. Expect the trend of dual roles to continue for experienced insurance professionals, too.

Cross training is more common than you might think. Agencies are cross-training marketing specialists to handle claims advocacy and employee benefits financial underwriting specialists to also manage key accounts as an account manager. Duality has a lot of benefits: • It gives every employee a back-up to help when they are out or during peak service seasons. • It buys time for agencies to replace vacant positions. • It offers new challenges to seasoned insurance professionals. • It opens new career advancement opportunities and increases retention. • It lets you tap into new talent pools for creative recruiting outlets.

More Nimble Service Positions

One thing hiring and recruiting does very quickly is demonstrate whether your company By Mary Newgard understands what it takes to compete in today’s job market. Last year, I had a lot of clients start to question their service structure after interviewing job seekers and making them offers. Just when you think you know the template for a commercial lines account executive job, you interview someone who works for a competitor, and they describe a completely different model, set of job responsibilities, and pay structure. In 2024 I expect a lot of insurance brokers to rebuild their service teams, making them more nimble, technical, and efficient. This may mean eliminating archaic positions or creating entirely new roles — say benefits consultant, whereas before your highest service position was benefits account executive. Matching your service roles with talent available in the market also benefits longterm, strategic talent acquisition planning. You can more clearly see where attrition and replacement openings will come from. You have confidence knowing the job openings you advertise in the market are competitive and attract top talent.

Newgard is partner and senior search consultant for Capstone Search Group, a national recruiting firm dedicated to the insurance industry. For questions and comments, email: asktherecruiter@csgrecruiting.com.

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Idea Exchange: Agency Management 3 Areas for Agents to Focus Growth Efforts in 2024 As the Hard Market Continues

e are obviously in one of the most intense hard markets of the last several decades. While much has been By Tony Caldwell said and written about how to navigate the challenges the market is creating for agents, I’d like to take a different tack and discuss something that is easy to overlook while struggling to service and retain existing accounts — the pursuit of organic growth. It’s easy in a rising rate environment, particularly one as aggressive as the one we find ourselves in currently, to become complacent about business growth. While the commission increases driven by the current market are welcome, they can disguise real growth — growth that comes from acquiring new customers and selling 40 | INSURANCE JOURNAL | FEBRUARY 5, 2024

new policies to current clients. With this in mind I’d suggest agency owners and managers set sales goals for the agency in three buckets: PIF (policies in force) growth, new business growth, and premium and commission growth for existing policies based on insuring to value. Then, take the premium and commission growth created by carrier rate increases as level setting in a different environment. Yes, agency expenses may be less than rate-increase-generated commission in the next year or so, but that will only serve to partially offset likely reductions in loss sensitive contingency income. Let’s consider each of these potential growth buckets.

Focus on Growing Policies in Force

PIF is a concept that is mostly thought about in terms of personal lines but

should be a key driver in commercial lines planning as well. Every discussion in agencies about quality growth and relationship building includes discussing the desirability of the agency in writing the entire account. Yet, benchmarking studies produced by the National Alliance (the Certified Insurance Counselor organization) or the IIABA “Best Practices” study demonstrate that the average agency falls short in writing all client coverage. While the often cited 1.3 policies per customer may move around over time, it’s clear that, on average, most agencies give up revenue to others due to failure to truly account round. To combat this, and increase organic growth in your agency, consider adopting these strategies: • Set an agency goal for increased average customer PIF on a year-over-year basis. If your average PIF is 1.8, for example, aim INSURANCEJOURNAL.COM

to grow it aggressively in the coming year. • A 25% increase in average PIF may only mean one additional policy per customer, but the income consequences can be significant. • Discourage the writing of monoline business by paying lower commissions on it. Or, consider eliminating monoline clients from your book of business entirely. • Pay commissions directly to customer service agents (CSA) for account rounding sales, rather than to the “producer” to motivate both producers and service personnel. • Consider offering higher-than-standard commissions or bonuses to producers and CSAs, where their average PIF count exceeds the agency’s on an annual basis. This will help change the team’s mindset and align their personal goals with agency results.

