IBAMAG.COM ISSUE 3.04
TOP
10
PRODUCERS Find out who made the inaugural list of the industry's best producers GLOBAL REACH LLOYD'S CHAIRMAN ON THE INSURANCE GIANT'S AMBITIOUS GROWTH PLAN
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NEGOTIATE BETTER PROFESSIONAL LIABILITY LEARN THE SECRETS THE NEW RISKS THAT TO WINNING THE DEALS ARE LEAVING YOUR YOU WANT CLIENTS EXPOSED
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ISSUE 3.O4
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CONTENTS
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UPFRONT 04 Editorial
TOP
10
PRODUCERS COVER STORY
24
Against all odds, agencies are growing
FEATURES
PROFESSIONAL LIABILITY
From frivolous lawsuits to cyber threats, professional liability risks are growing every day
08 Head to head
When is the right time to go public with a data breach?
10 News analysis
Closing the Uber insurance gap
12 Intelligence
This month’s big movers, shakers and new products How cloud computing is being used to help predict weather patterns
16 Workers’ comp update
IBA ranked the top producers in the industry – and found out the secrets behind their success FEATURES
INDUSTRY ICON
Mergers and acquisitions continue to dominate the industry
14 Technology update
TOP 10 PRODUCERS
PEOPLE
38
06 Statistics
44
CONSTRUCTION INSURANCE The structure of construction insurance is changing as the housing market heats back up
Lloyd’s of London chairman John Nelson outlines the company’s ambitious plans for global expansion
Big corporations come out in support of ‘opt-out’ legislation
18 Opinion
Why premium increases are necessary for the survival of the industry
FEATURES 42 Agency insight
Brunswick Companies
PEOPLE 48 Producer profile
Mitchel Kalmanson has built his business – and his life – around helping exotic animals
55 Career path
20 2
FEATURES
52
BE A BETTER NEGOTIATOR
A few simple rules for mastering the art of negotiation
For Rob Cohen, success is measured by the relationships he’s formed
56 Other life
Dan Mallory of Mallory Insurance is on top of the world
IBAMAG.COM CHECK IT OUT ONLINE
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37512 B
Your gateway to contractors markets.
CONTRACTORS SOLUTIONS
Placing insurance for different contractors can be a daunting project. At Burns & Wilcox, our network of domestic and international carriers opens doors to the broadest range of markets. Since time is of the essence, we deliver quotes and binders fast. When it comes to finding solutions for every stage of construction, contact the wholesale broker with the tools to make the hard-to-place easy – Burns & Wilcox. 800.521.1918 | burnsandwilcox.com Commercial | Professional | Personal | Brokerage | Binding | Risk Management Services
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UPFRONT
EDITORIAL
Defying expectations
I
t’s 2015, and industry observers continue to preach the death of the independent agent. Just a few months ago, the entrance of Google into the insurance space prompted one analyst to forecast a 25% contraction in the agency population. Others denied the presence of the multinational company would have a material effect on the agent sector, but said the agency channel would continue to deteriorate at a normal pace. Hardly anyone outside the industry, it seems, expects agents to stick around. And yet the agency sector has never been stronger. As of February 2015, there are 727,800 insurance agents and brokers operating the US – that’s significantly more than the pre-recession peak of 684,500, reached in July 2007, and jobs are expected to grow at a clip of 10% through 2022, according to the Bureau of Labor Statistics. Through innovative business models such as agency networks and
Hardly anyone outside the industry, it seems, expects agents to stick around. And yet the agency sector has never been stronger program business, the agent sector has continued to survive and flourish, even in the face of technological revolution and changing consumer preferences. In fact, a recent study suggests that even millennials – a generation famed for their tech dependency – are just as likely to purchase insurance in person with an agent as they are to purchase it online. It seems that if history is any guide, the independent agent will continue to be a vital piece of insurance distribution and consumer knowledge. While the entire sector is worthy of recognition for its success despite repeated death sentences from industry observers, a few agents have emerged as especially innovative and effective. With that in mind, Insurance Business America has compiled a list of some of the leading producers in the insurance industry today. We hope that by browsing the profiles of your peers, you’ll be inspired to reach higher and think bigger, continuing to defy the expectations of the outsiders and flourish. The team at Insurance Business America
www.ibamag.com MAY 2O15 EDITORIAL Senior Journalist Caitlin Bronson Journalists Ryan Smith Tim Garratt Donald Horne Jordan Maxwell Copy Editor Clare Alexander
CONTRIBUTORS Samantha Wright Mark Lee Josh Masters
ART & PRODUCTION Design Manager Daniel Williams
SALES & MARKETING Vice President Cathy Masek Media Sales Managers Chris Wills Chris Anderson Marketing and Communications Manager Lisa Narroway
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
Designer Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez
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ADVERTISING INQUIRIES
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Insurance Business America is part of an international family of B2B publications and websites for the insurance industry INSURANCE BUSINESS AUSTRALIA peter.smith@keymedia.com.au T +61 2 8437 47OO
INSURANCE BUSINESS CANADA john.mackenzie@kmimedia.ca T +1 416 644 874O
INSURANCE BUSINESS NZ peter.smith@keymedia.com.au T +61 2 8437 47OO Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss
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PAST| PRESENT |FUTURE Commitments That Last. As a recognized leader in the specialty marketplace, we customize our dedicated resources specifically to your client’s needs. Our carriers comprise admitted and E&S capabilities in all fifty states, which can serve as a multi-carrier platform to accommodate all your potential insureds.
Specialty Property & Casualty Programs and Products. (800) 482-2726 | PROGRAMS@MEADOWBROOK.COM
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1/05/2015 2:41:21 AM
UPFRONT
STATISTICS
More mergers ahead? The industry’s recent wave of mergers and acquisitions shows no signs of ebbing in 2015 MERGERS AND acquisitions played a big part in the insurance industry in 2014. There were eight deals worth more than $1 billion as sectors contracted across the industry. The final quarter of the year saw several key moves, and industry experts expect the pace of 2014 to flow through into 2015. While much of the consolidation was focused on the reinsurance space, there was
$11 billion PartnerRe and AXIS Capital amalgamate in a mammoth deal
increased activity across the broker business and in general insurance. The Deloitte 2015 M&A Outlook notes that 2015 should bring “continued acceleration of activity in the insurance M&A market.” Companies should be prepared for entreaties by private equity firms looking to invest in insurance, other new entrants to the market from both home and abroad, and a changing regulatory landscape that could affect M&A activity.
$1.9 billion
$4.2 billion
ReinsuranceRe Holdings acquires Platinum Under writers in November 2014
Irish-based XL Group acquires Catlin to create one of the largest players on the Lloyd’s market
$1.8 billion
Fairfax Financial buys UK specialty insurer Brit in February 2015
Sources: Mondaq, Wall Street Journal, PartnerRe, Deloitte 2015 M&A Outlook
Increased activity isn’t limited to the broking sector – reinsurance is a burgeoning M&A market, and major industry players expect this to continue
“Global reinsurers have seen the future, and it requires greater scale … for reinsurers, the game seems likely to remain ‘eat or get eaten’” – Standard & Poor’s RatingsDirect
“We believe that the consolidation of reinsurance and a diversification of these organizations into primary specialty insurance (with a particular emphasis on obtaining access to the Lloyd’s market) may be a sea-changing event for the industry” –Deloitte 2015 M&A Outlook
BROKERAGE BUYOUTS AN UNEVEN TREND In terms of volume, the broking sector saw its second-highest number of deals (321) in 2014, but deals within the sector are difficult to predict 400 350 300 Number of deals
REINSURANCE SEES BIG M&A ACTIVITY
250 200 150 100 50 0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Deloitte 2015 M&A Outlook
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TOP THREE DEALMAKERS With so much activity in the broking sector throughout the year, the top three saw major deals both at home and abroad
OUTSIDERS LOOKING AT US MARKET WITH INTEREST M&A activity from foreign-based companies picked-up speed in 2014, and 2015 looks to be no different
United States
Dai-ichi Life Insurance buys Protective Life in June
Hub International 28 deals
3
AssuredPartners 23 deals
AVERAGE BROKERAGE DEAL VALUE DROPS Even as the number of deals in the broking sector moved up in 2014, the value of those deals took a drop, on average, compared with the previous 12 months
Fosun International acquires Meadowbrook Insurance Group
$76
$433 million
$107
The year’s top targeted nation both by volume and activity for global, cross-border M&A
Biggest cross-border moves
$5.58 billion
2
$3.4
Increase in global cross-border M&A activity from 2013 to 2014
Arthur J Gallagher 38 deals
$3.0
45%
1
2013
2014
2013
2014
Aggregate value of deals ($ billions)
YOY: +13% Source: Deloitte 2015 M&A Outlook
Average deal value ($ millions)
YOY: -29% Source: Deloitte 2015 M&A Outlook
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UPFRONT
HEAD TO HEAD
How soon should companies make a data breach public?
In most states, companies are required to disclose a data breach – but the timing is still a matter of debate
Ken Goldstein
Jake Kouns
Adam Hamm
VP and worldwide cyber security and media liability manager Chubb Group of Insurance Companies
Chief information security officer Risk Based Security
Commissioner National Association of Insurance Commissoners
“Prior to making a data breach public, an organization should partner with a network security and privacy law firm to engage a forensic expert, who will determine whether private information has been accessed or has the potential to be accessed in the future. If the information has not been compromised, the company might opt not to disclose the event. If voluntary notification is considered by the organization, or the forensic report suggests private information has been (or will be) compromised, then the law firm should retain a public relations firm to ... proactively develop a message to impacted individuals.”
“A potential data breach warrants immediate investigation and an appropriate response, but how quickly to go public very much depends on the nature of the breach. If it is a simple, clearcut breach, then there should be no delay in disclosing the event and notifying those impacted. However, complicated incidents may require a more detailed investigation to fully understand who is affected by the breach. Jumping to conclusions can ultimately cost an organization much more than taking the time to figure out what has happened. Always keep the regulators, including each US states’ attorney general’s office, in the loop!”
“As soon as possible, but there are a number of factors that must be carefully considered in determining that. A USbased insurer should work with the FBI and its domestic state insurance regulator to determine the optimal time for a public announcement. The insurer and the FBI need to be confident the breach occurred and know what data was compromised. They should know the time period in which the attacker penetrated the insurer’s systems – and wait until they are confident the attack has been thwarted before announcing to avoid tipping off the hacker. The insurer also must comply with the requirements of state data breach laws.”
WHAT SPARKED THE DEBATE In March, Washington state insurance commissioner Mike Kreidler released a statement after learning of the cyberattack on Premera Blue Cross. It’s believed around 11 million customers may have been affected by the data breach. Commissioner Kreidler said in his statement, “I’m concerned that while Premera learned of this attack in January, it took approximately six weeks to notify my office.” Much discussion has followed as to how soon the public should be made aware of a breach following the discovery of a cyberattack.
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ACE_IB
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© 2015 ACE Group. The above is a product summary only. The insurance policy actually issued contains the terms and conditions of the contract. All products may not be available in all states and surplus lines products can only be offered through licensed surplus lines producers. ACE Westchester is the U.S.-based excess and surplus property and casualty operations of the ACE Group of Companies, headed by ACE Limited (NYSE: ACE). The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients around the world. Additional information can be found at www.acewestchester.com. ACE®, ACE logo®, and ACE insured.® are registered trademarks of ACE Limited.
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1/05/2015 2:43:26 AM 3/27/15 1:31 PM
UPFRONT
NEWS ANALYSIS
What’s driving Uber? Insurance companies, agents and state regulators are struggling to address coverage issues associated with the emerging ridesharing industry MORE THAN 8 million users worldwide are forgoing taxis in favor of logging an app that lets them catch a ride with the nearest available driver for hire. At the forefront of this ridesharing revolution is Uber, whose popularity is such that it now has an active presence in nearly every major city in the country. While the commuting population may adore Uber, however, nearly every sector of the insurance profession has been puzzled over how to properly insure a driver and car that operate both in the private and public spheres. And while there have been plenty of market solutions presented, the challenge of bringing all parties into agreement over insurance requirements remains unresolved.
exposure,” explains Peter Kochenburger, a professor of insurance law at the University of Connecticut School of Law. “In period one, an Uber driver is going around hoping to get business. The second period is when he’s been contacted and is en route to pick up the passenger. The third is picking up to passenger and driving to the destination.” Uber provides a form of insurance to its drivers, but many regulators contend the policy does not cover all stages of commercial activity, instead covering only the second two periods outlined by Kochenburger.
Market solutions are multiplying Insurers have been eager to address this gap. New ‘hybrid’ insurance policies combining
“The industry knows how to insure autos, taxis and personal autos – so it is just a matter of who is going to cover what and when” Peter Kochenburger, University of Connecticut School of Law The Uber coverage gap Operating as contract workers, Uber drivers use their own vehicles to transport passengers by logging onto the Uber app and accepting ride requests. The difficulty from an insurance perspective lies in defining when the driver is using the vehicle for personal use and when he or she is engaging in commercial activity. “There are three set periods of potential
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personal and commercial coverage have been made available in various states. GEICO and Progressive both have released hybrid auto products that replace the driver’s personal policy and respond to each period of risk with increasing coverage. USAA also has introduced a product for Uber drivers that is activated as soon as the driver has been matched with a passenger. The coverage is
available as an extension of USAA’s personal auto product and costs drivers an additional $6 to $8 a month. New comments from the National Association of Insurance Commissioners on the state of the ridesharing market and possible solutions for solving the insurance gap may help make these products more widely available. “It looks like within the last four to six weeks, the major auto insurers and the ridesharing network companies have reached a compromise that will be acceptable to many state insurance regulators, and maybe the state legislatures, which would have to enact such laws. This will hopefully be a good news story from an insurance and regulatory perspective,” Kochenburger says. “The industry knows how to insure autos, taxis and personal autos – so it is just a matter of who is going to cover what and when.”
