Page 1


TABLE OF CONTENTS 21

Sixty-Day Grace Period For NonImmigrant Workers After Loss Of Employments

22

To Beat Opioids We Must Address The Psychology Of Pain

24

Special Report: Is Big Data Changing The Way You Do Business?

27

ValueMomentum Continues To Experience Strong Growth

28

White Mountains To Acquire A Majority Stake In NSM Insurance Group

Glenn W. Clark, CPCU, Publisher CHART Exchange Earliest Adopter

32

6

3 Benefits Of Offering Product Performance Guarantees

If Our Field Is To Advance, We Must Make Sure Our Terminology Is Clear

35

9

Lloyd’s Voted Superbrand And Moves Up In Ranking Again

Tips For Preventing Cyber Attacks

39

The Sky Is Falling! Part 1 Of A 3-Part Article For SIAA Member Agencies

41

Lloyd’s Appoints L Marks And BCG To Collaborate On Lloyd’s Lab

45

Fortegra Establishes European Subsidiary In Malta

47

John Parry, Lloyd’s CFO To Leave After 17 Years

6 11 13 14

It’s All About The Niche When Bringing a Product to Lloyd’s Transaction Structure And Personal Goodwill In The Sales Of Insurance Distribution Firms Investors In Southeast Asia And India Capture 170 Technology Transactions In Q1 2018

Cover Image: [CREATIVE COMMONS)


SPECIAL REPORT: MAY 2018

Image Credit:Shutterstock Image Licensed to PL Communications

VOLUME 3 - ISSUE 4 Publisher: CHART Exchange Glenn W. Clark, CPCU Membership Services Kate Boyle Advertising: Kate Boyle Managing Editor: Kate Boyle Contributing Editor: Frank Huver

IS BIG DATA CHANGING THE WAY YOU DO BUSINESS?

CHART Exchange

info@chart-exchange.com 3001 Philadelphia Pike Claymont, Delaware 19703 www.chart-exchange.com 302-765-6001 Last Issue:

PG 24 PREFER TO READ IN PDF FORMAT? DOWNLOAD THE PDF VERSION HERE

Layout, Design & Circulation: Ron Manera AdMax Corp., Inc.

ADVERTISING IN THE CHART EXCHANGE MAKES SENSE: 302.765.6056


Talk to your clients about the importance of Employment Practices Liability Insurance …

“Harmless” office banter

#Metoo

before somebody crosses the line. Anyone keeping track of current events is well aware of the workplace-related scandals that have rocked both Hollywood and corporate America recently. The topic has certainly hit home, as evidenced by the impact of the phenomenon known as the “#MeToo” Movement. This social media platform has been used to help raise awareness about the prevalence of inappropriate behaviors within the business world. It would be naive to think this problem is limited to large corporations. Similar wrongful employment acts can occur in smaller firms as well. Even an innocent remark can be misinterpreted, leading to an allegation that needs to be addressed. The cost of paying for a legal defense and a potential adverse judgment/award could be financially devastating for any company. Let Rockwood Programs help protect your clients. Our Employment Practices Liability Insurance (EPLI) product protects companies from allegations of discrimination, wrongful termination, harassment, and workplace bullying. Coverage can be further enhanced to protect your client against alleged violations of the Immigration Reform Control Act, Wage & Hour disputes, and Third Party Wrongful Acts.

Visit us at www.rockwoodinsurance.com to learn more

Rockwood Programs, Inc., 3001 Philadelphia Pike, Claymont, DE 19703 p: 877-242-2487 • f: 302-762-4200 • e: sales@rockwoodinsurance.com


NEVER MISS AN ISSUE OF CHART EXCHANGE

SUBSCRIBE NOW

SUBSCRIBE TO CONTINUE TO RECEIVE THE CHART EXCHANGE


Message from the earliest adopter

IF OUR FIELD IS TO ADVANCE, WE MUST MAKE SURE OUR TERMINOLOGY IS CLEAR Glenn W. Clark, CPCU Publisher & Earliest Adopter

I

n last month’s edition of CHART Magazine, we touched on the problems some domestic agents have in understanding the unique insurance terminologies used by the Underwriters at Lloyd’s of London. To be sure, some of the nomenclature used by our friends across the pond may sound foreign to us. Let’s take a closer look at a few of these terms and offer some definitions. But first, here’s another pop quiz for all our Anglophile readers (answer at the bottom of the article). Brits call this item a “courgette”. In America, it is known as a: A. Trash Can B. Zucchini C. Lounge Chair

6

MAY 2018

TABLE OF CONTENTS

Our lesson begins with the concept of Lloyd’s of London. Contrary to popular belief, Lloyd’s is not an insurance company. Rather, it is a corporate body governed by Parliamentary regulation that operates as a marketplace within which multiple backers – called Syndicates or Risk Takers – come together to pool and spread risk. The various Underwriters (also referred to as “members”) are a collection of both corporations and individuals, the latter being traditionally known as “Names”. A Managing Agent is a company set up to manage one or more Syndicates on behalf of the members. These firms have the responsibility for employing staff, overseeing results, and supervising day-to-day operations.

www.chart-exchange.com


Writing business through Lloyd’s is usually done with the assistance of a Broker. Brokers act as intermediaries for the placement of both programs and one-off risks. In the United States, insurance companies sometimes delegate underwriting authorities to insurance agencies through a PA (Program Administrator) Agreement. Entities possessing these authorities are referred to as Managing General Agencies (MGAs) or Managing General Underwriters (MGUs). Similar arrangements can be made through the London market, but the terminology is different. Agents given the power to bind business on behalf of Lloyd’s are called Coverholders. A binding authority agreement gives an agent the authority to accept risks on behalf of Lloyd’s and to issue evidence of coverage for these risks without further approval. This contract is usually made between a Managing Agent and the Coverholder. The Agreement itself is comprised of sections addressing such topics as the limits of underwriting authorities being delegated, the coverage wordings to be used, and commission levels to be paid. Other provisions within the agreement specify the parameters regarding premium reporting and remittance. Transactional data relating to the business bound during the appropriate period is submitted on a bordereau (also referred to domestically as an accounts current document).

There is a section of the binding authority agreement called “Security Details”. It is not unusual to see multiple Syndicates listed here – a rather unique practice developed by Lloyd’s to help provide adequate spread of risk. This strength-in-numbers approach helps the market maintain its reputation of being able to offer broad and diverse coverage for many different types of exposures. This practice also helps mitigate the possibility of one particular Syndicate becoming insolvent. Are you interested in establishing a business relationship with the oldest and most recognized insurance brand in the world? The CHART Exchange can help! Send your inquiries to info@chart-exchange.com! The correct answer to our little quiz is “B”. This summer squash is usually harvested before it is fully ripened. In Britain and Ireland, a fully grown zucchini is referred to as a marrow.

Glenn W. Clark , CPCU CHART’S Earliest Adopter

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

7


Simplify your workflow! Give your team a clear path to winning new policies!

For over 18 years the NetRate Systems team has been tailoring insurance processing solutions to meet the unique requirements of each of our MGA, Program Administrator, Carrier, and Lloyd’s clients in the P&C marketplace. From submission portal through rating to policy issuance, our solutions will help you minimize key strokes, simplify workflow, and reduce systems maintenance.

“Not only do they understand insurance terminology, but they also understand the flow of business.” Jeremiah O’Donovan President, O’Donovan & Associates

Contact us today to learn how our experienced, U.S. based, insurance-savvy team can help you. Call 8

Learn More

877-738-2411TABLE OF CONTENTS www.netrate.com www.chart-exchange.com

MAY 2018


ANALYSIS - NETRATE

TIPS FOR PREVENTING CYBER ATTACKS

B

ig data breaches and cyber attacks of large companies grab headlines, but small businesses are increasingly the targets for cyber attackers. In fact, 61 percent of attacks last year targeted smaller businesses, up from 53 percent in 2016. In the insurance industry, which is moving rapidly to digital channels, cyber risks are growing exponentially. Is your organization vulnerable to attack? Here are some important protective measures for your organization, your employees and perhaps your clients to take: Have quality data security systems and procedures in place. Having a technology professional help you protect your business is well worth the

One of the most common tools for criminals are e-mails with links. Clicking on a ‘malicious’ link could send you to a website that’s designed to trick you into providing sensitive account information, cause computer viruses, or plant spyware to automatically infect your computer and allow fraudsters to obtain sensitive account information.” cost. Test your systems and procedures regularly and consider cyber liability insurance coverage. Make sure everyone in the office is using “strong” passwords. What’s a strong password? It’s one that’s not easily guessed by someone who already may have some of your personal information. It’s one that uses eight or more characters and includes both upper case and lower case letters,

numbers and symbols. A strong password is also one that is changed regularly. Never share a password via e-mail or text messages. Use different passwords for different accounts. Avoid using the same password for different online services, particularly for financial accounts. Using multiple passwords and changing See Preventing Cyber Attacks Page 31

R

ob Zuzula is Director of Marketing at NetRate Systems, a leading insurance solution provider of cloud-based underwriting, rating, and issuance software applications targeted at the Program Administrator, MGA, Carrier, and Lloyds Coverholder and Syndicate markets. Rob and the NetRate Systems team work with these markets to develop cloud-based solutions that deliver more efficient daily work processes, more consistent and controlled underwriting and rating, improved data reporting and analytics, and other custom business enhancing solutions that are rooted in the company’s long history of delivering rating solutions that support ISO®, NCCI, and proprietary rate plans.