New Business Growth

This is such an old topic, what else can be said about it? Perhaps nothing, but it’s critical to recognize the value of new business long term growth. This is particularly important to stress in an environment where inflating commissions resulting from the current hard market with little to no effort taken by the producer are far too commonplace. Successful agencies cannot back off a consistent and insistent push for new clients. To help keep your team focused on prospecting for and writing new clients, try some of these ideas: • Set big goals. You don’t often hit what you don’t aim at, so be aggressive. If you’re growing new business by 5% a year, how about a goal of 15% with serious incentives for 20% and 25%? Remember, agency retirements across the industry are increasing right now and customer frustration related to rising costs is also high. Take advantage of that by increasing your goals. • Host sales contests. We decided to sponsor a trip this year for pure organic growth based on new accounts. We set the goals to roughly double our new business rate from prior years, which was an admittedly big ask in a period of heavy remarketing activity. We decided to commit 100% of the income growth created by the winners INSURANCEJOURNAL.COM

toward a really nice trip and expected we’d break even year one and make money in future retention. We’ve been blown away by the results. Of course, producers are still getting paid commission, but the recognition, and the reward, have made a significant difference in motivation and results in a tough period of time. • Offer bonuses across the agency for significant improvement in new business rates. Producers always get rewarded. Consider including service team members and back-office staff and watch how they help motivate results.

Insure to Value

In a period of time when customers are navigating the sticker shock of rising insurance costs, it may seem counterintuitive to focus on raising prices even more with thoughtful replacement cost estimates. However, not doing so could invite future errors and omissions claims. Not only that, but the sensitivity of clients to costs invites a comprehensive conversation about risk management that could lead to a better understanding of what they are buying and why. Importantly, I think it can also result in conversations about what they are not buying. This is where the additional organic growth opportunity arises. Consider the following: • Review coinsurance. A detailed explanation may result in higher insured property values, a lower coinsurance amount, or both. Either will likely result in higher commission along with better client coverage.

• Increase insured values where appropriate. The current inflationary environment has sensitized everyone to higher costs of replacing cars and property. Clients don’t want to pay more, but they also don’t want to be surprised in the event of a loss. • Consolidate coverages with one carrier. With loss ratios running hot in the current environment, consolidation gives your insurance companies more premium to manage, which not only benefits them but can also lower agency loss ratios, as well as protect contingency payments. This is something that can’t be left to producers and CSAs but must be actively managed by principals. Consolidation, especially with products like workers’ compensation, which is highly profitable now, may also result in bonus commissions from carriers. I expect that 2024 will see rising agency and producer commission income just as a result of renewing business already on the books. Unfortunately, this will also result in lulling many principals and producers into a sense of complacency that could harm prospecting habits. This complacency will last longer than the hard market, harming long-term agency growth goals. Take steps now to ramp up organic growth to avoid this hard market pitfall and supercharge future growth rates. Caldwell is an author, speaker and mentor who has helped independent agents create more than 250 independent insurance agencies. Email: tonyc@oneagentsalliance.net. Website: www.tonycaldwell.net. FEBRUARY 5, 2024 INSURANCE JOURNAL | 41

Idea Exchange: Homeowners California’s Homeowners Insurance Shift: Population, Inflation and Admitted Insurer Exits

he excess and surplus lines homeowners insurance market in California has undergone significant changes in recent By Mikhail Gorshunov years. The number of policies has changed substantially in over the last decade — first increasing, then declining rapidly. However, new data suggests the market may be increasing again as new policies rebound at a high pace. What factors are influencing California’s changeable E&S homeowners insurance industry? Up until 2019, there was consistent demand from homeowners for E&S insurance in California. But then, the number of new policies being purchased started to decline, hitting a low point in 2020. More recently, the tide seems to be turning again. Our analysis shows that residential population changes, inflation

fluctuations and admitted insurer exits all shape turbulent demand patterns.