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UBER BY THE NUMBERS Uber users worldwide
8 million+ Uber drivers
160,000 Countries that have Uber service
50
Cities that have Uber service
250
Daily Uber trips, on average
1 million
Uber rides in 2014
140 million Amount Uber paid to US drivers in Q4 2014
$650 million
Source: Digital Marketing Ramblings
The role for producers
Uber fights back Uber, however, does not accept such a gap exists. In recent weeks, the company has threatened to pull out of states like Kansas and
for business purposes for decades and never needed this level of insurance,” says Uber spokeswoman Jennifer Mullin. Josh Mohrer, Uber’s general manager for the New York area,
“People have operated their private vehicles for business purposes for decades and never needed this level of insurance” Jennifer Mullin, Uber New Jersey due to insurance requirements it considers onerous – specifically, that drivers get an insurance rider to cover the period of time in which drivers are working through the Uber app, but have not yet picked up their passengers. “People have operated their private vehicles
acknowledged that drivers’ personal auto insurers do sometimes deny claims for accidents that occur during the gap between the driver logging onto the app and when he or she accepts a ride request, but that personal policies have covered such incidents “more than half the time.”
In the midst of the melee, producers face a sizeable task: identifying Uber drivers, educating them on the insurance gap and finding proper coverage with some of these new products. It’s a task that could be difficult, as most Uber appear to be unaware of their insurance requirements. Josh Waldrum of The Zebra – a digital auto insurance agency and comparison site – went without a car for a month and spoke with Uber drivers about their insurance policies. A full 92% of drivers Waldrum met had not told their insurers they were driving for ridesharing companies, and another 72% were not familiar with the coverage they were provided by Uber and Lyft. Drivers in such a position are “simply [hoping] for the best,” according to a new white paper from the National Association of Insurance Commissioners. Legislation is currently pending in at least 35 states concerning the insurance challenges faced by ridesharing companies and their drivers.
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PRODUCTS
UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
ACE Limited
Fireman’s Fund
ACE will integrate Fireman’s Fund’s high-net-worth personal lines insurance business
Brown & Brown
Spain Agency
Expands Brown & Brown’s presence in the commercial and personal lines space in New York
Bryn Mawr Bank
Robert J. McAllister Agency
Pennsylvania insurance agency will be merged into Bryn Mawr Bank’s insurance subsidiary
Integro
NPA Insurance Broking Group
NPA serves corporate clients and small and medium-sized enterprises.
National Financial Partners
Trinity Consulting
NFP adds significant scale to its risk management and employee benefits practices
National Financial Partners
Weber’s Insurance Service
Provides NFP with an expanded presence in the personal and commercial lines and group health and welfare markets
Willis Group Holdings
Carsa Consultores
Strengthens and supports Willis Mexico’s existing business while expanding its footprint in northwestern Mexico
New wholesale agency offers education insurance programs
United Educators Management Co. has announced the launch of Education Insurance Services, a new wholesale insurance agency dedicated to the education market. The agency will provide education-specific coverage for independent K-12 schools and small colleges. Coverage is sold through comprehensive packages designed to address many education-related exposures, including liability coverage for claims associated with athletic injuries, sexual molestation and Title IX compliance. Property, commercial auto and workers’ compensation coverage is also available.
China’s Fosun to advance $2.4 billion on global insurance acquisitions
Shanghai-based Fosun International has announced it is planning to spend $2.4 billion to acquire five insurers across the US, Europe and Asia. CEO Liang Xinjun said that insurance companies remain appealing to Fosun because their deep pockets of capital allow for worthwhile returns on investment. “Insurance is the most important business segment for use – the build-out of insurance gives us a cheap and sustainable source of funding,” Liang said. “The persistent low-interest-rate environment in the US and Europe has made the acquisition targets there look more attractive.” Although Liang declined to name any of the target acquisitions, several reports suggest that Fosun’s next step is to acquire a 52.3% stake in Israeli insurer Phoenix.
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Specialty brokerage creates HPR/engineered risk practice
AmWINS Group has announced the creation of Highly Protected Risk [HPR]/Engineered Risk practice handles the property placements for insureds with roughly $250 million TIV and up. The practice is intended to handle all aspects of an account, including CAT placements, and will offer risk engineering and risk management services. “This is just another example of our dedication to specialization, growing beyond the success of our traditional E&S platform and evolving as a distributor of broad specialty insurance products on a global basis,” said M. Steven DeCarlo, CEO of AmWINS Group.
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PEOPLE
PEOPLE Burns & Wilcox launches online marine insurance program The Burns & Wilcox Marine Center of Excellence is launching the ACE Recreational Marine program. The online program will allow brokers and agents to quote, bind and issue boat policies online for marine clients. Highlights include a bindable quote in just a few minutes, desktop quoting with a premier marine specialty company, admitted paper and direct billing, and an AA- rating. In addition to a 12% commission for agents, Burns & Wilcox is also offering a $50 Visa gift card to the first 100 brokers and agents to bind three or more policies.
CGSC expands professional liability offerings The North America unit of Cooper Gay Swett & Crawford has announced the launch of StatPro Underwriters, a managing general agent that will serve miscellaneous professional liability insurance needs in the US market. Target classes include a wide variety of professions, such as employment agencies, event planners, claims adjusters, real estate agents and brokers and appraisers. Coverage includes choice of counsel and automatic inclusion for additional insureds and contractors at no additional cost, and will be placed by CGNMB LLP – Cooper Gay’s Lloyd’s brokering operation.
Prosight and Affinity partner to offer ClubComplete ProSight Specialty Insurance and Affinity Group have partnered to create an insurance product for golf, country and leisure club owners and managers. ClubComplete is designed to be a onestop shop for both private and public recreational clubs. Customers can choose from many coverage extensions, policy enhancements and other options, as well as two golf club endorsements. ProSight also has partnered with Backgroundchecks.com to provide clients with access to discounted background check services, which are typically not included in standard insurance services.
NAMES
LEAVING
JOINING
NEW POSITION
Laura Coppola
Arch Insurance Group
Allianz
Head of management liability commercial, North America
Cynthia Evanko Olinger
Aon Risk Solutions
Jardine Lloyd Thompson Group
Senior VP and construction professional liability leader
Martha Gallo
JPMorgan Chase
American International Group
Executive VP and head of internal audit
David Gordon
Willis Group
Jardine Lloyd Thompson Group
Head of fine art, jewelry and specie
Scott Harrison
Harrison Law Office
Alvarez & Marsal Holdings
Managing director, insurance and risk advisory services
Dawn Jaffray
Soleil Advisory Group
United Fire Group
Chief financial officer
Lisa Lantero
N/A
CNA Financial Corp.
VP, architects, engineers and contractors design liability and Real Estate Professional Liability
Gary McInally
Canopius Group
Flood Re
Chief actuary
Todd Miller
Oswald Cos.
Risk International Services
Senior VP and managing director
Paulette Mullings-Bradnock
N/A
American International Group
Senior VP and head of strategic expense management
Stephan Ruoff
N/A
Tokio Millennium Re AG
CEO
Paul Scope
JLT Park
Willis Group Holdings
Chairman of Willis Bermuda
Nick Sinfield
Catlin Insurance Co.
Tokio Marine Kiln Group
Group head of claims
Ken Tolson
Crawford & Co.
Broadspire Services Inc.
President of accident and health
Heidi Turley
Pennsylvania Institute of Certified Public Accountants
The Risk Management Association
Chief financial officer
MetLife President announces shock departure
In a move that surprised analysts, Bill Wheeler, president of the MetLife’s operations in the Americas, announced he will be retiring effective August 2015. Wheeler has served as president of the Americas since 2011. “We view [Wheeler’s exit] as a meaningful management loss for the company that creates future uncertainty regarding an eventual CEO transition,” said Ryan Krueger and Black Mock of Keefe, Bruyette & Woods Inc.
Lloyd’s announces new US director
Global specialist market Lloyd’s has announced the appointment of Richard Magrath as regional director for its Western US region. Magrath will be based in Los Angeles and will oversee market development activities with distribution partners in 13 states. He brings more than 30 years of experience in the global property/casualty sector to the position, and was founder and CEO of technology and analytics service Global Legal.
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UPFRONT
TECHNOLOGY UPDATE NEWS BRIEFS Study reveals shocking number of health data breaches
There were more than 900 data breaches of protected health information, affecting at least 500 individuals, between 2010 and 2013, according to a study published in the April issue of the Journal of the American Medical Association. More than 29 million records were affected by the breaches; six incidents involving more than 1 million records each. The majority were caused by criminal activity and, in total, account for more than 82% of all reported breaches in the years that were studied.
Analytics service launches wind verification technology
Analytics service provider CoreLogic is releasing a new wind verification technology designed to improve the accuracy and timing of insurance claims related to wind damage. The tool, linked to CoreLogic’s scientific and observation-based Wind Speed Maps and Wind Verification Reports, provides updated wind activity analysis at the insured property by the hour. “Wind verification through scientific observation is going to mean more efficient and effective claims, which will reduce time, mitigate fraud and improve bottom-line results for claims adjusters,” said Lindene Patton, global head of hazard product development.
New online matchmaker for hard-to-place risks
Technology provider EvoSure announced a new online tool to help match independent insurance agents and brokers looking to source tough
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risk with underwriters that already have an established appetite in the area. Using Market Finder, agents and brokers input characteristics about the risk they are looking to place, and then receive a list of markets whose appetite for that business has been pre-qualified and verified by EvoSure. EvoSure then provides contact information for specific underwriters. The process is usually complete within 48 hours.
AIG wins approval to use commercial drones
Following approval from the Federal Aviation Administration, American International Group will become one of the first insurance companies to use drones to manage risk and assess claims. The drones will be able to survey property and take highresolution images. “It’s sometimes much quicker to get the machine out to these disaster zones than a human body, Kathleen Swain, USAA P&C group underwriter and pilot. “This could help speed up the process and help put them back to where they were before the claims event.”
Not enough cyber insurance capacity, says AIG CEO
The market capacity for cyber insurance is not large enough to adequately cover the risk, according to AIG CEO Peter Hancock. He believes the amount of cyber liability coverage currently offered by insurance carriers will only cover a fraction of damages. “The largest coverage I’m aware of is for a bank that has about $400 million in coverage, which is very small when you think about it,” Hancock said. “When you compare it to the amount of capacity that’s available for a complex chemical plant, refinery or offshore oil platform, the numbers are much, much higher.”
Cloud computing for cloudy days A new technological initiative has profound implications for the insurance industry Even though it’s considered “perhaps the largest external swing factor in business performance,” one critical variable is often still treated as a constant, if not overlooked entirely: the weather. But IBM is hoping to change that. The technology manufacturer has formed a strategic new alliance with WSI, the B2B division of The Weather Company, designed to combine unprecedented amounts of data from the Internet of Things and cloud computing with weather forecasting systems in order to better predict meteorological conditions. This could be a game-changer for the insurance industry. For example, improved weather prediction analytics will provide more advanced notice of impending hail storms, allowing agencies to save some of the $1 billion paid in claims every year by warning clients about incoming storms before they happen. In fact, brokers who use WSI’s Weather Alert service to text policyholders about impending storms can save up to $25 per client in hail-heavy regions, according to WSI, which adds up to millions of dollars every year. “We’ve done some tests with hundreds of thousands of policyholders and found that when we send them warning that hail could be hitting their cars in the next half an hour, about 50% take action to protect their vehicles,” says Andy Rice, vice president of products and analytics at WSI. In a broader context, this could help enterprises prevent widespread damage to their businesses through such actions as advising
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that automobiles be placed under cover at a dealership or suggesting that facilities raise the heat in anticipation of a deep freeze. “While the tendency is to focus on direct property losses, the indirect consequence of business interruption is a huge exposure for many businesses. Lost revenue due to the inability to open, provide services, etc., is in some cases a more significant exposure in
“The indirect consequence of business interruption is a huge exposure ...” terms of financial loss than direct property loss,” says Mark McLaughlin, director of strategy for IBM Global Insurance. In addition to preemptive notice, insurance companies will be able to use this tech infrastructure to better handle claims and assist with disaster relief. “They can immediately send text messages saying, we know your neighborhood may have been affected by a tornado. We’ve deposited money into your bank account for a hotel tonight, and we’re setting up operations at the church on Third and Main Street to look at cars and help file claims,” Rice says. Brokers can then request digital photos of household damage and begin expediting claims immediately. “It creates really good opportunities to open up these two-way communication portals and increase the company’s ability to react and be on the side of their policyholders,” Rice says.
Q&A
Dax Craig President and CEO Valen Analytics
About the company Valen Analytics provides proprietary data, analytics and predictive modelling to help insurance carriers manage and drive underwriting profitability
Google’s spot in the insurance market Why do you think Google’s entry into insurance is a game-changer? First, I think it puts the industry on notice that technological innovation and disruption have arrived in the insurance industry. The other reason … is that Google only enters markets where they think they can be wildly successful. And so they see a gap in the insurance market where their data capabilities, their technological capabilities can play a role and, obviously, inure to their benefit.
What opportunities do you see for agents who partner with Google? I think the agents who embrace … the Google opportunity will figure out how to remain very relevant and, also, I think they’ll figure out how to maintain ownership of the customer as a trusted advisor – and that, to me, is key. Agents play a really important role in the distribution of insurance, and it really is that role as trusted advisor … and if they adopt the opportunity that Google Compare represents, they can still maintain that. I think it’s a huge opportunity for them to play in targeted markets ... for customers they don’t reach today.
What risks could agents face by not partnering with Google? I think the biggest one is failing to meet consumer expectations. Google is masterful at the user experience. Just look at everything they do. They take something that is incredibly complex, like searching the web, and they make it simple. And that, to me, is where agents have the most to learn. If you look at the last decade of technological innovation and disruption, one thing is really clear – consumers are absolutely unrelenting in their demand to have a great experience and to get what they want, and an excellent track record of getting what they want. If you fight against what the consumer wants – which is transparency, ease of use – I think you do so at your peril. I think it’s committing company suicide.
