N.H. WAIVER WORRY Court: No Waiver, No Coverage
DINALLO BOWS OUT N.Y. Regulator Stepping Down
AGENCY MANAGEMENT TIPS Don’t Cheap Out on the Training
Inside This Issue June 15, 2009 • Vol. 87, No. 12 • East Region
EAST COVERAGE 6
| AIG Selling New York Buildings Insurer Ditching Headquarters 6 | Insurer Can’t Deny Coverage Because of Nearby Excavation New York Court Narrows Earth Movement Exclusion 6 | Lack of Waiver Voids Coverage for New Hampshire Climbing Gym State Supreme Court Says ‘No Waiver, No Coverage’ 10 | New York Regulator Dinallo to Resign Run for Attorney General Ahead?
N22 Special Report: Top 100 Agency Profile Diversification Spurs San Antonio’s SWBC to Great Heights
NATIONAL COVERAGE N1 | Special Report: Agency Options Financing InsurBanc’s Pettinicchi on Managing an Agency in a Troubled Economy N4 | Special Report: Agency Options Networks Social Networking for Fun and Profit N12 | Special Report: Top 100 Profile Diversification Spurs San Antonio’s SWBC to Great Heights N16 | Special Report: Agency Options Networks Assurex Global is the Globalized Broker N22 | Special Report: Agency Options Staffing How to Make Telecommuting Work for Your Staff N24 | Closer Look: Construction Risk Management Considerations for Projects on Standstill N26 | Sotomayor Shows Record of Favoring Insurers Attorney Finds Rulings to be ‘Very InsurerFriendly’ N28 | International Report Air France Crash Claims Could Top $1 Billion N29 | Closer Look: Construction Contractor’s General Liability Coverage Limitations 2 | INSURANCE JOURNAL-EAST REGION June 15, 2009
8 Don’t Cheap Out on the Training Lessons from HighPerforming Agencies
IDEA EXCHANGE 8
| Don’t Cheap Out on the Training Lessons from High-Performing Agencies N10 | Growing Your Property Casualty Agency Take Advantage of Bad Times by Hiring a Marketing Major N32 | Closing Quote: Risk, Reward and Reflection Lessons Gained from the Current Economic Storm
DEPARTMENTS 7 7 N8 6 12
| | | | |
6 Lack of Waiver Voids Coverage for N.H. Climbing Gym State Supreme Court Says ‘No Waiver, No Coverage’
Declarations It Figures MyNewMarkets Opening Note People
6 Insurer Can’t Deny Coverage Because of Nearby Excavation New York Court Narrows Earth Movement Exclusion
Idea Exchange Opening Note
Revisiting Surplus Lines Regulation Reform
ederal lawmakers once again are preparing to tackle the issue of how states can more effectively regulate the surplus lines insurance market. It’s been tried before, but legislation was recently reintroduced in the U.S. House of Representatives with the goal of standardizing state insurance regulation and introducing efficiencies into the surplus lines industry. Reps. Dennis Moore, D-Kan., and Scott Garrett, R-N.J., members of the House Committee on Financial Services, have reintroduced the Non-Admitted and Reinsurance Reform Act of 2009 (NRRA), or HR 2571. The measure has 20 other cosponsors. The Senate may soon have a similar proposal to contemplate as Senators Evan Bayh, D-Ind., and Mel Martinez, R-Fla., members of the Senate Committee on Banking, Housing and Urban Affairs, have said they plan on introducing a version on their end. The bill would establish national standards for how states regulate the surplus lines market and reinsurance, and would create a uniform system of surplus lines premium tax allocation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated commercial purchasers. The bill would Various insurance industry trade groups, includestablish national ing the National Association of Professional Surplus Offices Ltd. (NAPSLO), the Independent standards for how Lines Insurance Agents & Brokers of America (Big “I”), and the Property Casualty Insurers Association of America, states regulate appear to be supporting the legislation. It passed the the surplus lines House in 2008 and in previous years. The Senate took no action on it in 2007, however. market and Independent insurance agents and the properreinsurance. ty/casualty insurance carriers with which they do business have long supported such legislation. California, Florida, New York, Texas and Illinois are the states that generate the most premiums for surplus lines insurers, according to the Surplus Lines Stamping Office of Texas (SLSOT). Agents in those states may be particularly interested in what happens with this legislation. SLSOT reported that surplus lines premiums filed with 15 state stamping offices across the nation were down by 8.2 percent nationally in 2008, compared with 2007. SLSOT attributed the drop to the lingering soft market but it pointed out that three stamping offices reported premium increases: Oregon, Pennsylvania and Utah. Even with a decline, surplus lines still account for plenty of premium dollars: in 2007 the top 10 states for surplus lines represented more than $26 billion, according to SLSOT. Nationally surplus lines generated more than $38 billion in gross written premiums in 2007.
Kenneth J. St. Onge East Editor email@example.com
Publisher Mark Wells Chief Executive Officer Mitch Dunford
EDITORIAL Editor-in-Chief Andrea Ortega-Wells | awells@insurancejournal V.P. Content/ and Interim Midwest/Southeast Editor Andrew Simpson | firstname.lastname@example.org East Editor Kenneth J. St. Onge | email@example.com South Central Editor Stephanie K. Jones | firstname.lastname@example.org West Editor Patricia-Anne Tom | email@example.com MyNewMarkets Associate Editor Chris Boggs | firstname.lastname@example.org International Editor Charles E. Boyle | email@example.com Columnists Susan Henry, Alan Shulman Contributing Writers Gary Grindle, Timothy Kania, Gerald F. Ladner
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East Coverage News & Markets
Insurer Can’t Deny Property Coverage Because of Nearby Excavation By Kenneth J. St. Onge
n insurer can’t cite the commonly used earth movement exclusion to
deny coverage to an insured whose property
was damaged by excavation to a neighboring lot, a New York Appeals Court has ruled. The case pitted the owner of condo building, Pioneer Tower Owners Association, against its insurer, State Farm Mutual Insurance Co. Pioneer filed a claim with State Farm when cracks began appearing in its building, and a structural engineer soon concluded they were due to excavation work on an adjacent lot. Although an underpinning had been built to protect Pioneer’s building, it was faulty, and as a
result, earth slid away beneath condo building and damaged it. State Farm rejected the claim, saying the earth movement exclusion — as well as several others — in the condo’s policy did not require them to pay for the damage. Lawyers for the building owner countered that the unusual circumstances of the — that is, the settling of a building due to an intentional excavation — were not within the ordinary bounds of the insurance policy’s exclusion. A lower court decided in favor of the condo owner, and State Farm
appealed. In an unusual decision, the Court of Appeals — New York’s highest court — found that both interpretations of the policy were reasonable. However, the court decided in favor of the condo owner, saying precedent required it to narrow the exclusion. “This case is a close one, but we cannot say that the event that caused plaintiff’s loss was unambiguously excluded from the coverage of this policy,” wrote Judge Robert Smith in the court’s opinion. IJ
Lack of Waiver Voids Coverage for New Hampshire Climbing Gym By Kenneth J. St. Onge
n insurer can deny liability coverage to a New Hampshire climbing gym because it failed to get a waiver from a climber who was later seriously hurt, the state’s Supreme Court has ruled. The decision centered on a lawsuit between Dover Indoor Climbing Gym and its general liability insurer, Colony Insurance Co. In Aug. 2007, a climber at the gym, Richard Bigelow, fell and sustained serious injuries, and immediately after, the gym put Colony on notice to defend and pay claims on its behalf. Colony,
however, sued the gym, claiming that because the gym had failed to get a waiver from Bigelow, it was not required to pay claims. Its reasoning: An endorsement to the gym’s policy which said any participant was required to sign a waiver or release of liability, and failure to do so would render the policy null and void. The Supreme Court sided with Colony in its appeal, overturning decisions by a lower court which awarded a judgment to the gym. At the trial court level, lawyers for the gym argued that, because Colony did not provide the gym with a sample waiver, the endorsement to the policy was ambiguous, and therefore provided coverage. However, Colony appealed that
6 | INSURANCE JOURNAL-EAST REGION June 15, 2009
decision and argued the endorsement was not ambiguous, and contended the gym’s failure to get a waiver from Bigelow rendered the policy void. In addition, Colony argued, the gym was not entitled to coverage because it knew of the policy’s waiver requirement.
Ultimately, the Supreme Court sided with Colony and denied coverage for the claim. “The clear meaning of the policy language is that the gym is required to actually obtain waivers from climbing participants,” wrote Justice James E. Duggan in the court’s opinion on the case. IJ
AIG to Sell New York Buildings Including Pine St. Headquarters
merican International Group Inc. has reached a deal to sell two New York buildings, including its downtown Manhattan headquarters. The buildings being sold are located at 70 Pine Street and 72 Wall Street in New York. A buyer has not been named. Occupants of the Pine Street office are likely to stay there
through the end of 2010, while those at the Wall Street location will be there through the end of this year, the source said. Over time, AIG employees will be relocated to other locations, including offices at 180 Maiden Lane in New York, the source said. AIG declined to comment. © 2009 Reuters www.insurancejournal.com
Declarations Fine With Us
$10 Million Amount sought by a New York woman who claims two neurosurgeons twice operated on her for brain and spinal cord problems she didn’t have. Kristy Pirozzolo is suing Long Island doctors Paolo Bolognese and Thomas Milhorat, claiming she now has constant pain and has trouble moving her head.
$2.3 Million Amount of stimulus money Rhode Island will receive to protect towns against flooding, mostly in Cranston and West Warwick. Almost $2 million is devoted to purchasing easements and restoring damaged land along the Pawtuxet, Pocasset and Meshanticut Rivers. About $400,000 is for designing, engineering and obtaining permitting for the flood protection projects.
Topless Arsonist “I’ll keep going... I’ve got some girls out of work and I’m going to do all I can to get in there.” — Donald Crabtree, owner of a topless coffee shop in Vassalboro, Maine that was burned to the ground by an unidentified arsonist. The shop — which featured topless waitstaff — had been opposed by 97 percent of the town’s 4,200 residents. Crabtree said it was uninsured.
$2 Million Settlement reached by New York City with the family of a woman who died on a hospital floor as she struggled to get up while staffers ignored her. The family of Esmin Green — whose death was recorded on a hospital security video — still awaits a full investigation into what happened at the Kings County Hospital Center in Brooklyn. Green, 49, had been in a waiting room at the city-owned hospital for nearly 24 hours when she collapsed last June.
55 Number people who work in a South Portland, Maine claims office that will be closed by Allstate Corp. this summer. The company says the closure is part of a consolidation of claims offices, and that laid off employees are eligible to apply for jobs elsewhere with Allstate.