Population Changes and Increasing Expenses

Several factors contribute to the fluctuations in the E&S homeowners market in California. Increasing inflation, which accelerated in 2020, has pushed up costs of living. This may lead homeowners to reconsider additional expenses like specialized insurance. Concurrently, California’s residential population has leveled off and declined slightly since around 2019, indicating a decrease in potential homeowners insurance market participation. Further analysis shows that residential population size and inflation together explain roughly 41% of the changes in the number of new E&S homeowners insurance policies in California. Specifically, as California’s population declines, the number of new policies falls. Inflation also plays a role. When

inflation rises, the number of new policies decreases. Our findings indicate that a reduction of 1,000 in California’s residential population correlates to 1.2 fewer new E&S homeowners insurance policies on average. A one-unit increase in inflation (as measured by the Consumer Price Index) correlates to 8.7 fewer new policies on average.

‘Our analysis shows that residential population changes, inflation fluctuations and admitted insurer exits all shape turbulent demand patterns.’ As would be expected, our findings also show that residential population size seems to have a bigger impact on the E&S homeowners market compared with inflation. So, the key drivers of new E&S homeowners insurance demand appear to

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be the number of potential customers in California and inflation.

Major Insurer Exits and Their Impact

Recent developments have added further complexity to the situation. To delve deeper into these emerging trends, we segregated the data on the number of monthly E&S policies to differentiate new business from renewal policies. While renewals have remained stable, there has been a notable increase in new policies, indicating substantial growth in new business.

‘While the future remains uncertain, the latest data signals an increase in the E&S homeowners insurance market in California after a previous decline in policies written.’ For example, new business transactions increased more than three times in 2023 in December (5,294) compared with June (1,493). This divergence stands in stark contrast to previous patterns. The past few months have seen some sizable shifts, with considerable month-to-month elevations in new business transactions,

• Data on E&S homeowners’ insurance policies was gathered from the Surplus Line Association of California • The residential population data was sourced from the U.S. Census Bureau • Inflation data was collected from the U.S. Bureau of Labor Statistics most markedly in July (39%), August (30%), September (16%), October (12%) and November (43%) of 2023. The specific catalysts behind this sharp increase in new business, at first glance, remain elusive. Diving deeper, some indicators provide some clarity. Recent exits by major admitted insurance players (including industry giants like Allstate and State Farm) from California’s market might be playing a pivotal role. These moves have opened an opportunity for E&S insurers to provide supplementary coverage and support homeowners where admitted carriers are retreating.

The pullback of these major insurers is providing an opportunity for E&S carriers to fill gaps in coverage. As these large companies minimize their coverage, voids emerge — critical shortfalls that E&S insurers appear to be backing up and bolstering through expanded capacity. While the future remains uncertain, the latest data signals an increase in the E&S homeowners insurance market in California after a previous decline in policies written. With admitted insurers exiting, E&S providers have an opportunity to provide coverage and support to homeowners. In fact, E&S insurance is filling a critical gap by insuring homes that admitted insurers are retreating from or unwilling to cover. As inflation and residential population fluctuations continue to exert influence, insulation from future volatility requires vigilant monitoring of not just direct competition but broader socioeconomic forces. Though fluctuations may persist, continual analysis of internal and external drivers can help E&S insurers brace for the ups and downs ahead. Gorshunov, PhD, is a data scientist with the Surplus Line Association of California, where he leads data science initiatives and works with cross-functional teams to solve business challenges. He was previously an assistant professor of management at Western Illinois University. FEBRUARY 5, 2024 INSURANCE JOURNAL | 43

Special Report: Wishes & Predictions continued from page 30 the idea in 2024. “Local and regional relationships are expanding, and carriers are looking for ways to come out of this hard market on top,” he said. “There are many carriers positioned for growth in 2024, and they are realizing they need to focus on partnering

with networks delivering consistent, above average, and profitable organic growth.” Ashley Wingate, EVP, sales and distribution at Smart Choice, agrees. “From our partners and from a Smart Choice perspective, we worked really hard over the last 18 months to manage our books, work directly with our carrier partners on profile

