The CHART Exchange December 2017

Page 1


6 Glenn W. Clark, CPCU, Publisher CHART Exchange Founder & Earliest Adopter


Lloyd’s Chairman Outlines Vision For Insurance Market of the Future


Lloyd’s Payout on Harvey, Irma and Maria? $1.7B So Far...


Consider A Captive: Two Case Studies From Enterprise Risk Strategies


Claims and Concurrent Causation Issues in the Wake of Hurricanes Harvey and Irma


If You’re Not Available Online, Do You Even Exist?


Wingman’s Flight From Concept to Coverholder: A CHART Success Story


CHART Markets Gained Steam at CHART’s Third Annual Conference


Creating a Comprehensive Workplace Violence Prevention Program


What if? How Re-imagining History Could Help Insurers Better Analyse Risk


Appalachian Underwriters To Enable Online-RateQuote-Bind For Personal Lines Program


Gain a Competitive Edge With Remote Staffing Check the Benefits


Do You Listen To Your Clients?


Special Report: How To Value An Insurance Distribution Firm

Cover Image: By Dronepicr (Own work) [CC BY 3.0 (], via Wikimedia Commons




ollow Christopher M. Hughes, Managing Director of Insurance Distribution for Merger & Acquisition Services, specializing on insurance agencies, MGAs, MGUs, E&S agencies, wholesalers, and ancillary insurance businesses, as he expertly walks you through a tried-andtrue process for determining the value of an insurance distribution firm. If you are a buyer or a potential seller, Hughes crisply delivers a formula, EBITDA, that will allow you to arrive with confidence at that all important number. Read it NOW!


DECEMBER 2017 VOLUME 2 - ISSUE 11 Publisher: CHART Exchange Glenn W. Clark, CPCU Membership Services Kate Boyle Advertising: Kate Boyle Managing Editor: Kate Boyle Contributing Editor: Frank Huver Layout, Design & Circulation: Ron Manera AdMax Corp., Inc.

CHART Exchange 3001 Philadelphia Pike Claymont, Delaware 19703 302-765-6001 Last Issue:




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Message from the earliest adopter



ernon Law – a former major league baseball star with the Pittsburgh Pirates – was once quoted as saying “Experience is a hard teacher because she gives the test first, the lesson afterward.” Mr. Vernon’s observation is just as applicable in business as it was on the baseball diamond.

Our “test” was the Third Annual CHART Exchange Attendees appreciated the quality of the meetings Event, held this and the level of viable business ready programs past October at the Four Seasons Hotel in Baltimore MD. Some of the more seasoned attendees saw some significant differences when compared to previous




meetings: a smaller venue, a less structured agenda (one which maximized networking), and the opportunity for domestic retail agents and Syndicate representatives to communicate in an informal setting. But that’s not all. We introduced some innovative concepts during Tuesday’s General Session, all designed to improve the value proposition of CHART membership. Once we took the test, it was time for the lessons to begin. Did the meeting changes we introduced result in a better experience for the participants? Will the new concepts scheduled for 2018 implementation be viewed as beneficial to our members? We turned to the responses from the meeting questionnaire for our answers.


1. The quality of the meetings and the level of viable business ready programs improved over previous years. 2. Elevator speeches - every participant had the opportunity to address the entire attendee audience via a one minute or less “elevator speech” (what connections each sought for the Third Annual CHART-Exchange). 3. The elegant venue, pre-work done to qualify each attendee, and a new business-centric premise established a level of energy for open dialogue and an atmosphere of all audiences having equal status (Risk Takers, Vendor Partners, Coverholders, and Potential Coverholders).


ur team also generated sufficient “buzz” regarding the new ideas targeted for launch in 2018. The one garnering the most attention is CHART Markets. We liken this innovative idea to an online shopping mall established for the retail agent community. Much like its “brick-and-mortar” counterpart, this London-centric facility will provide participating members with virtual storefronts from which their various product and service offerings can be promoted. Marketing campaigns focused on our target audience (independent insurance agents) will be implemented in order to drive traffic to this unique internet platform. A multi-tiered promotional effort – using media advertisement, direct mail, broadcast e-mail, and other techniques – will be utilized to accomplish our objective.

Visitors to the CHART Markets site will be given the capability of searching through the portfolios of our store owners through a unique search portal. Entering keywords related to a product or coverage type will generate a roster of members with compatible offerings. Each listing will include highlights, contact information, and links to store owner websites. More importantly, members are notified every time an agent views their offering – allowing them to conduct their own follow-up. Click here to view a test version of the site. Future editions of our magazine will provide more information about CHART Markets as well as the other innovations we’ll be launching next year. In the meantime, feel free to e-mail us at with any questions or feedback you may have.

Glenn W. Clark , CPCU CHART’S Earliest Adopter




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News - Lloyds


Image Credit: Wikimedia Commons


hat if a solar storm had history – setting out how a type of struck during the London lateral thinking, called counterfactual, Olympics in 2012? can be applied to complement What if the wind had blown how insurers analyse risk. radioactive contamination onshore when the Fukushima nuclear plant The report discusses how downward was struck by a counterfactual tsunami in 2011? analysis – in other By What if West Africa words considering adopting a had been embroiled how historical in civil war during near misses might counterfactual 2014’s Ebola crisis? have become perspective major disasters and exploring Major global events – can be carried like these could have out in practice. It how historical had even more serious acts as a starting events could impacts if things point for future have unfolded had happened just research into differently, a bit differently. counterfactual additional insight events and their The worst disaster in characteristics. can be gained aviation history was into rare extreme According to narrowly avoided in July, for example, when losses that might Lloyd’s, downward a passenger plane pilot otherwise come as counterfactual descending into San thinking brings a a surprise.” Francisco airport pulled range of benefits up at the last second. to insurers. Lloyd’s, together with modelling company RMS, have published a new report – entitled Counterfactual Disaster Risk Analysis: Reimagining

Trevor Maynard, Head of Innovation at Lloyd’s, explained: “The fact that downward counterfactual events are anchored to actual historical


experience helps facilitate complex explanation, deeper understanding and more coherent communication of future risks and modelling uncertainty to board members, policyholders, policymakers, risk managers and others.” Gordon Woo, Catastrophist at RMS, added: “Insurers will benefit from looking at the past as just one realisation of what might have happened. Whatever the past, risk insight is gained from exploring how things might have turned for the worse – the downward counterfactuals. By adopting a counterfactual perspective and exploring how historical events could have unfolded differently, additional insight can be gained into rare extreme losses that might otherwise come as a surprise.” In regards to risk modelling, Woo, explained: “Downward counterfactual risk analysis helps address the bias that can be inherent in some models that are based on the same historical data sets.

See Reimagining History Page 32






enerally, people get nervous walking into someone’s office, even if they need the service they are about to be offered. Why is this? Because people hate being sold to. Humans are often skeptical of sales pitches and worry that most products or services won’t even address their needs or current situation. The easiest, most effective way to combat this mentality is to listen. If your clients feel like they are truly being

listened to, you’ll have customers for life. Listening is an easy concept to grasp, but it’s far more difficult to practice. Truly take the time to hear what your clients are saying. Ask about their specific pain points and challenges, and do your best to understand their fears and desires.

begin by saying, “so what I’m hearing is…” and then sum up what you heard and what you think their underlying problem may be.

Once you understand what a client is experiencing, you can offer them better, more satisfactory solutions. If you can take steps to improve your listening skills, your One of the best ways to clients will be pleased show you are listening with your work, and is to paraphrase they’ll continue to rely what has already on you for all of their been said during insurance needs. the conversation. For example, you can Good luck! - Cost Financial Group, Inc.




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SOLELY FOCUSED ON THE INSURANCE INDUSTRY. This allows our advisors to obtain critical industry knowledge and subsequently, provide clients with sound advice.

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MORE THAN 100 TRANSACTIONS IN 10 YEARS and has earned continuous placement within the "Top 5 Financial Advisors in Insurance Underwriting" according to SNL Financial. Investment banking services and securities transactions are provided through and completed by Merger & Acquisition Capital Services, LLC., a broker-dealer registered with the U.S. Securities and Exchange Commission and member of FINRA and SIPC.

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During the 3rd annual Chart Exchange meeting in Baltimore, M&A Services put on a presentation showing how to value an insurance agency. Over the last few weeks, we have received a number of follow up questions to the presentation. The purpose of this article is to provide an overview of how insurance distribution firms are valued, and to give you a sense of current market conditions.”

in order to lead you to your Pro-Forma Income Statement and EBITDA.