23% Percentage increase in the number of speeding tickets issued by state troopers on the Massachusetts Turnpike since 2007. Anti-toll activists are criticizing the increased ticketing on the state’s major East-West highway, saying it’s akin to a hidden fee on a highway which already seen significant toll increases. The state says the ticket increase is the result of a safety campaign that may be working; so far this year, there have been no deaths on the Turnpike, compared with three last year.
“We understand that the attorney general’s role is to protect consumers, and we wholeheartedly support that goal.” — Leah Knapp, spokeswoman for Progressive, which has agreed to pay $120,000 in fines for providing inaccurate auto insurance rates to Massachusetts consumers. The company has drawn a lot of criticism from agents in the state over its business practices — in this case, quoting prices for year- long policies when asked the prices of six-month policies, which usually are more expensive.
“He has been superintendent during one of the most turbulent times ever, and he has done an exceptional job.” — Howard Mills, former New York insurance superintendent, commenting on the departure of his widely praised successor, Eric Dinallo. The tenure of Dinallo — who steps down next month (see story on p. 10) — was marked by the collapse of AIG, debates over the compensation of insurance agents and brokers and a host of other high-profile insurance issues. His replacement has not been named.
Malpractice Data “All I can tell you is we’ve been paying and it’s outrageous.” — Elizabeth Deers, vice president of the Medical Society of the State of New York, which says the dollar increase in malpractice payments in the Empire State is substantial. Deers was responding to consumer advocates who released federal data which showed the total number of annual malpractice payments has held steady at between 2,000 and 2,400 since 1993. Advocates wants state officials to investigate physician complaints about rising insurance rates and automatically review doctors who make multiple malpractice payments.
Heck of a Job “They’re going to have a heck of a time getting somebody.” — Alan Johnson, managing director of New York-based compensation consultant Johnson Associates, on the prospects of American International Group finding someone to fill the shoes of Edward Liddy, current CEO, who is stepping down.
June 15, 2009 INSURANCE JOURNAL-EAST REGION | 7
Idea Exchange Agency Efficiency
Don’t Cheap Out on the Training And Other Lessons from High-Performing Agencies
By Stephanie K. Jones
se your agency management system to the max. Measure your productivity. Communicate consistently and effectively with your staff, customers and carriers. And above all, don’t cheap out on the training. Do those tactics sound familiar? Hopefully they do, as they are aimed at improving an organization’s bottom line and should be included in any high-performing agency’s management “bible,” according to a duo of consultants who work with agencies to improve operational processes and profitability. There’s a lot of redundancy out there, said Texas-based Pat Alexander, an independent consultant who works with agencies on defining and managing their agency management systems. “I have to tell you any time I go through an agency no matter at what level it is performing, I can find how that agency is not using its system to its maximum capabilities,” Alexander said. “Maximum operational performance leads to the improved bottom-line.” How does an agency achieve operational efficiency? “One of the first things you have to do is define the roles in an agency,” Alexander said. “The four basic roles are production, service, processing and financial. Some agencies also have a marketing department; some agencies have other specialty departments based on their niches. But these are the four basic roles.” Missed deadlines, finger-pointing and lackadaisical attitudes can all be avoided by clearly defining roles, making sure people know who is responsible for what and setting accountability, she said. It’s a big job to assess and refine an agency’s processes, Alexander said. The best way to achieve success, then, is by doing one thing at a time. “Figure out what that one 8 | INSURANCE JOURNAL-EAST REGION June 15, 2009
thing is, get it. Then take the next thing, get it,” she advised. “Enter data once and use it as many times as possible,” Alexander said, acknowledging that achieving that goal with some agency management systems can be tricky. However, systems are improving, she said, and agencies need to assess how they can put those improvements to the best use. “Unless you use your systems to their fullest, you have no way of measuring productivity with your staff,” Alexander said. Because an agency can only manage what it measures, management must determine how it will measure the productivity of its agency and be “ever vigilant in assessing needs, usage and performance.” An agency can’t successfully monitor its performance unless its staff and work processes are defined and employees are trained. While staff may have been trained at one time on the management and operating systems, “if you define something new, they have to have new training, [and a] new
understanding of your expectations,” Alexander said. “You have to implement it. You have to be very firm and say, ‘from this day forward we are going to do this new process.’ Until [employees] hear that and they see that in writing, they’re in denial. “Then you have to monitor. I’ve seen agencies go from total chaos to very well run organizations with these processes.” In a time when resources are low, Alexander said many agencies are reluctant to devote the time and effort to define and streamline operational procedures. However, while it’s important to sell, “you can’t support sales unless you have the back office to do that. … I find that my most successful clients take that step when they can least afford to,” she said. The Trinity Eric Moberg, an agency errors and omissions risk management consultant based in North Carolina, agrees that agency efficiency is extremely important at this time. www.insurancejournal.com
said, is to determine what extent someone who sits at an agency principal’s desk or staff member’s desk is able to look at what’s there, take over and go forward with the work.
Bolstering sales is one way to work out of the soft market, he said, “but if you don’t lean your back office, you don’t lean your process and you don’t measure it very carefully, your sales results are not necessarily going to achieve [the] bottom-line that you’re looking for.” Moberg explained that his approach to E&O risk management uses what he calls a “trinity” of communication, documentation and consistency. “This trinity can be applied to most everything you do in your business and in every relationship that you have,” he said. Within each part of that trinity, Moberg suggested agency owners and managers ask themselves some basic questions: • Communication. How do you communicate with your staff? How do you communicate with your brokers? How do you communicate with your carriers? Are you satisfied with the communication that you have? Are you using the best technology for that communication? If you are using imaging, are you using it the best way it can be used? Are you storing data multiple times? • Documentation. How do you document files? How do you document communications? Can you project yourself out three years down the road, and if you had to defend yourself in court on a case, would the documentation be adequate to do that? Does your staff understand this? • Consistency. Does everybody do it the same way all the time? Are they prepared to be trained and take the time to make sure that they understand this? This concept “of what you do day in and day out with your staff becomes extremely important,” Moberg said. The key to success in implementing consistent communication www.insurancejournal.com
and documentation is training. “Training is like breathing, it’s something you never want to stop doing. … You have to put the investment in to train your staff on how to do this. … Training becomes a critical aspect of everything that you do in the agency,” he said. Like Alexander, Moberg recommended agencies take time to review their workflow. “Put teams together to look at your existing work flow. How are you doing it today? Is it the best way? Look at your procedures. Are they well-documented? Are they accurate? Or is that procedures manual you spent oodles of time working on four years ago sitting on a shelf somewhere that no one looks at? Is it relevant to what you’re doing today?” One test of an agency’s level of communication, documentation and consistency, he
E&O Essentials While consistency and efficient use of data management systems can be used to enhance the company’s profitability, they are essential when it comes to errors and omissions claims. Courts, Moberg said, are holding admissibility of evidence in the courtroom to the highest level of technology. Therefore, it is imperative that the agency analyze its processes and how it interacts with the organization. Finally, Moberg said, it really is about the bottom-line. The work done to streamline an agency’s processes and procedures will enhance its ability to market and sell products. “Agencies and brokers exist to distribute the product for the carriers. That’s the simplest way to [put it],” he said. “Are you doing everything to optimize that with workflow?” IJ Editor’s Note: This article was based on a presentation at the Target Markets Program Administrators Association Eighth Annual Summit in Tempe, Ariz., in October 2008.
June 15, 2009 INSURANCE JOURNAL-EAST REGION | 9
East Coverage News & Markets New York Insurance Regulator Dinallo to Resign; Run for AG Ahead?
ew York state Insurance Superintendent Eric Dinallo will resign effective July 3, amid speculation the former prosecutor may run for state attorney general. Dinallo, who was a top aide to former Democratic Governor Eliot Spitzer when he was state attorney general, will become a visiting finance professor at New York University’s Stern School of Business, Paterson said in a statement. New York’s insurance chief is the most prominent of U.S. state insurance regulators given New York’s position as America’s financial capital. And Dinallo’s profile has been particularly high given the integral role he has played in the near-meltdown of insurer American International Group and other areas of the credit meltdown. “He has been superintendent during one of the most turbulent times ever, and he has done an exceptional job,” said Howard Mills, who was New York’s insurance regulator before Dinallo. Mills, who is now chief adviser for the insurance industry group at accounting firm Deloitte, added that Dinallo’s performance as insurance regulator will open many doors to him in both the public and private sectors. In 2003, Dinallo left the attorney general’s office, becoming managing director of regulatory affairs at Morgan Stanley. In 2006 was named general counsel for insurance broker Willis Group Holdings. Insurance regulators across the United States have in past used the position as a stepping stone to bigger public roles, said William Latza, a partner with law firm Stroock & Stroock & Lavan. “The state insurance system is going to be a little poorer for the fact he is not going to be involved,” said Latza. “What really has made him special was his willingness to challenge the status quo; to stand back and question.” An insurance department spokesman said Dinallo, who has held the post since 2007, was not immediately available to comment 10 | INSURANCE JOURNAL-EAST REGION June 15, 2009
on his plans. And a spokeswoman at the governor’s office declined to comment on when Dinallo’s successor will be named. In May, Dinallo told Reuters he had not yet made a final decision about whether to stay in public office, or return to the private sector. AG Run Ahead? The current state attorney general, Andrew Cuomo, also a Democrat, would beat Governor David Paterson in an election, according to recent polls. The next gubernatorial election is in 2010. Cuomo has not said he plans to run for governor, an office his father, Mario, held from 1983 to 1994. Paterson saluted Dinallo for overseeing the state’s response to the global credit crisis and the near-capsizing of bond insurers and AIG. “Under Superintendent Dinallo’s leadership, the department effectuated the largest regulatory settlement in the U.S., played an integral part in the reform of the workers’ compensation system and facilitated more than $15 billion in new capital for the bond insurance industry,” Paterson said. Dinallo, in a statement released with the governor’s, said: “Our efforts aimed at financial fairness and economic protection for policy-holders of all kinds, from new homeowners to the largest employers, are vitally important for New York’s future.” IJ © 2009 Reuters www.insurancejournal.com
East Coverage People
Harleysville Insurance of Pennsylvania has named Jonathan Young senior vice president and chief claims officer. Young will oversee all claims activities for the Harleysville organization, which includes oversight of the company’s home office central claims unit and its four regional claims service centers. Before joining Harleysville, Young was the managing partner of the New York office of Sills Cummis & Gross, and a member of the firm’s litigation practice group. Prior to that, he was the managing partner of Reed Smith’s New York office, and a member of the firm’s executive committee. He began his law career as a clerk to the Honorable Caleb Wright in the U.S. District Court for the District of Delaware. Tim Schott has been named deputy superintendent of the Maine Bureau of Insurance. Schott has been a county attorney in Webster County, Iowa since 2002, and has over a decade of prosecutorial experience - felony and misdemeanor cases - as well as experience representing government personnel in civil matters. Ramani Ayer, chief executive officer and chairman of The Hartford Financial Services Group will retire by the end of the year. Ayer, who became CEO in 1997, joined the company in 1973, after receiving a PhD from Drexel University, and undergraduate studies at the Indian Institute of Technology in Bombay. His replacement has not been named. The Navigators Group Inc. has opened a Pittsburgh office of Navigators Management Co. Inc., its principal underwriting agency subsidiary. The office, which will be headed by Robin Betza, will serve western Pennsylvania, western Maryland, Ohio and West Virginia and will initially be staffed with underwriters handling Directors & Officers liability, Excess Casualty, and middle market property casualty products, coordinating with underwriters in other Navigators offices to access products including Environmental Casualty, Marine insurance, Onshore Energy, Life Sciences and other specialty products. Betza She most recently held the same position at AIG/AIU Holdings where she spent the last 21 years of her career. ACE Limited has named Brian Dowd as vice chairman, ACE Ltd. and ACE Group Holdings. He currently serves as chief executive officer of ACE’s North America division. Dowd will assume corporate-wide executive responsibility for the ACE Group’s global product underwriting boards and the strategy and purchase of the company’s reinsurance programs. Dowd joined ACE in 1995 and has held a number of senior management positions with the company including president and chief executive officer of ACE Westchester, president of ACE Specialty P&C Group, and, most recently, chairman and chief executive officer of ACE USA.