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

9


Special Report - PL Communications

IT’S ALL ABOUT THE NICHE Whether you are a coverholder launching a new product or an agent looking for a new revenue stream, in insurance today it’s all about the niche. By Paul Lavenhar

F

A

bout the author: Paul Lavenhar’s firm PL Communications has provided marketing communications services for 25 years to such insurance clients Rockwood Programs, Capacity Coverage, MetLife, Selective, York Risk Services, and Admiral Insurance, among others. He has has written for 500+ companies in various industries. Paul also leads a band called GoodWorks that provides music and marketing services to help nonprofits raise money and awareness pro bono. Paul Lavenhar is the principle of the

insurance marketing communications firm PL Communications.

or many of the coverholders who created new products in conjunction with CHART, Many agents have realized a niche the motivation to create a is the way to stand out - whether new insurance product is based on it is specializing in nonprofits or a personal experience. Whether it is transportation. A generalized niche helping 6,000 families cope with flood is often not enough. Instead they damage from a hurricane like Jeff drill down into the subsets of those Wyrsch of Van Dyk, or a connection niches. The niche to bicycling races like It isn’t enough isn’t all nonprofits. Steve Weis of Affinity for coverholders It is mental health Group Underwriters, agencies that are to create a niche they saw a need product. The front line nonprofits. The niche and developed an for selling their products isn’t transportation, insurance solution. it is the school bus are agents. Agents industry, ambulances, need to be convinced to Independent or couriers. go out of their comfort insurance agents zone to sell a new are struggling in Y-Risk, LLC was product.” the face of online recently approved as insurance and the a Lloyd’s coverholder commoditization of insurance. They with authority for cyber and are looking for a way to differentiate technology E&O insurance. Its first themselves. niche based offering, “Y-ProTech for Marketplaces,” is a not just a generic

www.chart-exchange.com

TABLE OF CONTENTS

cyber and E&O policy. It is a drilled down niche exclusively focused on companies in the sharing and ondemand or “gig” economies. SELLING YOUR NICHE TO AGENTS Most new business comes from taking away business from another agent. Unless the prospect is a newly launched business the agent is trying to defeat the incumbent. The way to defeat that generalist agent is to outniche the competition. Show the prospect what the generalist has missed – because they are not niche experts. At the same time agents want to focus their efforts on selling, not developing marketing tactics. They don’t have

See It’s About The Niche Page 46

MAY 2018

11


NEWS Merger & Acquisition Services

serving the insurance industry

Merger & Acquisition Services is a

SPECIALIST ADVISORY AND FINANCIAL SERVICES FIRM firm specifically to participants within the insurance industry. Our mission is to provide

CONCIERGE-LEVEL SERVICES AND EXPERTISE

PROUD SPONSOR OF

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

M&A Services has closed

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.

OUR SERVICES Agency M&A Transactions Carrier M&A Transactions Agency Financing Capital Raising Strategic Advisory Valuation Services Program Business Renewal Rights Fronting

info@maservices.com http://maservices.com

(212) 750-0630 320 East 53rd Street New York - NY - 10022 Copyright 2017 Merger & Acquisition Services, Inc. & Merger & Acquisition Capital Services, LLC. All Rights Reserved.

NEW YORK, NY - ATLANTA, GA  - MYSTIC, CT  - CAYMAN ISLANDS

within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives. M&A Services is


ANALYSIS -M&a SERVICES

TRANSACTION STRUCTURE AND PERSONAL GOODWILL IN THE SALE OF INSURANCE DISTRIBUTION FIRMS By Christopher Hughes

M

ost insurance distribution firm acquisitions are structured as a sale of assets, rather than as a stock sale. There are two primary reasons for this: (1) the Buyer receives a stepped up basis in

the assets purchased, and will generally be able to amortize the price of the assets over a fifteen (15) year period, and (2) the Buyer is purchasing specific assets and retaining specific liabilities, thereby limiting successor liability for any liabilities that are not specifically assumed. The thing is, the tax treatment is very different for an asset sale of a closely held “C” Corporation than for a closely held

“S” Corporation, LLC or other pass through legal entity. For a closely held “C” Corporation, the sale of assets can create a double taxation event where the Corporation is taxed on the sale of the assets and then the owner is taxed on the distribution of the proceeds. See Personal Goodwill In A Sale Page 18

A

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.

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

13


News

INVESTORS IN SOUTHEAST ASIA AND INDIA CAPTURE 170 TECHNOLOGY TRANSACTIONS WORTH US$2.6 BILLION IN Q1 2018 Digital transformation and disruptive technologies will continue to reshape growth, presenting new investment opportunities for PE and VC funds

I

ndia/Hong Kong, 26 April 2018 – Southeast Asia and India continue to capture heightened attention from investors in 2018 looking to capitalize on budding technology (tech) opportunities and emerging market plays outside of China, with private equity (PE) and venture capital (VC) investors capturing 170 tech transactions worth US$2.6bn in Q1 2018. This reflects sustained momentum from 2017, which saw the value of tech[1] PE/VC deals in Southeast Asia and India nearly tripling over the prior year: US$18bn versus US$6.5bn in 2016. Since 2015, India has seen the majority of total PE and VC tech activity in the Indian and Southeast Asian markets, accounting for 56% of deal value and 71% of volume. As the next biggest market, Singapore accounted for 33% of deal value and 10% of volume, while Indonesia (7% of deal value and 7% volume) was also on investors’ radar screens.

14

MAY 2018

healthcare (medtech/pharmatech), Kroll, the global leader in risk and artificial intelligence (AI) mitigation and response solutions, sub-sectors stand out for their and Mergermarket, the To mitigate potential to disrupt leading independent and fundamentally M&A intelligence their change the business service, today released risk exposures, landscape across Staying ahead of foreign investors industry sectors. change: Investing in come to Kroll disruptive tech in India for our expertise Adding commentary and Southeast Asia, to the data analysis, the 14th issue in Kroll’s in conducting an in-depth interview Spotlight Asia series, investigative with Reshmi Khurana tracing the activity of research to help and Cem Ozturk, PE and VC investors them understand the Managing Directors at in the regions’ financial health and Kroll, reveals on-theswiftly evolving tech investment landscape. business practices ground insights on the ways private investors of a potential can spot and minimize The report aims to investment and risk while maximizing help PE and VC funds their target markets returns as they pursue understand how high-potential tech which, however industries pursue digital transformation challenging, are too opportunities in the and grapple with tech large to ignore.” region. disruption, how they According to Reshmi Khurana, reshape the core growth sectors in Kroll’s Managing Director and Southeast Asia and India, and the Head of South Asia, the key recent new investment opportunities that these emerging trends present. In particular, the ecommerce, fintech, See Tech Transactions Page 36 TABLE OF CONTENTS

www.chart-exchange.com


Be Cyber Resilient From cyber risk assessments and penetration testing to incident response and investigations, Kroll's global cyber experts are ready to help you and your insureds along the path to cyber resilience.

kroll.com/cyber


4215 E. McDowell Road, Suite 115 | Mesa, Arizona 85215 Phone 602.904.7687 | Fax 602.734.5759 | eriskstrategies.com

Consultation Services •

Performs a coverage audit

Provides risk management consultation

Assists in determining if a captive is the right solution for you (traditional or small)

If a captive is the right solution for you,

WE DO NOT REPLACE RELATIONSHIPS We will work with you and your advisors to find the right solution for you.

ERS provides insurance coverage policy design

ERS provides full underwriting services; including policy issuance, premium invoicing and collection (premium financing is available)

ERS aids in domicile selection

ERS provides captive formation and captive management services.

WE ARE HERE TO HELP YOU We are experienced, creative, responsive, and responsible. Providing customized solutions rather than off the shelf products.

And, that solution might not require one of our products.