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management, book management, to get to a profitable place,” he said. “Once that rate starts coming into their books, and we do feel like the middle part of the year, we will start to see our carrier partners open up in more and more states trending towards a growth mode in 2025.” Both Wingate and Masiello do see the agency network space continue to consolidate in 2024 as well. “The hard market of last year was tough on a lot of (network) groups, especially if they were younger or in their infancy of development, so I think you’ll continue to see consolidation in independent agency groups in 2024,” Wingate said. Masiello believes the same. “There will likely continue to be consolidation of networks,” he said. “Many smaller networks assumed a low barrier to entry and did not invest in services and infrastructure.” Additionally, market conditions have caused many carriers to take their own actions with networks to improve book profitability. “Networks that have quality control with membership recruiting and managing profitability of books have fared well. However, agents who joined networks not prepared for current market conditions have needed to seek out better affiliations that can deliver on the needs of their members in various market cycles and for the different stages of their member agencies’ life cycle,” Masiello said. He says with the shrinking inventory of larger premium retail acquisitions, networks are becoming the next place inquisitive investors are exploring. “Many small networks have competitive regional relationships that can be beneficial for their members and investors alike,” he said. Plus, there are many agencies that need the competitive advantages often available through strong networks. “I do hope to see that throughout the network community that access continues to open up as carriers get the rate they needed to return to profitability and open up for growth,” Wingate said. “I think we’ll see carriers about the middle of 2024, towards the end of 2024, hopefully shift as they get adequate rate and hopefully return to profitability, shift to more of a growth yield” environment. INSURANCEJOURNAL.COM

Idea Exchange: Minding Your Business Performing Your Agency Report Card

he beginning of a new year with all the related planning is a perfect time to take a look back and find areas of improvement. By Catherine Oak Planning ahead requires an understanding of where you are now, how you got there, what works and what does not work.

Key Performance Factors

When it comes to understanding agency performance, there are five main areas of primary focus to review: 1) Financial Analysis, 2) Productivity, 3) Sales, 4) Book of Business Analysis, and 5) Agency/Carrier Relationships. To get a good understanding of the strengths and weaknesses of an agency, the analysis needs to include peer group comparisons, as well as agency historical performance. Historical performance means simply looking at how the agency

has performed year-to-year in each of the areas reviewed.

meaning behind the numbers and gets the entrepreneurial juices flowing.

Peer Group Analysis

Financial Analysis

There are many excellent resources for peer group analysis. Some provide just a compilation of results while others have the raw material for self-analysis. See “Growth and Performance Standards” from CIC/The Academy of Producer Insurance Studies (www.scic.com) and “Best Practices” from IIAA (www.iiaa. com ). Also, Oak & Associates can perform an individualized analysis of agency performance. There also needs to be a subjective assessment of performance, areas for improvement and strengths that can be exploited. Sometimes there are too many deviations or intangible factors to be able to confidentially compare certain criteria to a peer group performance or even an agency’s own historical performance. A strong “gut feel” goes a long way in analysis. This type of analysis will provide insight to the

A good starting point is to review the financial health of the agency. It is relatively easy and it will need to be done for taxes anyway. For the financial review, one of course would need income statements and balance sheets. Don’t forget to obtain the accounts receivable and account payable reports. First, look at the changes in revenue and expenses to prior years. Have they gone up or down? What is the percentage of the change in each category? Look at each expense category. Is the agency spending more or less than its peers? What is the bottom line? Is the agency profitable? A good rule of thumb is the total return for the owners and all producers (compensation, perks and profit) in an agency should be targeted to be at least 50% of the revenue. Next, take a look at the following balance sheet ratios. The Trust Ratio (cash plus receivables divided by company payables) should be at least over 1.0 to 1.25, as well as the Current Ratio (current assets divided by current liabilities). If a firm is good at turning receivables into cash, the Collection Ratio (receivables divided by premium payables) should be 0.60 or less. Review the aged receivables report. How good is the agency’s collection practice? Accounts over 90 days old are usually considered uncollectable. Remember — the goal is to sell insurance not to be a bank.