12 | INSURANCE JOURNAL-EAST REGION June 15, 2009
The Swiss Re Group appointed Rudolf Flunger as head of Insurance & Specialty, the company’s division responsible for commercial insurance, industrial insurance, large corporate risks and specialty re/insurance. Flunger succeeds Agostino Galvagni, who was recently named Swiss Re Group’s chief operating officer. In his new function, Flunger will focus on growing Swiss Re’s insurance and specialty operations and innovative product offerings in the mid-size and large commercial insurance market. Teresa Long, has become director of Agency Services for the Institute of WorkComp Professionals (IWCP). Long will be working with IWCP member insurance agencies and their workers’ compensation claims processing and injury management procedures, helping agencies arrange medical clinic relationships, developing back-towork programs, conducting seminars for employers and providing training for the IWCP’s nearly 1,000 Certified WorkComp Advisors. Long was most recently vice president of Risk Management for Sarasota, Fla.-based Unisource Administrators, Inc., a managing general agent and third party claims administrator, where she was responsible for client services. Westbrook, Maine-based Acadia Insurance Co. has named Kevin Seth as assistant vice president of Field Services. Seth will be responsible for providing service to branch offices including document management, policy issuance, rating and other operational areas. He will also create a continuous improvement culture through developing and implementing best practices. He joins Acadia with a unique work experience having been associated with insurance carriers, agencies and his own consulting practice. In addition, Acadia has also named Paul Strohfus as its new senior vice president for Claims and Legal Services. Strohfus will oversee the development of claim operations for Acadia, work to maximize government relations efforts and ensure legal matters continue to be handled with best practices. He most recently served on the leadership team at Universal Underwriters and then Zurich American Insurance Co. Strohfus is a former defense counsel in the U.S. Navy Jag Corps and has also held previous positions with Fireman’s Fund in California. New York-based insurer Arch Insurance Group has named David McElroy to its executive management team. He will serve as president of the newly created Financial and Professional Liability Products Group of Arch Insurance’s U.S.-based operations. McElroy, who is a 25-year insurance industry veteran, most recently headed The Hartford’s Specialty Financial division which included Hartford Financial Products and Hartford Bond. Arch Insurance Group is owned by Arch Capital Group Ltd. IJ www.insurancejournal.com
Special Report Agency Options - Financing
Managing an Agency in a Troubled Economy InsurBanc’s Pettinicchi on Agency Financing Options
nlike many businesses, independent insurance agencies do not need to access credit on a daily basis. But when the time comes that an independent agency needs access to credit and cash, it is usually due to an event driven need, such as the working capital required to bring in producers, the money required to buy another agency or to open a branch office, or even to finance an internal perpetuation plan. So, if and when an agency needs credit, it needs to happen fast. In this interview with Insurance Journal’s Andrew Simpson, InsurBanc’s Executive Vice President and Senior Lending Officer Bob Pettinicchi offers insurance agencies tips on how they can access credit when they need it, why it’s a good time to examine banking relationships and services offered to agencies, and why now more than ever is a good time for agency owners to invest in their own agency.
payments on a timely basis gives the bank a good indication of how well a business loan will be repaid. In the case of an agency, the agency principals are really the machinery that drives that agency. We expect those agency principals to stand behind their agency. IJ: Would you ever recommend that an agency principal either loan money to its own agency or in the reverse, borrow money from its own agency? Pettinicchi: Certainly, we would recommend that they don’t borrow from their agency. Usually you would like to see an agency principal get compensated in the form of a salary or a draw, but not a loan from the agency, because that ends up being an asset that is hard to quantify; it is not a strong asset of the agency. In the case of an agency principal lending money to an agency; that’s usually regarded as a good thing. It shows that the principal believes in the agency and usually moneys that are lent to an agency, they usually stay in that agency and would be repaid after other creditors are paid. So, it is like a form of capital. great
IJ: How does an agency protect its access to credit? Pettinicchi: An agency, like other businesses, has to operate in a fiscally responsible manner by This is a maintaining a good payment time for owners IJ: What about cash manhistory on credit they have agement in these ecoobtained, maintaining good to examine nomic times? Is it more personal credit standing for their banking important for an agency the owners of the agency, to conserve cash now, adhering to best practices, and cash and what can they do to running their business like a management. improve upon that? business, collecting the Pettinicchi: This is a great receivables timely, paying time for agency owners to examine their their bills timely. banking, specifically how they manage their daily depositing to a bank and their cash IJ: How important is an owner’s own management. An agency principal should credit rating to the operation of the want to deal with a bank that is stable and business and their ability to access that provides value and services for them; capital for the business? services that they really need like cash Pettinicchi: Well, very often insurance agenmanagement, remote deposit taking, the cies don’t have a longstanding record of borability to sweep funds into investment rowing money, so when they need to borproducts (and) having ready, online access row money, a bank would not only look at to information. the financial standing of the agency, but also the financial standing of the individuIJ: Do you think these services have als that own it. Their propensity to make www.insurancejournal.com
Web Video To view the video series, Managing an Agency in a Troubled Economy, visit www.insurancejournal.tv. been taken for granted in the past or not really paid attention to? Pettinicchi: I think a lot of people take their banking relationship for granted and feel that they are getting the best deal from their bank if they are not paying much for it, or if they are getting free services. Truly nothing is free. There is a cost to everything, but a prudent agency will examine their banking relationship in the way their policyholders will examine their insurance from year to year. Don’t take the banking relationship for granted. IJ: In these times, there are bound to be more ‘no pays’ and ‘slow pays’ for agents. Any advice on how to best handle accounts receivables in this economy? Pettinicchi: Try to manage them carefully. Try not to extend terms to your clients. Avail yourselves to premium financing for those. Why be in the lending business? Leave it to the experts. IJ: Agents have probably in the past not worried too much about the financial soundness of their banks. But given the financial situation today and so much talk about banks being in trouble, has that changed? Is that something that agents should be paying a little bit more attention to? Pettinicchi: Well, you can’t help but pay continued on page N2
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N1
Special Report Agency Options - Financing Trouble Economy, continued from page N1
attention to it because it is on the news constantly. An agency principal should want to deal with a stable institution, one that is going to be there for them, one that understands their business. Many banks right now are having significant financial problems because the quality of their loan port-
folio is not doing as well as it should because of these times. … All of our clients are independent insurance agencies located around the country. As strong as that industry is, it represents the strength of our bank. The bank is only as strong as its clients.