Turn-key captive management includes • Regulatory compliance and oversight • Corporate compliance and oversight • Bookkeeping and recordkeeping services • Coordination with tax professionals for timely filing of all tax returns and tax payments

The staff of Enterprise Risk Strategies (ERS) has over 100 years of insurance and risk management experience. Our staff includes accountants, CPAs (certified public accountants), CAs (chartered accountants), attorneys, business and insurance professionals.

Keeping you on the right path. Solving today’s problems with an eye towards tomorrow’s challenges.


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

888-235-3525 www.nsminc.com

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

17


Analysis - M&A Services Continued From Page 13

PERSONAL GOODWILL IN THE SALE OF INSURANCE DISTRIBUTION FIRMS

include: (1) sale of the stock of the “C” Corporation to the Buyer, (2) convert the Company from a “C” Corporation to an “S” Corporation or LLC, or (3) determine if the allocation of purchase price to Personal Goodwill, employment agreements, and restrictive covenants is appropriate. The first option of the sale of stock does eliminate the double taxation event for the seller, but the Buyer is not able to amortize the purchase price of the assets. So, while this type of transaction may work for the Seller, the Buyer will not achieve the value of the amortization, which will ultimately impact the overall purchase price that a Buyer will be willing to pay. Below is an example of the new present value of Amortization of the purchase price over fifteen (15) years at a 5% interest rate.

Below is an example of the difference in tax treatment of a closely held “C” Corporation vs “S” Corporation’s sale of assets .

As you can see in this example, the owner of the “C” Corporation will have $9.065 Million in after-tax proceeds, while the owner of the “S” Corporation or LLC will keep $11.475 Million in after-tax cash. For owners of a closely-held insurance distribution firms that are incorporated as “C” Corporations, there are limited options to make a transaction as tax efficient as possible. The most common transaction options

18

MAY 2018

As this chart shows, the Seller is able to achieve after-tax proceeds of $11.43 Million rather than $9.065 Million by selling the stock of the Company rather than the assets of the Company. Unfortunately, the Buyer of the Stock is not able to amortize the Purchase Price which in this example has a net present value of $3.150 Million. Thus, the sale of stock is not an attractive transaction for the Buyer. Most, if not all, strategic buyers, will discount the valuation of the Company to reflect this loss of value.

TABLE OF CONTENTS

www.chart-exchange.com


The second option is to convert the Company from a “C” Corporation to an “S” Corporation, and have the “S” Corporation sell the assets of the Company. This may be a viable solution, but, it will be subject to the “built-in gain” tax (BIG tax) if it sells within a ten year period from the date that it converts to an “S” Corporation. Thus, this strategy is acceptable if the timeline to sell the firm is over ten years.

In many insurance agencies where the Owner is an active producer and manager of the firm, there may exist Personal Goodwill that can be sold separately from the Company, and in a much more tax efficient manner.”

to the value of the applicable Personal Goodwill. In each case, the United States Tax Court looked at a number of facts of each case to determine if Personal Goodwill exists that was distinct from the Corporate Goodwill owned by the Company. Below is a summary of the primary characteristics of Personal Goodwill utilized by the Tax Court in each case: PERSONAL GOODWILL FACTORS 1. No Employment Agreement between Company and Owner; 2. No Non-compete Agreement in place between Company and Owner; 3. Business is dependent on Owner’s reputation, relationships, and expertise; 4. Owner is essential for business continuity; 5. Business has few suppliers and/or customers and those relationships are with the Owner; 6. Company is specialized or engaged in professional services. CORPORATE GOODWILL FACTORS

The third transaction option to consider is the allocation of the purchase price to various assets that are personal to the owner of the selling company, including Personal Goodwill. Personal Goodwill is a term used in mergers and acquisitions that is a specific asset that is being acquired and is distinct from Corporate Goodwill. Personal Goodwill is developed and owned by the individual shareholder, and Corporate Goodwill is developed and owned by the Company. The existence of Personal Goodwill in a merger or acquisition transaction can be a tax efficient asset allocation to the entire transaction, both from the Buyer and the Seller’s perspective. There are a number of recent tax law cases that clearly establishe the existence and tax treatment of Personal Goodwill versus Corporate Goodwill. The primary and most frequently cited cases include: Martin Ice Cream Company, 110 T.C. No. 18 (1998), Bross Trucking, Inc., T.C. Memo. 2014-107, and Estate of Adell, T.C. Memo. 2014-155. In each of these cases, the concept of Personal Goodwill is discussed, the facts of each case are examined to determine if Personal Goodwill exists, and then the appropriate tax is applied www.chart-exchange.com

1. Company has Employment Agreement with the Owner; 2. Company has a Non-competition Agreement in place with the Owner; 3. Owner is an “absentee” Owner and is not involved in the operation of the Company; 4. Company has a strong management team and larger organizational structure; 5. Company has broad supplier and/or customer base; 6. Company name and brand is recognized and valued in the marketplace. In looking at these factors, an owner of an insurance distribution “C” Corporation, can determine if the Company and Owner’s specific characteristics look more like Personal Goodwill or Corporate Goodwill. In many insurance agencies where the Owner is an active producer and manager of the firm, there may exist Personal Goodwill that can be sold separately from the Company, and in a much more tax efficient manner.

TABLE OF CONTENTS

See Personal Goodwill In A Sale Page 29 MAY 2018

19


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.

wilsonelser.com Š 2017 Wilson Elser. All rights reserved. 567-17


news & aNALYSIS - Wilson Elser

SIXTY-DAY GRACE PERIOD FOR NONIMMIGRANT WORKERS AFTER LOSS OF EMPLOYMENT By Susan Karlovich

T

he U.S. Department of Homeland Security has promulgated a regulation affecting highly skilled foreign workers when they lose their jobs. The stated purpose of the regulation is to improve the ability of U.S. employers to hire and retain highly skilled foreign workers and to increase the ability of those workers to pursue new employment opportunities. Nonimmigrant workers are individuals who enter the United States for a temporary period of time and are restricted to the activity consistent with their visas (those in E-1, E-3, H1B, H1B1, L-1, O-1 and TN status). Prior to

this regulation, a nonimmigrant worker who was laid off or whose employment was terminated would immediately begin to accrue unlawful status. Since the beneficiary of a visa petition must be in valid status at the time of filing, a sudden loss of employment was particularly problematic in terms of transferring the visa to a new employer.

A new regulation affects highly skilled foreign workers when they lose their jobs

While U.S. Citizenship and Immigration Services (USCIS) was somewhat forgiving if a new sponsoring employer was identified quickly, the conventional wisdom was that the USCIS would not approve a transfer petition if the beneficiary was out of work in excess of one month.

The new regulation provides for a 60day discretionary grace period, during which a nonimmigrant worker does not accrue unlawful status. This allows nonimmigrant workers two months to locate a sponsoring employer to whom the visa may be transferred, to apply for a change of status or to wind See Sixty-Day Grace Period Page 31

A

bout the author: Susan Karlovich has extensive experience in federal, state and administrative trial and appellate courts, with emphasis on toxic torts, employment and immigration law as well as liability defense of attorneys and medical professionals, appellate advocacy and environmental litigation. Susan is active in the American Immigration Lawyers Association, a voluntary organization of more than 11,500 attorneys and law professors who practice and teach immigration law. True talent is rarely limited to one endeavor, and Susan’s ten years as a professional dancer performing in theaters around the world gave her the discipline and focus to practice law with similar grace and power. Susan still enjoys dancing, and performs in a biannual fundraiser sponsored by the New Jersey Law Journal to provide free legal services for New Jersey artists. p. 973.735.6012 susan.karlovich@wilsonelser.com

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

21


Analysis - key media int’l

TO BEAT OPIOIDS WE MUST ADDRESS THE PSYCHOLOGY OF PAIN By Bethan Moorcraft, News Editor at Key Media International. Article was first published in Insurance Business America.

Workers’ compensation insurers play a key role in curtailing the opioid crisis, according to Mark Walls, vice president, communications & strategic he battle against the US opioid crisis rages on. The analysis, Safety National. Speaking to Insurance Business at RIMS 2018, epidemic, which takes he described the the lives of The mind industry as being over 100 Americans plays a “ahead of the curve” every day from huge role in pain. but said there’s still overdoses, has been work to be declared a public Therefore, battling more done, especially health emergency the opioid crisis in the alternative by President Trump really has to start treatment space. and remains a top-of-

T A

bout the author: Bethan Moorcraft is the news editor at Insurance Business Canada / America - Key Media International Previous experience at the Bath Chronicle, Mirror Online, The New Day, Wales Online and South Wales Evening Post. MA with Distinction - News Journalism at Cardiff University JOMEC. Undergraduate English Language and Literature at King's College London. Passionate and accomplished sportswoman with international cricket caps and county honours in various sports.

mind issue for various industries nationwide.

with a focus on mental health. It has to be a wholebody treatment approach.”