What questions should agents ask themselves in trying to ascertain what Google’s entry into the marketplace could mean for them? The biggest thing is how to become a part of it – how do they understand it, embrace it, and how do they learn from Google generally to provide that modern consumer experience. I also think there’s something that they can gain here, which is the notion of 24/7 service: online, phone, mobile-friendly. Those are things that, as an industry, insurance hasn’t adopted as well as other industries have, and that, to me, is the opportunity.
www.ibamag.com
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1/05/2015 2:47:14 AM
UPFRONT
WORKERS COMP UPDATE
Support grows for alternative programs Walmart, Nordstrom and others are accused of advocating for regressive workers’ comp policies
still be required to purchase workers’ comp insurance, but they would be free to craft their own policies or form nonsubscriber systems, such as the one in place in Texas. Those against such action contend that ARAWC-supported legislation leads to unfavorable outcomes for workers. In Texas, for example, Walmart has written a workers’ comp plan that allows the company to select the physician an employee sees as well as the
“[This will] make it harder for workers hurt on the job to access lost wages and medical care”
Efforts to support alternatives to state-run workers’ compensation programs have taken root in Tennessee and Oklahoma, and a new report from progressive news site Mother Jones suggests that as many as two dozen major American corporations are working to bring that option to all 50 states. Those corporations, which include Walmart, Nordstrom, Safeway and Lowe’s, are financially supporting a lobbying group called
NEWS BRIEFS
the Association for Responsible Alternatives to Workers’ Compensation [ARAWC]. Mother Jones considers the efforts of ARAWC an attempt to gut workers’ compensation and “make it harder for workers hurt on the job to access lost wages and medical care.” However, the association says it is simply interested in establishing more free market alternatives to state-run workers’ compensation plans. Under such laws, corporations would
Tennessee lawmakers abandon workers’ comp legislation
Attempts to allow employers in Tennessee to form their own workers’ compensation plans have been deferred until next year. The state’s House Consumer and Human Resources Subcommittee voted to defer the bill, which would give certain companies the right to ‘opt out’ of the state-run workers’ comp system, until the 2016 legislative session. A similar effort has been moving forward in the Senate, but analysts note that without support in the House, passage of the bill this year is unlikely.
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arbitration company that hears disputes. The plan also does not cover asbestos exposure. Such systems “create a race to the bottom,” says Oklahoma workers’ comp advocate Michael Clingman, in which businesses attempt to save money by writing plans with narrow benefits and forcing competitors to do the same to remain competitive. But Richard Evans, executive director for ARAWC, contends such plans in fact enhance benefits for employees. “We want the employer to have the ability to send the employee to the best possible doctors,” he says. “If you ask employers why they get good outcomes, it’s because they get their employees to the best doctors quickly, get their treatment so that it’s not delayed, and then get them back to work in a much faster fashion.”
Catamaran acquires Healthcare Solutions
Catamaran Corporation has completed its acquisition of Healthcare Solutions, which it purchased for $405 million. “This acquisition presents a great opportunity to further expand our presence in the workers’ compensation market,” said Mark Thierer, chairman and CEO of Catamaran, said. “Healthcare Solutions’ long-standing and established relationships with significant insurance carriers and TPAs provide an opportunity to bring Catamaran’s full suite of technology and services to Healthcare Solutions clients.”
www.ibamag.com
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Q&A
Mike Manley Research coordinator Oregon Department of Consumer and Business Services
Fact Manley co-authored the 2014 Oregon Workers’ Compensation Premium Rate Ranking Summary
Oregon study pinpoints the most expensive states for workers’ comp Can you provide a brief rundown of the report and its objectives? Probably our biggest single objective is to put states’ premium rates on a comparable basis by doing what’s necessary to factor out the differences in hazard mix across states. We’re doing that in three primary ways. First would be using the same mix of hazard classifications. Second would be using the same payroll quantities for those classifications, and the third would be using the quantifiable factors that apply to all employers within a state. [We don’t factor in] things that are individualized by employer – for example, the impact of experience modification.
What do you think are the highlights of this report? If you’re trying to look at the biggest picture, I think one thing that you would see is that our benchmark for rates nationally, which is the median rate in our study, is still declining a little bit. And so that tends to track fairly closely with other measures of rates nationally for workers’ compensation insurance. We saw a slight decline between 2012 and 2014 there. The second thing is that, in many ways, the states are still clustering more closely in the middle of
Audit finds rampant workers’ comp abuse at LAPD and LAFD
Workers’ comp costs for LA police and firefighters increased by 35% over the past five years, according to a recent audit. The report also found that 25% of emergency workers had filed multiple claims, and 66% of firefighters and 60% of police officers filed one claim in the past three years. The Los Angeles Times, which conducted preliminary investigations, declared it a “culture of workers’ compensation abuse,” especially since many claims occurred during such activities as exercise and playing sports.
distribution. We now have 21 states that are plus or minus 10% of that median figure, and that’s the highest number that we’ve had in that middle group in any single study we’ve done.
California is number one on the list, despite having passed legislation some time ago aimed at cutting costs. Do you have any insight into what’s happened there? Let me first say that when we look at any given state, we aren’t analyzing what costs are expected to do. We are analyzing what rates were at the time we take our snapshot. So these were their rates reflected on January 1, 2014. I believe they do anticipate some cost savings from their changes in their system, but they haven’t been fully realized yet. In a long tail line of insurance like workers’ compensation, sometimes the cost changes aren’t readily reflected right off the bat. I believe California is definitely that way. They have some underlying cost drivers. Some of them continue to drive rates up, and some of them are now pushing them in possibly a different direction. But at the time that we took our snapshot, we hadn’t seen those downward forces reflected in rates yet.
Investigative report finds workers’ comp deteriorating nationwide
ProPublica and NPR partnered to investigate the state of workers’ comp in America, and found that since 2003, lawmakers in 33 states have passed laws that either lower benefits or create obstacles in obtaining them. In addition, benefits vary greatly by state – the loss of eye, for example, receives a maximum compensation of $27,280 in Alabama, compared with $261,525 in Pennsylvania. It also revealed that many states place a time limit on benefits, and may cease payments even if injuries persist.
Patriot National acquires TriGen Insurance Solutions, others
Patriot National, an outsourcing solutions provider for the industry, has purchased specialty brokerage TriGen Insurance Solutions for $9.74 million. Patriot also bought the assets of Hospitality Supportive Systems, as well claims service affiliate Selective Risk Management, for $13.5 million. “The acquisitions of HSS and Selective Risk Management are consistent with our growth strategy to expand Patriot National’s fee-based product offerings beyond workers’ compensation,” said CEO Steven M. Mariano.
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1/05/2015 2:47:55 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email iba@keymedia.com
Why premium increases are a good thing Despite the increase in extreme weather events, it’s still tough to sell consumers on the necessity of premium increases, writes Mark Lee AMERICAN HOMEOWNERS are seeing an increase in flood insurance premiums thanks to the changes made to the Homeowner Flood Insurance Affordability Act [HFIAA] in 2014 as the National Flood Insurance Program attempts to pay down the federal debt incurred as a result of Hurricane Katrina and Superstorm Sandy. But the question needs to be asked: Are Americans more understanding of premium increases as a result of the various extreme weather events in recent years? I believe this question can be extrapolated out to any insurance policy with property coverage. Given the various weather events that plague the different regions of the United States, ranging from heavy wind, hailstorms and hurricanes to floods, drought and fires, there are a number of insureds across the country who have been affected by price increases to their policies. One of the most difficult parts of being an insurance agent is the fact that we sell a product that we hope people never have to use. It is because of that lack of use that many policyholders fail to see the value of the product or understand an increase in premium. I do not believe a typical consumer sees the value in the product, especially as it relates to personal insurance, because it is not something they benefit from on a daily basis. My father and mentor once told me: “We sell an intangible product, the value of which cannot truly be realized until point of claim.”
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I have always believed in those words and know that insureds will experience the value of the product they purchased – after a claim.
a claim and continue to faithfully pay their premiums are less likely to understand why they are paying an increase on their policy when their exposure has not changed. The way they see it, they’re getting penalized by the carrier because of other policyholders’ losses. They take it personally and do not look at the big picture – which is that in order for the company to stay in business and offer them the ability to buy a policy, they need to continue to be a profitable entity. Too many consumers look at insurance carriers as charitable organizations, as if they’re not entitled to be able to turn a profit. The big, faceless corporation that takes their money and seems to raise their rates every year in turn for a piece of paper and a promise to help in the event of a claim that never happens is the quintessential storybook bad guy. These people rarely see the carrier as the hero who swoops in during a family’s greatest moment of need, handing that family a check
“One of the most difficult parts of being an insurance agent is the fact that we sell a product that we hope people never have to use” It goes without saying that no policyholder likes to see their insurance premiums go up, but when they do, I believe clients will have very different attitudes toward the increase depending on their personal claims experience. Those individuals who have suffered losses and had their insurance carrier pay out claims for damages are much more tolerant of the following year’s premium increases than those who have had no claims. Those with claims experience are more likely to understand that their homeowner’s policy, which was costing them a few thousand dollars a year, may go up by a few hundred dollars because of the multiple hundreds of thousands of dollars that were just paid out by the carrier on their claim. They realize that even if their premium goes up, they will most likely never pay in premiums what the carrier paid out in claims, regardless of how many years they renew. Those individuals who have not turned in
to help them begin to rebuild their lives, starting with their home. Our great country creates an environment whereby if a carrier tries to drastically increase a policyholder’s rates, there are other options available to the consumer – they can move their coverage and contain their cost. As long as we have competition for coverage between various carriers, there will always be a way to help contain insurance premiums. I believe the consumer may be a bit more understanding of moderate price increases when they happen if they first understand that, in order to have choices regarding where to obtain their coverage, the carriers needs to be able to profit.
Mark Lee, CIC, is a managing director of Higginbotham, a Texas-based insurer that specializes in a wide range of individual and commercial insurance products.
www.ibamag.com
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PEOPLE
INDUSTRY ICON
A WORLD VISION John Nelson, chairman of Lloyd’s of London, discusses the company’s grand plans to increase its global footprint IN 1688, Edward Lloyd ran a coffeehouse on Tower Street in London. It became a bustling address, frequented by those whose business was connected to the ships, and was soon known as the place to buy marine insurance. Today, Lloyd’s name is synonymous with insurance around the globe. It’s the world’s leading market for specialist insurance. It has 94 syndicates, managed by 57 managing agents, and more than 200 different brokers bringing in business from over 200 countries and territories. Despite technology leading all industries down a path toward increasing automation, Lloyd’s chairman John Nelson was keen to impress upon attendees at a recent industry event in Auckland, New Zealand, that Lloyd’s has no shortage of manpower. “I have heard it said that there are no real underwriters anymore – just computers, churning out off-the-shelf products,” Nelson said. “Well, in the case of Lloyd’s, nothing could be further from the truth. We have a growing global marketplace full of expert underwriters – more than we’ve ever had – writing the most innovative and specialist products going. We have a worldclass reputation built on being flexible and responsive to our clients’ needs and our first-class knowledge of the changing risk landscape.”
Strategy In May 2012, UK Prime Minister David Cameron attended the company’s worldfamous Lime Street premises to assist Nelson in launching Vision 2025, a strategy for the development of the Lloyd’s market
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that aims to make it the global center for specialist insurance and reinsurance. Plans to make Lloyd’s mirror the geographic origin of the market’s business and capital read every bit as ambitious as its endeavors to develop in high-growth economies. The ambitious plan involves global expansion – Southeast Asia, China, Eastern Europe and Latin America are all poised to become key to Lloyd’s business. It also includes the goal of being globally diverse in its capital base, as well as being a diverse market by gender, age and ethnicity. Nelson sat down with Insurance Business America to speak about Vision 2025. While still in its early days, he says Lloyd’s has made “good progress” in working toward its objectives. “Bottom line, I would say that Vision 2025 has very much been embraced, and it’s very much being executed,” he says.
Diversity Nelson believes that, in terms of gender diversity, Lloyds has made great progress. “Without wishing to overplay it, we have the first female chief executive, Inga Beale, we’ve ever had in Lloyd’s. She wasn’t selected because she was a female. She was selected because she was the best candidate. But I think it was a sign of the times that we had a female candidate who was the best candidate.” Nelson says that while gender diversity moves along, nationality diversity remains a challenge. He says nationality diversity is “very, very important because, if you have true nationality diversity in the Lloyd’s market worldwide, you get much more input in terms of local culture and customs [and] understanding new local risks and new markets.”
“In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively…it’s going to be tough” JOHN NELSON ON THE IMPACT OF ALTERNATIVE CAPITAL “[We] do have some concerns about the concentration of alternative capital, focusing on a few specific areas – both geographic and in terms of peak risks. We need to try to harness capital on a broader basis, particularly to assist the industry in driving forward into new markets and new products. “This will require sophisticated, knowledgeable and long-term investors. And they will need to be supported by the continuous development of analytical resources and techniques. A lot of work is already being done on this within Lloyd’s – and it needs to be. “As we continue to grow globally, and alternative capital floods into the market, there are going to be many issues that we have to navigate.”
www.ibamag.com
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PROFILE Name: John Nelson Company: Lloyd’s of London Title: Chairman Age: 67 Years in the industry: 15 Became chairman of Lloyd’s: October 2011 Previous organizations: Kleinwort Benson, Lazard, Credit Suisse First Boston Europe
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PEOPLE
INDUSTRY ICON LLOYD’S BY THE NUMBERS Nelson points to the banking industry in London in the 1980s as an example of a sector that successfully involved huge national diversity in business. He says that diversity was what really drove London to becoming the financial intermediation center of the world. “I think we have the same opportunity in Lloyd’s in the London insurance market. You’re seeing greater diversity now, but there’s quite a way to go.”