Productivity Analysis

Is the existing staff operating efficiently? Is the agency

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Idea Exchange: Minding Your Business continued from page 45 properly staffed? The best way to answer these questions is to review workloads and agency productivity. Keep in mind the single biggest factor in a profitable firm is a productive staff. Start with the collection of the following: 1) an employee list including the percentage of time each employee (and owners) spends on production, service, administration and management; 2) compensation for each employee; and 3) commissions and number of accounts each CSR handles. Usually, the hardest part of this exercise is to determine who is doing what role. In fact, don’t be surprised if redundancies and unnecessary tasks are uncovered. Still, it is important to begin the review with the big picture. Clean up of workflow can be done later. The bottom line is the bottom line. Calculate revenue per employee, per CSR, and per owner/producer. Keep in mind to not use the job titles, but the percentage

of time the employees spend in each category. If a producer truly spends a third of their time doing traditional CSR service work, then they count as 33% of a CSR and 66% as a producer. Next, narrow the scope down to commissions per CSR and accounts per CSR. Compare the agency’s performance to its peers. Sometimes the comparisons to peer group numbers are not accurate because an agency may have a unique book of business, such as program business. In these cases, subjective judgement is required. Another way to evaluate if the staff is productive is to calculate the “Spread,” which is revenue per employee minus compensation per employee, the higher the better, with the average being $50,000.

New Sales Review

An obvious key indicator to the success of an agency is new sales. New sales are a function of the effective use of agency resources. Collect sales information (new

sales and total book of business) by producer and the agency overall. It is important to understand not just what the new sales numbers are, but what the potential is for each producer and the agency overall. A bright young producer might have poor production results if they are not properly trained. A burnt-out but seasoned producer might be revitalized if a good marketing and servicing team provides proper support and her or she develops and keeps to a sales plan to get out of their rut. Keep in mind that even if an agency has tremendous sales, if there is a significant loss of business through attrition, the effort for new sales is like digging out of a collapsing hole. Calculate the attrition rate for the agency and each producer. High attrition rates are usually an indication that the business the agency writes is transient, and either the clients are price shopping or are poor risks. Another excellent sales indicator tool is hit ratios. Poor hit ratios will end up costing the agency a lot of money and waste the time of both producers and staff. The technique of producers with low hit ratios needs to be checked and adjusted. Often, the producer fails to pre-qualify the prospect. Sometimes producers just are not approaching businesses that match up with the products the agency has expertise in writing or competitive markets in which to place the risk. Make sure the producers are properly trained. Have them take a sales class every two or three years, such as “The Dynamics of Selling,” offered by CIC/The Academy of Producer Insurance Studies.

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Composition

Now that the agency sales are understood, it helps to find out what exactly was sold. What is the composition of the agency’s book of business by line of business — personal, commercial, life, group benefits, program business, etc.? Calculate the average size account for each line. Also, how much of the agency business comes from the top 10 accounts? Finally, analyze what the distribution of business is by industry. The review should evaluate if the mix of business is healthy for the agency. Niche selling is usually more profitable, however, it is also riskier. If the agency has a lot of small accounts, the procedures in place for selling and servicing them are critical in order to make sure the agency can make a profit. It is important to distance oneself from the book of business and objectively ask the question “is this book valuable or should its composition be changed?” This diagnosis should also be done for each producer. Are the producers selling accounts that fit well with the agency’s book and its markets? Make sure that producers concentrate on larger accounts. Streamlining a producer’s book by removing small and non-conforming accounts to a Small Accounts Department or CSR to handle will work wonders in their ability to have time to focus on new sales. Changing compensation to not paying for accounts under a certain size will help transition the producer to larger accounts.

contractors, etc.). Some of the questions that should be answered include: Will volume commitments be met and how will it be done? Are there new markets the firm should seek out? Is the volume spread too thick or too thin? Is the agency maximizing profit sharing agreements? Part of the process should include a “what if?” scenario study. What if a key market pulls out? Where would that business be moved? It will be very beneficial to seek out reputable MGAs and surplus lines carriers. New channels need to be readily available if the market hardens or in some states markets have pulled out.