Decreasing loss trends in the workers’ compensation markets suggest the highprofile messaging surrounding the opioid crisis is starting to kick in. In most states, pricing relative to loss trends has been flat or down for the past few years, which is partly due to increased emphasis on workplace safety, loss control and new pain management systems.

“I believe the workers’ compensation industry is ahead of the curve when it comes to the opioid problem. We’ve been battling the issue for at least 10 years,” said Walls. “In the last two years, we’ve started to see more nationwide emphasis on cutting down opioid abuse, which is helping to drive down costs in the workers’ compensation industry. See Psychology of Pain Page 42

22

MAY 2018

TABLE OF CONTENTS

www.chart-exchange.com


www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

23


SPECIAL REPORT - Vantage Agora

IS BIG DATA CHANGING THE WAY YOU DO BUSINESS? By Arvind Gopalakrishnan

U

nless you’ve been living under a rock for the last decade or so, there’s no doubt you’ve heard the term ‘Big Data’. In the wake of the Facebook Cambridge data breach, we all understand the negative implications, risks and fears that go along with the latest technological evolutions, but how can we make the most of Big Data to safely and responsibly help our businesses in a positive way? The volume of data has increased exponentially, spurring the need for faster data analysis to provide quick and valuable insights. The value and effectiveness of the data also depends on understanding and formulating the proper queries to direct Big Data projects. Big Data is analyzed using software

specifically designed to handle large, complex data sets. Many Software-asa-Service (SaaS) companies specialize in managing complex data that businesses use to turn it into actionable information. Such assessments may be done in-house or externally by a third party who focuses on processing Big Data into digestible formats. HOW DOES YOUR ORGANIZATION USE BIG DATA TO GAIN A COMPETITIVE EDGE? According to Saptarshi Das, a content writer in the digital marketing space, “Around 80% of unstructured data in organizations has information hidden inside that can be used for fulfilling customer requirements, improving sales figures, enhancing marketing strategies, creating rigid risk management function, and overseeing fraudulence activities. And all this can

be done by deploying Big Data analysis in your organization.” With the help of graphic data visualization, organizations can retrieve all the information required for the successful functioning of their business processes. But what if this information is stored in several places? For example, within every insurance company, there are a range of systems used to collect and analyze data for making important business decisions. This data is rarely gathered from one single source or stored in one single place. Pulling data from Policy Management, Claims and Rating Systems can become time-consuming and often hinders businesses from reaching their prospective goals.

See Big Data Page 40

Arvind Gopalakrishnan is the VP of Technical Sales at Vantage Agora, a global provider of customized technology and remote staffing solutions, including OX Zion, an industry-leading Business Operating System that provides users with powerful tools to improve Visibility, Control and Communication. Because of the key insights that OX Zion provides to organizations and business leaders, Vantage Agora was recently named a CIO Applications Journal Top 25 Insurance Technology Company. Arvind has extensive experience delivering a wide range of solutions to numerous insurance clients worldwide.

24

MAY 2018

TABLE OF CONTENTS

www.chart-exchange.com


Now here’s a

REAL SURPRISE…

A firearm liability product that can be sold by independent insurance agents! It is estimated that nearly 80 million Americans own at least one firearm. But what happens if a law-abiding citizen is actually forced to use that weapon to protect themselves, a loved one, or their personal property? Many homeowner policies specifically exclude firearm use — even in self defense — as a covered exposure, deeming it to be an intentional act. That leaves the gun owner personally liable for legal expenses, bail bond costs, and any judgments awarded through a civil action. As an insurance agent, you are in the best position to explain the significant personal liability exposure faced by your gun-owning clients. Unfortunately, you haven’t been able to help your clients by offering a product to address this need — until now. Rockwood Programs now offers a firearm liability policy designed to protect insureds against civil or criminal actions resulting from the use of a gun in self-defense. It is the only one available in the industry that can be sold through insurance agents. A wide variety of limit options are available, ranging from $50,000 to $5 million. Annual premiums start at just $135. Best of all, we make it easy for you to present the firearm liability product to your clients. An inventory of customizable sales aids is available, including marketing brochures, simplified self-rating applications, and more. Our team can even help provide product-specific content for your website!

Visit us at www.rockwoodinsurance.com to learn more We can also accommodate group accounts (police, security, gun clubs, etc.). E-mail: president@rockwoodinsurance.com Rockwood Programs, Inc., 3001 Philadelphia Pike, Claymont, DE 19703 p: 800-558-8808 • f: 302-764-5477 • e: sales@rockwoodinsurance.com

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

25


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 Aubrey.Fountain@yorkrsg.com. 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


News

VALUEMOMENTUM CONTINUES TO EXPERIENCE STRONG GROWTH 2017-18 Fiscal Year Growth Marked By Larger Transformation Deals And 14 New Clients, Including Tier-One Insurers

V

alueMomentum, Inc., a leading provider for software and services to insurance firms, today announced its continued strong growth momentum in its fiscal year ending March 31st, including expanding the customer base by 23% and revenue by 26%. The growth has been fueled by larger transformation deals, new tier one customers and expansion of existing relationships. CUSTOMER WINS New customer wins were fueled by solutions designed to help insurers: realize better ROI from their core investments, achieve speed in testing core implementations, engage customers and agents digitally, analyze and improve rating logic and build agility in their product operations. “Tier One Carriers is a market segment increasingly warming to ValueMomentum for industry specific

www.chart-exchange.com

CONTINUED FOCUS ON INNOVATION ValueMomentum has continued its long tradition of reinvesting profits into its industry focused R&D efforts, especially focusing on helping insurance carriers achieve speed in: core implementations, ISO solutions”, said James Carlucci, Senior adoption, digital distribution, vendor integrations, rating sophistication and Vice President, ValueMomentum. product innovation. CUSTOMER SATISFACTION ABOUT VALUEMOMENTUM “Focusing relentlessly on delivering value to our customers has helped us maintain high customer satisfaction ratings and substantial repeat business. Now, we have embarked on a journey to bring speed to everything we do and every customer we are working with. We are extremely proud of the strong partnerships we have with our customers and are happy that they are ready to join hands with us in achieving speed”, said Raj Samanthapudi, ValueMomentum’s CEO.

TABLE OF CONTENTS

ValueMomentum provides software 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 https://www.valuemomentum.com.

MAY 2018

27


News

WHITE MOUNTAINS TO ACQUIRE A MAJORITY STAKE IN NSM INSURANCE GROUP

H

AMILTON, Bermuda, April 2, 2018 – White Mountains Insurance Group, Ltd. (NYSE: WTM) (“White Mountains”) announced today that it has entered into an agreement to acquire a majority equity stake in NSM Insurance Group (“NSM”), a leading specialty insurance program administrator. The transaction values NSM at approximately $388 million.

in NSM alongside the management team. The company is high quality, and we believe there is tremendous opportunity to grow and expand the business,” said Manning Rountree, Chief Executive Officer of White Mountains. “We look forward to working with Geof and his team and to providing them with support and resources to continue to grow the business organically and through acquisitions.”

White Mountains intends to fund the acquisition through a combination of cash on hand and new debt issued by NSM. NSM is a leading specialty insurance program administrator placing in excess of $500 million in premiums annually through its relationships with more than 6,000 brokerage firms and approximately 100 insurance carriers. NSM’s expertise covers a wide range of specialty insurance sectors such as collector cars, non-profit organizations, sports & wellness centers, specialty real estate and pet insurance.

“This transaction marks a new and exciting chapter of growth for NSM. We are thrilled to have the support of an experienced insurance investor with a long-term capital base as we set our course toward future success,” said Geof McKernan, Chief Executive Officer of NSM. “We look forward to working with the White Mountains team to continue to execute on our growth strategy while delivering the best solutions and services to our insurance carrier partners.”