Innovation Nelson shared with Auckland event attendees the startling statistic, from a recent study by The London Market Group, that only 10% of the corporate risk map is covered by insurance. “What does this tell us? It tells us that in the same way there is a physical world out there needing coverage, there is a panopoly of new, emerging risks demanding innovative solutions,” he said. He refers to cyber, supply chain and reputation as being niche classes of
“It’s not just a cost thing,” he continues. “It’s making it more user friendly and, as we grow overseas, making it easier for stakeholders to plug and play…”
Outlook Asked about the global outlook for the industry, Nelson says, “In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively … it’s going to be tough. It’s going to be very tough.” His advice for dealing with fierce competition is simple: “Innovate to compete.” When it comes to talking about the long-term outlook for specialist insurance, Nelson is much more optimistic. “If you look at Lloyd’s market, we think our addressable market at the moment, in annual terms, is around $600 billion. We think that, in 2025, that number will be around $2 trillion.” He says China, India, Brazil, Mexico and
70%
Lloyd’s covers almost 70% of the airline industry, 70% of the pharmaceutical industry and well over 55% of the telecom industry globally
100% Lloyd’s provides insurance to 100% of the Dow Jones Index and 94% of the FTSE 100
60%
Approximately 60% of Lloyd’s business is direct insurance, and around 37% is reinsurance
“We like to think we’re in the vanguard of innovation and it’s very important we are” business that are in high demand, adding that, “The bespoke, imaginative and intellectual challenges they represent offset the commoditization of more traditional coverage.” Speaking specifically about Lloyd’s, he says, “We like to think we’re in the vanguard of innovation, and it’s very important we are.” Nelson also says it’s absolutely vital to make back-office platforms more efficient and user friendly. “I would say the insurance industry, generally, is behind the rest of global industry in terms of embracing technology to improve their platforms, and that would be true of Lloyd’s as well. I think, though, now that the market has smelled the coffee, they understand they need to do it, and we’re doing that.
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Turkey will form the majority of global GDP, and those countries are currently among the least insured in the world. He also says that, according to Lloyd’s figures, a 1% rise in insurance penetration translates into a 13% reduction in uninsured losses, a 22% reduction in taxpayers’ contribution following a disaster and increased investment equivalent to 2% of national GDP. “The amount of risk that’s being created in these countries is prodigious,” he says. “Governments know … they need to close the insurance gap just to make sure that the economies are sustainable. There is a real correlation between good insurance, diversified insurance and economic performance.”
In 1973, Liliana Archibald became Lloyd’s first female broker
The Lloyd’s building on Lime Street in London was officially opened by Queen Elizabeth II in 1986. It contains 33,510 cubic meters of concrete, 30,000 square meters of stainless steel cladding and 12,000 square metres of glass
www.mpamag.com
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FEATURES
COVER STORY: STORY TOP PRODUCERS
TOP
10
PRODUCERS Insurance Business America ranks producers to find the industry’s top performers
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www.ibamag.com
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Growth
WELCOME TO Insurance Business America’s inaugural Top 10 Producers special report. After seeking out, receiving and vetting nominations from producers across the country, our research has identified the industry pros worthy of inclusion in the top 10. But when it comes to deciding who gets the top spot, it’s not just about the biggest gross written premium. Our unique “handicap” methodology means we place producers in markets both large and small on a level playing field to find the country’s best performers. Think your name belongs on the list? Make sure you enter your name for consideration in next year’s rankings! We appreciate the effort of the producers who put themselves forward through this year’s process, and we hope readers enjoy the insight provided by our top honorees. The methodology The Insurance Business America ranking system is an objective way of ranking the best-performing producers. Each nominated producer was required to provide his or her own details to IBA in order to be eligible. There were six criteria: • Total revenue (2014) • Revenue growth (2014 vs. 2013, as a percentage of total revenue) • Revenue from new policies written in 2014 (as a percentage of total revenue) • New policies in 2014 (as a percentage of total policies) • New clients per broker in 2014 (as a percentage of total clients) • Total number of clients Each producer was ranked by each of these criteria, and the sums of their rankings were added together. The producers were then ordered according to who had the lowest overall score. (Think of it like a golf score – higher total rankings add up to a lower overall score.) In the event of a tie in overall score, the producer with the highest total sales volume was given preference. By ensuring that the majority of the criteria rewarded producers based on a percentage of their total business – rather than just critical mass – the very best producers were rewarded, rather than those who are simply fortunate enough to work in a large market.
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1/05/2015 2:50:46 AM
FEATURES
COVER STORY: TOP PRODUCERS
Which producers fared best in each category? In addition to the overall rankings, we calculated the top five brokers for each category. For some criteria (such as total revenue), brokers for larger firms naturally rose to the top. However, we didn’t want larger firms to dominate the competition merely through sheer size. So for other criteria, we ranked producers on a sliding scale to allow those working in smaller markets a chance to shine as well. For criteria like policy growth and new clients per broker, producers’ numbers were ranked as a percentage of total business.
TOP 5 RANKINGS 2014 TOTAL VOLUME
POLICY GROWTH IN 2014
Top 5 average: $5.9 million
Top 5 average: 75.95%
1 Rich Skorupski, Meeker Sharkey Associates 2 Lori McDermott, Niagra National 3 Zachary Sibrel, German American Insurance 4 Matt Hammer, Baldwin Krystyn Sherman Partners 5 James Werdin, Corporate 4 Insurance Agency REVENUE GROWTH
Top 5 average: 70.13% 1 Herb Dorow, Maris Brown Rossell Insurance Group 2 Chad E. Mumford, Liberty Mutual Insurance Group 3 Sam Brown, Ranch Mesa Insurance Services 4 Zachary Sibrel, German American Insurance 5 Rich Skorupski, Meeker Sharkey Associates REVENUE FROM NEW POLICIES
1 Cole Williams, Insurance Associates 2 Zachary Sibrel, German American Insurance 3 Anthony P. Kasperek, Kasperek New York Life Insurance 4 Herb Dorow, Maris Brown Rossell Insurance Group 5 Brian Foley, Corcoran & Havlin Benefits Group TOTAL NUMBER OF CLIENTS
Top 5 average: 1,697 1 Kelli Cantlin, Brown & Brown Insurance 2 Patrick O’Leary Sr., Trident Insurance Agency 3 Katie Sanford, Liberty Mutual Insurance Group 4 James Werdin, Corporate 4 Insurance Agency 5 Karen Poore, MetLife Securities
(as a percent of total volume)
Top 5 average: 39.7% 1 Anthony P. Kasperek, Kasperek New York Life Insurance 2 Mervyn Fried, MJF Consultants 3 Kari A. Dybdahl, American Risk Management Resources 4 Brian Foley, Corcoran & Havlin Benefits Group 5 Kelli Cantlin, Brown & Brown Insurance
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CLIENT GROWTH IN 2014
Top 5 average: 52.16% 1 Katie Sanford, Liberty Mutual Insurance Group 2 Herb Dorow, Maris Brown Rossell Insurance Group 3 Karl Henley, SeibertKerk Insurance Agency 4 Chad E. Mumford, Liberty Mutual Insurance Group 5 Kari A. Dybdahl, American Risk Management Resources
www.ibamag.com
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TOP 10 PRODUCERS RANK
NAME
COMPANY
COMPOSITE SCORE
1 2 3 4
Herb Dorow Chad E. Mumford Kari A. Dybdahl Justin Beidleman
Maris Brown Rossell Insurance Group Liberty Mutual Insurance Group American Risk Management Resources Arbor Insurance Group
52 52 55 71
5
Brian Foley
Corcoran & Havlin Benefits Group
72
6 7 8 9 10
Patrick O’Leary Sr. Harrison W. Scheider Sam Brown Rich Skorupski Brian Pool
Trident Insurance Agency American Risk Management Resources Rancho Mesa Insurance Services Meeker Sharkey Associates Lonestar Integra Insurance Services
73 74 74 75 76
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1/05/2015 2:51:03 AM
FEATURES
COVER STORY: TOP PRODUCERS
10 BRIAN POOL FAST FACTS Company: Lonestar Integra Insurance Services Years in the business: 8 Specialties: Home and auto, commercial/business Website: www.lonestarintegra.com
What excites you about being an insurance professional? I enjoy helping people, and being in this industry allows me to do that every day of the week. I see all too often where another agent has missed something or omitted something that the client was simply unaware of, and being able to help fill those gaps to further protect clients does indeed excite me! Name five factors that have contributed to your success. • Organization • Persistence • Options • Follow-up • Customer service Not necessarily in that order. I have a high standard for responding to my clients – always as quickly as possible, and always with accurate answers/resolutions. People are busy, and taking care of their needs after the first contact is imperative to success. What’s the most important thing a producer can do to develop his or her business? Be diligent; follow up; generate clients, not customers; and always pick up the phone when it rings. Relationships and trust are a massive part of this industry, and you must have both with your clients if you intend to work with them long-term.
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When you’re not at work, what are you likely to be doing? I volunteer with the La Porte Livestock Show and Rodeo Association to help facilitate their annual cook-off to raise money for scholarships for FFA and 4H kids in the area. I also volunteer for the MD Anderson Cancer Center Riders for Life motorcycle rally and provide music for their events. Additionally, I’m on the Advocare Texas Bowl hospitality committee, assisting with hosting the teams and coaches who come in to the city of Houston for the annual college football bowl game. In my free time,
I enjoy attending athletic events at the University of Houston, my alma mater, with my family and friends. What’s most satisfying to you about your job? Being able to help people on a daily basis. I often run across people who may not be able to purchase their home if they can’t find the right insurance policy, and I help them accomplish that. There are other times that I run across people who may lose their home if they can’t find a way to lower their rates. I help them accomplish that.
“Relationships and trust are a massive part of this industry, and you must have both with your clients if you intend to work with them long-term”
www.ibamag.com www.insurancebusiness.ca
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9 RICHARD SKORUPSKI FAST FACTS
billing or cancellation to a claims issue. • Surrounding myself with good, committed individuals: It also helps if they are smarter than you! I really can’t stress how much this has aided me in not only obtaining clients, but retaining them. … The old adage, “You’re only as good as the people you work with,” is really true.
Company: Meeker Sharkey Associates Years in the business: 32 Specialties: Insurance and risk management for nonprofit organizations Website: www.meekersharkey.com What excites you about being an insurance professional? Initially, I was attracted to the opportunity to meet new people and understand how they do business. I enjoyed learning how a company came to be and how the owners found a way to create a successful organization. As I began to work with social service organizations, I came to appreciate the work they did to support their specific missions and the populations they served. Ultimately, I felt if I was going to work with businesses, I wanted to work with businesses that had a social conscience and served individuals in need. Being an insurance agent allows me to help these organizations meet their goals by protecting their assets. Name five factors that have contributed to your success. • A commitment to the industry: I have never enjoyed attending trade shows and handing out business cards, cold-calling and the rest of the ‘sales’ aspects of our business. I believe it is important to be involved and give back to the industry. • Perseverance: I have always worked in this sector of insurance, but I’ve also worked in other areas with different industries. While you can do a good job with research and experience, you will never be as good as when you fully immerse yourself in a particular industry. • Taking risks: Five years ago, I left a large
“The old adage, ‘You’re only as good as the people you work with,’ is really true” national broker to rejoin the principals at Meeker Sharkey, a smaller independent agency. It required leaving behind a book of business I had built over 20 years, and I had to uphold a two-year non-compete agreement. … It was not an easy decision to leave the perceived comfort of the large agency, but it turned out to be the best decision for me. • Developing trust: I think sometimes we lose sight of the fact that carrier relationships are as much a part of the sales process as finding and obtaining new clients. Once you have developed trust with your underwriters and senior management, it’s much easier to reach mutual goals and go to bat for your clients with any problems that come up, from
What’s the most important thing a producer can do to develop his or her business? Picking a specialty, committing to that niche and immersing yourself in it is the best way to succeed. For a new producer who needs to write business, this may be a luxury. But the sooner they can begin to differentiate themselves, the more successful they will be in the long haul. When you’re not at work, what are you likely to be doing? Probably the most passionate thing I enjoy to do for pleasure is to scuba dive. I have been diving since the late ’70s, and it always provides great relaxation. It’s probably the one place you can go and not be bothered by the outside world. In addition to diving, I enjoy reading, especially Elmore Leonard gangster novels. I also volunteer for two nonprofit boards, having served as past president of the Union County Educational Service Foundation, and currently as a board trustee for the Supportive Housing Association of New Jersey. What’s the most satisfying thing about your job? I know it sounds corny, but I do like the feeling of servicing my clients. At the end of the day, we sell paper and promises. If we can provide good advice and help them when they have a claim or an issue that we can solve, it’s a good day.
www.ibamag.com
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FEATURES
COVER STORY: TOP PRODUCERS
8 SAM BROWN
FAST FACTS Company: Rancho Mesa Insurance Services Years in the business: 9 Specialties: Human services Website: www.ranchomesa.com What excites you about being an insurance professional? I receive personal satisfaction when we protect human services organizations, as they make our communities better places in which to live and raise families. I enjoy helping clients expand their influence and offering strategies to grow while managing risk. Name five factors that have contributed to your success. • Disciplined prospecting • Detailed and organized processes • Protecting my time and work product when competing for new business
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• Educating myself on coverage forms and claim scenarios • Astute market (carrier) knowledge and building those relationships What’s the most important thing a producer can do to develop his or her business? Understand an agent has two roles: producer and broker. The producer in us must continually research prospects, look for opportunities, ask for referrals and make the cold-call. The broker side must understand the market, manage client expectations, advocate for clients and understand the insurance coverage. Both roles are equally important and always need tinkering. When you’re not at work, what are you likely to be doing? I am a board member for one of my nonprofit clients, and I enjoy volunteering at its youth
“The producer in us must continually research prospects, look for opportunities, ask for referrals and make the cold-call. The broker side must understand the market, manage client expectations, advocate for clients and understand the insurance coverage. Both roles are equally important and always need tinkering” center. I enjoy surfing the beautiful San Diego beaches and watching cartoons with my 2-year-old daughter and 4-year-old son. Teenage Mutant Ninja Turtles are back! What’s the most satisfying thing about your job? Hearing a heartfelt “thank you” from clients when saved premium dollars fund a new program benefitting our community or the right coverage allows for expanded services.