OBJECTIVES • • • • •

aluation Methodology V Overview of the Pro-Forma Income Statement Current Market Environment Deal Structures- Components and Examples Asset Vs. Stock Sale

When valuing an insurance agency, you will take a deep dive into the company’s key operational and financial metrics, and determine which specific value drivers may be adjusted to increase the fundamental value of the company. The objective is to maximize earnings, and growth potential for the firm. The key metric for all insurance valuations is Pro-Forma EBITDA. Insurance agencies are valued at a multiple of EDIBTA (Earnings, Before Interest, Taxes, Depreciation, and Amortization). The term “Pro Forma” is used to describe EBITDA from “normalized” or “adjusted” financials from the buyer’s perspective. To get the Pro-Forma EBITDA, you would first look at the Income Statement that reflects the earnings of the firm. Then you would see what personal, nonrecurring, or extraordinary factors of the business exist that can be adjusted TABLE OF CONTENTS

Once you have arrived at the “Pro Forma” EBITDA, a market based multiple is applied to the EBITDA to arrive at a value for the firm. ADJUSTING THE PRO-FORMA INCOME STATEMENT The Pro-Forma Income Statement is where most privately-held insurance agencies adjust their expense structure to where it is more personal to the owner. Begin with the most recent income statement and take a look at the Owner Salary and Corresponding Expenses – Is there an owner operator? An absentee owner who owns multiple agencies? Is there a market value being applied to the owner’s salary – is it too high/ too low or right where market is? Is there corresponding expenses – taxes or employee benefits for the owner? If so, make adjustments accordingly. Next, you can take a look at Excess/Redundant Staffing – Is there some form of family member(s) or employees who have been there for a long time that are not necessary to the business? See Value An Insurance Firm Pg 21



News Bruce Carnegie-Brown was confirmed as the Chairman of Lloyd’s by the Council of Lloyd’s in February 2017. He has over thirty-five years of experience across the financial services and is currently Chairman of Moneysupermarket Group and a vice-Chairman of Banco Santander. He was Chief Executive for Marsh UK and Europe between 2003 and 2006, Senior Independent Director at the Catlin Group Ltd from 2010-2014, NonExecutive Chairman of Aon UK Ltd from 2012 to 2015 and has been a NonExecutive Director of JLT Group plc since 2016. He previously worked at JP Morgan for 18 years across a number of senior roles, ran 3i Group plc’s Quoted Private Equity Division from 2007 and was a Senior Independent Director at Close Brothers Group plc from 2006-2014.

LLOYD’S CHAIRMAN OUTLINES VISION FOR INSURANCE MARKET OF THE FUTURE In A Speech At The London Market Conference 2017, Chariman Bruce Carnegie-Brown Shared His Vision Of The Future. Here’s The Full-Text:


ood morning!

When American inventor and agriculturist Cyrus McCormick demonstrated his new horsedrawn mechanical crop harvester to farmers in the 1830s in the US, they laughed him out of town. Why spend money on an unproven technology when there was an endless supply of labour to reap the harvest manually? Why use a contraption that with its jiggling wooden bars and sharp blade looked both absurd and dangerous? Twenty years later, McCormick had the last laugh. By 1856, his company was selling crop harvesters all across the US. Farmers couldn’t get enough of a machine that improved productivity by a factor of six or more.




But he wasn’t the only inventor of a mechanised harvester at the time so why did he succeed and others fail? McCormick understood three things better than his competitors: First, the importance of new technology – as new engineering techniques were invented he kept improving his machine so that it would always be the best. Secondly, the importance of distribution – he used a trained sales force to sell the harvester and made use of the then new rail network to deliver it around the US; and, Thirdly, customer focus – he offered an in-field repair service in case of break down. McCormick’s innovative strategy changed farming’s business model forever. Although these events played out more than 170 years ago,

and just in case you think you have stumbled into an episode of Farming Today, I’m sure you can see where I’m going with this story.

As you all know, our slow adoption of technology is creating opportunities for techsavvy start-ups who see the insurance sector as “ripe for disruption”. If we don’t react to this competitive challenge by disrupting ourselves, the London market will surely be disrupted by others.” McCormick found himself at a key point in agricultural history: a time of transition from manual to mechanised labour. Today, the commercial insurance market is also facing a key moment in history – at the end of the old industrial, analogue era and at the beginning of a new digital world. Much as McCormick did, we can see the opportunities that await us. And yet, unlike him, we seem hesitant to shrug off the past and embrace the new. Some market participants take the view that: “If it ain’t broke, you don’t have to fix it.” After all, the traditional insurance business

model has been pretty successful over the years – for more than 300 years in the case of Lloyd’s. There have been some tough times along the way, but in the main it’s paid our bills, paid our shareholders and paid our policyholders.


And it still is. But there are signs the model is vulnerable. We all know the challenges we are facing: The way we transact our business is outdated and clunky Expenses are too high and the distribution chain is too convoluted We do not focus enough on our customers. There’s an innovation gap – product development is not keeping pace with risk evolution. And we are not as successful as we should be in persuading people that insurance is an essential service with a huge contribution to make to society. Too often we are seen only as an unnecessary cost. In combination, these challenges are making us less relevant to our customers. The latest London Matters report already referred to showed that the London market, while gaining in some classes, is only tracking market share in property and casualty, and is losing share in


See Bruce Carnegie-Brown Page 35 TABLE OF CONTENTS




LLOYD’S PAYS $1.7BN SO FAR FOR STORMS HARVEY, IRMA AND MARIA News comes as Lloyd’s launches a profileraising campaign to highlight the market’s claims paying record


he Lloyd’s market has now paid claims worth US$1.7bn in response to windstorms Harvey, Irma and Maria. Earlier this year Lloyd’s estimated a total commitment of US$4.8bn for the three storms. Lloyd’s brokers are receiving money from Lloyd’s managing agents within just five days of agreement so they can pay policyholders promptly.


“As well as helping businesses reopen their doors, claims from the Lloyd’s market serve all manner of different purposes, such as restoring vital public services like power, so people can heat their homes, or

The news comes as Lloyd’s launches a profile-raising campaign to highlight the market’s claims paying record. Lloyd’s revealed that, over the past five years, the market has paid out $85bn in claims, an average of $43m per day paid to policyholders around the world.

Commenting on the new claims campaign, Vincent Vandendael, Whether offering advice to Chief Commercial mitigate risks, creating Officer, said: “For too long we insurance policies that cater for new have not made the risks or honouring our promise to pay most of our claims claims to help people get back on their service, which is feet after disaster strikes, insurers have a one of our greatest crucial role to play. It’s time they shouted attributes, with global reach, high service this story from the rooftops.” standards, financial security and focus on the policyholder. clearing roads, railways and airstrips,

Commending the market, Lloyd’s CEO, Inga Beale, said: “As a market that’s been trading for 328 years, Lloyd’s understands the importance of honouring its promise to pay. This has always been the foundation of


Lloyd’s trusted reputation. With total net financial resources of £28bn the market stands ready to support policyholders when they need us most.

so commerce can be restored or vital aid delivered to those in need. Claims payments might also go towards repairing boats so fishermen can get back to sea, or mending machinery so farmers can re sow their fields. All of this helps local communities get back up and running again as quickly as possible.” TABLE OF CONTENTS

“Whether offering advice to mitigate risks, creating insurance policies that cater for new risks or honouring our promise to pay claims to help people get back on their feet after disaster strikes, insurers have a crucial role to play. It’s time they shouted this story from the rooftops.”

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Continued on Page 36... About the Author: Dana Marino brings more than 20 years of reinsurance underwriting and marketing expertise to Enterprise Risk Strategies (ERS). She is the East Coast business development representative for ERS. Dana has worked in various segments of the alternative risk and reinsurance industry. Most recently she has worked as a captive consultant in both underwriting and business development. Previously, Dana has held underwriting and marketing positions within the reinsurance and alternative risk marketplace and was responsible for producing casualty insurance business, predominately from privately held corporations. Dana has a bachelor’s degree in economics from Bucknell University and is currently pursuing an Associate in Captive Insurance (ACI) designation through ICCIE.both the private and public sectors. | 610-353-4820 (office)




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(A. Adjust out non-operating interest income, B. Normalize Owner’s Compensation to Market Salary C. Adjust out excess spouse compensation, D. Normalize Employee Benefits reflecting B & C above, E. Normalize Payroll taxes from Owner/Excess Comp, F. Adjust Country Club and Personal Travel, G. Adjust Family Car and Boat Expenses, H. Adjust Excess Rent paid to Owner, I. Adjust out all Non-Operating Expenses (Acquisition Amort))




Continued From Page 13 If so, maybe prospective buyers can take those employees out or replace them. Looking at Extraordinary and/or Non-recurring Income – Was there one large life insurance non-recurring commission received, that happened only once? Make that adjustment. Looking at your Extraordinary and/or Non-recurring Expenses, was there a new service system put in place that was a one-time expense? Was there college expense(s) for the owner’s kids? Any expenses that are personal to the owner of the business are non-necessary to operate a business and a small adjustment can be made to the pro-forma. In addition, all non-operating expenses Depreciation, Amortization, Interest, and Taxes will be adjusted out. After you make all adjustments to Pro-Forma, you can see in the chart above that the total expense statement goes from 4.2 million dollars down to 3.6 million dollars; EBITDA goes from 1.7 million dollars to 2.1 million dollars, which is a $500,000 increase. Applying a 8.0X multiple to this $500,000 adjustment makes the valuation increase by $4 million. On the opposite page, you can also see the EBITDA margin is 37.3%. As for EBITDA margins, insurance agency’s typically have margins

anywhere between 30-40% which is the normal range. Anywhere above 45% perhaps becomes unrealistic to expect the buyer to think they can run the company at such a high EBITDA margin. When the margin is much less than 30%, you can take a look at more expenses to trim to get the margin to a normal range. Well run agencies with a 37% EBITDA margin create a high premium in the market place. CURRENT INDEPENDENT AGENCY VALUATION MULTIPLES

The above chart shows the multiple of EBITDA with agency revenue at less than $2 million, midsize agencies with $2 million- $10 million, and platformtype scale agencies greater than $10 million. Applying the above Agency’s adjusted EBITDA to a market multiple, you can see that for an agency with $5.775 million in revenue and $2.184 million in EBITDA, the valuation range would be $17.5 to $18.5 million. See Value An Insurance Firm Pg 22


bout the author: Christopher M. Hughes serves as Managing Director of Insurance Distribution for Merger & Acquisition Services, specializing on insurance agencies, MGAs, MGUs, E&S agencies, wholesalers, and ancillary insurance businesses. Mr. Hughes comes to Merger & Acquisition Services, Inc. with over 10 years of insurance and legal experience, working on engagements with Property / Casualty and Life / Health insurance distribution businesses. He previously served as an advisor for a boutique firm in CT where his exclusive focus was on insurance distribution companies. In addition, Mr. Hughes spent 7 years as a senior product manager for Hartford Financial Services Group (“HIG”) with full P&L accountability for specialty products, and as director of HIG’s internal retained asset and structured settlement departments. Prior to The Hartford, Mr. Hughes practiced commercial litigation in Boca Raton, Florida. Mr. Hughes was honorably discharged from active duty in the United States Marine Corps (USMC) in 1992, after serving with E Company, 2nd Battalion, 8th Marines, 2nd Marine Division. While in the USMC, he served as an infantryman in the 1991 Northern Iraq operations: Provide Comfort, Encourage Hope, and Force Hope. Mr. Hughes has earned a J.D. degree from Northern Illinois University, a M.B.A. from the University of Connecticut, and a B.A. from the University of West Florida.