NSM’s deep industry knowledge and capabilities and longstanding relationships with insurance brokers and insurance carriers allow it to serve as a critical intermediary in the specialty insurance market. “We are pleased to make this investment

28

MAY 2018

The transaction is expected to close by the end of the second quarter of 2018. The closing is subject to regulatory approvals and other customary closing conditions. The closing is not subject to a financing condition. Merger & Acquisition Services acted as financial advisor to White Mountains, while TABLE OF CONTENTS

Cravath, Swaine & Moore LLP provided legal advice. Latham & Watkins LLP acted as legal advisor to selling equity holders and NSM, and McDonald Hopkins LLC acted as legal advisor to NSM management. ABOUT NSM INSURANCE GROUP NSM is a full-service MGU and program administrator for specialty property & casualty insurance, with over $500 million of controlled premiums. NSM manages all aspects of the placement process on behalf of its carrier partners, including product development, marketing, underwriting, policy issuance, and claims. The company specializes in niche sectors such as collector cars, social services and behavioral health, specialty real estate, sports and fitness centers, and pet insurance. NSM is actively seeking to acquire additional program managers and niche specific insurance businesses. For more information, visit www.nsminc. com. ABOUT WHITE MOUNTAINS White Mountains is a Bermudadomiciled financial services holding company traded on the New York Stock See M&A Activity Page 31 www.chart-exchange.com


Analysis Continued From Page 19

PERSONAL GOODWILL IN THE SALE OF INSURANCE DISTRIBUTION FIRMS

This chart demonstrates that if the facts warrant a 95% allocation of the value of the transaction to the Personal Goodwill of the owner, then the Buyer will be able to amortize the majority of the purchase price, and the Seller will not be subject to a punitive double taxation event. In summary, the transaction structure and allocation of Purchase Price can have a significant financial impact on both the Buyer and the Seller in the transaction. It is important to discuss the specific facts and circumstances with your accountants, tax advisors, and M&A advisors to determine and plan for the most appropriate and tax efficient transaction structure. I hope you have found this information useful.

The below chart illustrates the tax efficient structure of a transaction that is allocation 95% to the purchase of Personal Goodwill versus a stock sale or asset sale without the sale of Personal Goodwill.

www.chart-exchange.com

Christopher Hughes Managing Director Merger & Acquisition Services, Inc.

TABLE OF CONTENTS

MAY 2018

29


News Continued From Page 21

SIXTY-DAY GRACE PERIOD

Continued From Page 9

TIPS ON PREVENTING CYBER ATTACKS

Continued From Page 28

up their affairs before departing the United States. ONE GRACE PERIOD PER VALIDITY PERIOD Employment is not authorized during the grace period, but the nonimmigrant worker may begin working with the filing of a transfer petition by a new employer. A worker may use the grace period only once for each validity period. For instance, if a worker loses his job and then uses the grace period to transfer his visa to another employer, he may still be eligible for another 60-day grace period should he lose that job. Unused days in the first grace period cannot be carried over into a subsequent grace period. USCIS has the discretion to deny or shorten a grace period if there are violations of status such as unauthorized employment, fraud or criminal convictions, among others. The 60-day grace period is a welcome accommodation to nonimmigrant workers who find themselves suddenly laid off or their employment terminated. www.chart-exchange.com

Understand the risk of ransomware. It’s a growing problem for small businesses. Using antivirus systems, being extremely careful when clicking on a link or downloading a file from an e-mail, backing up your data and keeping your software up-to-date can go a long way to helping manage this threat.

them regularly requires effort, but it significantly reduces your chances of becoming a victim of identity theft. Avoid using public wi-fi and/or computers to access accounts. Avoid accessing accounts on a public wireless connection, such as at a coffee shop or airport. Passwords and other personal information can be stolen on a public wireless network. Make sure the settings on your computers and mobile devices will not automatically connect to any available Wi-Fi connection. Watch out for links in e-mails. One of the most common tools for criminals are e-mails with links. Clicking on a ‘malicious’ link could send you to a website that’s designed to trick you into providing sensitive account information, cause computer viruses, or plant spyware to automatically infect your computer and allow fraudsters to obtain sensitive account information. Having firewalls installed can help prevent this from happening, but everyone in your office needs to know that they should not click on links or download attachments in e-mails from unknown senders. TABLE OF CONTENTS

M&A ACTIVITY Exchange and the Bermuda Stock Exchange under the symbol WTM. Additional financial information and other items of interest are available at the Company’s web site located at www. whitemountains.com. ABOUT MERGER & ACQUISITION SERVICES, INC. Merger & Acquisition Services, Inc. is a specialist advisory and financial services Firm to the insurance and reinsurance industry, with offices in New York, Connecticut, Georgia & Cayman Islands. Founded in 1999, the Firm and its affiliates provides investment banking and insurance consulting services globally, including; merger & acquisition advisory capital raising, valuations, program placement/fronting, and reinsurance advisory. Merger & Acquisition Capital Services, LLC., a registered broker-dealer and member FINRA / SIPC, is an affiliate of Merger & Acquisition Services, Inc.

MAY 2018

31


ANALYSIS - Fortegra

3 BENEFITS OF OFFERING PRODUCT PERFORMANCE GUARANTEES By Roger High, VP of New Markets

Product Performance Guarantee

A

s the mobile accessory industry continues to grow, product performance guarantees are becoming more of a necessity. Here’s how OEMs can benefit.

R

oger High is Vice President of New Markets at Fortegra where he leads strategic partnership development for the company’s warranty division, with an industry focus on cable and utility, OEMs, and emerging markets. A graduate of Miami University (OH), Roger previously served as National Sales Director at Fortegra subsidiary ProtectCELL, where he was responsible for building a sales organization that doubled revenue growth four years consecutively.

32

MAY 2018

Thanks in large part to the development of advanced features, the mobile phone repair industry has now reached $4 billion. When you look at the manufacturer warranty for, say, the new Apple iPhone X, that number begins to make a lot of sense. Though Apple claims their new glass is unbreakable, there already have been plenty of examples to the contrary. And since drops aren’t covered under the phone’s warranty, customers are left to foot the bill out of pocket. A screen repair on the iPhone X? $279. If it suffers even more damage from a drop, Apple is charging a whopping $549. Yikes! Many consumers are purchasing protection accessories—like screen protectors or phone cases—to help avoid these types of costs. But the list of tools available to protect consumer devices doesn’t end there. OEMs can TABLE OF CONTENTS

add an additional layer of protection by enlisting a product performance guarantee from a third-party warranty provider.

Offering these types of protection solutions can put you one step ahead of the competition and keep your company top of mind for consumers – if and when their phone is damaged, they know you’ll take care of them because the device is protected, with guaranteed coverage.” OEMs can use these measures— warranties that supplement the benefits of owning a protection accessory—to stand behind the quality and value of their product with the promise of a guarantee.

See Performance Guarantees Page 42 www.chart-exchange.com


Your Partner for Admitted Market Capacity

1

PROGRAM CARRIER WITH NEARLY

$

BILLION

,000,000,000

IN TOTAL SALES

A- RATING A.M. BEST

S P E C I A LT Y P RO G R A M S

PREMIUM FINANCE

7

ADMITTED

INSURANCE COMPANIES

CAPTIVES & RETRO COMMISSION STRUCTURES RISK PARTICIPANT SUPPORTING COVERHOLDERS, MGA S & MGU S

CREDIT P RO G R A M S

WA R R A N T Y P RO G R A M S

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 fortegra.com/programs, or via email at programs@fortegra.com.

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.


BRIDGING THE GAP

BETWEEN USA AND LLOYD’S OF LONDON

34

MAY 2018

TABLE OF CONTENTS

www.chart-exchange.com


News

LLOYD’S VOTED SUPERBRAND AND MOVES UP IN RANKING AGAIN

W

e are delighted to announce that Lloyd’s has been awarded Superbrands status again in 2018 for the 12th year. Showing positive momentum in the rankings for the third year running, Lloyd’s this year secured a position in the top 50 brands. The long-running annual survey has been identifying the UK’s leading business-to-business brands since 2001 and is managed by The Centre for Brand Analysis (TCBA). To determine the Superbrands the TCBA questions over 2,500 individual business professionals from across the UK, as well as the independent and voluntary Business Superbrands Council. This year the two audiences judged over 1,500 brands, voting for Superbrands that have established the finest reputation in their field and offer customers significant emotional and/or tangible advantages over its competitors, which customers want and recognise. The main three key criteria they assessed brands against were: quality, reliability and distinction. Stephen Cheliotis, Chief Executive of TCBA and Chairman of the Business Superbrands Council said, “Lloyd’s is an extremely valuable and powerful brand in the UK and this has once again been reiterated by it attaining Business Superbrands status for another year. Following the most recent vote of UK business professionals and marketing experts, Lloyd’s has placed in the top 50 Business Superbrands, continuing a consistently strong performance in the annual survey. The brand plays a critical role in the insurance industry and an important role in the wider UK economy, and I am delighted for all those that work at Lloyd’s - or are associated with Lloyd’s - that its significance and performance continues to be recognised and saluted. www.chart-exchange.com

The brand has an incredible heritage but importantly also remains an innovative and trustworthy expert and this keeps it in the leading group of brands”. Brand is one of our strategic priorities, with the aim of ensuring that the Lloyd’s brand remains admired and attractive to customers and market participants. It is an honour to be voted a Superbrand once again for 2018.