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7 HARRISON W. SCHEIDER FAST FACTS Company: American Risk Management Resources Years in the business: 11 Specialties: Environmental risks Website: www.armr.net What excites you about being an insurance professional? The opportunity to educate and help manage my clients’ risks. Every day, I have the opportunity to inform and educate the agents and business owners I work with on the risks of category 3 water and bacteria, which is no longer being covered within their property or general liability insurance policies. Policyholders have relied on coverage in these policies for years, but now have gaps in their coverage due to very complex pollution exclusions. It is my job to educate and help them understand those gaps in coverage well enough so we can offer a solution. Once the agent or business owner understands the need for environmental coverage and that there is a solution I can offer, then a deal is made. Name five factors that have contributed to your success. • Faith and family • Persistence • Education • Organization • Strong management support and defined company goals What’s the most important thing a producer can do to develop his or her business? The most important thing a producer can do to develop his or her business is to educate themselves. Studying for my CPCU designation
has prepared me with a wealth of insurance industry knowledge in a short time, and I am able to have educated risk management discussions with clients because of my coursework. Along those same lines, a producer would be wise to learn as much as they can about a specific coverage line and become an expert. Once viewed as an expert, develop a need for your services by targeting a niche class of business and learning as much about that niche class as you can. Proceed by targeting the influencers in that class of business and educating them on the solutions you provide. Once you become known as the expert for your
“The most satisfying part of my job is solving problems. Every day I have the opportunity to develop creative risk management solutions and educate my clients” solutions and helpfulness, word of mouth within the class of business you are targeting travels fast, and your work will speak for itself, at which point you will become quite busy. When you’re not at work, what are you likely to be doing? I am most likely on an adventure of sorts with my wife, her 15-year-old sister and our 4½-year-old twin boys. I enjoy getting outside with our boys whenever we can. Between zombie Nerf gun battles, hiking and working on our first home, our family stays very busy. I am passionate about any kind of sport, whether it be football, which I played in college, or hunting, which I grew up doing in northern Wisconsin. I am a competitor in everything I do, and this has contributed in many ways to my success as
an insurance broker. What’s the most satisfying thing about your job? The most satisfying part of my job is solving problems. Every day I have the opportunity to develop creative risk management solutions and educate my clients on products that provide solutions for their environmental exposures. I feel most satisfied when I have worked hard with my team on an account, educating our client in the use of an environmental insurance product and the client understands the need and places a policy to solve a problem that is no longer hypothetical. All it takes is one, and then that client becomes an advocate for the product line, and the business relationship continues to grow from there.
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FEATURES
COVER STORY: TOP PRODUCERS
6 PATRICK O’LEARY SR.
FAST FACTS Company: Trident Insurance Agency Years in the business: 32 Specialties: Affluent clients, million-dollar homes Website: www.tridentinsuranceagency.com What excites you about being an insurance professional? In my particular role, I get to see people see their dreams come true – purchasing their dream home. I ease the new homeowner through the
“In my particular role, I get to see people see their dreams come true – purchasing their dream home. I ease the new homeowner through the process of protecting their dream”
• Surrounding myself with other successful people • The Realtors who provide a continuous flow of referrals • Empathy and compassion for clients who experience losses • A sense of humor to provide balance in work What’s the most important thing a producer can do to develop his or her business? To successfully develop a business, a producer must develop centers of influence as a referral base, be true to who they are, be sincere, knowledgeable and be a trusted advisor.
process of protecting their dream. This is the beginning of our relationship; from there, we continue to build the relationship through continuous interaction. Name five factors that have contributed to your success. • Perseverance to maintain the drive to be successful
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When you’re not at work, what are you likely to be doing? In my spare time, I enjoy golfing; barbecuing with family, friends and neighbors; Caribbean cruises; and visiting the East Coast beaches. What’s most satisfying thing about your job? Being able to educate a client and provide insight on an insured’s policy, and guiding clients during difficult times [such as] Superstorm Sandy, hurricanes, etc.
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FOR MORE INFORMATION, VISIT WWW.IBAMAG.COM 32
www.ibamag.com
or contact Cathy Masek cathy.masek@keymedia.com
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5 BRIAN FOLEY cost-effective benefit plans, helping them be more compliant and improving the value of their benefit package to employees makes my job a very enjoyable one. Name five factors that have contributed to your success. • Being a good listener • Sincerity • Continuous learning • Hard work • Professional persistence What’s the most important thing a producer can do to develop his or her business? This business is not easy. The most important thing is to consistently bring value to customers and prospective customers. You have to let them know why you are different. When you’re not at work, what are you likely to be doing? When I’m not working, I spend most of my time with my wife and daughters on a soccer field. I volunteer as a coach for several teams and serve on the board of directors for our town’s youth soccer league.
FAST FACTS Company: Corcoran & Havlin Benefits Group Years in the business: 19 Specialties: Employee benefits Website: www.chinsurance.com
What excites you about being an insurance professional? I get most excited about helping people. Many people view brokers as salespeople. I don’t view myself that way. I think I am good at figuring out problems, and I apply that to insurance. Working with business owners to find
What’s the most satisfying thing about your job? When I am able to help a business owner in a meaningful way, I am most satisfied. I go to work every day hoping to make a positive impact on a client’s business.
“This business is not easy. The most important thing is to consistently bring value to customers and prospective customers. You have to let them know why you are different” www.ibamag.com
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FEATURES
COVER STORY: TOP PRODUCERS
4 JUSTIN BEIDLEMAN “Never give up, and don’t let a ‘no’ discourage you from obtaining a ‘yes’” calling or hit the streets and begin walking in and out of businesses. The key is to try not to ‘sell’ your prospect – rather, introduce yourself, quickly build a relationship and differentiate yourself from whomever it is they are doing business with now. Always remember: Most of the time, it takes multiple touches to gain just one meeting.
FAST FACTS Company: Arbor Insurance Group Years in the business: 5 Specialties: Captive insurance solutions with a strong focus in the construction and restaurant industries Website: www.arborig.com What excites you about being an insurance professional? I was intrigued by this industry because of the opportunity to develop relationships and meet people, business leaders and those who help make this country run. In building those relationships, I’m able to protect the businesses people operate by identifying, designing and implementing insurance programs tailored to their specific business needs. I see myself as not
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just becoming the insurance advisor of a business, but rather becoming their business advisor and helping them build their business. Name five factors that have contributed to your success: • Drive • Passion • Role models • Family • The future What’s the most important thing a producer can do to develop his or her business? Never give up, and don’t let a ‘no’ discourage you from obtaining a ‘yes.’ Much of my business has been developed by cold-calling. A producer can’t be afraid to pick up the phone and begin
When you’re not at work, what are you likely to be doing? My passion is my family. I have a beautiful wife and an energetic, fun-loving 21-month-old son. What I do during my workday is for them and our future. I enjoy working on our home, whether it be redefining rooms within the house or designing new landscapes on the outside. Fortunately, living in Allentown, we are spoiled to have Triple A affiliates for the Philadelphia Phillies and Philadelphia Flyers in the Ironpigs and Phantoms, so attending games is always fun. What’s the most satisfying thing about your job? What is most satisfying is that it’s a career and not a job. I have always believed there was a difference. I never speak of my work as a job. It’s not a typical workday – and sometimes it isn’t a typical night or weekend – but a career is something you are passionate about and love doing. I enjoy coming to work every morning, and I love what I do.
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3 KARI A. DYBDAHL FAST FACTS Company: American Risk Management Resources Years in the business: 8 Specialties: Designing and providing environmental insurance solutions Website: www.armr.net What excites you about being an insurance professional? The insurance industry has endless opportunity for insurance professionals to grow their book of business. Being able to create my unique stamp on a product excites me. The sky is the limit, and that is exciting. Name five factors that have contributed to your success. The first and most important factor to my success would be the mentors I have had the
“The most important thing is to find insurance coverage lines you are excited about – that excitement will turn into passion, and once you are passionate about what you are selling, the success just falls into place”
opportunity to work with. I can’t think of anything much better than learning from the pioneer of environmental insurance. Other factors to my success would be brainstorming with other industry professionals, reading insurance publications, my supportive family and my passion for the insurance industry. What’s the most important thing a producer can do to develop his or her business? This is a tough question. The most important thing is to find insurance coverage lines you are excited about – that excitement will turn into passion, and once you are passionate about what
you are selling, the success just falls into place. When you’re not at work, what are you likely to be doing? I am likely at the gym, reading a book or trap shooting with my family. What’s the most satisfying thing about your job? Spreading the knowledge I have learned over the years about environmental insurance. I absolutely love talking to and teaching classes to clients about insurance. Being able to provide an insurance product that will help keep a client’s business going is very satisfying.
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FEATURES
COVER STORY: TOP PRODUCERS
2 CHAD E. MUMFORD FAST FACTS Company: Liberty Mutual Insurance Group Years in the business: 19 Specialties: Personal lines products Website: www.libertymutual.com What excites you about being an insurance professional? The relationships I have created throughout the community and within Liberty Mutual. I enjoy sitting down with my clients and taking the time [to help them] truly understand the coverages, features and benefits of their policy and what it can do for them when they need it. Also, mentoring and celebrating the success of fellow agents and peers. Knowledge is one of the few things that you can give away and still receive more of. Name five factors that have contributed to your success. • Learning insurance at young age: I was 17 years old when I studied for my P&C and life licenses. • Meeting clients and prospects face to face and having a thorough and consultative meeting with them • Dedication to personalized service: Every service call is an opportunity to offer other financial products that best fit their needs. • Making sure my referral sources know and understand how important they are to me • Continuing education: I am constantly educating myself on the ever-changing insurance market.
What’s the most important thing a producer can do to develop his or her business? Continually educate yourself so as to deliver concise, expert advice to your clients and to ask for referrals. If your client views you as an expert, they will feel more confident in referring you to their family, friends and coworkers. When you’re not at work, what are you likely to be doing? I enjoy partnering with local companies within the community to volunteer my time to the less fortunate. I also like to volunteer my time
to local churches and charities as well. My passion is vehicles; I enjoy all things car-related. I’m fortunate to live in a larger city with numerous car-related activities. What’s the most satisfying thing about your job? Most satisfying to me is at the end of the appointment when a client looks at me and shakes my hand, and you can see the client is truly thankful for my advice and recommendations. You can almost feel the burden of making sure that their family and possessions are properly covered being lifted off their shoulders. It’s a great feeling of accomplishment.
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1 HERB DOROW FAST FACTS Company:Maris Brown Rossell Insurance Group Years in the business: 8 Specialties: Contractors, habitational, large property schedules (office, industrial, retail, etc.) Website: www.myfamilyagent.com What excites you about being an insurance professional? The ever-changing marketplace and coverage forms. It excites me to know that we are at a level of production and clients that carriers come to us for advice. A lot of carriers we write with come to us when developing new target markets. They come to us not only seeking our advice about the correct direction to head in, but also to help develop the specific coverages needed to insure the risk correctly. Name five factors that have contributed to your success. • Honesty: It is said all the time, but without a doubt, if you lie to a client about coverage, they will find out. Maybe not today, but one day the claim will not go as you promised. • Recommendation forms: We always take the approach of being an advisor. When a client does not have the coverage needed, we offer them the option to obtain it. If the client chooses not to, we have them sign a waiver. You’d be surprised how many clients want the correct coverage after this process is explained. • Pre-qualifying: A lot of producers spend most of their time doing quotes and then chasing those prospects after exchange of the quote. [To manage] time as well as commission expectancy, spend a little more time qualifying the prospect and only
moving forward with those who can actually do business with you. • Referrals: Our closing ratio is over 70% when the prospect was directly introduced to us. • Business planning: Sometimes [producers] feel they don’t need to have a business plan, they just need to sell. That couldn’t be further from the truth. The act of putting a full business plan together is essential for accessing and determining the target markets to focus on. What’s the most important thing a producer can do to develop his or her business? Become an expert. I see producers all the time ... [who] never became an expert in any one
“Our clients have a business – and in most cases, a passion. They have put so much of themselves into creating this dream or success. It’s rewarding to know that on their worst day, we can be their best friend” discipline. For myself and our agency, it is a big statement to say we have $5 billion in property insured. If you want to be a player in a line of business, then you need to be an expert. Join everything related to that line, and take classes
offered for those in that industry. It may not be a class about insurance, but a class geared toward a contractor for snow plowing safety will help you be more knowledgeable in that field, making you more of a valued asset to the business and not just a salesperson. When you’re not at work, what are you likely to be doing? I love to be outside enjoying a number of things – from being on the lake and boating to getting lost in the woods of Northern Michigan. One of my passions is deep sea fishing; when not working or with the family, I’m always looking for a way to fit that into my demanding schedule. What’s the most satisfying thing about your job? The ability to help a client in a changing market. Our clients have a business – and in most cases, a passion. They have put so much of themselves into creating this dream or success. It’s rewarding to know that on their worst day, we can be their best friend.