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HOW TO VALUE AN INSURANCE DISTRIBUTION FIRM Continued From Page 21 Value Range Example


the revenue divided by the valuation. Multiple of revenue is purely derivative of what the valuation is when doing multiple of an EBITDA calculation and dividing it by your revenue. The whole relationship is driven by EBIDTA margin. The lower the margin is, the lower the multiple of revenue; the higher the margin is, the higher the multiple of revenue.

There are other factors that can affect the applied valuation multiple other than just size and scale. Growth of the agency (Organic & M&A), The facts Profitability, Client Concentration and circumstances & Nature of of each deal can Relationships, pose risk/reward Size and Scale of scenarios that can Operations, Mix of business, Retention vary greatly from Ratios & Loss Ratios, one party to the Key Personnel next. In the end Producers, and Contracts (Nonanalysis, valuation competes, Carriers) has a degree all can impact of subjectivity the valuation.

specific to each party to the transaction.”

Growing agencies are worth more and higher EBITDA multiples will be applied versus agencies that are flat or shrinking. Profitability of an agency is a big driver – looking at the above chart where the multiple of revenue is applied; the multiple of revenue is



Client Concentration could have a negative effect on a valuation when a company has one big client that constitutes 15 to 20 percent or in some instances even 30 or 40 percent of entire agency’s revenue. This likely presents a risk factor since the higher revenue concentration with one client will lower the valuation and will also drive more earn-out type scenarios with that specific client remaining a client.

Mix of business can also affect your valuation; for example companies who have strong cross-sells between clients where they offer Property & Casualty, TABLE OF CONTENTS

Employee Benefits, Life & Health and financial services could sell a number of clients different types of services. This in general will raise the valuation and will give a company more lifetime value from a buyers prospective. Retention Ratios & Loss Ratios are both factors that have impact on the valuation; higher retention ratios equate to a stronger valuation. Loss ratios – For instance for valuing MGAs or MGUs; a significant amount of revenue can be derived from a profitsharing component and relationship with carrier. As for Management, valuations are higher when there is a management team (key personnel/ producers) and infrastructure are part of the agency transaction. Services or Products (niches being more desirable) gives competitive advantage in the marketplace. Systemization (internal systems) can impact the valuation in a positive manner when an agency management system is already in place (CRM, accounting, etc.). In terms of Contracts, Producers non-compete and non-solicits are a big driver for valuations. If those contracts are not in place and key producers are able to walk out the day after the sale, it will most definitely have a negative impact on the value of an agency. Carrier contracts should be all up to date and beneficial from you and your buyer’s prospective.

PRIVATE EQUITY’S MARKET INFLUENCE The valuations for insurance distribution firms are, and have been, at an unprecedented peak over the past two years, and the outlook remains strong. Currently the market is priced at a 50% premium to normal market conditions over the average valuation from the last 30 years. The driver of this valuation premium is the private equity new buyers using low interest rate debt to fuel acquisitions.

with an Earn-Out or Upfront Component with a Promissory Note. The difference is that an Earn-Out is based on the future performance of the agency after the transaction. The agency could grow and meet certain targets where it becomes a larger potential earn-out, or on the other side; the agency could shrink or lose certain clients and the potential earn-out could be worth less. From a promissory note point of view—a promissory note is seller financing.

then some portion of that will be carried toward employment/producer and non-compete agreements. Note the chart on this page showing an example of 3 offers from 3 different buyers.

The first offer is an Earn-Out that is paid at end of the 3rd year and for example, is paid if Revenue meets 10% CAGR (Compounded Annual Growth Rate). Looking at the chart above, if the agency grows, you can end up with $5 million; but if the Private equity groups and publicly For example, the buyer can put a agency does not grow, you could end traded brokers have created an certain amount of cash at closing, up with nothing. This offer is very expensive and competitive landscape say $10 million then have $500,000 attractive to growing agencies but for insurance distribution assets over comes with downside if the past 2 to 3 years. An example of 3 offers from 3 different buyers. growth is not realized. While valuations have leveled off – there is The second offer is no indication of lower an offer where all valuations in the short Earn-Out payments term. From a seller’s are guaranteed and standpoint, now is there is Promissory the time to sell an Note component. agency unless you are This is guaranteed growing at 20-25% that $500,000 will year over year and be given. The overall expect to continue. multiple of EBDITA and the overall payment DEAL STRUCTURE is less than the first A deal structure example, however can take many forms, guaranteed for the next five or so there is no risk associated with but these are the most common to years. In this case, the Earn-Out is future growth as it relates to the every offer that is made or received. more variable then the Promissory agency’s value. A principal risk a There could be an Upfront Payment note since future payments will be seller takes in this example is the in either Cash or an Equivalent. based on the growth or lack thereof. credit worthiness of the buyer to The equivalent of cash is when the Employment/Producer and Nonultimately pay the note to the seller. company is bought by a larger broker compete Agreements also come and the company offers privately into play as it relates to the valuation The third offer is Earn-Out Payment held stock or public stock that is the to any deal. Let’s say if the overall scenario where a buyer looks at equal amount of cash. There are also amount of the deal is $15 million See Value An Insurance Firm Pg 41 often times an Upfront Component




Bringing U.S. Entrepreneurship to the London Market The CHART/Wilson Elser strategic partnership combines the innovative underwriting philosophy of the world’s oldest insurance brand with the entrepreneurial mindset of U.S. agencies. For close to 40 years, Wilson Elser has helped organizations to better navigate challenging markets and realize improved combined ratios. We provide London- and Europe-based insurers with ready access to more than 60 discrete legal services delivered by nearly 800 attorneys in 34 strategic locations throughout the United States. Guided by a proprietary, systematic legal project management program, we help clients define strategies and achieve outcomes that align with agreed business requirements. We also implement dedicated Program Claim/Litigation Management services, creating value and driving efficiencies with respect to legal spend and indemnity. Wilson Elser is especially proud of its strategic partnership with CHART Exchange and our shared commitment to strengthening relationships between cover holders and risk takers on either side of the Atlantic. Š 2017 Wilson Elser. All rights reserved. 567-17

aNALYSIS - Wilson Elser



urricanes Harvey and Irma delivered one of Mother Nature’s most powerful one-two punches in U.S. history. Harvey struck first. On August 25, 2017, the storm made landfall near the Texas Gulf Coast as a Category 4 Hurricane and began its slow easterly crawl. By the time Harvey became a depression 117 hours after landfall, areas in southeast Texas had been subjected to wind gusts around 100 mph, tornados, tens of inches of rain, powerful storm surges and massive flooding. While Texas was hit hardest, Harvey did not spare Louisiana. Exactly 12 years after Hurricane Katrina, Louisiana was again battered by devastating wind and water. Just as Harvey was winding down, satellite imagery showed another storm brewing in the Atlantic. Within 24 hours, that storm became Hurricane Irma. After wreaking unprecedented havoc in the Caribbean for days, Irma arrived on the shores of the United States as a Category 4 Hurricane on September 10.

As Irma made its way up the length of Florida, many areas were exposed to wind gusts of 70−90 mph, tornadoes, torrential rain, storm surges and vast flooding. Similar to Harvey, Irma retained enough energy to bring its destructive forces into a second state. This time, Georgia was the victim. The rapidity and intensity of these weather conditions led to unprecedented devastation of homes and buildings in these states. The storms seem likely to have caused $150 billion to $200 billion in total damage. As affected individuals begin to rebuild, they will inevitably look to their insurance carriers for the means to do so. However, many will find to their dismay that not all damages are covered under their policies. While wind damage typically is covered under property insurance, flood insurance usually needs to be purchased separately. Given the immense wind and water damage inflicted by Harvey and Irma, the key question becomes: Is the loss covered by the policy? CONCURRENT CAUSATION VERSUS EFFICIENT PROXIMATE CAUSE


The answer to that question may depend on which side of the TexasLouisiana and Florida-Georgia borders the insured property falls. The reason is that these states employ different doctrines when determining whether coverage exists when both a covered cause and excluded cause combine to create the property loss. While Texas and Florida adhere to the doctrine of concurrent causation, Georgia and Louisiana employ the doctrine of efficient proximate cause. The concurrent causation versus efficient proximate cause issue was touched upon briefly in a recent posting to Wilson Elser’s Landfall ’17 resource center, “Is There a Silver Lining with Hurricane Irma?” Under the doctrine of concurrent causation, followed by a minority of jurisdictions, a loss caused by multiple perils is recoverable when at least one peril is covered under the policy, even if multiple perils are excluded. Thus, when a determination is made that the loss would not have occurred “but for” a covered peril, then the claim will be covered. See Claims & Concurrent Causation Page 46



aNALYSIS - ValueMomentum



here’s been reams written about how digital is impacting every industry and every business. Many have been disrupted and yet more are undergoing disruption. Even the property/casualty insurance industry is undergoing a huge transformation and is on eve of disruption! Think you’ve heard it before and you remain skeptical?