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IJ: So, actually having independent agents as customers insulates your bank somewhat? Pettinicchi: To a degree, yes, absolutely. IJ: The $700 billion bailout package, among other things, raised the FDIC limits. What does that mean for your customers? Pettinicchi: That means that right now the limit that was $100,000 per account has been increased to $250,000 per account. Also, the limit was completely lifted on accounts that are noninterest bearing, such as business operating accounts. So, this should give agency owners a lot more confidence to deposit money in their bank, in particular at the increased coverage level on the noninterest bearing accounts. IJ: So, that is a better situation for independent agents and customers of banks in general? Pettinicchi: Agencies may hold a significant amount of money in a fiduciary capacity. You want to make sure that that money is absolutely safe. IJ: What about investment strategies for agencies going forward, any advice? Pettinicchi: I think that agency principals might want to think a little less about taking money out of their agency so they can invest it in the stock market. … Look at opportunities to invest in their own business. If you think about it, their insurance agency is a perfect business in that they control it, they don’t have to report to the street quarterly results, and they could take a long-term perspective that many companies can’t take. If you do the right things — you adhere to best practices, you have a strong sales culture, you keep your risk low and make sure that you run your business so that you can readily access credit, you will have opportunities. IJ: Are you saying that one of the best investments for an agent might very well be his or her own business? Pettinicchi: Oh absolutely. IJ www.insurancejournal.com
Special Report Agency Networks – Social Media
Social Networking for Fun and Profit Why Agents Should Use Twitter, LinkedIn and Facebook to Build their Brand By Ken St. Onge
hether it’s used to market new insurance products or interface with current clients, social media is transforming the insurance industry landscape — and fast becoming a key tool for agents who want to grow their business. That’s according to two insurance industry branding gurus: Peter van Aartrik, CEO of branding and communication firm Aartrijk, and Rick Morgan, a senior associate with the firm. Recently, Morgan and van Aaartijk sat down with Insurance Journal to discuss how insurance agents can — and should — tap these technologies to change the way they interact with clients and build their businesses. Their thinking: If an agency isn’t using social media yet, it should start. Soon. At its simplest, social media refers to the use of Web sites to connect with peers, clients, competitors and the public at large. It’s a very simple concept that has very complicated and powerful implications. As a tool for insurance agents, social media can be leveraged to attract new customers, market new products and brand an agency by harnessing the power of the Web. And increasingly, as the Internet becomes more and more a part of every day, the use of social media seems likely to grow. So knowing how to use it will be a major key to any business — be it an insurance agency or otherwise — that is looking to remain relevant. “On a macro level, social media is nothing more than networking using technology,” Morgan said. “It’s the same kind of networking that we’ve all done forever ... now we’re using the Internet.” It’s powerful. At its core, Morgan said, it’s a tool that can help Main Street insurance agents return to the hallmarks of their profession: building relationships. For a long time,
independent agents “feared that relationships would go away, everything would be all about price, and insurance would become a commodity. What’s exciting about social media is that it allows agents to get back to a past time, to hook into a very human need to have trust, and do business with people with trusted relationships. This is a very exciting time, and I think it feeds right in to the independent agency world and how they want to do business.” Social Networking 101 There’s a huge range of social media sites on the Internet, but three of the most useful for insurance agents are Twitter, LinkedIn and Facebook. Although they overlap in some ways, each has its own functions, audience and niches. Facebook is probably the biggest. The site claims more than 200 million users worldwide, and is growing every day. Although it began as a site for college students to exchange photos and other information, it’s increasingly attracted an older crowd — the fastest growing demographic on Facebook, for instance, is women age 55 and older. Users can post photo galleries, connect with old friends, join groups and trade information about what they’re doing. It’s the same basic principle as another social networking site, LinkedIn. However, LinkedIn is focused largely on professionals, a fact that is underscored by the tone, look and feel of the site, which overall is more business-like. It’s most commonly used for business networking and recruitment, but users can do many of the same things Facebook offers. Twitter, the social networking site of the moment, is a little different. The site allows a
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Web Resource The podcast, Agency Management Done Right, Episode 2: Social Media, may be accessed online at www.insurance journal.tv/videos/2434 user to post short messages — 140 characters — which are available to anyone on the Internet, and are delivered immediately to the user’s “followers.” People can post links to articles, photos or anything else they want. Users build a following by continually posting content and links to share with others. Which one should an agent use? “I wouldn’t say one is better than the other for an agency,” Morgan said. “It’s extremely important for any business jumping into social media to have an overall strategy, and then to pick the tools, or choose the tools or assess the tools that make most sense for what it is they’re trying to accomplish. There’s a synergistic value that comes by using more than one. So it’s not just about picking one and saying that’s it.” Peter van Aartrijk agreed. “Maybe another way to look at it is to say: ‘What do insurance agents do now to grow their business?’ They do a lot of face-to-face and telephone work. Telemarketing. A lot of out-bound. The meeting space they’re used to, whether it’s a chamber of commerce or Kiwanis or whatever, that still exists. But social media is like that on steroids, because you can reach a lot more people a lot quicker.” Both Morgan and van Aartrijk advised agents to start by diving right in. “You can go on Twitter, Facebook or LinkedIn and very easily begin to build a presence for your agency,” van Aartrijk said. “It doesn’t take that long to set up, and once you start playing around with these things, you can see incredible implications for growing and servicing insurance, and it’s just starting to emerge.” Try not to get overwhelmed, Morgan said. “A great suggestion is for people to get started by just playing. Do it on a personal, noncontinued on page N6 www.insurancejournal.com
Special Report Agency Networks – Social Media
Social Networking, continued from page N4
threatening basis so it doesn’t have to be, necessarily, connected to your business, which is threatening to a lot of people. Get on Facebook and put in a profile. Find out how many of your old high-school or college friends find you and connect with you, just to get a sense of how all this works.” Mixing Personal and Professional One of the concerns many social networkers have is about the implications of mixing their personal and professional lives, which can happen often in a group where clients and personal friends share information. There can also be concerns about employees getting involved in discussion boards, posting comments and sharing material that hasn’t been vetted. “This is a huge bugaboo for a lot of people, particularly corporate lawyers who are really scared, but even agency owners can be scared about what’s going on, ” van Aartrijk said. “In the old days, the corporation would be sort of defined by what it would send out. It would reach out and touch people with direct mail,
telemarketing and so on. It was very one way.” Social networking is redefining the concept of the brand. Now, the people who receive information about a business are reshaping the way that business communicates with its clients and potential clients. “It’s becoming really about the consumer, the customer, even the prospect owning your brand more than ever, and responding to it,” van Aartrijk said. The idea of consumers owning a business brand can be very powerful. For agencies that already communicate with their clients regularly through newsletters, account rounding calls, and e-mail, adding in social networking could build even more trust with clients. “Agencies can use these tools to help make their presence more viable, more aware, and more interesting,” Morgan said. Set Some Rules Agencies that want to tackle social media head-on should create an agency-wide approach for how they are going to do so, van Aartrijk said. “Take a look at the tools, experi-
ment. Bring in everybody. Everybody should be looking at what this impact could be for the agency,” he said. Agency managers should create some boundary lines, too. “There ought to be some rules about ‘what are we going to blog about, what are we going to Twitter about, what is our corporate Facebook page going to look like,’” van Aartrijk said. “You’ve got to give some thought to it.” Added Morgan: “Like anything in an agency, whether it’s technology or any other process, it needs to be managed and monitored. We’ve got procedures for phone answering and response and conversations. When e-mail came out, we did the same thing. Social media is really no different. … Part of the strategy, part of the management and part of the monitoring is all something that needs to be taken into account as companies begin to participate.” IJ This story was based on an installment in the podcast series, Agency Management Done Right, hosted by Wells Publishing CEO Mitch Dunford.
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BRAINS & BRAWN N6 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
New Markets The following markets were selected from the MyNewMarkets database of 25,000 coverages and programs. To find additional markets, or to submit markets, go to www.MyNewMarkets.com. Contractors General Liability Market Detail: London American Risk Specialists Inc. (www.londonamericantx. com) brings agents a commercial general liability (CGL) market for residential and commercial general contractors (GCs). Work done on the GC’s behalf by sub-contractors is covered in this program. Program allows the option for use of uninsured and underinsured sub-contractors. Roofing contractors, artisan contractors and general contractors are the program target classes. New ventures are eligible. Occurrence, sunset or claims made forms are available for use. Minimum premiums begin at $750 for artisan contractors and go up to $4,000 for roofing contractors. Deductibles begin at $1,000. Available Limits: $1 million to $2 million. Carriers: Unable to disclose. “A” rated by A.M. Best. Non-admitted. States: All except N.H. and N.Y. Contact: Chris Chiodetti at 713-977-7726 or email email@example.com.
Green Building Consultants E&O Market Detail: ELM Insurance Brokers Inc. (www.e-o.com) offers a new liability product designed for green building consultants accredited in programs such as LEED, Energy Star, Green Globe, EarthCraft, HERS and NAHBGreen. Coverage is also available to insureds who conduct green education seminars, green marketing consultants and green technical writers. Registered users of www.e-o.com or ELM Insurance can quote these products online. Minimum premiums begin at $1,300 with minimum deductibles starting at $2,500. Available Limits: $500,000 to $5 million. Carriers: Unable to disclose. “A+” rated by A.M. Best. Admitted and non-admitted. States: All. Contact: Fred Fisher at 310-322-1301 or e-mail firstname.lastname@example.org.
Security Guard & Alarm Liability Market Detail: Izzo Insurance Services Inc. (www.izzoinsurance.com) brings 25 years of
specialization to agent’s security guard and alarm industry clients. Izzo offers these classes of operation primary general liability, following form umbrella coverage (including errors and omissions protection) and four workers’ compensation markets. Fidelity bonds and employment practices liability protection are also available. Minimum premiums begin at $2,500 and deductibles begin at $1,000. Available Limits: Starting at $1 million. Carriers: Unable to disclose. “A” rated by A.M. Best. Admitted and non-admitted.
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States: All except Alaska. Contact: Scott Newell at 800-800-1704 or e-mail email@example.com.
Construction Managers & Consultants E&O Market Detail: Travis-Pedersen and Associates of Arizona offers a comprehensive policy to cover construction managers and consultants. Coverage is available to cover the various services provided by construction managers and consultants including: 1) acting as the owner’s representative or agent; 2) constructability reviews; 3) value engineering; 4) schedule development; 5) establishing preliminary and working budgets; 6) consulting on design, utility and building costs; 7) reviewing contractor qual-
N8 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
ifications; 8) monitoring contractor and design team performance; and 9) construction claims management. Available Limits: $500,000 to $5 million. Carriers: Various “A+” Rated by A.M. Best. Non-admitted. States: Ala., Alaska, Ariz., Ark., Calif., Colo., Conn., D.C., Fla., Ga., Hawaii, Idaho, Ill., Ind., Iowa, Kan., Ky., La., Maine, Md., Mass., Mich., Minn., Miss., Mo., Mont., Neb., Nev., N.J., N.M., N.Y., N.C., N.D., Ohio, Okla., Ore., Pa., S.C., S.D., Tenn., Texas, Utah, Vt., Va., Wash., W. Va., Wis., Wyo. Contact: Matt Gervin at 480-281-3850 or email firstname.lastname@example.org.
Land Surveyors Program Market Detail: Agency Marketing Services (www.agencymarketing.com) offers a professional liability program for land surveyors and land surveying firms. Protection is available for independent surveyors, employed surveyors and surveying firms. Several carriers are part of this program. Carriers do not require a full application; the applicant only needs to answer nine questions. Minimum premiums start at $1,200 and deductibles begin at $1,000. Available Limits: $250,000 to $5 million. Carriers: Unable to disclose. “A” rated by A.M. Best. Non-admitted. States: Ala., Colo., Conn., Fla., Ga., Mich., Miss., Nev., N.J., N.C., Ohio, S.C., S.D., Texas, Vt., Va. and Wis. Contact: Keith Alexander at 800-542-2805 or e-mail email@example.com.
Bio-Fuel Manufacturers Casualty Market Detail: International Excess Agency Inc. (www.intlxs.com) offers agents access to liability protection designed specifically for manufacturers of bio-diesel. The program also allows agents to offer time element pollution liability coverage to both premises/operations and products/completed operations losses. coverage can be provided on either an occurrence or claims www.insurancejournal.com
made coverage trigger. Defense is in addition to the coverage limits. Other unique features include: a zero deductible option; medical payments coverage; worldwide coverage for products suits; coverage for shortterm business activities and $100,000 product withdrawal expense coverage. Minimum premiums begin at $15,000. Available Limits: Up to $2 million. Carriers: General Star. â€œA++â€? rated by A.M. Best. Admitted and Non-admitted. States: All. Contact: Kenneth Kukral at 216-797-9700 or e-mail firstname.lastname@example.org.
Pharmaceutical & Medical Device Manufacturing Market Detail: MarketScout (www.marketscout.com) provides access to coverage for companies in the life sciences industry including those involved in pharmaceutical, biotechnological and medical device
manufacturing. We offer flexible options, which allow us to adapt to this fast-paced and rapidly changing field. Products available include: general liability with products coverage; automobile liability; workersâ€™ compensation; property insurance and product recall. Targeted risks include: pharmaceutical companies with less than 50 percent in generic drug manufacturing; accounts that manufacture 25 or more products; domestic and foreign exposures; and manufacturers conducting their own clinical trials. Minimum premiums begin at $25,000 and deductibles start at $5,000. Available Limits: $1 million to $25 million. Carriers: Unable to disclose. â€œAâ€? rated by A.M. Best. Non-admitted. States: All. Contact: Norman Alberigo at 972-932-4275 or e-mail email@example.com.