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FEATURES
PROFESSIONAL LIABILITY
THE CHANGING LANDSCAPE OF PROFESSIONAL LIABILITY Professionals who don’t have comprehensive professional liability coverage are leaving themselves exposed to all kinds of potentially devastating risks – from lawsuits to data breaches – as Samantha Wright explains 38
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LET’S FACE IT – nobody’s perfect. Even the most experienced professionals make mistakes from time to time. And in our litigious society, even when your service delivery is flawless, a client could still seek legal action against you. That’s where professional liability insurance comes into play. Also known as errors & omissions insurance (or malpractice insurance in the medical sector), professional liability is a mature yet ever-evolving sector of the insurance industry that offers specialized coverage to protect a professional or business from liability caused by ‘wrongful acts’ — including any actual or alleged breach of duty, neglect, error, misstatement, malpractice or omission. When professionals err (and even when they don’t), PL coverage can help protect them from paying the high cost of a lawsuit. “As our economy continues to shift to a service orientation, the market for professional liability coverage continues to grow,” says Greg Leffard, president of Hanover Professional E&O at The Hanover Insurance Group. “Professionals and service providers are seeing increased activity in lawsuits when their service or advice doesn’t meet their client’s expectations. The defense costs of lawsuits alone can be quite substantial. In fact, it can force many smaller professionals out of business. So having a professional liability policy that will pay for defense costs is crucial, even if facing frivolous suits.”
Who needs it? As its name suggests, the PL sector is most generally associated with traditional licensed non-medical professionals – lawyers and accountants, architects and engineers, Realtors and insurance agents. But PL/E&O coverage is also available (and highly recommended) for any and all miscellaneous providers of business and personal services – from arborists to zookeepers – and the thousands of classes in-between. Simply put, “If you are transacting business on behalf of someone else where there could be a financial remedy for the failure to deliver those services, then you need professional liability coverage,” says Jill Tellez, senior vice president and professional liability leader at
“The defense costs of lawsuits alone can be quite substantial. In fact, it can force many smaller professionals out of business” Greg Leffard, The Hanover Insurance Group Victor O. Schinnerer & Co. And yet, “The biggest challenge is that many professionals are ‘non-buyers’ – they don’t think they need this coverage, or may actually think they have it when they in fact do not,” Leffard adds. “They may believe that they have coverage for their services under a general liability policy when they do not. For such businesses, they actually may have the most loss exposure coming from their professional services.”
An evolving, diversified sector To ensure the best protection possible, the traditional advice has always been that every business should have both professional liability and general liability policies in place, because GL policies do not cover PL exposures. But Reza Khan, executive vice president at ThinkRisk (an MGA owned by Ryan Specialty Group), says that it’s not always that clear-cut anymore. “Twenty-plus years ago, traditional E&O and PL policies were typically offered as a monoline product by a handful of specialty insurers such as AIG,” he explains. “That approach has morphed over time. Many insurers now offer E&O as a component of a package including GL.” Additionally, Khan observes that more and more E&O carriers are now expanding their definition of professional services to affirmatively address claims that professionals didn’t face as recently as 10 years ago, such as media, cyber and privacy liability exposures. “In fact, E&O policies are no longer triggered just by third-party liability issues,” he says. “It has become increasingly common to see E&O policies covering the cost of privacy notification and credit monitoring, as required in 47 states following a data breach
3 TRENDS IN THE PL/E&O SECTOR
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Premiums As the economy recovers, more small businesses and consultants are entering the marketplace, increasing demand for professional liability insurance. This demand has sparked more interest in the space among insurance providers, resulting in a great supply of insurance capacity and a marketplace in which the price of professional liability coverage has decreased, says Dana Ross-Paige of V3. Meanwhile, Marsh’s US Insurance Market Report 2015 predicts that significant volatility in cyber pricing seen during 2014 is likely to continue in 2015.
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Renewal rates Marsh reports that average commercial E&O renewal rates in the fourth quarter of 2014 ranged from no change to an increase of 3%, compared to a range of a 3% decrease to a 7% increase during the same quarter in 2013. This trend is likely to continue into 2015.
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Risks – Cloud computing, social media and privacy exposures top the list of Marsh’s risk trends in the commercial E&O space in 2015. Business interruption was an area of particular concern for third-party vendors in 2014, as more businesses rely on the vagaries of their cloud provider for mission-critical systems.
– although typically, those coverage grants are sub-limited.” There has also been an explosion in the number of carriers offering E&O in the last couple of decades. “Looking back at the ‘70s and ‘80s, there were probably fewer than 10 national insurers offering E&O coverage,” Khan says. “Today there are over a hundred that target one or more class segments of the
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FEATURES
PROFESSIONAL LIABILITY professional liability market. The choices and terms and conditions can vary significantly from risk to risk and carrier to carrier.” “Who’s not in the market is a shorter list,” says Kevin Collins, senior vice president at Victor O. Schinnerer. “Generally there are a few very long-term players like ourselves.” Schinnerer has stayed on top of the crowded PL field by becoming a specialist in the real estate and construction industries, serving real estate professionals, architects and engineers, contractors and specialty consultants. “Industry specialization has really been the driver for our programs for the last 57 years,” Collins says. V3 Insurance Partners also has specialized by offering a ‘small miscellaneous’ professional liability program designed for professionals who fall into the truly miscellaneous
Excellence, has observed that the greatest growth areas in the PL sector mirror the greatest growth areas in the economy. “If you look at the top 100 jobs across the US, 40% fall within the healthcare sector, and 20% are in the technology field. That’s where we are seeing the growth within the PL sector, and that’s what we are aligning our business with,” he says.
Cyber is the new black Whether they realize it or not, every organization has a cyber and privacy exposure, and that’s where a lot of PL spending is projected to go in the future. “The cyber and privacy insurance market alone in the US last year was $2 billion,” Derigiotis says. Any company that stores customer data (in the form of email lists, credit card records
“If you look at the top 100 jobs across the US, 40% fall within the healthcare sector, and 20% are in the technology field. That’s where we are seeing the growth within the PL sector” David Derigiotis, Burns & Wilcox category – anything from freelance writers to rooster consultants. V3 also has a program for directors and officers/general partnership liability (D&O/GPL), an executive liability product that specifically focuses on complex corporate entities. Most recently, V3 Professional Lines has entered into a strategic partnership with AIG to be the program administrator for a kidnap and ransom product solution. “It’s never dull because there are so many diverse and novel clients who turn to us to mitigate their risks,” says Dana Ross-Paige, senior vice president and national practice leader at V3. “These are the risks that we like; they allow us to demonstrate our extensive underwriting acumen.” David Derigiotis, corporate vice president at Burns & Wilcox and director of the Burns & Wilcox Professional Liability Center of
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or other files) could be victimized by a data breach. According to the nonprofit Identity Theft Resource Center, 761 data breaches exposed 83,176,279 personal records in 2014. And those numbers continue to balloon – ITRC reports that every three seconds, there is a new victim. Through April 2015, 256 breaches had already occurred, exposing 102,374,010 additional records. The vast majority of these were in the medical/healthcare sector, stemming from the devastating breach at Anthem Blue Cross. But businesses, educational institutions, banking/credit/financial institutions and the government/military sector are also under attack. “All sorts of things can happen that people don’t think about,” Derigiotis says. “It doesn’t have to be someone hacking in from halfway around the world to open the organization up to that exposure.”
PROFESSIONAL LIABILITY FOR THE CONSTRUCTION SECTOR The 2008 recession was a key differentiator and driver for a lot of firms in the construction industry, but Victor O. Schinnerer & Co. has launched a new policy form that addresses emerging areas for enterprise risk management in the sector, including: Lost generation Because of the financial collapse, a whole generation of architects and engineers did not come into the construction industry. “So as firms grow, the question becomes, how do you staff up and how do you deal effectively with that?” says Schinnerer senior vice president Kevin Collins. “You need to be smarter about risk management, about quality assurance and quality control procedures. So that’s one huge area of growth.” Evolution of change “We are starting to see an exponential increase in the evolution of change in terms of how people practice and how services are being delivered,” Collins says. “The speed to technology, the speed to industry and solution – everything is faster paced.” In response, Schinnerer now offers add-ons to its PL policies, such as crisis event coverage. Jill Tellez, senior vice president and professional liability leader, says it fits with the company’s enterprise risk approach. “We are constantly speaking with risk managers and saying, ‘What is the new emerging thing? When you look at your risk across your enterprise, what’s keeping you up at night?’” Ownership transition issues “The construction industry is aging, and a lot of firms are dealing with either financial or ownership transition issues that often cater to and deal with insurance problems that we need to address and drive,” Collins says. Case in point: the statute of limitations that defines the length of time a construction professional can be sued for negligence resulting from prior services. Ten years is the norm in a lot of states, but most insurance policies only offer a one-, three- or five-year extended reporting period. On its newly released form, Schinnerer offers a 10-year extended reporting program component as a reward for loyal firms that have spent a significant amount of their careers with Schinnerer.
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Experts agree that one of the biggest problems in the PL sector is that educating customers about cyber liability is still not where it needs to be. “Many E&O policyholders mistakenly assume they don’t have any material cyber liability exposures simply because they don’t process credit cards like retail stores that have been breached, and whose stories have dominated the national headlines,” Khan says. “But every business – regardless of size – has some form of cyber and privacy liability exposure.” Indeed, every time a laptop leaves the office, or a mobile device that contains sensitive client or employee information is lost, or an email is received that may contain malware, there is a potential security breech. “The smaller the business, the less capable
“Every business – regardless of size – has some form of cyber and privacy liability exposure” Reza Khan, ThinkRisk they are of thwarting a cyber attack, and frankly, the more appealing they will be to a hacker,” Khan says, stressing that businesses that rely upon small limits of cyber coverage offered under their standard E&O policy for “free” should be careful they are not underinsured if a material breach happens. “I think it’s going to take a little more time before the insurance-buying public gets better educated about cyber exposures,” Khan says. “It is incumbent upon members of the
insurance brokerage community to do their part to help better explain the importance of this coverage to their clients.” Derigiotis believes there is a fear factor around the issue of cyber liability at the broker level. “It’s fear and lack of understanding – that’s what has kept sales and growth down,” he says. “There has been incredible growth within cyber liability, but it could be so much more if the insurance industry was better versed.”
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FEATURES
AGENCY INSIGHT
Brunswick Companies Ohio-based Brunswick Companies has been providing insurance solutions since 1972, but this three-generation family-owned company is hardly resting on its laurels. CEO Todd Stein shares what they’re doing right
IBA: How important do you think it is for an agency to have a commitment to specialization?
cubicle or an office in your space, but you are getting 55 people to fill that one cube.’
Todd Stein: Very important. Our commit ment to specialization has contributed to our longevity and is critical to our future success. Our clients are sophisticated and expect a high level of knowledge and expertise from their risk management advisors/insurance agents. We need to focus our efforts and expertise on their specific businesses. We don’t think that the sophisticated insurance purchasers today are looking for salespeople. They really are looking for solid people who understand their business as it relates to the world of risk.
IBA: What are you doing to attract and grow your talent?
IBA: How have you been able to build up your various specializations? How have you built this into your culture? TS: Our specialization has built up over time. We have been in business since 1972. Ultimately, our goal is to evolve with our clients’ businesses. Many of them have been with us from the beginning. We have been able to grow with them from mom-and-pop start-ups to publicly traded, significant worldwide players. We invest in learning all the intricate facets that our clients’ businesses need and how this relates to risk. It’s a constant learning culture here. We talk to our clients; we engage in industry conversations and associations. We like to tell our clients, ‘It’s like we have a
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TS: That’s probably the toughest part of our business, to be honest with you – being able to find and get the level of sophistication that we require here. People basically are attracted to us. Our talent is diverse. We have both young college graduates, and one of our senior risk managers has been alongside me here for 34 years. We are constantly infusing our company with new, young, bright people, because with that comes new ideas, new energy. It keeps everybody on their toes, and no one is complacent. We are constantly developing talent. It’s a very supportive culture. Personal and profes sional growth are supported and expected. We are also constantly reinvesting within the company. I want the latest and the greatest IT, be it hardware or software, so the people who
work here can utilize their brains, talent and education to do their work on a day-to-day basis with the best tools available. If you are going to work with the high-end, sophisti cated clients, they have latest and greatest technology and expect it of you.
IBA: What do you think makes you stand out as an agency? TS: We run by a simple philosophy here. If you ask any person in the company who’s their boss, they will never ever say that it is another member of the Brunswick team. Our very simple philosophy is that our boss is our client. Our job is to respond to the wants and needs of the client. At the end of the day, we are the risk management department of these companies. We also own our own adjusting company, a separate entity through which we manage general/product liability and property damage claims all over the United States. Most importantly, we are a third-generation
HOW HAS YOUR AGENCY GIVEN BACK TO YOUR LOCAL COMMUNITY? We are very blessed and happy to be in the position we are in, and we feel it is very important to give back – not only to remember your roots, but to think outside the box. We handpick what we do and get involved not just with money but with our time. Anyone can throw a check at a charity, and then you’re just another check. Our leadership team is very committed to holding senior board positions in several organizations. I actually sit on the board of the LeBron James Family Foundation. From United Way to the Jewish Community Federations, our team is engaged on a global and national basis.
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FAST FACTS Top specializations
“Our commitment to specialization has contributed to our longevity and is critical to our future success�
Risk management service Commercial insurance Surety Professional liability Personal lines, specializing in high-net-worth families and family offices Affinity-type program business Year founded: Brunswick Companies was founded in 1972 by Morton M. Stein. Since then, it has grown from a small insurance brokerage to a large risk management consultancy, designing unique and comprehensive insurance solutions for individuals and businesses of all sizes Number of employees: 55 Corporate headquarters: Fairlawn, Ohio Licensed in all 50 states Delivers more than 250 policies a month A family-owned business with thirdgeneration leadership
company. My father, Morton M. Stein, started the business in ’72. I came on board in 1979 and took it to the next level, and I am proud to say that I have two daughters who are in the business, Michelle Hirsch and Rachel Weinberg. They play significant roles in our
business on a day-to-day senior management level, diving into their respective responsibilities. The reason for our top-line growth over the last five years has been the energy and sophistication that they brought as the next generation of the business.