Proud supporters of CHART

Serving coverholders’ needs since the 1930s … and into the future Bespoke solutions Packaged lines Enhanced commissions Web-based platforms US domiciled marketing office Access us through 170 Lloyd’s brokers

AtriumUw

www.atrium-uw.com

Atrium Underwriters Ltd

TABLE OF CONTENTS

MAY 2018

35


News - Kroll Continued From Page 14

KROLL ASSISTS IN TECH TRANSACTIONS developments in PE and VC tech investment activity in India and Southeast Asia can be attributed to the dynamic interplay of several factors. Outlining these developments, Khurana says, “As traditional banks continue to face pressure from nonperforming loans in India, and increasingly in Southeast Asia, technology companies seeking capital have been turning to private investors. Meanwhile, governments in these geographies have been providing fertile ground for digitization and tech investment through policy initiatives, by incubating tech funds with traditional banks or by initiating e-governance projects to digitize government services, attracting investment in ancillary industries like enterprise solutions.” EVOLVING REGULATORY LANDSCAPE AN INHERENTLY CRITICAL CHALLENGE FOR PE/VC INVESTORS IN NEW TECHNOLOGY Although new tech advances come hand-in-hand with a number of risks for PE and VC investors, Khurana says,

36

MAY 2018

“The number one risk is regulatory risk, aside from shared market and financial risks, especially when tech crosses into highly regulated sectors like financial services, insurance, and even media.”

comments, “Investors come to Kroll to help them understand how regulators, customers, competitors, and other stakeholders are likely to think about a certain sector, or Policy change company, business model as can still it evolves.”

Anticipating regulatory reaction be ad hoc in some to new technology is of these countries, Regulatory risk a complex challenge is also closely leading to political associated for investors as Khurana notes, uncertainty and risk with political “Businesses cannot surrounding changes exposures. Given predict regulation possibility that may affect tech the because regulators of a regime companies. India, cannot predict change in some how businesses governments, Cem for instance, is on will evolve. To Ozturk, Managing the path of tech some degree, all Director in Kroll’s liberalization, but may Investigations & new technology is be prone to sudden Disputes practice inherently disruptive to established policy shifts, as with says, “A key business models its currency ban or factor to watch is or processes. Out whether aspiring alcohol prohibition. of necessity, this political forces often translates into Overall, governments are running regulatory action on platforms are committed to that is more reactive of economic liberalization and job than proactive as nationalism, and creation, but each the effects and then whether consequences government can still certain disruptive of a particular technologies are make policy decisions technology become being framed that disrupt certain known over time. as emblems of We often see sectors.” foreign influence.” regulators later imposing controls around licensing Moreover, Ozturk comments, or pricing to protect consumers and “Policy change can still be ad local businesses.” hoc in some of these countries, leading to political uncertainty To stay ahead of competitors and and risk surrounding changes protect their investments in light that may affect tech companies. of regulatory uncertainty, Khurana India, for instance, is on the path TABLE OF CONTENTS

www.chart-exchange.com


News - Kroll of tech liberalization, but may be prone to sudden policy shifts, as with its currency ban or alcohol prohibition. Overall, governments are committed to liberalization and job creation, but each government can still make policy decisions that disrupt certain sectors.” NEW TECHNOLOGY LANDSCAPE OFTEN CHALLENGING TERRAIN FOR RISK ASSESSMENTS To navigate safely in an investment landscape replete with hidden risks, investors are well advised to conduct thorough investigative due diligence prior to committing to an investment. Khurana comments, “Many may have great business ideas and built innovative companies, but they don’t have a vast track record that can be easily assessed. We help investors understand the background of such founders and analyze how they might be expected to behave postinvestment, providing insight into fundamental considerations such as whether the investee has the ability and commitment to scale up and manage the business and to maintain the governance standards that the investor expects.” Khurana adds, “To mitigate their risk exposures, foreign investors come to Kroll for our expertise in conducting investigative research to help them understand the financial health and business practices of a potential investment and their www.chart-exchange.com

target markets which, however challenging, are too large to ignore. To factor in these risks and maximize an investment opportunity and its returns, investors have to make both qualitative and quantitative assessments, identifying influencers and uncovering their relationships with regulators and governments.” TRENDS AND HIGHLIGHTS IN STAYING AHEAD OF CHANGE: •

Hot tech sub-sectors: Ecommerce, fintech, healthcare (medtech/pharmatech), and AI stand out for their advances in applications that cross and connect diverse industry sectors.

Top target countries: India saw the majority of total tech PE/ VC activity in the Indian and Southeast Asian markets from 2015-Q1 2018, accounting for 56% of deal value and 71% of volume. Coming in second, Singapore contributed to 33% of value and 10% of volume, followed by Indonesia with 7% of both value and volume.

Foreign funds: While local or regional funds have been the dominant players in these markets, foreign investors have been making inroads. US investors took part in 25% of tech investment occurrences from 2015-Q1 2018, followed by Japanese (5%) and European (4%) funds.

TABLE OF CONTENTS

WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?

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

MAY 2018

37


38

MAY 2018

TABLE OF CONTENTS

www.chart-exchange.com


Analysis - SIAA

THE SKY IS FALLING! A 3-PART ARTICLE FOR SIAA MEMBER AGENCIES: PART 1 By Matt Masiello, EVP & Chief Operating Officer

T

he sky is falling! Or maybe it’s just our industry evolving at a more rapid pace. Insurance is one of the last industries to become consumer-centric. Big change is coming, but I’m sorry to tell the doomsayers, it’s NOT happening tomorrow. Or even next year. SIAA has a unique view into the lens of the insurance industry. We do business with many players in the insurance industry – including local agents all the way through the most senior executives of insurance companies. This gives us a perspective like no one else from Main Street to Wall Street.

There are ‘disruptors’ and ‘insurtech’just what we needed, more buzz words. These things DO exist, and they are NOT the boogeyman. These concepts are looking to make our industry more consumer-friendly. Some people think they will make the agent obsolete. A recent article I read suggested that agents and brokers can make the insurance companies obsolete with ‘insurtech’. Change is coming, but let’s get out of the sci-fi movie and back to reality. HERE’S WHERE WE ARE: 1. Independent agents are NOT going away. True, some won’t make it. Maybe even some of you reading this piece (sorry). For years, we’ve been touting that you need to change to survive. That’s not new. The good news is that those of you who survive will have evolved to be better business owners.

2. Captive agents are in deep… stuff. They are NOT doing well. They have ONE product to sell. Their carriers find their form of distribution VERY expensive. When opportunity knocks, you should probably answer the door! These agents, many of whom are local in your community, write 40% of personal insurance and 12% of small business. A bit later we’ll discuss what you can do about this… 3. Insurance companies are not going to put YOU out of business by using multiple forms of distribution. In fact, they are more likely to level the playing field with product and pricing with all their forms of insurance distribution, which reduces their expenses by managing one platform.

See The Sky Is Falling! Page 44

A

bout the author: Matt Masiello is executive vice president and COO of SIAA. Matt is responsible for operational management of the largest alliance of independent insurance agencies in the United States and its related companies, providing leadership to over 50 direct employees, 49 Master Agencies and more than 6,500 independent insurance agents across the United States. Matt is also president and CEO of SAN Group and Strategic Independent Insurance Agency Solutions. He can be reached at mattm@siaa.net.

www.chart-exchange.com

TABLE OF CONTENTS

MAY 2018

39


Analysis - Vantage Agora Continued From Page 24

IS BIG DATA CHANGING YOUR BUSINESS?

Solutions like OX Zion® - recognized by technology research and advisory firm, Gartner®, as an industry-leading Business Operating System - allow companies to visualize data with a holistic view of all their business or portfolio processes. OX Zion’s Insurance BOS gives companies the ability to make quick informed decisions by consolidating key data into one secure system that is accessible anywhere from any device. The platform brings data from multiple systems into one easy-to-navigate dashboard, eliminating the need to sort through stacks of excel sheets and other documentation from each division or department, providing faster analysis for more accurate decision-making. OX Insurance BOS provides key decision-driving metrics and ratios from a company’s distribution network (Agents, Underwriters, Internal staff) and Claims: •

40

Are distribution agents providing the right kind of business? Are they giving the company enough business?

MAY 2018

Is the underwriting department efficient? Are they turning things around in a timely fashion?

Are the losses within an acceptable range? Are the right steps being taken to mitigate losses?

With a Business Operating System like OX Zion, companies can also use Big Data for predictive analytics to analyze trends and direct company resources towards what provides the highest ROI. Insights into pricing trends are broken down to help focus marketing efforts, and those will likely yield the highest returns or predict how turnaround time can impact future submissions from agents. OX Zion’s underlying Business Operating System features combined with the Insurance BOS give insurance market players a path to achieving Operational Excellence and gaining control over your Big Data. With the right formula, we can leverage these technological evolutions to create efficiency, reduce cost and increase revenue, but most importantly, change the way we do business for the better.