Market Detail: Francis L. Dean & Associates Inc. (www.fdean.com) brings agents a market for general liability and participant accident insurance for motor sports facilities, race teams, special events and more. Coverage is offered on an admitted basis with immediate underwriting and policy issuance. Minimum premiums begin at $500. Available Limits: $1 million to $2 million. Carriers: Starr Indemnity & Liability. â€œAâ€? rated by A.M. Best. Admitted. States: All except Calif. Contact: Michael Dean at 800-745-2409 or e-mail firstname.lastname@example.org. Submit your companyâ€™s property/casualty markets to the industryâ€™s leading searchable database at www.mynewmarkets.com.
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June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N9
Idea Exchange Growing Your Property Casualty Agency
Take Advantage of Bad Times by Hiring a Marketing Major Enhance Your Survival by Finding Light Within the Darkness Shulman
By Alan Shulman
he economic landscape is mired in ty at far less cost to them than they could in darkness. Bankruptcies and foreclobetter times. It’s a win-win arrangement that sures have risen to frightening levels, may last no longer than the recession, but it’s while the stock market languishes in still well worth the hire. Here are just a few despair. The high rate of unemployment has a ways that they can help. dreadful impact on downsized employees and their families, particularly those who have no 1. These nascent experts can develop recogimmediate prospects. It also makes the world nizable local brands that are not entirely appear bleak for recent coldependent on company reprelege graduates who seek to It’s important for Agency survival sentation. enter the workforce for the your long-term survival. first time. And in our indusAccept representation as a depends on try, an increasing number of privilege, but not as your busimore than raw once proud insurers are ness identity. Look at the being bailed out by the selling skills; it 3,400 or so car dealers who American taxpayer — or askrecently fired by demands smart were ing to be. Chrysler and GM. Something similar could happen in the But as Leonard Cohen, the marketing as agency business as well. venerable poet and songwell. 2. Trained marketers writer notes, “...There is a understand the concept of the crack, a crack in everything. unique selling proposition (USP). Essentially, That’s how the light gets in.” And the light, in the USP convincingly differentiates one sellour context, is the ability of insurance agener’s offerings from another’s, motivating a cies to use aspects of this economy to their buyer to switch. This classic theory originated business advantage. in the 1940s, while print and radio were the dominant ad media. Today, there are endless Insurance as a Fallback ways to grab a prospect’s attention and to In times of unemployment, selling insurcommunicate with them, both online and off. ance looks more appealing than ever. Agencies Young grads are familiar with them all, on find a seemingly endless supply of producer both business and social levels. wannabes. But the potential problem here is 3. Too many commercial producers are disthat by the time a new agent is fully trained organized in their new business solicitation and approaches profitability, they quit, returnprocesses. Marketing majors can help agents ing to their previous career, once times get and their CSRs to logically identify and probetter. In other words, you’re just the rebound fessionally solicit and follow-up on their most boyfriend and not the groom. You can gamble salable leads. These efforts might include sales by hiring these folks to sell for you, or you can planning and tracking, marketing material hire some new college grads as short-timers to modification or development, direct marketenhance your long-term survivability. ing test campaigns, etc. 4. A large selection of agency Web sites are Hire a Marketing Major screaming for a redesign. Many haven’t been Un- or under-employed college grads, with seriously modified since the 1990s. Some, but fresh business degrees in marketing, are anxnot all, marketing grads can help agents to ious to apply their lessons to the real world. update theirs, while concurrently performing Agency offices can offer them this opportuniN10 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
other much needed in-office services. 5. Ideally, this individual will bring real value to your office and want to make insurance his or her career — but you can’t count on it. It is wiser to presume that the recent grad will accept your job while simultaneously seeking a better-paying position elsewhere. So make certain that they invest a healthy portion of their time with you training others in the agency and leaving systematic marketing breadcrumbs for staffers to follow after their departure. Survival Time Agency survival depends on more than raw selling skills; it demands smart marketing as well. A full-time marketing professional is a desirable addition to any P/C insurance office. These professionals provide a sense of purpose and order to an agency’s promotional efforts, much like an IT pro manages your computer systems. Hiring an out-of-work grad is an affordable way to test the waters, without investing big dollars. Many are glad to work for modest pay because it gives them resumequality job experience that they can use once the economy kicks back into gear. But if the fit is right, the young expert you hired may elect to stay on and become a permanent and indispensable part of your team. IJ Shulman, CPCU, is the publisher of “Agency Ideas,” a subscription-only sales and marketing newsletter. He is also the author of the “Illustrative Insurance Sales Letter” series and other P/C sales resources. Phone: 800-724-1435. E-mail: email@example.com. Web site: www.agencyideas.com. www.insurancejournal.com
TOP100 AGENCIES Left: Gary Dudley, president and co-founder of SWBC Right: Charlie Amato, chairman and co-founder of SWBC
Do THAT, Too! Diversification Spurs San Antonio-Based SWBC to Great Heights By Stephanie K. Jones
harlie Amato says Gary Dudley got him into the insurance Even so, sometimes customers’ product requests are declined because business. Dudley doesn’t deny it, and why should he? From they don’t make sense or because they would be too short lived, Dudhumble beginnings as entrepreneurial partners selling ley explained. But, he added, when a client requests a product, “we insurance out of the trunks of their cars, the two have creresearch it with a lot of other clients that we’ve had long term relationated a world-class diversified financial services company — with 13 ships with and they can be a judge, and say ‘yeah, we would like that divisions and offices throughout the United States — that generates product as well.’ Then we’ll proceed with developing that product and nearly a billion dollars in annual revenue and employs 1,250 people. building it.” There’s no doubt that with the hundreds of prodFor more than 30 years Amato and Dudley have ucts and services the company has to offer, it is operated San Antonio-based SWBC as a 50-50 partTop 100 Agency Profile diversified. Insurance agency? Check. Risk managers? nership and neither would have it any other way. Ranking No. 13 Check. Insurance company? Check. Real estate? Friends and fraternity brothers in college, Amato (ranking based on 2007 figures) Check. Technology? Check. Mortgage origination? went into banking after graduation and Dudley Check. Employee benefits and wealth management? entered the insurance business after serving in the Agency Name: Check. Plus reinsurance, equities brokerage, collecMarines, and as a coach and teacher. SWBC tion services, call center, insurance wholesaler — “I worked for a company that sold specialty Headquarters: the list goes on. products to credit unions, insurance products,” San Antonio, Texas “Everything interconnects,” Amato said. For Dudley said. “It was a small company out of Year Founded: instance, SWBC owns 51 percent of a real estate busiMichigan. And they hired Charlie. He was in San 1976 ness. We’re “an insurance agency, and we own an Antonio and I was Houston. We were basically just 2008 Total P/C Premium: insurance company, and we have money to invest,” he sales people, worked out of the trunk of our cars. $645.3 million said. “So besides putting money into CDs and stocks, That company, we determined after a short period 2007 Total P/C Premium: equity, corporate bonds, we thought real estate of time didn’t have the clients’ best interest at $481.0 million would be another investment for us, to give us anothheart. They didn’t treat their customers and 2008 Other than P/C: er option. So basically everything we do is connectemployees the way we felt like they should treat $176.5 million ed.” And, “if you think about it, all those projects them. So Charlie and I left and formed SWBC. We 2007 Other than P/C: have to be insured,” Amato added. didn’t call it that in the very beginning but that’s $232.7 million who we were.” % Commercial: 62% An REO Niche That sense of fairness and the dedication to %Personal: 15% Early on, SWBC developed a recognized expertise treating their customers and their employees with 2008 P/C Revenue: in insuring real estate owned (REO) properties — a the utmost respect remains the foundation of the $246.3 million niche that grew out of, again, clients’ interests. The company today and it has served them well — as 2007 P/C Revenue: company’s involvement in the niche began “years and has their determination to diversify the company, $158.7 million years ago as a request from some of our clients that both geographically and product-wise. Agency Principals: were starting to repossess properties,” Dudley said. SWBC’s corporate slogan, We Do That Too, “realCharles Amato, Gary Dudley Having previously written coverage through ly tells the story,” Dudley said. “When we started Number of Divisions: Lloyd’s of London, Dudley and Amato turned to we were selling insurance products to financial 13 Lloyd’s for help developing a product to protect institutions,” Dudley explained. “We started out Number of employees: financial institutions and their repossessed, unoccuwith one product. As a result of the client liking 1,250 pied properties. While it’s been a profitable business how we delivered and did what we said we were for some time, the REO sector has been a real growth area for the going to do, they’d ask us for another product.” company during the current economy and SWBC is one of the top two Most of the products and services SWBC offers have been developed agencies in the country for this type of product. at the request of a client and that makes good business sense, Amato Standard insurance companies “don’t have the appetite to insure says. After all, the more products you can sell to one client the more vacant property or empty property. So that’s why REO insurance has cost efficient those transactions become. become so popular in today’s environment — because it’s designed While diversified, all of the company’s products and divisions are related and complementary, and they all begin with the customer. continued on page N14 www.insurancejournal.com
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N13
SWBC, continued from page N13
A Broader Mix specifically for repossessed properties that are unoccupied,” Amato While the percentage of REO business in SWBC’s property casualty explained. division increased from 17 percent in 2007 to 23 percent in 2008, com“REO was a nice, diversified part of the agency” when he joined mercial lines continue to make up the bulk of the division’s writings. the company in 2006, said Nick Grant, CEO of the Property and In 2008, commercial lines represented 62 percent of the P/C business, Casualty division of SWBC Insurance Services. By the end of that down slightly from 2007. Personal lines came in at 15 percent in 2008, year the country was headed into a difficult mortgage market, folcompared with 16 percent in 2007. lowed by the economic downturn and tightening of the credit On the commercial side the agency writes a wide variety of SIC market. codes. However, Grant said, “every agency leans towards certain “The whole mortgage industry started sliding and that’s when industries. … We do a number of banks; we’re very good at doing they started taking properties,” Grant said. “Seeing that, Gary and banks. We’ve been very successful with property managers, commerCharlie urged me to develop more of a marketing arm.” Grant then hired a producer whose “sole job is to ‘We started out with one product. As a result of the client liking cover the whole United States, reaching how we delivered … they’d ask us for another product. … So we’d out to anybody that create that product and build it for them.’ services a mortgage and may be taking properties back.” cial buildings, multi-purpose office buildings, we have great markets Some of the institutions currently being forced to take properthere. And for whatever reason the agency has gravitated toward ties back have never had to do that before, so it’s a sensitive issue, restaurants. We write a lot of the nicer, high end restaurants here in Grant said. The REO program can insure the property against hazSan Antonio and we have excellent markets in that area, as well.” ards and flood, among other things, and can be set up to do so on a The agency also serves a broad mix of small, medium and large month-to-month basis. “Our program is an extremely cost effective, business customers. user-friendly program,” Grant said. “It allows monthly billing. And “We have our share of smaller accounts,” Grant said. “We’ve been the reason I point that out is that the properties have to be successful in partnering with companies like Hartford and Travelers insured, and we believe we go about it in the most cost effective, that will make small account servicing, or what we call special efficient manner for the institutions.” account servicing, for the smaller client.” And, he added, SWBC has the ability to underwrite the program SWBC’s growth is linked to its customers’ growth, he explained, and tailor it to clients’ specific needs. and with small businesses it’s especially important to handle their accounts in a cost effective way. “We’re sensitive to that. … [We] realize that a start-up restaurant may not represent a huge premium, but then it picks up and takes off, and you’re part of the growth process.” The agency also sees growth opportunities in middle market accounts, especially in construction accounts, which is an area of special expertise for Grant. “When I came in, the agency was predominantly a white collar business, no real blue collar construction or artisan contractors, and I’d cut my teeth in this industry on construction,” Grant said. So he went on a search for the right people to help grow a concentration in construction, general contractors, subs, artisan contractors and the like. Now, SWBC has an experienced construction team that includes a producer, a CSR, and loss control and claims personnel. Grant added that SWBC writes a number of large-sized accounts, as well. Dudley and Amato “have never met anybody they didn’t think they could insure,” and that attitude filters down throughout the organization, he said. “You could be Frank’s Palette Manufacturing down the road or you could be any large corporation. They wouldn’t hesitate to ask the CEO of Southwest Airlines or anybody else — why aren’t we writing your insurance?” Whether an account is large, small or medium-sized, or whether Left to right: Nick Grant, CEO Property & Casualty Division, SWBC Insurance Services, it’s personal lines or commercial, one thing the agency strives for is to Charlie Amato, chairman and co-founder, SWBC, Gary Dudley, president and co-founder of make sure its customers’ exposures are protected appropriately. “We SWBC, Bill Pegel, CEO Financial Products, SWBC N14 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