2014 revenue: Brunswick is a privately held company and does not disclose this data. Growth: Top line revenue has doubled in the past five years
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FEATURES
CONSTRUCTION
CONSTRUCTION COVERAGE IN THE POST-RECESSION ERA As the construction market heats back up after years of decline, construction insurance is embracing new models
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THE GREAT RECESSION was particularly cruel to the construction industry – and to the insurance producers who were invested in it. Across the country, multimillion-dollar projects that were well underway came to a sudden standstill, and those that were still in the development phase got eighty-sixed as funding sources – and policy sales – blew away like tumbleweeds. Today, buoyed by optimism and a resurgent economy, the construction industry is getting its groove back. “Recent reports show the construction industry is growing at a steady rate for the first time since 2011,” says Michelle Hirsch of Brunswick Companies. “Experts credit a strengthening economy and the recent increase in government spending for the industry’s current success.” Indeed, according to the 2015 Dodge Construction Outlook, total US construction starts for 2015 are estimated to rise to $612 billion, up from $564 billion in 2014. With the exception of electric utilities and manufacturing plant construction – which are on the decline – all markets in the construction sector expect to see increases in building this year, stoking the industry’s appetite for appropriate insurance policies. Against the backdrop of this past year’s estimated trillion dollars of construction development and increasing renewal rates, a dynamic sector has once again emerged from the recession’s ashes. Yet a challenging regulatory climate, coupled with a growing appetite for more sophisticated policies, make it more important than ever for producers in the construction sector to develop the expertise to custom-build insurance coverage for their clients. As the saying goes: “Measure twice, cut once” to make sure it fits just right.
Project versus practice Construction insurance covers improvements to real property and the services of the professionals who are executing those improvements, prior to the property being put to its intended use. Key clients include project developers
“Smart owners and their GC partners are looking for insurance solutions that attach to their construction project timelines rather than relying on others for continuous cover” Ben Beauvais, Ironshore and investors, contractors and subcontractors, owner-GCs, real estate investment trusts, public works, sovereign wealth funds that invest in real estate – basically anybody who develops and builds property. The construction sector can essentially be broken down into project business and practice business. Some insurance carriers specialize in one side or the other, while some have products around both distribution points. While there are many carriers in the business, the larger, more complex risks are generally handled by industry giants including AIG, Zurich and ACE. Traditonally, the practice business model has been the structure most commonly followed when procuring construction insurance. Under this model, the owner of a construction project hires a general contractor, who in turn hires a variety of subcontractors such as electricians, plumbers and framers, to execute various aspects of the project. The general contractor provides a certificate of insurance to the owner to demonstrate that he has adequate limits across all of the required policies – general liability, worker’s compensation, automobile liability, excess liability coverage and so on – naming the owner as an additional insured. He also obtains certificates of insurance from each of his subcontractors, verifying that they in turn are carrying their own insurance policies. In contrast to the practice business model, the project business model for procuring insurance offers a more comprehensive ‘project-specific’ or ‘wrap-up’ insurance solution with various levels of increased protection under a single policy to joint venture partners or other participants, up to and including subcontractors (in the
TARGET CLASSES IN THE CONSTRUCTION SECTOR Commercial general contractors Commercial trade contractors Infrastructure construction Street and road contractors Institutional construction Commercial building construction Municipal/DOT projects Trade contractors Wrap-ups case of a wrap-up). Completed operations coverage is a key coverage for construction projects. It can provide coverage for property damage arising out of the new construction down the road. In the event of a dispute between a project owner and a GC, the project owner might sue the general contractor in order to seek a remedy. The GC’s insurance carrier, in turn, will likely attempt to tender the claim to the particular subcontractor(s) at fault. In the end, the owner of the property doesn’t really care who pays for the claim, as long as it’s covered. But what if the subcontractor’s certificate of insurance represented a level of coverage that he had under a prior insurance policy period? What if the subcontractor’s policy becomes more restrictive on a renewal during the middle of the project?
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FEATURES
CONSTRUCTION No developer or GC enjoys discovering that there are coverage gaps when a loss arises. “Smart owners and their GC partners are looking for insurance solutions that attach to their construction project timelines rather than relying on others for continuous cover,” says Ben Beauvais, executive vice president of casualty and construction at Ironshore. Project policies have come on the scene fairly recently – over the past 30 years or so – resulting both from a challenging workers’ compensation pricing environment and an increase in litigation connected with construction defects since the late 1990s. “You are talking about people who are building multimillion-dollar buildings. It doesn’t matter if the project size is a $25 million multi-family development or a $150 million hotel,” Beauvais says. “Project stakeholders want contract certainty.” Initially intended for mega-projects, project-based policies are also becoming increasingly common for smaller commercial and residential developers – particularly in high-risk construction defect states. “We are seeing more project insurance placed on commercial risks that traditionally have not been large enough to qualify for owner-controlled insurance programs [OCIPs] versus contractor-controlled insurance programs [CCIPs],” Beauvais says.
PROJECTED GROWTH IN 2015 BY SECTOR Commercial building
+15%
Single-family housing
+15%
Institutional building
+9%
Multifamily housing
+9%
Public works construction
+5%
Source: 2015 Dodge Construction Outlook
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Key risk exposures Despite risk control improvements, con struc tion remains a dangerous business, accounting for the third most fatal work injuries of any sector after transportation and warehousing, according to a recent ACE Group report. Because of this exposure, “The number-one cost arising out of a construction project with regard to risk management is worker’s comp-driven costs and injury on the job site,” Beauvais says. After workers’ safety, the second largest risk exposure is damage to the project during the course of construction. This exposure is covered by builders risk insurance – coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/ or equipment being used in the construction or renovation of a building or structure, in the event of physical loss or damage from a covered cause. Rounding out the top construction risk exposures are adjacent liability property damage requiring third-party coverage, design challenges and design disputes, and defective construction issues.
How to sell it “To me, construction insurance is all about the contractual nature of the participants in the project,” Beauvais says. “What you want to sell as a producer in this area is expertise on contractual liability, understanding the project delivery method that you’re looking to insure and knowing the contractual relationship among all of the participants. You need to show how you can best cover your customer’s contractual needs and ensure they have the best protection for their stake in the project.” It is also important to be well-versed in the state and federal regulations pertaining to the construction industry; the statute of limitations for construction litigation in some states is 10 years or longer, Beauvais notes. As in any insurance sector, one key to success is to find niches in which to specialize. Ironshore, for example, controls the capacity for project cargo – the shipment of outsized cargo arising out of difficult construction
5 KEY CHALLENGES The construction insurance sector is a dynamic space fullrecession of opportunities, there areand a few The 2008 was a keybut differentiator driver pitfalls to look out for. for a lot of firms in the construction industry, but Victor O. Schinnerer & Co. has launched a new policy form Falling oilemerging and gasareas prices: As hiring risk in the oil that addresses for enterprise and gas industry slows, demand for new management in the sector, including: housing and the small businesses that support that housing is drying up. As aBecause result, “There will be Lost generation of the financial a measurablecollapse, decreasea whole of growth in the generation of architects construction and sector that was tothe be there engineers didforecasted not come into as little as 12 months ago, ” Beauvais says. construction industry. “So as firms grow, the question
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becomes, how do you staff up and how do you deal The rise construction defect legislation: effectively with of that?” says Schinnerer senior vice Another that plaintiff groupsabout are president Kevinchallenge Collins. “Youis need to be smarter challenging both about courtsquality and legislatures on aquality risk management, assurance and state-by-state basis broaden the area interpretation control procedures. So to that’ s one huge of growth.”of CGL policies to provide coverage for defective construction.Evolution “That’s definitely something an to of change “We are from starting insurance carrier perspective that is a challenge see an exponential increase in the for us as we lookevolution out across the country, ” Beauvais of change in terms of how says. “Inpractice particular, the fact that we people and how services arecould beingface delivered,” changing legal on multi-year project Collins says. “Theassumptions speed to technology, the speed to policies and requires careful consideration when industry solution – everything is faster paced.” In underwriting project now risk. offers add-ons to its PL response, Schinnerer policies, such as crisis event coverage. Jill Tellez, capacity: As the construction senior Growing vice president and professional liability leader, theresisenterprise a lot of capacity says itindustry fits with revives, the company’ risk coming into which is having adverse approach. “Wethe aresector, constantly speaking withanrisk impact onand rates. “Particularly within past 24 managers saying, ‘What is the newthe emerging months, we you havelook seen a number of competitors thing? When at your risk across your enter or reenter construction enterprise, what’sthe keeping you up atspace night?’with ” dedicated units that have created commoditization of complex products that require expertise, as Ownership transition issues “The every projectconstruction is unique,” Beauvais industry issays. aging, and a lot of firms are dealing with either financial or The Fed: The construction sectorcater is particularly ownership transition issues that often to and sensitive to interest ratethat fluctuations. cost deal with insurance problems we need toTheaddress of borrowing directly ability finance and drive,” Collins says.impacts Case inthe point: the to statute of projects and themthe to length fruition.of time a limitations thatbring defines construction professional can be sued for negligence Cyber Construction resulting fromliability: prior services. Ten yearsfirms is thethat normfallin a prey tobut cyber-attacks canpolicies incur significant lot of states, most insurance only offer a coststhreewhenorremediating data breaches, one-, five-year extended reporting according period. On to newly a recent Marshform, report. Many GLoffers policies include its released Schinnerer a 10-year specific exclusions for cyber claims, but extended reporting program component as a reward standalone policies provide coverage for loyal firmscyber that have spentcan a significant amount offor datacareers breaches similar losses. their withand Schinnerer.
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projects (think of a $300 million turbine shipped from a manufacturer in Germany to rural Arkansas). “We insure that shipment from its point of origin to its point of delivery,” Beauvais says. The capacity for Ironshore’s project cargo facility is $250 million annually. Compared to other markets in the construction sector, public projects generally remain steady and are another great place to specialize. Last year, ‘shovel-ready’ road projects, like the New Jersey and Ohio Turnpikes, became realities as state and local governments tapped into the federal Highway Trust Fund [HTF] to finance much-needed road and bridge reconstruction, noted industry writer John L. Gougeon in his analysis of construction market trends for 2015. “Alas, according to Pew research, the HTF will be
TOP CONSTRUCTION INSURANCE PRODUCTS & SERVICES • Primary casualty for contractors practice programs • Worker’s compensation • General liability • Commercial auto • Primary casualty for wrap-ups and other projectspecific risks • Construction risk • Contractor’s equipment • Environmental • Umbrella/excess liability insurance for construction industry • ESIS® construction industry risk management • Professional liability
insolvent by 2017, forcing states to impose gas taxes to offset the loss of federal funds,” Gougeon added as a caveat. But Mark Patterson, an executive vice president with Partners Specialty Group who works with commercial and infrastructure construction projects, remains optimistic that there will always be a budget to pay for public works projects. “Roads are always going to get run down. There may be less of a budget than there used to be, but after 1,000 people run over 18 different potholes, streets and roads are going to get fixed,” he told IBA in a special report on the construction industry in 2014. “The real challenge in taking advantage of these projects is positioning oneself as a confident, detail-oriented leader in the construction space.”
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PEOPLE
PRODUCER PROFILE
Where the wild things are Mitchel Kalmanson has devoted his life to exotic animals – insuring them, transporting them and raising them WHERE YOU see a circus elephant, Mitchel Kalmanson sees a million-dollar mortality risk. Where you see a monkey, he sees rabies. And where you see a tiger, he sees flimsy caging. In the vast insurance jungle, Kalmanson has staked out a wild niche insuring the risks associated with exotic animals – “everything from alligators to zebras” – and the entertainment industries that showcase them. His customers include movie producers, circus and fairs, Vegas acts, zoological and private facilities, research labs, and folks who just want to have exotic pets. Given that there are more captive tigers now in the US than wild ones in Asia, according to the World Wildlife Fund, that adds up to a lot of folks. Located in Maitland, Fla., the Lester Kalmanson Agency (named for Mitchel’s father, who founded the company) is a licensed independent retail insurance agency with more than 40 years of experience providing specialty insurance throughout the globe. “We’ve made our mark by providing insurance for the wild, weird and wacky,” Kalmanson says. “More specifically, we offer tailored insurance policies to customers
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“We’ve made our mark by providing insurance for the wild, weird and wacky”
who would have a hard time getting coverage from anywhere else.” Kalmanson doesn’t just insure exotic animals – he lives with them, too. Among the critters on is 200-acre suburban ranch north of Orlando, Fla., are more than 25 captive big cats, a herd of wild African cows, five domesticated foxes and the only domesticated mink outside of Russia. The animals are mostly creatures he’s taken in from private owners or facilities that can no longer care for them, he says.
Born to be wild Perhaps it all goes back to the fact that he was raised with pet monkeys – the first one’s name was Willy. “I was five years old when we got him,” Kalmanson says. “He laughed and cried and sucked his thumb.” Kalmanson’s parents also got him into farm and livestock animals, sealing his fate from an early age. “It was a lifestyle that I wanted to continue,” he says. After he dipped his toes into the world of real estate, the lure of the family insurance business reeled him in. He tweaked the agency’s focus to suit his predilection for wild things (of both the human and animal variety), and 31 years later, he’s never looked back. “I created it. I saw a niche. It was a dream. I said, ‘Let’s put some discipline and passion in it, and make it fun,’” Kalmanson says. “And I’ve done that.” There may be ‘copycats’ out there, but Kalmanson and his larger-than-life persona have cornered an outsized share of the exotic animal insurance market – both the liability and mortality side. “I’m known all over the country,” he says. “We write the unusual risks; we write very, very rare rather than normal risks. I want the problems. I want the entertainment. I want the high profile. I want the unique exposures that nobody else wants to insure. There’s a lot of opportunity there.” From Michael Jackson’s menagerie (yes, Kalmanson insured it) to the house arrest of certain Ponzi schemers and California starlets (he also specializes in insuring the liability and property of such problem children) to the mating habits of bonobos and critically endangered softshell turtles to the airlifting of giant Tanzanian rats, Caribbean wild dolphins, domesticated Siberian foxes and a famous killer whale, Kalmanson’s career track comes across as a star-studded safari. As he tells his tale, Kalmanson takes brief diversions to touch on how he helped save upwards of 50 animals from the Miami Metro Zoo and Monkey Jungle after Hurricane Andrew. He alludes to his testy relationship with PETA and the USDA (which has cited him twice for escaped tigers), and drops just a few details about a recent over-the-top party at a private estate in south
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PEOPLE
Florida that featured high-wire circus acts, a fire breather and a unicycle guy riding in and out of traffic “for entertainment reasons, obviously” – as the valet was parking the cars. The party had a price tag upwards of half a million dollars, and Kalmanson insured it.