BOUT THE AUTHOR: Abhijeet Jhaveri is Chief Marketing Officer at ValueMomentum and leads ValueMomentum’s softwareas-a-service business targeted at the MGA, Program Administrator and Coverholder markets. Abhijeet and his team works with MGAs, Program Administrators and Coverholders to deploy ValueMomentum’s iFoundry rating software with support for ISO, NCCI, AAIS and proprietary rate plans and extend these to agents, customers and employees with ValueMomentum’s BizDynamics Digital Experience Solution and App2Data ACORD forms processing Solution.



Before you being to roll your eyes, read on! In this article, written for MGAs and Program Administrators, I have shared: 1. Exactly how Digital “IS” impacting your space 2. How you are uniquely positioned to take advantage of this trend 3. What you can do right away to transform your business. Well capitalized Insurtechs want a large bite of the pie! Let’s follow the money! According to AON’s “Global Insurance Marketplace Opportunities, 2017 Insurance Risk Study”, since 2012, a cumulative $14Bn has been invested into over 550 Insurtech startups. And the pace has only been accelerating with around $9B invested in 2016-17. Disruption is occurring across different dimensions, ranging from product innovation


(Metromile, trov, Slice, Bunker), distribution (thezebra, Lemonade, Coverhound, the zebra), underwriting & claims using Internet of Things (Lowes, ADT, Leakbot), drones, telematics and other “smart” assets. Digital technologies are the core of the disruptions being led by these startups. They are using: • •

Location data to provide you a contextual experience API-based integration with third party data sources to reduce the number of questions they ask the customer and reduce the amount of time spent in issuing quotes or settling claims Demographic data to target the audience that would be a good fit for their products, among other similar digital technologies

SPECIALIZATION IS CRITICAL TO COMPETE IN THE DIGITAL AGE So how are you going to handle all this competition – from technologybased innovators with serious capital backing them? I believe MGAs and Program Administrators are uniquely positioned to survive and thrive in light of this potential disruption. Specialization – both with See Are You Available Online? Page 32




Wingman Insurance - A chart Success Story



ave you ever had an insurance product idea that you knew was a winner, but you couldn’t find an admitted carrier to make it happen? That’s what Wingman Insurance experienced – until they found CHART Exchange and accessed the Lloyds market. “We focus on the tech and cyber industries, and we had a new cyber product idea that we based on years of working in that sector. We approached all the admitted markets who do tech, or who want to enter the market.

We’re very lucky that we found CHART because it has really helped us take our business to the next level.”

We explained we had a whole new way of doing insurance. It's easier and better for the agent and the client - and we want it to be admitted. All of them said, ‘that's the best idea I've ever heard. There's absolutely no way we can do it.’ " said Wingman Insurance Managing Director Ellie Feldman.



“I was very frustrated with the U.S. admitted markets. I have done business for 35 years, and all the carriers would take our meetings. But when it came to support an innovative product, they didn't understand it, and they did not want to take the risk,” said firm founder G. Philip Feldman.


Ellie Feldman, Managing Director of Wingman Insurance

Faced with the resistance from U.S. markets, Ellie and her father Philip spoke to Glenn Clark – CHART’s founder. Glenn suggested approaching Lloyds and becoming a coverholder.


Ellie Feldman, Managing Director of Wingman Insurance

He explained that CHART could provide contacts and guide them through the coverholder process. Today they are coverholders, and they have launched the product that the U.S. markets said “no” to supporting. And, they have more product ideas “waiting in the wings.” “I met our broker Lauren Roche of IRIS Insurance Brokers at the first CHART conference in Philadelphia

to see if our idea was feasible – especially after being rejected by so many admitted markets. She introduced us to several syndicates, and many said it is a great idea that they would actually do,” said Ellie. After that Philip and Ellie worked with their Lloyds broker to develop the program. The policy forms and rating had to be written from scratch because this was a new way of doing insurance. Wingman worked with the law firm Wilson Elser, an insurance specialist who they also met at the CHART conference. At the next year’s CHART conference, Wingman was able to shop its idea and continued to get interest. That led to them starting the coverholder process. It took Wingman about ten months working closely with their Lloyds broker to complete the application. The Lloyds application requires firms to look closely at their marketing plans, finances, book of business, and more – a global perspective of how your firm operates. “Once the data is done, you know you have a viable company and business plan – and Lloyd's does, too. It was a very valuable exercise for our agency. For example, we found a vulnerability that we had to fix with our billing practices. The process made us stronger, and as a Lloyd's coverholder, we now have their pen. Once you have coverholder status, the world is open to you to work with all their people and find the solutions you need,” says Ellie.

The company has since launched Wingman Cyber - a specialty insurance product for small and medium-sized businesses (SMBs) to protect against loss resulting from cyber attacks and data breaches. The Wingman Cyber Insurance platform offers a user friendly online interface to acquire a quote, bind and issue admitted cyber policies for SMBs. Its online, sixquestion application makes cyber insurance easy to understand for both insurance brokers and buyers.

The Wingman brand is part of the SeQure Underwriters LLC family, based in Cambridge, Maryland. To learn more about Wingman Insurance or Wingman Cyber Insurance visit Also - Watch Ellie Feldman’s interview on AM Best TV.

G. Phillip Feldman, Founder Wingman Insurance

“My vision has always been to make it easy for the agent, and put the best coverage that you can out there. I relate it to an Apple iPhone that gives you everything you need, but makes the buying choice simple. Our approach is to put everything in a policy that a technology company needs including first and third party cyber coverage. You only have to choose the limit. It makes it easier for the agent to explain, and it is a onestop-shop for clients,” says Philip. Once the application is complete, the

Wingman platform offers multiple cyber insurance quotes from AXIS Insurance with policy options up to $3 million in aggregate policy limits, so businesses can choose the appropriate level of coverage. In the event of a data breach, Wingman’s cyber insurance policy also provides services and covers the costs of critical business functions including legal support and computer forensics to investigate a cyber incident and breach response.







Partners who understand your needs. York Risk Services Group, Inc. is honored to be a Preferred Vendor Partner of the CHART Exchange. We are a premier provider of TPA Services, Specialized Loss Adjusting, Customized Claim Solutions, & Risk Control Services for Lloyd’s of London & the London company market. We offer: Dedicated Binding Authority Adjusting Team Dedicated E&S/Specialty Lines Open Market Adjusters Back office team for banking, bordereau production, MI reporting Customized Physical Risk Assessments (Risk Control) Virtual Risk Evaluation Services

To learn more, contact Aubrey Fountain, at 850.650.2380 or C L A I M S M A NAG E M E N T | M A N AG E D CA R E | R I S K MA N AG E ME N T | LOSS CO N T R O L www. YORKRSG .co m

aNALYSIS - York Risk Services

CREATING A WORKPLACE VIOLENCE PREVENTION PROGRAM In order to have a comprehensive program, an agency must start with workplace violence policies and protocols addressing threats and threatening behavior in the workplace.


often speak on violence in the workplace and the challenges affecting employers with creating or enhancing a formal or informal workplace violence program. Public entities face a myriad of risk including, but not limited to, home visits with clients, public utilities, hazardous materials, trenching and shoring, driving, law enforcement, fire service and emergency medical services. One risk that comes up with increasing frequency is violence in the workplace. It sometimes seems that the news covers a story every month on a violent incident occurring at an office building, mall or other venue. In the most recently published data from the National Institute for Occupational Safety and Health for workplace violence related deaths and injuries resulting in lost time,

government agencies topped the list. While public entities continually request the need for active shooter/ assailant training, there is a need to address the underlying concerns to prevent or reduce the chance of an active assailant incident. This can be achieved by having a comprehensive workplace violence program.

acts of violence by anyone on (city/ school/district/agency) property against clients, employees, visitors, guests, or other individuals are not tolerated. Violation of this policy may lead to: 1) disciplinary action, up to and including dismissal; and 2) removal from premises, arrest and criminal prosecution.


Other components of the program are: reporting, investigation, domestic violence, orders of protection (the agency’s compliance with such orders), warning signs, potential sources of threats, entities support structure for victims, work rules, disciplinary action for violations, Employee Assistance Program support, filing false reports and any exceptions to disclosure through the Public Information Act with regards to open records requests, threats of harm, threatening behavior or acts of violence and the entities stance on such behavior.

In order to have a comprehensive program, an agency must start with workplace violence policy and protocols addressing threats and threatening behavior in the workplace. Workplace isn’t just limited to what happens in the office, but includes domestic violence and stalking. The policy components should include a policy statement. An example of a policy statement is: Threats, threatening behavior, or

ESTABLISH A REPORTING PROCESS One of the most important aspects of the program will be the reporting process. As in workers’ See Work Place Violence Page 50




News - Lloyds applying counterfactual thinking. At Lloyd’s we recognise that thoughtful risk management is already in place and this suggested methodology is a useful addition to the suite of tools that insurers and risk managers already use.

as enhancing scenario-based modelling in areas where the data is poor (especially for emerging risks), downward counterfactual analysis could help by creating structured, transparent, scientific and evidence-led scenarios.