The Final Report

The final product should include all the reports previously described, as well as comments on what is working well and areas for improvement. Look for a second opinion on the final findings by soliciting input from key staff and outside advisors.

Just like a report card from school, the agency review should be revised periodically throughout the year. The annual report card can be used as part of any business plan the agency may have for the year. Owners that are too busy to reflect on their business’ performance will usually reach a plateau, as they do not have a firm foundation to build on. Take the time to perform an agency diagnostic. By making this effort to review agency performance there will be a noticeable improvement and the agency will enter into the strata of the high performing firms. Oak is the founder of the international consulting firm, Oak & Associates, based in Bend, Oregon and Sonoma, California. The firm specializes in financial and management consulting for national and international insurance agencies, including valuations, mergers and acquisitions, clusters, sales and marketing planning, as well as perpetuation planning. Phone: 707-9356565. Email: catoak@gmail.com. To download free

New sales are a function of the effective use of agency resources. Market Relations

The last area to check out is the agency’s markets and the relationship with them. This exercise should provide some fun. List all the carriers with volumes, commission rates (or commissions), loss ratios and contingents received. Analyze how the agency’s book of business stacks up with the existing markets. Compare all the carriers and the products that the agency has with the top 15 industry groups the agency writes (e.g. manufacturers, retail, INSURANCEJOURNAL.COM

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Idea Exchange: The Marketing Connection The Growing Influence of LinkedIn on the Insurance Industry

he insurance industry thrives on making meaningful connections with potential clients and partners. By Kristen Nevins Among social media platforms, LinkedIn stands out as a powerful tool for B2B insurance marketing and networking — allowing you to display your expertise, build your company or personal brand, and connect with decision-makers in your target market. Whether you’re a seasoned LinkedIn user or new to the platform, here are some tips to leverage this forum for successful new product promotion and business growth.

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Understanding Your Audience

One of the foundational principles of successful marketing on LinkedIn is understanding your audience. In the insurance industry, your audience likely includes a diverse group of professionals including agents, brokers, underwriters, claims adjusters, and more. To effectively connect with them, it’s crucial to tailor your content and engagement strategy to their needs and interests. First, identify your target audience’s pain points, challenges, and aspirations. What are the common issues they face in the insurance industry, and how can your products or services address those concerns? Once you have a clear understanding of their needs, create content that provides solutions and valuable insights. This positions you as an expert in the field

and fosters trust among your audience.

Fostering a Dialogue (Not a Monologue)

LinkedIn is not a platform for one-way communication; it’s a place for building relationships and engaging in meaningful discussions. Instead of using it solely as a broadcasting channel, focus on fostering a dialogue with your connections. Engage with your audience by responding to comments on your posts and articles, participating in industry-related discussions, and reaching out to professionals who can benefit from your expertise. Establishing these connections and engaging in conversations not only helps you stay top-of-mind with your network but also positions you as a thought leader and problem-solver in the insurance industry.

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Utilizing Newsletter Articles (and Ghostwriters)

One of the most effective ways to showcase your expertise and build your brand on LinkedIn is by publishing newsletter articles. These articles allow you to dive deeper into industry topics, share your insights, and provide valuable information to your network. However, not everyone has the time or writing skills to consistently produce high-quality content.

Success on LinkedIn is often measured in the long term. This is where the use of ghostwriters can be invaluable. Ghostwriters are professional writers who can help you create well-researched and engaging articles while preserving your unique voice and perspective. By partnering with a ghostwriter, you can consistently deliver valuable content to your audience without the stress of writing it yourself. When utilizing ghostwriters, it’s essential to maintain transparency with your audience. Give credit to the ghostwriter or acknowledge their contribution when sharing the content. This way, you can build trust while benefiting from their expertise in crafting compelling articles.