This end up
“It’s amazing how many opportunities are out there ... I can pick and choose those that make sense and are properly funded. I work with people who won’t take shortcuts”
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Some of Kalmanson’s most compelling work involves designing and executing animal transport life support systems as a broker and consultant with certain underwriters at Lloyd’s of London. He can prepare the itinerary and will personally oversee the transport of domestic, exotic and marine mammals from any destination to any other receiving facility in the world. On one recent assignment, he traveled to Tanzania to escort 50 giant African pouched rats to a research university in the US. The rat species, which is about the size of a cat, can be trained to detect tuberculosis in blood samples and sniff out land mines with 80% accuracy. It may one day replace the dogs that are currently used in land mine detection operations. While the weight of a dog can detonate a land mine, the rats are so light that they can scamper right over one without setting it off. Another fascinating job involved transporting the last known female Yangtze giant softshell turtle in the world from one Chinese zoo to another to meet a potential mate, in hopes that they would reproduce and save the species from extinction. Kalmanson was in charge of insurance and transportation logistics for the 15-hour, 1,100-kilometer operation, which included a caravan of veterinarians, PhDs and a PBS Nature film crew. Once united at the Suzhou Zoo, the turtles did mate, but none of the resulting eggs were fertilized, leaving Kalmanson to speculate that the elderly male, Rafetus, was “shooting blanks.” “I think we are going to end up losing the species,” he says. “It’s very tragic. But that’s science and that’s life, and we’ve got to try.” Over the past several years, Kalmanson has also developed a specialty in insuring and importing RussianSiberian domestic foxes; he owns five of them himself. (They are, ironically, the only kind of animal he has come across that he isn’t allergic to.) The foxes, he says, are social, playful, intelligent animals that relish human contact and interaction. They are easily trained to walk on a harness and leash, can be taught to sit and lay down, can be litter or house trained, and socialize well with other animals. Transporting large exotic animals is always a complicated affair, but transporting marine mammals
A WALK ON THE LIABILITY SIDE Despite the carnivalesque atmosphere surrounding captive exotic animals, insuring their liability is deadly serious business for which Kalmanson typically writes anywhere from $25,000 to $1 million-plus of coverage, depending on the degree of exposure. When things go wrong, they can go horribly wrong, as illustrated by the 2003 tiger attack on Roy Horn of the Siegfried and Roy Show in Las Vegas. Born Free, an advocacy group for captive exotic animals, reports that since 1990, big cats in circuses and traveling shows have been responsible for 65 documented human attacks — one-third of which resulted in fatal injuries. According to the same report, elephants in performance situations during that same time period were responsible for 30 human deaths and more than 100 injuries worldwide. In a well-publicized 2009 incident, a woman’s face was literally ripped off by her friend’s uninsured pet chimp. And in 2011, a disturbed Ohio man released his menagerie of lions, tigers, bears, monkeys and other animals before committing suicide. His actions were also a death sentence for his animals, which were ultimately gunned down to protect the public. (After the media frenzy surrounding this last incident, Kalmanson says his business increased by 50%.) In spite of such high-profile disasters and the growing prevalence of exotic pets in the US, only a dozen states (Arkansas, Florida, Georgia, Hawaii, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, Missouri and Texas) currently require owners of exotic pets to carry liability insurance. (dolphins, whales, sea lions) adds a whole new element of complexity. In Kalmanson’s experience, sharks are the most difficult to move, requiring an excruciating degree of logistical planning, customized holding tanks and retrofitted aircraft. Occasionally, animals do die in transit. (That’s what mortality insurance is for.) But having someone like Kalmanson on board to oversee the process exponentially increases their chances of survival. “You have to know the animal welfare side, the risk management side, the shipping side, the transportation side, the chemical immobilization if need be, the type of crating, the type of lighting ...” he says – and the list goes on and on. “It’s amazing how many opportunities are out there that just keep coming about,” Kalmanson says. “I can pick and choose those that make sense and are properly funded. I work with people who won’t take shortcuts. I am a pain in the ass when it comes to that.”
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FEATURES
STRATEGY
How to be a better negotiator Contrary to what you might think, negotiation is not about ‘winning at all costs.’ Josh Masters explains that if you approach negotiation as a process where all parties achieve the best outcome, you may well find that you achieve more success in your dealings with others THE ART of negotiation is one that is truly underestimated in the corporate and small business world – many professionals fixate on playing either good cop or bad cop when it comes to sealing a deal. This turns what is actually a science into a gambling game where the high stakes don’t always pay. The basic premise of negotiation is to work together with another party to achieve an outcome that works for you both. Rather than come from a traditional stance, where there’s a winner and a loser, it’s best to think flexibly. In closing hundreds of deals throughout my career as a professional property buyer, I’ve learned a number of techniques to master negotiation that will have you getting what you need without damaging any relationships along the way.
Create a third position It’s important to remember that a negotiation is an exchange of energy. Place two people face to face, and they will feel confronted. Pride, stubbornness and ego can get in the way because each person feels they’re being threatened personally. Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue. Separating the problem from the person avoids any personality clashes and reduces the chance of offending the other
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person. Rather than reacting harshly to the other party not wanting to budge from their original offer because they’re ‘stubborn and unreasonable,’ you can instead focus attention on the problem. Take personality out of the equation, and focus on finding a solution rather than becoming defensive and equally unreasonable.
Look for the ‘why’ Most people will make a decision based on reason. Finding out what that reason is can be an invaluable strategy, as it gives you the opportunity to create a solution, often in return for what you want. For example, if a colleague has asked for a three-month
extended vacation during the business’ busiest time, you can negotiate on whether they can work remotely via email during some of this period.
Avoid getting personal No one likes to be attacked personally. Even when you’re negotiating through a third party, you have to assume that this third party may communicate your every word to the person you are trying to settle a deal with. So keep it polite and remember that you’re trying to get them to cooperate. Playing the blame game or reacting negatively will work against your goals. Even when something doesn’t go your way, stay
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calm and be respectful, and remember that you may lose in the short term, but as long as your eye is on the prize, your long-term goals should come to fruition. You also need to avoid thinking the worst of the other party. For example, just because they request that you make an upfront payment before receiving the goods does not mean that they’re going to steal your money. This can be difficult, as you don’t necessarily know the background of the person you’re dealing with in a negotiation. However, assuming the worst of the other person will rarely be productive – and remember, they may actually be thinking the same about you!
Be flexible The more flexible you can be toward the other party, the more likely they will be willing to give you what you want. If you can decide what you want before you go into the negotiation, such as your best offer and what terms you can and can’t waver on, you often can give the other party what they want without having to sacrifice your position.
Think of the other person At the end of the day, a negotiation, however brief, is a relationship. If you fail to consider the other person’s feelings or what they want, then it is unlikely you will have much success. If they are resolute about particular terms of the negotiation, it can be beneficial to withhold your judgment and put yourself in their shoes. Is there a reason why they’re being so firm? Is there something important to them that you haven’t considered? After all, you might very well do the same thing if you were in their position. Having some empathy for the other person will often ease the pressure in a negotiation – enough to get them across the line on the other things that are important to you.
Using ‘if’ One of the secrets to a successful negotiation is to never give anything up without asking for something in return, even if it’s small. Using ‘if ’ through your negotiation is a good way to handle this.
If I give you … then I would like … I’m happy to give you … if … If you can … then I’d be more than happy to...
Use silence One of the most effective ways to negotiate is to stay quiet. This may not be appropriate in situations where there are five other parties all trying to win over your potential customer, but it can be invaluable when the other party is poised on a favorable outcome. When you remain silent, you automatically get the ‘ball in your court,’ so to speak, which
“Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue” leaves you with the power to make the next call. In the meantime, the other party waits in anticipation, hoping they may achieve their outcome. This can create the impression for the other party that the negotiation process may soon end with a good result and they can walk away happy. When you do come back to the table with a counter offer, their anticipation of closing the deal immediately will make the seller more willing to sacrifice items that they may have fought hard to get earlier, all because they’ve seen the light at the end of the tunnel. Silence can be useful for difficult negotiations, as it can give the time needed for both parties to ‘cool off ’. Sitting back can give you the perspective you need to get a better understanding of the situation and provide you with a long-term view.
Avoid any confusion Sometimes it can be difficult to draw the line between offering help and asking for business, especially with people with whom you have developed a relationship within a casual setting. If you feel you’re approaching a level of information that you think you should be charging for, it can be handy to say things like, ‘Call me if you would like to work together on something’, or ‘This is the sort of information I often provide to my client base’; that way, you’re being clear on your expectations for the future without severing the lines of communication altogether.
Strike a pose While most of us have come across an overbearing tyrant trying to win power by force, an equally destructive force can be approaching a negotiation lacking confidence and presence. Harvard’s Amy Cuddy has a wonderful presentation on conveying ‘presence’ in front of peers, which shows that it can be as simple as the way you hold your posture before you enter the room. Two minutes with your head up, shoulders back and hands on hips can really provide the confidence you need to stand your ground and muster the courage to ask for what you want. The biggest misunderstanding surrounding the art of negotiation is in its actual definition. It’s important to remember that negotiation is not used to get the best deal possible or get the most out of someone for the least amount of budget; it’s about coming to the most positive outcome for all parties involved. The origin of the word negotiation comes from the Latin term negotiates, meaning ‘to carry on business,’ and with the right techniques, you will carry on closing deals, securing clients and building relationships.
With more than 15 years of experience, Josh Masters is one of Australia’s most respected buyer’s agents. He is author of new book and investment guide, Why Property Why Now; learn more at www.joshmasters.com.au
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PEOPLE
CAREER PATH
A MAN OF THE PEOPLE
Rob Cohen has had a long career in insurance. But as a major philanthropist involved with several nonprofit organizations, his chief focus is people 2015 & BEYOND
Cohen speaks proudly of the fact the new corporate headquarters has created an 2011 environment where people can interact, have BUYS RANCH fun and build relationships. On the home front, he says the purchase of a ranch has facilitated FOR HIS FAMILY the same.
“Nothing that I own matters unless it facilitates people interacting.”
CHECKS OFF BUCKET LIST When Cohen graduated from college, he wrote down 100 things he wanted to do in his life. He carries that list with him to this day, and has ticked off 36 items. What’s next? “I wanted to hit all the historic baseball parks in America – I’ve hit them all, but I’ve never been to Wrigley Field. That’s probably likely to be next” Cohen cut a deal to build the new company headquarters on the north wing of historic Union Station, which had been marked for redevelopment. 2009 “Our deal allowed the federal government to give $300 BUILDS NEW HEADQUARTERS million to the revitalization of the train station, which has now led to a complete neighborhood being built”
1989
ARRIVES IN DENVER Having joined The IMA Financial Group in their Wichita office in 1986, Cohen then had the chance to move to Colorado and open an office in Denver, where he eventually became chairman and CEO. “I would say there are very few people who get to carry on the legacy of an existing company, yet at the same time do an entrepreneurial start-up. I would say that, of all the things in my career … that would be the most significant single moment”
Cohen is the third generation of his family in insurance. Initially, he went to college to study business with a view to going on to law school. Later, reconsidering his career options, he contemplated insurance and, specifically, risk management. “I realized there was a heavy contractual law component to the insurance business. That’s probably the pull that brought me in”
1984 ENTERS THE INDUSTRY
1984
DECIDES ON INSURANCE CAREER
Cohen’s first job in the industry was at Chubb and Son in Dallas, where he worked in marine underwriting and had the opportunity to work on transportation related to the restoration of the Declaration of Independence. “[That was] certainly something that I didn’t see coming!”
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HITTING FREE E-NEWSLETTER! HIS PEAK “The greatest outcome [of] having climbed all these mountains … is the high level of confidence that my three kids have attained that has served them so well in their development in life”
DAN MALLORY runs Mallory Insurance in Barrie, Ontario – a family business started by his father way back in 1949. Mallory carried on the family business, but he also established his own family tradition. His first ‘serious’ climb, with his wife, was Pico Bolivar in Venezuela – all 16,332 feet of it. “We had no experience, but our guide made it sound like everyone did it – like it was a nice hike,” Mallory says. The reality was difficult conditions and extreme vertical exposure, but the couple made it to the top. The
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1951 Born
idea to go on to conquer further high peaks – and include the pair’s three children in the experience – was thus born. Since then, Mallory has conquered the highest peak on every continent of the world (the ‘Seven Summits’) with one or more members of his family. In 2008, Mallory, with his two sons and daughter, became part of the first and only family of four in the world to successfully reach the summit of Everest. His daughter, Laura, is the youngest Canadian female to summit Everest.
9
Years to complete ‘Seven Summits’
29,029 ft
Highest altitude reached (Everest)
Expert Advice and Strategy Insights Learn about what makes a success-driven practice from the best and brightest minds in the industry Up-close and Personal Gain access to exclusive interviews with Canada’s top life and health insurance professionals and discover their strategies in enhancing their business Real-time Content Delivery Keep informed with daily market updates and regulatory news delivered straight to your inbox
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We built our company anticipating the
NEW NORMAL AND BEYOND.
In the new normal, a million credit card details can be stolen in a millisecond. That’s why our Industry Practice Team constantly evaluates emerging risks well before they affect most companies. Our ability to keep ahead of the pace of change is why we’ve been one of the top ranked companies for innovation by Advisen. Let’s face it, the new normal needs new solutions. www.ironshore.com
The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service.
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Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide. For information call (877) 234-4450 or visit auw.com/us. Š2015 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.
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