By expanding the data available based on what could have happened, these models can be built with less reliance on single-source data, which might improve their accuracy. It also provides a useful tool for regulators to stress-test catastrophe risk models.”

After a disaster risk analysts tend to carefully study what happened, but comparatively little attention is paid to what might have happened. This is a demanding technical undertaking, but we think insurers will benefit from a systematic assessment of downward counterfactuals.”

Maynard concluded: “The report offers a way of systematically

By analysing additional plausible versions of actual events as well

These could augment existing limited historical loss event datasets and could improve insurer’s assessment of probable maximum loss scenarios. For catastrophe risk quantification, counterfactual risk analysis can be applied in all three core catastrophe modelling activities of a P&C (re) insurer, namely pricing, capacity management and capital calibration.

Continued From Page 9


aNALYSIS - ValueMomentum


Continued From Page 26

ARE YOU AVAILABLE ONLINE? underwriting niche segments and marketing to those niche segments – is invaluable today. It is no surprise that in its 2017 State of Program Business Study presentation, Target Markets highlighted yet again that the MGA/ Program Administrator segment



has been growing faster than the property/casualty industry in general Demographics favor Specialists Demographic shifts are also in favor of specialization.

• Millennials and their younger Gen Z siblings expect that you provide them an easy to use experience as they insure their cars, homes and businesses. They expect personalized guidance. They are willing to allow those they choose to do business with access to their vast troves of personal data – as long as it is used for their own benefit – and responsibly. Which means, prefilling information publicly available on their homes, their cars, their traffic violations, their businesses, their properties, and so on. TABLE OF CONTENTS

Specialization in the specific niche in which your customers exist, personalized guidance to explain what coverages they need and why Giving your customers and agents control throughout their buying and service journey, and Making yourself available to them anytime, anywhere, and on whichever channel they prefer (phone, web, mobile, social) – are all keys to succeed in the digital age.

BUT THE RULES OF COMPETITION ARE CHANGING Harnessing the powerful forces that are impacting virtually every industry

- data, analytics, mobility, Internet of Things, Social – is key to competing in the digital age. It is not sufficient to have a well-capitalized market, strong underwriting discipline and effective distribution. While those are fundamental, companies who survive and thrive digital disruption will have to learn how to harness these digital forces in their value chain spanning product development, distribution, underwriting, pricing and claims. Democratization of technology access You may ask, how you can harness these powerful digital forces and compete with those who have deep pockets and are starting off with a technology first approach? Technology today, is abundantly available to those who wish to harness these digital forces. In retail, Etsy, Shopify, Amazon and eBay are enabling small businesses to compete effectively in their specialty niches. The gig economy is thriving where folks with specialized skills are able to offer their services on a variety of platforms like Uber, Fiverr, eLance and many others! Even in insurance, savvy technology vendors are providing access to ratequote-issue, policy administration, billing and claims on the cloud powered by mega-vendors such as Microsoft, Amazon and Salesforce. com. And these mega-vendors are investing billions to enrich their platforms by harnessing the digital forces making machine learning, analytics, Internet of Things, social and mobility accessible to all!

How can MGAs and Program Administrators harness these digital forces? ELECTRONIC ACCESS TO RATES, RULES & FORMS FROM BUREAUS Let’s start with basics. Rates, rules, forms from bureaus such as ISO, NCCI and AAIS are available today, electronically and you can leverage these to rapidly design and develop products and tailor them to your niche segments. Or, if you have a proprietary rate plan, have them rapidly configured and extended not only to your underwriters, but also for your agents and in cases, where it makes sense, to your insureds!


CLOUD-BASED SOLUTIONS Policy processing and servicing along with such rate-quote-bind solutions are available today in the cloud. Of course, you must choose your vendors carefully and avoid those that are locked into proprietary technologies that will not be able to take advantage of the breakneck speed of technology innovation. In other words, be sure to select those vendors who have a roadmap to harness these digital forces. READY FOR CURRENT GENERATION TECHNOLOGIES Be sure to have them showcase how you can – for instance – help prefill data from 3rd party data providers to reduce keystrokes by your agents. Or those who can electronically make available advisory loss costs, rates and

I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.

See Are You Available Online? Page 53 TABLE OF CONTENTS



News Continued From Page 15

BRUCE CARNEGIEBROWN reinsurance. It found we are not keeping pace with emerging market growth despite insurance business expanding rapidly in these regions. As you all know, our slow adoption of technology is creating opportunities for tech-savvy start-ups who see the insurance sector as “ripe for disruption”. If we don’t react to this competitive challenge by disrupting ourselves, the London market will surely be disrupted by others. Relentless downward pressure on pricing is making it harder and harder for our industry to deliver sustainable growth. Technical pricing is out of kilter with risks covered and for many of us profitability is declining. At the same time costs remain stubbornly high. No one I speak to thinks the London market’s expenses are sustainable. They are not just reducing our returns on capital; they are making us vulnerable to more efficient competitors. And even as we develop new products such as cyber insurance

or policies for the sharing economy, we need to reinvent how we distribute them to our customers. The creators of Uber, AirBnB, Google and Facebook – some of the world’s fastest growing and most valuable companies - are not interested in doing business with an industry stuck in the analogue world. We need to make ourselves relevant in this new business paradigm. You’ve heard it before but it’s worth repeating: these challenges are deep-seated and structural - and they need fixing.

We need to demonstrate the same long-term thinking and commitment to change McCormick showed when developing his revolutionary harvesting machine; the sort of thinking that changed US agriculture for ever and that will propel us into our own brave new world.” And we would be very foolish to allow the prospect of firming insurance prices post the recent hurricanes to persuade us that change is not required. The challenges faced by the insurance industry are far too important to be left to the vagaries of the market cycle. We need to take action to make


our industry more competitive. We need to demonstrate the same long-term thinking and commitment to change McCormick showed when developing his revolutionary harvesting machine; the sort of thinking that changed US agriculture for ever and that will propel us into our own brave new world. Technology was at the heart of McCormick’s revolution and technology is at the heart of the changes taking place in our sector. Imagine for a moment that you are an insurance customer coming to Lloyd’s in 2025. You put your property risk up for auction on Lloyd’s online portal. Syndicates bid for the risk or part of the risk online, offering a range of different premiums and covers. The risk can still be syndicated – the auction method allows for parts of the risk to be transferred in the way they can be now. In effect, Lloyd’s now offers its own price and product comparison service. Because the system is fully electronic, frictional costs are reduced. Your preferred brokers may or may not be involved in the process depending on the complexity of the risk, but they now offer you a range of value-added services based on expert advice. Their fee structures are lower, because digitisation has lowered their costs.

See Bruce Carnegie-Brown Page 39 DECEMBER 2017


ANALYSIS - Enterprise Risk Strategies Continued From Page 19

Real Estate Developer Case Study


Insuring your business. Ensuring your future.

Client Concern/Issue:

A midsized, privately held real estate developer, is required to carry both an environmental liability policy and a condemnation policy in order to enter into certain contractual agreements with local governmental bodies and general contractors. Each policy contains a $250,000 deductible. The insured is concerned about the potential negative impact of a $250,000 expenditure to their operating income should they incur a loss under either policy.


ERS Solution: ERS created a captive insurance company exclusively owned by the partners of the developer to issue a deductible reimbursement policy for expected losses. The captive provides a mechanism to prefund for potential deductible obligations for any insurance policies which contain deductibles. Results/Benefits: The partners now own a captive insurance company and any underwriting profit generated in their insurance program. Even though the captive is in its first year of operation, the developer has successfully transferred the risk from their balance sheet to a captive.

Disclosures IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (a) avoiding penalties under the U.S. Internal Revenue Code or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein. The views and statements expressed in this presentation are for general information only. ERS, LLC is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation provides general information about certain legal and accounting issues and should not be regarded as rendering legal or accounting advice to any person or entity. As such, the information is not privileged and does not create a client relationship with the companies, or any of its employees. This presentation does not constitute an offer to represent you, and you should not act, or refrain from acting, based upon any information so provided. In addition, the information contained in this presentation is not specific to any particular case or situation and may not reflect the most current developments. Enterprise Risk Strategies

36ERS does DECEMBER 2017 not provide legal or tax advice


Robert Nizzi, President 5700 W. 112th Street Overland Park, KS 66211 tel: 913-220-0442 Dana Marino East Coast Business Development tel: 610-353-4820 visit


Your Partner for Admitted Market Capacity
















As CHART's newest vendor partner, Fortegra's admitted paper helps coverholders and MGAs gain access to premier markets. Learn how Fortegra’s admitted program can help you Experience More at, or via email at

Fortegra® is the marketing name for the specialty underwriting operations of Fortegra Financial Corporation and its subsidiaries. Specialty underwriting program availability varies by jurisdiction. Where available, the programs are underwritten by admitted insurance companies.






News Continued From Page 35

BRUCE CARNEGIE-BROWN Let’s say you get the cover for the risk – it might have cost you less than it does today because by 2025 the algorithms are so developed, the data sets so rich and the analysis so insightful that much actuarial work is now automated.

Underwriters benefit from data-rich technical pricing meaning that policies are more closely tailored to the customer’s risks. Brokers benefit from a more diverse income stream because they now offer a greater range of services to customers. Policyholders benefit from better customer service: bespoke products and policies that cost less and come with faster claims payments. Costs are lower for everyone – both acquisition and operating costs. New technology means we can compete with and beat the disruptors. By disrupting ourselves, we will have

See Bruce Carnegie-Brown Page 44

Your insurance product is tailored to your needs because the data you provide will allow underwriters to build a bespoke risk profile. You have the option to turn the cover on and off when you need to. The clunky one-policy-fits-all approach we offer today is no longer the way of working. Halfway through your policy term, a storm destroys your property. Straight after the disaster strikes, satellites beam back imagery augmented by drone photography to build up a picture of the disaster zone and verify the damage has taken place.