Advertising Potential

With LinkedIn Ads, you can promote your new insurance products or services directly to decision-makers and professionals who are most likely to be interested. This targeted approach ensures that your marketing efforts are more efficient and cost-effective. Moreover, LinkedIn Ads provide detailed analytics that allow you to measure the performance of your campaigns and make necessary adjustments to maximize your ROI. Gary Vaynerchuk highlighted LinkedIn during his keynote speech at Insuretech Connect 2023 in Las Vegas. He specifically cited the platform’s ads as one of the most cost-effective and easily accessible ways to connect with your target audience — especially more elusive ones like venture capitalists. You can also consider leveraging sponsored content to boost the visibility of your posts and articles. Sponsored content appears in users’ newsfeeds, increasing the likelihood of being seen and engaged with by your target audience.

Setting Realistic Expectations

While LinkedIn is a powerful tool for insurance professionals, it’s essential to set realistic expectations for your efforts on the platform. Building a strong presence and seeing significant results takes time

and consistent effort. Don’t be discouraged if you don’t see immediate success. Instead, focus on creating valuable content, engaging with your audience, and nurturing relationships. Success on LinkedIn is often measured in the long term, as you establish your reputation and build trust within the insurance industry. LinkedIn has become a vital platform for insurance professionals looking to grow their businesses and make meaningful connections. By understanding your audience, fostering a dialogue, utilizing newsletter articles (and ghostwriters), leveraging advertising potential, and setting realistic expectations, you can unlock the full potential of LinkedIn for insurance marketing and networking. Nevins is the director of Marketing & Operation at Direct Connection Advertising & Marketing. Visit directconnectionusa.com to learn more.

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February 5, 2024

Bristol West Insurance Company 6111 Oak Tree Blvd, Suite 300 Independence, OH 44131

Tesla Insurance Company 45500 Fremont Blvd Fremont, CA 94538

Physicians Insurance A Mutual Company 601 Union Street, Suite 500 Seattle, WA 98101

The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.

The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.

The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Life, Accident, and Health Insurance and Property and Casualty Insurance in the Commonwealth of Massachusetts.

Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

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Closing Quote The Time to Modernize Building Codes Is Now

By Mark Berven

s we’ve seen for the past several years, severe weather is no longer a seasonal or geographic issue — climate risk has now made these events possible all year long and in every state. The statistics back up this frightening reality. November’s U.S. National Climate Assessment revealed the U.S. suffers a billion-dollar extreme weather event once every three weeks — a drastic increase from the 1980s when such a phenomenon would happen every four months. The devastation and heartache these events caused Americans and their families is incalculable. While technology is helping

predict severe weather and prevent some of these losses, other actions must be taken to further mitigate the damage. Most notably, legislators need to take a close look at their community’s building codes and update them to require new and existing structures to be built to withstand severe weather events. FEMA reports that while following modern building codes is one of the best ways to safeguard against the effects of a natural disaster, 65% of U.S. counties, cities and towns have not adopted them. Nationwide recently invested in research to hear directly from stakeholders to determine if they would be in favor of legislative action to strengthen building codes. What we found is that support for stronger building codes has never been stronger. Nationwide recently surveyed commercial property stakeholders — those being

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commercial property owners, new construction builders and business owners. Ninety-seven percent of those surveyed agree that enhancing building standards will help better protect their properties. Virtually all (99%) say complying with current building codes is vital for protecting their properties against weather and that they actively stay informed on their region’s building codes (98%). However, many are concerned the building codes in their region aren’t updated to account for the climate risks they face, especially in coastal states. A quarter (24%) believe building codes in their region are currently outdated and 84% say it’s important to improve the building codes in their area. Insurance leaders have a responsibility to use their voices to advocate for the adoption of modern building codes across the country. By

partnering with local stakeholders and policy makers, we can build more resilient homes, businesses and communities for us all. It’s time for elected officials at all levels of government to review their community’s building codes and to modernize them to deal with the increased climate risks their constituents are facing. We simply can’t afford to ignore this issue any longer. Let’s make 2024 the year that we turned the corner on protecting our citizens, their families and their businesses. Berven is president and chief operating officer of Nationwide Property & Casualty, which includes agency-based and direct-to-consumer distribution, excess & surplus/specialty insurance, agribusiness insurance, claims, strategic partnerships, member solutions, and the commercial and personal lines organizations. He previously served as Nationwide’s Chief Strategy and Product Management officer.

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