TOP100 AGENCIES make every effort to get our prospects, our clients to understand that we’re not insurance sales people,” Grant said. “Our producers are people that go in and expose risk. We go to a client and look at their exposure and make sure they’re fully aware of what’s at risk. And then we provide options to insure the risk.” Embracing Technology SWBC has experienced tremendous growth since its founding in 1976, but in the past four years it has more than doubled in size. One enabling component of SWBC’s success is its total and complete embrace of technology, which both Dudley and Amato both see as yet another example of expansion into an area of business that complements the company’s existing strengths. “We’re a high technology company,” Dudley said. “We have 100 computer programmers on our staff, for instance, to design programs and keep our systems running.” SWBC in 2008 increased its technological investment by buying a stake in Pennsylvania-based Akcelerant Software LLC, which develops software, including collections software, for the financial services industry. And recently, SWBC made an additional investment to facilitate the purchase of one of Akcelerant’s Canadian competitors. “A lot of our financial institutions — credit unions and community banks — use this collections software,” Amato said. As a result of the investment, SWBC established a payment reminder services unit that makes after-hours soft collection calls for clients. The calls are made from a facility SWBC built two years ago — a spacious, light-filled, state-of-the-art contact center large enough to house 400 employees. The proprietary software tracks accounts that are past due and collection personnel make payment reminder calls. In addition, the call center staff can take payments while the customer is on the line.“The results have been remarkable,” Dudley said. “The financial institution hires us on their behalf,” he added. “We started that about two years ago before we knew what the economy was going to do, as a request from one of our clients. That has turned out be our fastest growing division.”
Basketball, Automobiles and the World
hile SWBC owners and founders Gary Dudley and Charlie Amato both acknowledge that the company is very much their life, they do participate in few side projects apart from SWBC. And like all other facets of their world, there are connections. The two are investors in the San Antonio Spurs basketball franchise, and Spurs’ star and point guard Tony Parker serves as a “goodwill ambassador” for SWBC, appearing in ads and marketing campaigns for the company. Dudley and Amato together also own four automobile dealerships in San Antonio, in which they employee more than 200 people. The dealerships don’t use the SWBC moniker, but in the spirit of interconnection, they do sell its products and the company handles the insurance for the dealerships’ properties. While world domination may not be the goal, expanding SWBC’s horizon is always in order, according to Amato and Dudley. SWBC owns a Bermuda-based reinsurance company, SWBC Re, and they are in the process of becoming a corporate name in Lloyd’s of London, Amato said. There’s the possibility of investing in a retail operation in London, as well. Also, says Amato, while “we’ve never taken the time to do it because we’ve been so busy, but the software that we were telling you about earlier that tracks for financial institutions? I truly feel that if we ever told that story in Europe, especially in the current economic crisis, there would be a demand for our software.” IJ
the referring employee gets $200. Once an employee successfully refers five new hires, they get an extra $1,000. So, for referring five people who are a good fit, the referring employee can make $2,000. SWBC also compensates its employees well, Amato says, “because we feel that’s the only way we can compete with the public companies. Some people here are making a lot of money and we’re proud of that. We have some people who over a period of years have made more money than Gary and I … and we love it.” SWBC encourages each of its 13 division leaders to run their units ‘We’re a high technology company. … We have 100 computer as if they owned them, Dudley programmers on our staff ... to design programs and keep said. It makes for a very entrepreneurial atmosphere and one that our systems running.’ allows the company to “turn on a dime,” as Amato says, and react An Entrepreneurial Spirit quickly and efficiently to their clients’ needs. Because SWBC is Like many business owners, Amato and Dudley are quick to credit privately held, if a manager comes to one of the owners — to distheir management team and employees for the company’s achievecuss ideas or for an investment in their division — unlike in a ments. “I’d stand up and put our 1,250 people against any company in publicly traded company, they can give that manager an immedithe country,” Dudley said. “They just have that — ‘I want to help, I ate answer. want to take care of the client’” — attitude. Amato said they’ve been encouraged to go public and have been Both Amato and Dudley stand firmly behind the notion that if “you approached by equity firms interested in investing in SWBC, but hire the right people, they hire the right people,” Dudley says. And so far they’re not interested. Going public would not fit the combelieving that talented people associate with talented people, they pany’s business model, Amato said, “because it would take some put their money where their mouth is — they pay their employees to of our entrepreneurial creativity away from us. If we want to refer potential employees to the company. form a new division and lose money for three years, that’s our If a referred employee stays on the job a minimum of six months, privilege — we can do it and we can afford it.” IJ www.insurancejournal.com
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N15
Special Report Agency Networks
The Globalized Broker Network Assurex Global Struck Gold with Partners Around the World By Charles E. Boyle
ssurex Global wasn’t fully “global” until the late 1990s, when it changed its structure to meet the challenge of an increasingly integrated insurance market. Assurex, which is actually a partnership of the top independent insurance and risk management brokers worldwide, (www.assurex.com ), was founded in 1954. Over the next 30 years or so it developed a strong presence in the United States and Canada. It also established some links with international, i.e., non-U.S, affiliates. “However, they had no shares and no voting rights,” explained John Rodwell, vice president, International Business Development, in a telephone interview. “That began to change in the late ‘90s,
as we realized we had to get bigger, or decline.” As a result, he explained, Assurex altered its basic structure. The group is set up as a corporation, with each member/partner owning shares in the enterprise, electing directors and setting group policy, as well as serving on the committees that oversee Assurex operations. Partners are selected from the most competent and dedicated independent agents and brokers, according to the group. They are committed without reservation both to their independence and to providing top quality service to their clients. Assurex members occupy a large niche, or second tier, market — between Marsh, Aon and Willis, or companies such as A.J. Gallagher and Lockton —
N16 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
Assurex Global Year Founded: 1954 Locations: 500 offices on six continents Employees: 20,000 Annual Premium Volume: $28 billion Annual Revenue: $3.4 billion and smaller agencies. It’s a model that fits like a glove with U.S. firms in the same market — see Insurance Journal’s Top 100 Independent Agency Profiles — and it has propelled Assurex Global to the top spot as the “world’s largest privately held brokerage group,” according to its Web site. In total, Assurex has 110 partners, who collectively write more than $27 billion in premium volume from more than 500 offices in 80 countries. continued on page N18 www.insurancejournal.com
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Special Report Agency Networks Globalized, continued from page N16
establish a presence outside of Europe. “We The Expansion Trail were seeking an international network that The growth from being essentially a United States and Canada network to a glob- would generate cross border business,” said Flach, and “we particularly sought a partner in al one has been remarkably swift. Ten years North America.” ago the existing shareholders, realizing Enter Assurex, which was looking in the Assurex had to grow, instituted a sea change. other direction. The four companies became They contributed a substantial amount of new Assurex members in July capital, earmarked for expan1999, forming the cornersion, and began to seek likely stone of its international firms to join the network ‘We’ve become operations. from outside the United much more “Joining Assurex was States — as full partners, coabsolutely essential for our equal with existing domestic effective in terms future,” Flach continued. shareholders. of understanding “They are the same as us.” They soon struck gold. In Both the European and 1997, Aon bought the U.K.the nature of the American partners are based broker Frank B. Hall, global economy independent, dynamic, which had established a network of partners that includand the exigencies highly skilled, and focused on the welfare of ed, as they are currently of international their clients. Both cater to known, France’s Verspieren the middle market — Group, the U.K.’s HSBC trade.’ from large commercial Insurance Brokers Ltd., enterprises to smaller Germany’s Leue & Nill firms. That model has guided Assurex since its GMBH, and Italy’s GPA Pulsar. beginning, and continues to do so. “As we did not want to become part of Aon, Further expansion followed. “We now look we formed our own group,” explained Jérôme at it [Assurex presence] on a region by region Flach, directeur adjoint (assistant director) for basis,” said Rodwell. They are: The United international operations at Verspieren. Their States and Canada; Latin America; Europe; the network, Synérgie, was the largest independMiddle East and Africa (EMEA); and ent broker network in Europe, based on its Asia/Pacific. He explained that the Assurex member’s strong presence in the European board of directors now consists of representaUnion’s four largest economies. tives from each of the regions. But, the four companies realized that, if “We no longer just meet North American they were to expand further, they needed to
Benefits of Having Partners Those “details” are an important part of what Assurex offers its members. “What’s great about Assurex is that it’s not a huge global broker,” said Ron Wanglin, chairman of Pasadena, Calif.-based Bolton & Co., a longtime Assurex member. “We can call on regional brokers across the U.S. or abroad.” Depending on what kind of business is involved, Bolton either cooperates with other Assurex partners in solving problems and placing coverage, or, usually where smaller firms are involved, gives the business to the broker who’s best placed to handle it. “We work with the client and with our partners, and we strive to be the best, but we continued on page N20
Assurex Global Partners’
Number of Asssurex Global Partners US & Canada
needs; we also see what the rest of the world needs. We’ve become much more effective in terms of understanding the nature of the global economy and the exigencies of international trade.” The Web site explains: “We can tailor client programs to meet specific regional or local needs nearly anywhere in the world. Clients deal directly with the Assurex Global partner in their own market. In turn, the partner works with other Assurex Global offices around the world to expertly serve the clients’ needs. It’s a simple way for clients to manage an often complex insurance portfolio without losing personalized, local service. We manage the diverse details so that the client doesn’t have to.”