Serving coverholders’ needs since the 1930s … and into the future

When there’s too much cloud cover, insurers use a free online service that aggregates images from all of the CCTV cameras in the damaged area to provide an alternative on-the-ground view. Once this data reaches a certain evidential threshold, the claim is triggered automatically – you don’t need to submit it. The payment is made electronically, underpinned by distributed ledger technology, such as blockchain, within days of the claim being made. THINK OF THE BENEFITS ONCE THIS VISION BECOMES REALITY:

Proud supporters of CHART

Bespoke solutions Packaged lines Enhanced commissions Web-based platforms US domiciled marketing office Access us through 170 Lloyd’s brokers


Atrium Underwriters Ltd




OUR TEAM IS THERE FROM THE START TO THE FINISH NSM Insurance Group Comprehensive Insurance Coverage for: Social Services I Addiction Treatment I Professional Liability Staffing Firms I Workers' Compensation I Collectible Vehicles Coastal Condo Associations I Breweries and Wineries Sports and Wellness I Specialty Aviation





Special report - M&A Services Continued From Page 23

HOW TO VALUE AN INSURANCE DISTRIBUTION FIRM the average of the next 2 years of the EBITDA multiple less the cash paid at closing. For a growing agency, you get the valuation of the future growth over the next two years and apply it to the general EBITDA. The EBITDA should be higher, since there is growth. This assumes 5% EBITDA Growth each year. The Earn-out could increase if there is growth or decrease of retention or revenue goes down. ASSET SALE VS. STOCK SALE Almost all independent insurance agencies are sold as Asset transactions. In general, the Buyer is buying the assets of the insurance agency. The Buyer sometimes assumes general liabilities but normally those do not transfer to the Buyer, unless specifically provided for. The Seller maintains their corporate existence generally through the earn-out or promissory note period and typically keeps specific assets and/or liabilities. The Buyer has a stepped up basis in

assets to depreciate over 15 years which creates a real economic advantage for the Buyer which in turn can translate to an economic valuation of the seller to do an asset transaction rather than a stock sale. In a stock valuation, usually, all obligations are transferred including all liabilities (known and unknown) and contingent liabilities. They are bought by the Buyer and there is no step up in basis (lower value to the buyer, and lower price to the seller). As a result of this, about 90% of Insurance Agency transactions are Asset transactions.


CONCLUSION This article explains in a general sense how insurance distribution firms are valued, common adjustments to the income statement, current market conditions, and common deal structures. Every business and every deal is different, and strategic buyers can derive more value from a transaction than pure EBITDA plays. Further, the facts and circumstances of each deal can pose risk/reward scenarios that can vary greatly from one party to the next. In the end analysis, valuation has a degree of subjectivity specific to each party to the transaction.


Please look forward to our next article on the Merger & Acquisition Process.









APPALACHIAN UNDERWRITERS TO ENABLE ONLINE-RATE-QUOTE-BIND FOR PERSONAL LINES PROGRAM The MGA Will Be Using ValueMomentum’s Rating Software and Digital Engagement Platform Appalachian Underwriter’s selection of ValueMomentum’s software reinforces its “Business Made Easy” commitment to agents ValueMomentum Inc., a provider of software and services to the insurance, healthcare and financial services industries, announced today that Appalachian Underwriters Inc. has selected ValueMomentum’s iFoundry Rating Engine and BizDynamics software for enabling rating & online quoting for its AssetGuard personal lines program for valuable personal articles. Appalachian Underwriters is ranked as the nation’s 5th largest MGA and specialize in Workers’ Compensation, Commercial Specialty, Personal Lines, and Brokerage. AUI has offered AssetGuard for a while, however, the quote and policy issuance process relied heavily on manual processes. “The program was very well received and we wanted to enable online rate-quote-

bind to our agents,” said Robert J. Arowood, President of Appalachian Underwriters. “When we evaluated ValueMomentum’s rating software and digital engagement platform we realized it would be a good fit to help us continue our tradition of making Business Easy for our agents. It provides us the flexibility to configure and launch online rating and quoting to our agents.” “We had a meeting of minds from our very first conversations with the entrepreneurial team at Appalachian Underwriters. Our goal is to provide MGAs and insurance companies access to the modern technology they need to execute like the insurtechs,” said Abhijeet Jhaveri, chief marketing officer of ValueMomentum. “We welcome Appalachian Underwriters as a valued customer of ValueMomentum and look forward to helping them harness the powerful digital forces in their efforts to navigate the opportunities facing the property/casualty industry.” ABOUT VALUEMOMENTUM ValueMomentum provides software TABLE OF CONTENTS

and services to Insurance, Healthcare & Financial Services firms. Customers choose ValueMomentum due to the company’s track record of delivering value and driving the momentum of customers’ business initiatives. ValueMomentum accomplishes this by applying a time-tested formula of combining strong technology expertise with deep industry experience. For more information, visit ABOUT APPALACHIAN UNDERWRITER, INC. Appalachian Underwriters is a leading insurance wholesale outlet for agents looking to bring their clients a broad selection of products. They are ranked the nation’s 5th largest MGA by Business Insurance and specialize in Workers’ Compensation, Commercial Specialty, Personal Lines, and Brokerage. Appalachian Underwriters’ onestop approach allows you access to multiple carriers and products. They offer a wide range of services to help make Business Easy for you! DECEMBER 2017


News Continued From Page 39

BRUCE CARNEGIEBROWN beaten them. And we are more relevant – by responding to the rapidly developing needs of our customers, we demonstrate our value and reinforce our purpose. Of course, these developments may come at a cost. McCormick’s invention drove the rural workforce into the cities to look for the jobs that no longer existed in agriculture. We have to expect similar disruption to our own sector. For how long can actuarial science repel the advances of algorithm-derived risk pricing? How will the role of the broker and the underwriter change? The challenge for all of us is to work out our value in the insurance buying chain. I am very fond of saying there is too much activity as a substitute for achievement in our industry. By which I mean that we do a very poor job of differentiating between that part of our role which is process and that part which genuinely creates value. Digitisation will eliminate manual processes but it will not eliminate the valuable part of what we do. That’s



why each of us, whichever part of the insurance chain we are in, needs to be clearer on what their value is. We need to enhance, develop and where necessary redefine our value so we are relevant in 2025 and beyond. The good news is that all the technology I have referenced today already exists. We don’t need to invent everything from scratch. What we need to do is to put it all together so we can provide one seamless experience for our customers.

For Lloyd’s, our priorities must be to execute on our plans to digitise the market; to improve our competitive position across insurance classes; to continue to lead the insurance market in innovation; to enhance our returns; and to protect our credit ratings. And by focusing on these things, we will aim to continue to build Lloyd’s brand and reputation globally.” And while this is easier said than done, of course, there are a number of London market and Lloyd’s projects in flight. For example, electronic placement is up and running - and the adoption rates are improving. Today there are 90 underwriting firms TABLE OF CONTENTS

and 25 brokers on the platform, and over 10,000 risks have been bound. We have standardised data in the placement process so information can flow seamlessly between brokers and underwriters, without rekeying. Reforms to central services now mean brokers can interact with the bureau using the same data and process standards as they do in other markets. This radically reduces the administrative burden on brokers. And coverholders, who make up a significant percentage of our market, will see real improvement in simplifying their audit and compliance processes from next year. These projects, known collectively as the London Target Operating Model, need to be fully embraced and adopted. As with all technology projects, there have been teething troubles as we parallel process in both the digital and analogue worlds – that’s to be expected. This means we have yet to reap the benefits of becoming digital but I believe that 2018 will be the year when the digital future becomes a digital present in the London market. Of course, the TOM work is just the start of the story. As our operating systems and processes become more efficient, we can look at how we can help the market compete more

effectively – for example, by providing higher quality data and data analytics. In other areas such as pricing, risk selection and underwriting decisionmaking, it will be down to individual companies in the Lloyd’s market to adopt new technologies. Some companies are cautious about adopting these new ways of working, but many others understand the benefits, quietly investing in data and new technologies, cleaning up their operating models and hiring experts to take competitive advantage of the post-TOM world. The businesses that get this right will gain a first-mover advantage. If you are not leading your peers on this, you need to ask yourself “why not?”