TABLE OF CONTENTS

www.chart-exchange.com


NEWS

LLOYD’S APPOINTS L MARKS AND BCG TO COLLABORATE ON LLOYD’S LAB

L

loyd’s announced on April 23rd, the appointment* of L Marks and The Boston Consulting Group (BCG) to support the set-up and operation of the Lloyd’s Lab set to launch in the second half of 2018.As first announced in February, the Lloyd’s Lab will focus on designing technologydriven solutions to meet the unique and rapidly changing needs of the Lloyd’s market. The Lab will enable new concepts, ideas and products to be tested in a fast-track, fast-fail environment with the support and active involvement of Lloyd’s market participants. L Marks, an innovation specialist with a deep understanding of the global InsurTech sector, will leverage its vast experience from the successful creation and operation of over 30 innovation labs across industries to define the overall Lab activities and timetable, run global scouting campaigns to identify the most relevant InsurTech start-ups, support the day-to-day operation of the Lab, and arrange mentoring and business support programmes for participating start-ups. BCG will support the Lab by working with the Lloyd’s Market Association www.chart-exchange.com

(LMA) and managing agents to identify key challenges faced by the Lloyd’s market. The challenges identified will be channelled into themes that the Lab will address. BCG will also support continued collaboration between Lab participants and the Lloyd’s market beyond the life cycle of the Lab incubation period. Lloyd’s Head of Innovation, Trevor Maynard, said: “We are pleased to announce collaboration with L Marks and BCG, given the knowledge and experience they both bring to this project. L Marks has exceptional operational expertise in running Labs for some of the world’s most successful businesses. BCG has a deep understanding of how the Lloyd’s market operates, as well as how to turn digital innovation into actionable change. Both organisations have a strong track record in executing truly collaborative projects such as this and are committed to ensuring it benefits from real market participation and engagement.” Founder and Chairman of L Marks, Stuart Marks, said: “L Marks is proud to be collaborating with Lloyd’s and BCG on the first ever Lloyd’s Lab. Many TABLE OF CONTENTS

corporates are embracing innovation and to see an industry leading organisation like Lloyd’s do so through supporting start-ups validates this new way of working. For the start-ups and entrepreneurs that take part, the Lab will provide unprecedented access to Lloyd’s and I’m certain that we will find the InsurTech leaders of tomorrow and create new solutions that will benefit the Lloyd’s market.” Partner at The Boston Consulting Group, Justin Balcombe, said: “BCG is delighted to work alongside L Marks and Lloyd’s on this transformative initiative. With the right level of market input to ensure concepts in the Lab are relevant to the market’s needs, combined with the entrepreneurial ideas and creative talent entering the Lab, it will be very exciting to see what technological solutions can be developed that can bring about a step change in the market’s digital future.” The Lloyd’s Lab will officially launch in September this year (2018), following a global scout for the first cohort. More information will be available soon on www.lloyds.com/LloydsLab. *This appointment is subject to agreement of contractual terms between the parties. MAY 2018

41


NEWS Continued From Page 32

BENEFITS OF PRODUCT PERFORMANCE GUARANTEES

Continued From Page 22

CHART THE DEFENDER PSYCHOLOGY COVERHOLDER E&O AVAILABLE NOW!

Plus, by working the price of a product performance guarantee into product pricing, you can provide consumers that extra backing within the convenience of a single payment. Offering these types of protection solutions can put you one step ahead of the competition and keep your company top of mind for consumers – if and when their phone is damaged, they know you’ll take care of them because the device is protected, once again, with guaranteed coverage. Finally, the right partner can (and should!) work with you to create a turnkey solution—from the product itself, to the language on the packaging, to compliant program filing and claims administration services—to best suit your products and customers.

Mark Lann Phone:

305-248-9495 Email: chart.eo@rockwoodinsurance.com

MAY 2018

“Another thing driving down costs is that several states have implemented treatment guidelines and drug formulas to ensure people are getting the proper treatment, appropriate medication and cutting out abuse issues.” Safety National’s medical management team has partnered with a company called Best Doctors to offer policyholders and their employers additional medical expertise and resources. Through this partnership, Safety National policyholders have access to a database of physicians with expertise in catastrophic injury claims. The program has seen much success, according to Walls, especially with regards to exploring alternative pain management treatment and taking people away from opioids in order to get their lives back on track. “One of the key issues our industry faces right now is: how do we transition away from opioids and drugs being the go-to option? How do you deal with pain and what are the alternatives?” Walls commented.

Interested in learning more about adding performance guarantees to your product lineup? Contact Fortegra today to get started!

42

OF PAIN

TABLE OF CONTENTS

www.chart-exchange.com


NEWS “That’s what we’re focusing on at Safety National – finding pain relief and treatment alternatives rather than just prescribing a pill. “The first thing to emphasize is that pain is very individual. Everyone has a different pain threshold, and everyone responds to treatment in different ways. Some examples of alternatives out there include: yoga, meditation, bio-feedback, and multi-disciplinary pain management programs. If someone’s chronically addicted to a pain relief drug, you have to start with a detox program and then guide them through some of these pain management programs.” A key element to alternative pain management is psychological treatment, Walls explained. Pain management experts often stress that fixing physical ailments starts with mental health and the psychology of pain. “The mind plays a huge role in pain. Therefore, battling the opioid crisis really has to start with a focus on mental health. It has to be a wholebody treatment approach,” he told Insurance Business. “The problems we face in workers’ compensation are not unique to the industry. Unfortunately, there’s not enough focus on mental health in the workers’ compensation industry or in the US healthcare system in general. “If we don’t address the psychology of pain, then we’re never going to get the opioid epidemic under control.”

www.chart-exchange.com

REPORT: LACK OF FUEL CAUSED 2016 BRAZIL FOOTBALL TEAM CRASH

O

n November 28, 2016, a plane carrying 81 passengers including most of the Chapecoense football team from southern Brazil crashed in the Columbian mountains near the Columbian city of Medellin. Of the only six survivors, three of them were from the team.

LaMia, an aviation company that once specialized in transporting South American sports teams has since disbanded, had been in a “precarious financial situation” and had a reputation of allowing planes to operate “with critically low supplies of fuel,” according to the report. The report also declared the aircraft was 1,100 pounds overweight at the time of the crash.

NEVER MISS AN ISSUE OF CHART EXCHANGE

The team, which had risen quickly from obscurity, had made it to the finals of the regional Copa Sudamericana tournament and were to meet Atletico Nacional of Medellin next. They never made it. After a lengthy and thorough investigation, it was determined that the accident ““was caused by the plane’s empty fuel tank as a result of inappropriate risk management by LaMia,” said Miguel Camacho, who leads Columbia’s civil aviation authority’s accident investigation branch.

TABLE OF CONTENTS

SUBSCRIBE NOW TO CONTINUE TO RECEIVE THE CHART EXCHANGE!

MAY 2018

43


Analysis - Siaa Continued From Page 39

THE SKY IS FALLING!

You’ll need to do a little work to help with your evolution and we’ll get to that-stay tuned for the 2nd part of The Sky is Falling where we discuss what SIAA is doing as the insurance industry evolves. PART II - JUNE CHART EXCHANGE

If insurance is sold online or directly, through a captive agent (with one product), or through an independent agent – who do you think wins? I’m betting on the home team (that’s you guys!). Also, its important to note that insurance carriers are losing large agents at an alarming rate through acquisition every day. This rapid consolidation has them looking at the local agents in a much more favorable light. 4. Consumers, not companies, are forcing these changes. The agent of the future will be a new type of business, and a business development center for insurance companies. You will assist clients with the insurance purchase and make sure they have adequate protection, but service will move to a secondary position in your agency. Consumers want selfservice, like they have in other parts of their life, and carriers will bring it to them in response to that demand. You will not be out of the loop, you’ll still be an advisor and advocate. The future client is not looking for a traditional insurance agent. Don’t get in their way – help them get what they want!

44

MAY 2018

LLOYD’S STARTS HIRING FOR BRUSSELS SUBSIDIARY

L

loyd’s, the world’s insurance and reinsurance market, has started hiring staff for its Brussels subsidiary. There will be a number of vacancies across finance, operations, compliance, HR and underwriting. All roles will be based in Brussels.

write all non-life risks from the EEA to ensure our partners can continue to have seamless access to the specialist policies of the Lloyd’s market. Vincent Vandendael, Lloyd’s Chief Commercial Officer, said: “I am pleased with this next step in the setting up of our operations in Brussels. Since the outcome of the UK Brexit referendum, Lloyd’s has been working hard to ensure that whatever the outcome of the Brexit negotiations, our partners across the EEA will continue to have access to our specialist, innovative policies, and benefit from the security of the Lloyd’s market. Being at the heart of Europe will deliver many different advantages for our customers and provide an opportunity for us to continue to grow our business in the continent”. Lloyd’s Brussels subsidiary will have 19 branches throughout Europe, including the UK, and it will be authorised and regulated by the National Bank of Belgium, and capitalised according to Solvency II rules.