Premium Volume (billions)
US & Canada
Source: Assurex Global N18 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
Source: Assurex Global www.insurancejournal.com
Special Report Agency Networks Globalized, continued from page N18
chart our own course,” Wanglin said. “It’s not all done in Chicago, or New York.” Part of that process, he noted, is being sure that the partners they deal with have the same high standards. One of Assurex’s greatest strengths is that it assures that each partner meets that criteria, Wanglin said, describing it as a “guaran-
tee of best practices,” adding that partners have to “live and breathe Assurex.” Partner relations within the United States are relatively simple. The language is the same and for the most part so is the legal system. Assurex domestic partners have built personal relationships with their counterparts over the
years. Beyond the United States’ shores it gets a bit more complicated. “International business requires dealing with different languages and different cultures,” said Flach. “Even if the international business language is English, each part‘It’s a question ner has their own of language, point of reference.” Over-coming those culture and barriers is part of communication.’ what Assurex does. Flach described his main activity as being a “gatekeeper.” Not so much in the sense of keeping people out, but guiding them to the right person within Verspieren who speaks their language and has the requisite expertise to handle the specific business they require. “It’s a question of language, culture and communication,” he said, adding that “Assurex is the key” to gaining the necessary understanding to be able to reach a successful conclusion. Assurex’s business model is predicated on having one firm for each country outside the United States. Rodwell explained that this prevents unnecessary competition and promotes openness. As a result, agent and broker partners in developed countries are usually a good deal larger than their U.S. counterparts. They have to be in order to have the expertise and the capacity to handle the multitude of different types of business that comes through Assurex. Verspieren employs more than 1,400 people, with offices in most major French cities, as well as branch offices in Spain and Portugal. However, another foundation of Assurex’s business model is to eschew standardization. Assurex members greatly value their independence and would resist any attempt to impose uniform procedures, modeled on the United States, or on any other type of operation. “Each region has its own approach,” Flach explained. “Just as each state in the U.S. is different, each country has its own peculiarities. Our goal is to meet those regional needs.” Selection Process and Oversight Dedication alone, however, isn’t sufficient to be admitted to one of the world’s most exclusive clubs. As the Web site says: “Every Assurex Global Partner is carefully selected following a
N20 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
rigorous (and ongoing) evaluation process.” A prospective partner is chosen by a committee when the need to expand the association becomes evident. “What we want to do is review and refine the partnership network,” said Wanglin. “We’re not interested in filling in dots on a map.” “Initially we define the need,” said Rodwell, “then we see what carriers they [a particular broker] work with. We telephone affiliates and we ask Assurex partners who, in their opinion, might fit our criteria for that region.” That’s just for openers. “We are looking for quality brokers, who are responsible and who function as we do,” said Wanglin. “Can they offer multiple coverage? What is their local reputation? How strong are their financials? Do they have broad capabilities?” Assuming a candidate meets all of the above, Assurex undertakes a comprehensive “due diligence” examination. The final step involves personal meetings with Jim Hackbarth, Assurex current president and CEO, as well as with the board of directors and the selection committees. “We’re very selective, because we realize that one bad apple can spoil the whole barrel,” said Rodwell. Once a broker has joined Assurex, however, they remain under scrutiny. “All firms are evaluated every three years,” said Rodwell. “Our evaluation committee looks at whether they are still a strong global player; are they participating with other partners? And are they helping others to become better partners?” It is essentially a “peer review” process. www.insurancejournal.com
impose them, which gives each partner more freedom as to how they serve their customers.” Transferring knowledge and expertise has never been easy — even within the same company. Assurex first tackled the problem with its United States and Canada partner network. Following its expansion those efforts took in the global partners. The association recently developed a new tool — Passport — to make it easier to transfer expertise from one region or country to another. Wanglin explained its usefulness by citing the example of Mercedes-Benz. The auto manufacturer has plants or does business in the United States, Mexico, France, Germany and Italy. “We are able to put all of the documents, policies and related information into the Passport system, so that everyone involved can Over the years, very few partners have left Assurex. “It does happen,” said Rodwell, but he receive by instant communication all of the data necessary. It doesn’t have to be shuttled could only remember three or four occasions when it has. The reasons were either financial, back and forth by e-mail or snail mail.” In another example he posited a broker who or because the firm involved lacked the same needs information on writing country club principles and dedication as the other partrisks — a field that it hasn’t worked with ners. before. “If you send out a call for information to Given the rigorous selection process, the Assurex partners on Passport, you’d have more ongoing peer reviews, as well as the twice information than you’ll ever need about country yearly board meetings, and regional meetings clubs.” The system has been in operation for between the partners, it’s not surprising that almost four years, and, Wanglin said, “we’ve so few have left. Joining Assurex is not like pretty much worked out all the bugs in it.” joining the local Lions Club. “It’s really like an That statement could apply to Assurex as extension of our own firm,” said Wanglin, we well. Its system has proven itself over time. It count on the reciprocity; we work with our combines both loyalty clients and our partners; it’s a and flexibility, and has ‘win-win’ situation. Plus avoided becoming too they’re good people; I’m ‘It works because static to accommodate happy to meet with them.” the partners are new risks, new technology, and above all new Passport to the Future committed to partners. “We’re not yet In return for that commiteach other. But at maturity, we’re still at ment Assurex partners get the development stage in more than a few business ultimately it’s a number of countries” leads. The reciprocity princiall about people.’ said Flach. ple means they can call on “The Assurex business the support of other memmodel has held up for over 50 years, through bers of the network any time they need it. generations of changes,” said Wanglin. “It While the growth in technology has made works because the partners are committed to global cooperation easier, Assurex remains a each other. But ultimately it’s all about people. people to people business. The Internet hasn’t The senior partners explain the value of done away with face to face meetings, which, Assurex to their employees, so that they Wanglin said, “happen frequently.” understand, and are engaged at various levels.” “Each country has its own needs,” he conThat commitment bodes well for Assurex’s tinued, “there are no definitive answers, therecontinued success. IJ fore we look for solutions, but we don’t June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N21
Special Report Agency Options - Staffing
How to Make Telecommuting Work for Your Staff Constant Communication Helps to Keep Remote Employees Motivated to Succeed Henry
By Susan Henry
elecommuting is increasingly popular in today’s business world. It cuts operational costs for the employer, while allowing employees the convenience of working from their home offices. While telecommuting has proven valuable for many organizations, it requires a non-traditional approach to management. From communicating to measuring productivity, you must alter your management style to accommodate your off-site staff. Here are a few techniques to ensure happy and productive telecommuting employees. Telecommuting Not for Everyone Make sure those you hire are positioned to succeed. Telecommuting is not for everyone. Certain employees will thrive as telecommuters while others need more constant supervision and direction. Keep this in mind when you are hiring on new employees or transitioning current employees for telecommuting roles. In the interview, make sure that candidates have a demonstrated history of success working in an independent environment. Stress to candidates that the individual selected will be expected to work with limited direction. Entry-level employees or those who require constant supervision are not good candidates. Provide comprehensive training for the role, and lay out your exact performance and productivity expectations. Communication is vital to maintaining an effective and functional relationship with offsite employees. Make a point to talk with each of your employees at least once a day —
even if that means reserving time on your calon their own — without your feedback. endar. Do not rely solely on e-mails and Unlike a regular office environment, teleinstant messages — pick up the phone and commuters cannot go to lunch to discuss call your employees. Schedule weekly one-onwork-related issues. Give them outlets to one meetings to review performance and to communicate on a personal level. Try to get set goals and objectives for the group together face-to-face the week. This will proquarterly. If they live in the Telecommuting same area, have them assemble vide formal, uninterrupted time to go over any project once a month for a team meetis not for difficulties or general work ing or lunch. everyone. issues. Make time for casual Utilize Available Technology conversation. Personal connections play a In addition to the phone and e-mail, a large role in job satisfaction and retention. In wealth of technology is available to assist a typical office environment, these connectelecommuters. Explore your communication tions occur naturally. However, when you do options and be open to all available technolonot see each other everyday, it is easy for gy. Invest in internal systems that can track phone calls and e-mails to become strictly productivity and allow you to review workbusiness. Make a conscious effort to incorpoin-progress in real-time. This will also enable rate casual conversation into your corresponyou to observe employees’ strengths and dence. Allow time in your weekly meetings weaknesses. Take advantage of Web-based to talk about upcoming vacations, discuss a meetings and teleconferencing. Yet don’t let popular TV show, or ask about each other’s technology replace face-to-face meetings. kids. At least once a week, you should find time to check in with your virtual employees Celebrate Successes “just to chat.” Promote teamwork and a sense of unity by Promote communication among employcelebrating individual successes — both perees. Telecommuters do not connect face-tosonal and work-related. Make announceface with colleagues on a regular basis. While ments to the team in weekly meetings. it is important that they have strong working Additionally, celebrate contributions such as relationships with their managers, it is also exceeded performance objectives, met goals important that they interact with their coand acquired sales leads. Motivate employees workers. If you have a large team, schedule with monthly competitions and other incenweekly calls for the entire team. During this tives. This will also promote social interactime, each team member should give an tion and team building. update on his/her own goals and projects. While telecommuting requires the right This weekly meeting will prepare your employees and a flexible, hands-off manageemployees for the week and boost morale by ment style, it has many benefits. Make a congiving them a sense of camaraderie. scious effort to keep employees motivated, Let your team connect without you. Resist encouraged and appreciated, and you will the urge to micromanage. If you control produce a team positioned for success. IJ everything, your employees cannot have candid conversations among themselves. Have Henry is senior vice president of Jacobson Solutions, the senior-level employees pair up with newer temporary staffing division of The Jacobson Group. Phone: employees for role playing or other training 800-466-1578. E-mail: firstname.lastname@example.org.
N22 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
The Insurance Professional’s Practical Guide to Workers’ Compensation: From History History through through Audit Audit From Author: Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA Price: $55.00 for paperback and $49.95 for a pdf download Available at: http://ijmag.com/wcbook
1 2 3 4
Legal and contractual concepts surrounding workers’ compensation presented in simple, non-legal terms.