Image Credit: Creative Commons

And we are making progress on the other challenges I mentioned, too. We are re-making the case for the value of insurance with renewed vigour. London’s contribution to this is boosted by the excellent and welcome LMG campaign Chris mentioned at the outset. This is exactly the kind of positive, front-foot action we need to remind the world of what we do and how well we do it. Cross-market initiatives such as the Dive-In diversity festival are starting to change the perception that our sector from one that is stuck in the past, to one that shows we are open, dynamic and outward looking. This

will help us attract a new generation of insurers and leaders who will carry on the work that we have begun, to secure the future of our industry. There’s so much more good stuff we are doing of course – and we should be very proud of the changes we are starting to make. But the fact remains we need to do more – and we need to do it faster. And for those that haven’t started, it’s not too late – but the time is now. For Lloyd’s, our priorities must be to execute on our plans to digitise the market; to improve our competitive position across insurance classes; to continue to lead the insurance market in innovation; to enhance our returns; and to protect our credit ratings. And by focusing on these things, we will aim to continue to build Lloyd’s brand and reputation globally. I want to conclude with a reminder of why it is worth making all this effort; of why it is vital we succeed in making our industry fit for the future. Insurance underpins human progress and development. Without insurance, mankind could not plan to travel to Mars, invent the sharing economy and turn driverless cars from being a Silicon Valley fantasy into a rapidly approaching reality. Without insurance, global economic development would be pegged back by the punishing impacts of natural disasters, businesses would crash under the cost of remediating cyber-attacks and communities TABLE OF CONTENTS

would spend years rebuilding after catastrophes strike. Insurance transfers risks away from the public purse onto the private sector and helps build resilience. Nowhere is there a clearer demonstration of the value of insurance than in the recent payment of billions of dollars of claims to help the people of the Caribbean and the US recover from the disaster of three hurricanes in the space of a month. As we pay these claims – as we pay all our claims - we should remind ourselves and our customers of the power of insurance to put businesses, communities and people back on their feet after disaster has struck. If we don’t make the case for the value proposition of our industry, no one else will. The lessons of history are clear: the winners in business are those who align purpose and capability, those who continually react to the circumstances they encounter, and who constantly reinvent themselves and strive to do better. McCormick beat his rivals because he adapted faster and did things better. In success terms, he literally reaped what he sowed. His focus on excellent customer service, efficient distribution and new technology is a blueprint the insurance sector would do well to follow. Thank you for listening. DECEMBER 2017


aNALYSIS - Wilson Elser Continued From Page 25

CLAIMS AND CONCURRENT CAUSATION Conversely, the doctrine of efficient proximate cause adhered to by a majority of jurisdictions permits coverage only when a covered peril is the “leading” or “predominant” cause of the loss. If the covered peril is merely a contributor, the peril may not be considered in determining whether coverage exists. As a result, after a court determines the predominant cause of the loss, coverage then depends on whether the predominant cause is covered or excluded. To shed light on the impact these two

approaches will have on individuals affected by Harvey and Irma, it helps to consider a hypothetical: Contemplate a scenario in which Neighbor A, whose insured property lies in Texas, and Neighbor B, whose insured property is located in Louisiana, have similar standard property insurance policies and have sustained significant damage to their properties as a result of Hurricane Harvey’s wind and flooding. Neighbor A’s loss is more likely to be covered than Neighbor B’s loss because Texas employs the insured-friendly doctrine of concurrent causation. Similarly, if Neighbor A’s insured property is in Florida and Neighbor B’s insured property is in Georgia, then, again, Neighbor A is more likely than Neighbor B to recover for the property damages resulting from the wind and flooding brought by Hurricane Irma.

ANTI-CONCURRENT CAUSATION CLAUSES Despite these important differences, which doctrine a jurisdiction employs may be inconsequential if the jurisdiction views the doctrine as merely a default rule. In such jurisdictions, insurers may insert language, known as an Anti-Concurrent Causation (ACC) clause, into the policy to circumvent the applicable doctrine and preclude recovery in all instances in which an excluded cause contributes to the loss. The ACC clause issue also was briefly touched upon in the article referenced above. For example, an ACC clause at issue as a result of Harvey or Irma may read, “Damage caused by flooding is excluded regardless of whether any other cause or event contributed concurrently or in any sequence to the loss.”

Co-author Robert J. Taylor focuses his practice on insurance defense and coverage. Prior to joining Wilson Elser, he gained valuable experience in these areas while working in an insurance company’s legal and compliance department and in another law firm’s insurance law practice group. Additionally, Robert has been exposed to litigation at both the state and federal levels through a clerkship at the New Jersey Superior Court, Civil Division and at the U.S. District Court for the District of New Jersey.

Co-author and Wilson Elser Partner Kevin Kavanagh focuses his practice on insurance and reinsurance matters with a particular emphasis on property and transportation-related issues. Kevin has extensive trial and arbitration experience in Pennsylvania and New Jersey courts, while his reinsurance practice is national in scope. Whether for “quick questions” or in-depth discussions, Kevin is always accessible to his clients. Prior to establishing his legal practice, Kevin was employed in the insurance industry in a variety of technical and management positions. This practical experience affords him a unique perspective on the various issues that invariably arise during the claims process. He has been involved in drafting policy wording and has extensive experience with investigating insurance fraud. In addition, Kevin has written and spoken extensively at seminars directed to insurance professionals.




While there is a split of authority in Louisiana as to the enforceability of ACC clauses, the highest courts in Texas and Florida recently found that ACC clauses are valid. Although Georgia’s highest court has not ruled on the issue, courts applying Georgia law also have found such clauses to be enforceable. Thus, Neighbor A’s greater likelihood for coverage in the above examples may be negated by the inclusion of an ACC clause. VALUED POLICY LAWS

of a total loss by fire. Moreover, the Louisiana Supreme Court, in Landry v. Louisiana Citizens Property Ins. Co., 969 So.2d 615 (La. 2007), stated in dicta that Louisiana’s VPL “is intended to apply only to fire insurance policies, which may include coverage against other perils as allowed by La. R.S. 22:691 and is distinct from homeowners’ policies.”

the valuation used for purposes of determining the premium charged without deduction or offset by setting forth a different method of loss computation in the application and policy.

In Landry, the court found that the insurer opted out of the VPL by sufficiently setting forth a different method for settling covered property losses in the policy, which “clearly indicated that only covered If an ACC clause is losses were to be settled.” As a result, the court found that included, insurers the insurer was obligated should be wary of challenges to only to settle the covered the enforceability of such clauses property losses, as set forth in the policy, and that the insurer in Louisiana and Georgia, where the highest courts have not ruled was not obligated to pay the face value of the policy on the matter. Moreover, if there because the different method is ACC language and Louisiana or of loss computation set forth Florida law controls, insurers should in the policy did not require a payment of face value.

Valued Policy Laws (VPLs) may provide some policyholders with a weapon to counter the ACC clauses in the coming Harvey and Irma coverage disputes. In general, VPLs require a property insurer to pay the face amount of an insurance policy when there is a total loss to qualifying insured be prepared to defend against property caused, at least arguments that a total loss occurred Thus, although the policy in part, by a covered peril, and that the VPL trumps the ACC in Landry contained an ACC regardless of the actual value clause, the court was able to of the property at the time clause.” avoid addressing whether of the loss. In the past, courts the VPL trumps the ACC construing their state’s clause, stating, “Whether the statutory VPLs have found that once there is Even if a cause is covered by the valuation provisions would require a determination of a total loss and applicable fire insurance policy or an insurer to pay the face value of the that a cause of the loss is covered, counsel is arguing that Louisiana’s policy when a total loss was caused contribution from an excluded VPL applies to homeowners’ concurrently by a [sic] covered and cause will be immaterial even in the insurance policies despite the non-covered losses was irrelevant face of an ACC clause. The courts dicta in Landry, a second issue because those provisions no longer reasoned that enforcing the ACC may arise for policyholders via the applied once a different method of loss clause would run contrary to the VPL. Louisiana VPL’s “opt-out” provision. computation was validly set forth.” Although Texas, Georgia, Florida Under the provision, an insurer and Louisiana each have some form may avoid the requirement that of a VPL, the Texas and Georgia it compute and compensate statutes only apply in the event any covered property loss at See Claims & Concurrent Causation Page 48




aNALYSIS - Wilson Elser Continued From Page 47

CLAIMS AND CONCURRENT CAUSATION Given this decision, there is still an open question as to whether Louisiana’s VPL overrides an ACC clause when the insurer fails to opt out of the VPL.

damage to result in a total loss. Generally, three methods are used to determine if there has been a total loss:

applied each of the three tests to determine if a total loss occurred. TAKEAWAYS

Given the magnitude of property losses due to a combination of wind The “identity” test under which and flooding in the wake of Harvey a total loss exists when the and Irma, there inevitably will be building has lost its identity and mass litigation over whether such specific character as a building losses are covered by insurance The “restoration” test, which deems policies. As a matter of best practices, a building to be a total loss when a insurers should always carefully look reasonably prudent owner would at the policy at issue to determine not use the remains of the structure if there is an ACC clause. If not, after the loss as a basis for restoring coverage may depend on whether the building to its pre-loss condition the jurisdiction applies the doctrine The “constructive total loss” test, of concurrent causation or the doctrine of efficient If an ACC clause is included, proximate cause.

Florida’s VPL is not limited to fire insurance policies or insurers should be wary of events in which the If an ACC clause is challenges to the enforceability of such total loss was caused included, insurers should clauses in Louisiana and Georgia, where by fire. However, be wary of challenges the highest courts have not ruled on in 2005, Florida to the enforceability of revised its VPL to the matter. Moreover, if there is ACC such clauses in Louisiana state that an insurer’s and Georgia, where language and Louisiana or Florida law liability for policy controls, insurers should be prepared to the highest courts limits is limited to have not ruled on the defend against arguments that a total cases in which the matter. Moreover, if covered peril would loss occurred and that the VPL trumps there is ACC language by itself have been and Louisiana or Florida the ACC clause.” sufficient to create law controls, insurers a constructive total should be prepared to loss and cases in which the covered defend against arguments that a under which a total loss exists when peril actually caused the total loss. total loss occurred and that the a building is only partially destroyed VPL trumps the ACC clause. but is damaged to the extent that .Nevertheless, where a covered the law and regulations in force at and non-covered peril combine Wilson Elser attorneys will continue the time of the loss actually prohibit to create the property loss, an to look at the natural disaster−related or prevent the building’s repair. individual may argue that despite issues of concurrent causation as Courts typically do not limit the existence of an ACC clause, the well as other relevant insurance themselves to one of these. In fact, property loss is covered because the topics. Please visit our website Louisiana and Florida courts have covered peril alone caused sufficient Landfall ’17 to read more.