Roles will be advertised across the coming weeks on www.lloyds. com, and candidates can express interest Vincent Vandendael, Lloyd’s Chief Commercial Officer by e-mailing us at Lloyd’s has decided BelgiumCareers@lloyds. to create an insurance com with your cv. company in Brussels to ensure it can continue to serve the European For more information about Lloyd’s Economic Area (EEA) after the UK Brussels subsidiary please visit www. leaves the European Union. Lloyd’s lloyds.com/brexit. Brussels subsidiary will be able to TABLE OF CONTENTS

www.chart-exchange.com


News

FORTEGRA ESTABLISHES EUROPEAN SUBSIDIARY IN MALTA By Sanjay Vara, Executive Vice President & Chief Underwriting Officer

Leading specialty insurer prepared to bring underwriting programs to EU

J

“The formation of FEIC is an exciting and important milestone in our international growth strategy as it establishes a key strategic platform for us to become a leading European warranty insurer,” said Sanjay Vara, Fortegra’s Executive Vice President and Chief Underwriting Officer for Warranty and Consumer Products.

ACKSONVILLE, Fla. (March 28, 2018) – Fortegra Financial Corporation (“Fortegra”), a leading international specialty insurer and We’re very subsidiary of Tiptree Inc. excited for (NASDAQ:TIPT) (“Tiptree”), this opportunity today announces the to help European creation of a whollyowned European partners and subsidiary—Fortegra consumers Europe Insurance Experience More. Company Limited We are thrilled (FEIC)—based in Malta. to expand our Following regulatory authorization by the business in Malta Malta Financial Services and have enjoyed Authority (MFSA), FEIC is working with the ready to write business MFSA leadership immediately.

as we formed the company.”

Initially, FEIC will utilize its access to the European Economic Area (EEA) to write business aligned with Fortegra’s position as a warranty and consumer products provider. www.chart-exchange.com

FEIC’s Maltese presence provides Fortegra with opportunities to continue to build relationships in the international insurance community. Additionally, Fortegra’s A.M. Best A- (Excellent) financial strength rating for its group of U.S.-based companies will assist FEIC’s initial engagement with some of Europe’s premier business organizations.

“Since Fortegra’s inception we’ve never been satisfied to maintain the status quo,” said Fortegra President and CEO Richard Kahlbaugh. “From adding TABLE OF CONTENTS

new growth lines to increasing our international presence, we’re always looking for opportunities to build the brand—and we’re very excited for this opportunity to help European partners and consumers Experience More. We are thrilled to expand our business in Malta and have enjoyed working with the MFSA leadership as we formed the company. ” For more information on FEIC and Fortegra products and services, visit www.fortegra.com. ABOUT FORTEGRA Fortegra Financial Corporation (a Tiptree Inc. company) and its subsidiaries comprise a single-source insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting programs. Delivering multifaceted coverage with an unmatched service experience for domestic and international partners and their customers, Fortegra solves immediate, everyday needs, empowering consumers to worry less and Experience More.

MAY 2018

45


NEWS

JOHN PARRY TO LEAVE LLOYD’S

L

loyd’s has announced today that its Chief Financial Officer, John Parry, has decided to leave the Corporation, after 17 years.

John is a Chartered Accountant and joined Lloyd’s in August 2001. He was appointed Chief Financial Officer in December 2014, and is a member of both Lloyd’s Board and Executive Committee. His responsibilities include financial reporting for the Corporation and the market, capital setting and capital adequacy, tax, treasury and investment management. Inga Beale, Chief Executive Officer at Lloyd’s said:, “During his 17 years at Lloyd’s, John has made an exceptional contribution to Lloyd’s Corporation and market. In a period of unparalleled change in the insurance industry, his knowledge, experience and great commitment to the Lloyd’s market have earned him the respect of all those who work with him. I have very much enjoyed working with John and value the support he has given me. I wish him every success in the future.” John’s leaving date will be confirmed in due course, and Lloyd’s will start the search process to find his successor

46

MAY 2018

Continued From Page 11

WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?

IT’S ALL ABOUT THE NICHE the time or energy. They want to sell products they understand, feel comfortable talking about, and are easy to sell. It isn’t enough for coverholders to create a niche product. The front line for selling their products are agents. First, agents need to be convinced to go out of their comfort zone to sell a new product. Giving agents the ammunition they need to sell gives them the confidence to move forward. Making it easy to write it and serve it is the push they need to embrace it. From a sales point of view, when an agent can articulately discuss the issues the prospect faces and how the coverage can solve those issues, it gives them an edge over other players in the market. It shows the prospect they can walk the walk and talk the talk about that niche business.

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

TABLE OF CONTENTS

Large carriers with large marketing departments are well-equipped to provide sales training and materials to encourage agents to sell their products. It is harder for a wholesaler or smaller carrier without a large marketing department, but making www.chart-exchange.com


Special Report - PL Communications the effort can be the difference between a new product taking off or tanking. HERE ARE WHAT SOME NICHE PLAYERS ARE DOING TO SUPPORT AGENTS SELLING THEIR PRODUCTS

Image Credit:Shutterstock Image Licensed to PL Communications

The founders of CHART - Rockwood Programs - are leading by example. CHART created a new firearms liability product. Many homeowner policies specifically exclude firearm use – even in self-defense – as a covered exposure, deeming it to be an intentional act. That leaves the gun owner personally liable for legal expenses, bail bond costs, and any judgments awarded through a civil action. To promote its program Rockwood provides agent training. But it goes beyond that. Every agent gets a customized application and brochure with their branding. Going one step further, Rockwood created mini websites – also with the agents’ branding – to give agents an online presence to sell the coverage. Prospects can apply online – making it easier for the agent to process. It also has a 24-hour claims hot line, which is managed by Wilson Elser. Van Dyk launched a new flood program after its experience on the New Jersey shore helping its customers recover from Hurricane Irene and Sandy. Even though Van Dyk sells flood insurance through the National Flood Insurance Program (NFIP), it saw a need for a private flood insurance alternative. Van Dyk created a new business entity www.chart-exchange.com

for flood called “Insurance Agency Connection.” As part of promoting its new product to agent it emphasizes it is a Lloyds product – taking advantage of Lloyds’ well-established brand reputation. More importantly they make it easy for an agent - “just send us the elevation, we’ll do the rest.” When NFIP is the better fit for a particular client, they provide NFIP quotes. That opens a new sales door for agents not already in the flood business.

Lloyds is all about niche creativity.

The National Alliance of Environmental Specialists Insurance Program (NAESIP) provides pollution coverage for both environmental and nonenvironmental businesses. NAESIP focuses on sales support. It provides questionnaires to determine coverage needs – essentially these are sales scripts. Environmental is an area most generalists avoid – and those who do provide coverage may get it wrong. It is a complicated, technical coverage. NAESIP does a pre-consultation with prospecting and appointments to make sure agents are prepared. It TABLE OF CONTENTS

shepherds through the application process. It also has an online loss control program for insureds. As a result, it has a quote to bind ratio of 60 percent or better. Environmental coverage isn’t just for environmental consultants. The market opportunity includes gas stations, airports, dry cleans, hazmat truckers, condos, public entities, and more. It presents a wedge into new accounts that are not insured properly by an incumbent as well as opportunity to upgrade existing accounts.   “Bought by Many” is a UK-based free, members-only service that develops niche insurance products based on demand. Its motto is, “Insurance made social.” It uses social media and search engine analytics to identify niche insurance opportunities that range from travel insurance for diabetics to French bulldog owners. To create products for its 58,000 members, it may work with Lloyds or negotiate with a carrier to adapt an existing product into a custom policy. Lloyds is all about niche creativity. These are just a few examples of the marketing creativity it takes to make niche products succeed whether you are selling direct or through agents. If you have an innovative approach to marketing your niche product, please let us know, so we can share your innovation with our readers. Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications.

MAY 2018

47


Image Credit: Creative Commons

LLOYD’S OF LONDON

48

MAY 2018

TABLE OF CONTENTS

www.chart-exchange.com

Credit: Loco Steve Attribution-ShareAlike 2.0 Generic (CC BY-SA

The CHART Exchange May 2018  

Tips For Preventing Cyber Attacks - It’s All About The Niche When Bringing a Product to Lloyds - Transaction Structure And Personal Goodwill...

The CHART Exchange May 2018  

Tips For Preventing Cyber Attacks - It’s All About The Niche When Bringing a Product to Lloyds - Transaction Structure And Personal Goodwill...