Analysis - Vantage Agora


consuming tasks like data entry are an inevitable part of any business. But these duties are not likely to be the most efficient use of your staff’s time. What if your team of specialists and experts could spend that time focusing on rewarding functions like improving customer service and increasing your company’s sales? A remote staff can help alleviate the time spent on data entry.


re you working as efficiently as possible? In today’s competitive economic climate, more companies are exploring ways to work smarter and faster while remaining productive. There is a growing trend to complement existing staffing models with a dedicated remote staff. According to, approximately 50% of the U.S. workforce holds a job that is compatible with at least partial telework, and approximately 20% to 25% of the workforce teleworks at some frequency. If you haven’t considered remote staffing, you may be missing out on opportunities to increase your organization’s optimal potential. BENEFITS OF REMOTE STAFFING •

Staff Retention: An ongoing business challenge is recruiting and retaining top talent. Finding qualified employees, training them and keeping them has become a huge expense for employers, but a well-trained remote staff can alleviate these concerns by providing consistent and reliable service. Greater Focus: Mundane,

Increased Efficiency: As pressure to deliver quality service day and night continues to grow, companies are faced with a dilemma that remote staffing can easily solve. A remote staff enables companies to remain competitive in an always-on global marketplace by taking advantage of different time zones to utilize a 24/7 responsive workforce and a commitment to continuous improvement. A remote team can pick up the work until your core team returns to the office the next day. In addition to this, firms like Vantage Agora search for better ways to do the work through focused teams or TABLE OF CONTENTS

ABOUT THE AUTHOR: Mike Fieseler is the VP of Business Development for Vantage Agora. With over 20 years of experience in insurance and technology, Mike joined the VA Sales team in 2010. Mr. Fieseler majored in Marketing and Management Science at the University of Iowa and has over 2,000 hours of continuing education including a Six Sigma Green Belt, Operational Excellence Level I, CPC, and ITIL training. enhancing workflows. At Vantage Agora, we set goals of reducing time to perform tasks by 5% to 20% over the first 18 months of an engagement.

See Consider Remote Staffing Page 52 DECEMBER 2017


aNALYSIS - York Risk Services Continued From Page 31 STAFF TRAINING

CREATING A WORKPLACE VIOLENCE PROGRAM compensation, liability and property losses, reporting incidents is the only way to know they occurred. Employees should report all incidents to a specific department. I recommend that all security incident reports be filed with risk management and safety division. A Security Incident Report form with instructions for completion must be readily available and easy to use for employees to actively report concerns and/or incidents. An online version is best for ease of use, but an active PDF or Word document works well, too.

Public entities should establish a workplace violence program that addresses the core of the program, reinforcing policy, procedure, reporting of incidents and response and recovery measures. Determine the best method to reach all employees. In my former position with a public entity, I was responsible for training over 54,000 employees throughout Texas. I thought the best method was computer based training; however, over 20,000 of those employees did not have their own computer. Solution: Computer based training (CBT) with DVDs of the training for those without access to the CBT. Be innovative with your training and training delivery to reach all employees. Keep in mind that training

curriculum for front line staff may differ from training curriculum for staff conducting home visits with clients. Employees will also want to know what internal support is available for victims of threats, threatening behavior, domestic violence, stalking or other acts of violence. Public entities can develop personal safety planning for employees who are in fear for their personal safety. Each safety plan is written for the specific employee, based on his or her specific situation. In my experience, I have written hundreds of personal safety plans for individuals in threatening situations. Training employees to repare personal safety plans for staff in threatening situations is a key support mechanism for the entity’s workplace violence program.

The agency should also establish response protocols to serious incidents and threats considered a risk to personal safety. Conduct trending and analysis to demonstrate areas of concern in the same manner as injury trend reports. This will allow entities to focus their safety and security efforts in areas of need. An entity will not realize how many incidents are occurring within their location or in the field, until a reporting process is implemented.




Employee Assistance Programs (EAP), Disaster Behavioral Health (DBH) services and Critical Incident Stress Management (CISM) teams are also essential for employee support after a catastrophic event to address employee counseling and debriefing.

Establish a policy and protocols addressing threats, threatening behavior and acts of violence to include domestic violence and stalking

Establish a reporting process and track incidents



Managing threats, threatening behavior or other acts of violence is necessary to reduce the likelihood of an incident from occurring or reduce the impact of a potentially violent act. The focus of this multidisciplinary team is to assess and manage threats of violence in the workplace, and the workplace includes all areas where employees are conducting work in course and scope of their employment. The team must consist of decision makers who are familiar with the policy, and may include representatives from human resources, risk/safety management, mental health, legal, facility management, law enforcement/ security and others with specific expertise, as needed. The team will gather information, assess the situation, determine action measures and determine mitigation measures or recovery measures, if post incident. Establishing a comprehensive workplace violence program is critical not only to address the threat to staff, but to reduce the liability and reputational risk. REMEMBER TO:

Establish training programs for employees addressing threats, threatening behavior and acts of violence

Establish a Threat or Incident Assessment/ Management Team

Change you culture to one of awareness and preparedness

Partner with EAP, CISM and DBH services for employee support

ADDITIONAL RESOURCES If you’d like to learn more about Workplace Violence and how to prevent it, a number of governmental agencies publish useful information: NATIONAL SAFETY COUNCIL Is Your Workplace Prone to Violence OSHA Workplace Violence Prevention Programs CAL/OSHA Cal/OSHA Guidelines for Workplace Security


With 20 years of experience in the Risk Control industry, I assist my clients in increasing their underwriting profits by reducing their loss ratio and premium leakage through loss control assessments, consultative services and premium audits. Clients include commercial and personal lines insurance carriers, wholesalers and brokers. For additional questions regarding York’s Risk Control capabilities, please contact Rich Wirth at 337.408.2774 or



Analysis - Vantage Agora Continued From Page 49 •


At Vantage Agora, we’ve developed an industry-leading remote staffing model to enable companies to achieve Operational Excellence by optimizing their business functions.” o Automation: Robotic Process Automation (RPA) is a topic you should discuss with any staffing vendor you engage. At Vantage Agora, we look for consistent and replicable tasks that are candidates for automation rather than being performed manually. This enables the tasks to be completed in seconds rather than minutes or hours, and with higher levels of quality.



Cost-Savings: One of the biggest expenses of running a business is the investment in employees. From hourly costs to state and federal taxes, benefits and overhead, there is a lot of money wrapped up in your workforce. Hiring a remote staff can greatly reduce these expenses and ultimately make an organization more profitable. Scalable Staff: Having a remote staff at your fingertips allows you to easily scale your workforce based on your business needs. Continuous growth or a busy peak season may require an increased staff. An on-demand remote staff can supplement your existing team to meet growing demands.

TAKING THE LEAP The benefits of remote staffing are obvious, but not all remote staffing partners are equal. It’s imperative to partner with a provider who understands your business and your unique needs. Priority musthaves include transparency, realtime visibility and ongoing growth and improvement opportunities. At Vantage Agora, we’ve developed an industry-leading remote staffing model to enable companies to achieve Operational Excellence by optimizing their business functions in the following ways: TABLE OF CONTENTS

• • • •

Increasing productivity between 20% to 40%. Reducing operating costs, often by more than 50%. Leveraging artificial intelligence and automation where possible. Delivering real-time Operational Intelligence and data through our patentpending Business Operating System (BOS), OX Zion.

Vantage Agora specializes in managing all data-entry and nonrevenue-generating activities for various industries including Insurance, Logistics, Healthcare, Manufacturing, Professional Services and many other industries. We are committed to providing customizable staffing solutions for the companies we partner with. If your organization is considering remote staffing to help increase efficiencies, be sure to weigh the pros and cons before choosing a partner. With Vantage Agora as your partner, you can achieve Operational Excellence.

aNALYSIS - ValueMomentum Continued From Page 53

ARE YOU AVAILABLE ONLINE? rules from bureaus. And those who can enable your agents and insureds buy and service their insurance policies online – through web based rate-quote-bind applications that are also mobile and tablet friendly.

that you start investing today in technologies that will help you harness these digital forces? There is a spectrum of approaches being used today – from the big bang approach (requires capital and can be disruptive) to a phased approach (start with a program or line that can benefit from online rate-quote-bind, measure results and then add more programs and lines onto your new platform) or plain opportunistic.

… And new technology innovations You must ensure that you can easily access data – marketing, distribution, underwriting, pricing and loss data – for easy manipulation to derive new insights. You can evaluate how your vendor can help you distribute your products through new distribution channels, such as digital agencies or even new technology channels, such as Alexa or chat bots. LET’S TAKE STOCK While we envision a digital future and sharpen our pencils to effectively compete, let’s take stock of where we are. Sadly, many programs administrators and MGAs do not even have an online presence. They may be locked in with vendors who have failed to continue investing in their applications. Is it meaningfully viable to continue staying the course? Is it not already an imperative


CONCLUSION Regardless of how impervious you believe your business is today to these digital forces, you can be sure that there is someone tinkering in a garage or in an incubator, contemplating how they can change the status quo. And over time, you can be sure that change will happen. But you can take charge of your destiny and take the first step in the direction of embracing digital – by making your program or line of business available online. With the right vendor, you can cross the proverbial chasm and join the tremendous opportunities ahead – waiting to be harnessed – with digital. TABLE OF CONTENTS

I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.



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