Provides selected statutory information for every state.
Allows the reader to understand the framework on which workers’ compensation coverage is built.
Designed to combine statutes, common law, contracts and the human element of workers’ compensation into one resource.
I've worked in the insurance industry for almost 50 years, including periods as an underwriter, educator, agent and consultant. Of all the textbooks, reference sources, etc. that I have read on the subject of WC, these articles are by far the best I have ever encountered. Congratulations and thanks for a job well done!! Russ Taylor Risk Management Tactix Spring, TX
"A must read for everyone wishing to truly understand workers' compensation sales. Chris's writing style makes complex issues easy to understand even for beginners. This book should be the standard for our industry." Chris Burand President – Burand & Associates, LLC www.burand-associates.com Excellent book - even for those of us whose primary occupation is not in the insurance industry. This book explains insurance terminology in a way that anyone can understand. I may not understand all of the finer points of worker's compensation, but I now know what questions I need to ask! Ricky Horton, CMA Vice-President of Finance McCombs Steel Company, Inc
Closer Look Construction
Construction Projects at a Standstill Risk Management Considerations to Help Protect and Preserve Properties on Hold By Timothy R. KaniaIn
n the current economic and credit crisis, construction entities — project owners, contractors, architects, engineers, material and equipment suppliers, and end-use customers — are all facing unprecedented levels of financial uncertainty. The financial deterioration of any of those entities can create substantial challenges for the construction project at hand and, in severe cases, may impact the ability of the project to continue as scheduled. In instances where a project enters a standstill period, both a proactive approach to address exposures, and a continued focus on risk management and loss prevention practices are essential. A fully documented property conservation program implemented by the property owner and contractor can help to reduce the likelihood of property losses as the project enters the standstill phase. Documentation also can help facilitate the successful resumption of the project in due course. Winding Down The first stage of winding down should begin well before the decision to stop work at the project site is contemplated. As financial difficulties emerge, cost savings strategies such as lowering skilled labor qualifications or reducing site safety protocols can be tempting. Such measures, however, can quickly transform a well-run project into a severely stressed project. For example, accepting a low-bid labor force without paying attention to required skill sets can lead to quality control and workmanship issues that create costly work-site inefficiencies. Other cost-saving measures under consideration by the project owner may involve reducing overall management oversight at the worksite. However, this can result in problems such as an increase in workforce safety issues due to site congestion or increased property risk exposure as attention to debris cleanup, proper storage of combustibles, and maintenance and
storage of critical equipment wanes. Meanwhile, owners and contractors also have to be aware of the potential for moral hazards once the decision has been made to shut down a project. The frequency of arson, theft and water damage events may increase as workforce reductions become apparent. Therefore project oversight, including the maintenance of high loss prevention standards and proper site security, is paramount throughout the standstill transition period. Conservation Practices As soon as the decision to wind down a project has been made, it is critical to establish a written policy to address property conservation practices and establish authorities and responsibilities across the project team. Specific actions should be undertaken for the purpose of protecting property assets from the threat of accidental loss, including natural hazards exposures. The project site should be adequately secured to control site access and deter unauthorized entry. All construction debris should be removed, and prudent
N24 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
housekeeping practices should be followed. All fire protection services should be maintained, the local fire department consulted and emergency response plans formulated. In addition, temporary measures to protect and preserve property from weatherrelated exposures should be implemented, and maintenance of critical on-site equipment should continue throughout the standstill period according to the original equipment manufacturer’s recommended maintenance and storage practices. Communication Effective communications among the various construction entities including owners, facility engineering and maintenance, finance and purchasing, suppliers and contractors can help to minimize the potential for loss during the standstill period. The project’s insurance provider should be at the top of the notification list. Proactive communication between a policyholder and its insurers reaffirms and respects the partnership created during www.insurancejournal.com
the work site and maintain equipment can policy negotiations. This communication may also satisfy contractual obligations typ- help to facilitate the restart of construction operations. By using a well-documented ically contained under property construcand executed standstill protocol, compretion programs with respect to cessation of hensive records of site conditions, building work conditions at a project site. and equipment preservation Policy coverage warand maintenance procedures, ranties generally provide a While a standstill and incident details can be maximum cessation coverproject exposure reviewed to establish requireage period and, once the can present numer- ments to restart the works. insurer is notified and Following a lengthy standassured that the property ous challenges, still period, a comprehensive will be protected and implementing a due diligence exercise will maintained, it may be open proactive approach need to be undertaken to to negotiating extended identify the structural, eleccoverage for the standstill to protecting and and mechanical integriperiod. If a project owner preserving property trical ty of the property at the does negotiate an extension, he or she will need to can help to mitigate work site. A detailed analysis to determine appropriate provide the insurer with the risks. actions, including the repair, periodic updates on the refurbishment, or replacement of property, project status and confirm that property will also be required. This process may conservation programs are maintained. require the assistance of third-party experts, as well as may require original Restart Operations equipment manufacturers to assist in the As a project emerges from standstill, the loss prevention efforts undertaken to secure review process.
For critical high-value equipment, project owners will need to determine what specific actions are required to reinstate the original equipment manufacturerâ€™s warranty provisions. Upon completion of the above process, the selection process for contractors and applicable consultants can be undertaken to restart the works, develop a revised time schedule and complete the project. While a standstill project exposure can present numerous challenges, implementing a proactive approach to protecting and preserving property can help mitigate the risks. This philosophy must resonate throughout the project team from the first indication of financial distress throughout the entire standstill period. With proper adherence to a comprehensive risk management policy, the project will have the solid footing required to emerge from standstill and re-initiate the works toward a successful completion. IJ Kania is senior vice president of construction for Liberty International Underwriters.
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N25
National Coverage News & Markets
Supreme Court Nominee Sotomayor Shows Record of Favoring Insurers Philadelphia-Based Insurance Attorney Finds Rulings to be ‘Very Insurer-Friendly’ thinks, Maniloff said. “The stereotypical view of a liberal would probably not have them being sympathetic to the insurance industry.” he Supreme Court almost never takes up There are numerous doctrines in the law of insurance related cases. Even so, President insurance coverage which, according to Obama’s recent Supreme Court nominee— Maniloff, make an insurer a seven-point underfederal appeals Judge Sonia Sotomayor — dog in every case because those doctrines typibrings a long record of decisions favoring cally favor policyholders. “That’s why insurers insurers, a possible plus for the insurance are always swimming against the tide in insurindustry, said Philadelphia based insurance ance coverage cases, because of these various attorney Randy J. Maniloff. rules on how you determine coverage that all Maniloff, who is a partner in the commerfavor the policyholder,” he cial litigation department said. of White and Williams LLP, In Maniloff’s experience, said that in his review of many courts find against Sotomayor’s insurance-relatinsurers because it’s so easy ed opinions, he discovered to point to one of the insurthat she ruled “consistentance doctrines. ly, across the board in favor In Maniloff’s review of of insurers.” Sotomayor’s insurance opinManiloff, who concenions, he found she was not trates his practice in the willing to “jump to the conrepresentation of insurers, clusion that one of these reviewed many insurancedoctrines applied and thererelated cases by Sotomayor fore coverage was owed.” and found that the overSotomayor was “extremely whelming majority of the thorough in going through cases resulted in opinions considered to be favorable Supreme Court nominee Sonia Sotomayor walks the decision to determine whether or not coverage to insurers. with U.S. Senator Arlen Specter to Specter’s Given her lengthy time hideaway office on Capitol Hill for a meeting in was owed and didn’t have that sort of knee-jerk reacon the bench, including on Washington REUTERS/Hyungwon Kang tion that coverage was owed the District Court and (UNITED STATES POLITICS) because of these doctrines Court of Appeals, Sotomayor has a long list of insurance coverage that favor insureds.” One such case Maniloff reviewed is Greenidge cases on her resume, Maniloff explained. “But v. Allstate Ins. Co., 446 F.3d 356, 364 (2d. Cir.) what I discovered in the course of looking at (Sotomayor, J.). In the opinion she wrote: Judge Sotomayor’s overall body of opinions on “Unfortunately, it was the Greenidges’ own coverage issues was far more interesting than actions, and not Allstate’s, that put them at any one case. Judge Sotomayor has been very, risk of a large adverse judgment. The law of very insurer-friendly during her time on the bad faith is not intended to reduce the incenbench.” tives of insured parties to protect their own In general, courts are not sympathetic to interests in situations where they are empowinsurers, according to Maniloff. While insurered to do so. In the instant case, the ance coverage cases rarely, if ever, make it to the Supreme Court — generally because insur- Greenidges had ample opportunity to protect their own interests. Allstate was aware of the ance is not considered a federal issue — Sotomayor’s insurance opinions could make the options available to the Greenidges, and it was also aware that the Greenidges were representcase that she’s not as “liberal” as everyone By Andrea Wells
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asserted against Maska nor reported to U.S. ed by private counsel. Allstate was therefore of forms having to be filed and whether or not Fire during the policy period.” entitled to assume that the Greenidges would they are effective, and she concluded that This appeal case involved a dispute between application of the pollution exclusion was not take steps to protect their own interests. The an insured, Maska, and two of its insurance Greenidges’ failure to do so does not convert precluded by Vermont public policy,” Maniloff carriers, Zurich Insurance Co. and United Allstate’s refusal to accept the Seay plaintiffs’ said. “When you read the decision, she cites States Fire Insurance Co., concerning coverage settlement offer into a display ‘of recklessness case after case after case — which seemingly for liability costs and related defense costs on the part of the insurer.’” support the policyholder position — and she incurred in connection with environmental This case in particular illustrates just goes through them one by one and distincontamination at Maska’s Sotomayor’s willingness to be guishes them by why they don’t apply.” manufacturing facility in extremely thorough in the Maniloff said while the Maska case isn’t a ‘Judge Bradford, Vt. analysis when finding in favor true coverage case, it did represent again the Sotomayor Maska, which manufacof the insurer, Maniloff said. thoroughness of the opinion. tured national hockey league The case involved a dispute There were at least seven cases Maniloff has been very, jerseys, used perchloroethyl- reviewed as to whether or not there was that were the most telling in her very insurerene (perc), a dry cleaning going to be $300,000 or finding in favor of insurers, he added. (See side to clean its fabrics. $600,000 available under the bar below). In all, Maniloff said Sotomayor was friendly during chemical Use of the chemical and its policy. “Allstate was adamant careful to examine the policy wording closely. her time on discharged wastewater, led to that there was only $300,000 “She goes through them, she analyzes, she a huge amount of environavailable — it went to trial and parses the policy wording and she decides the bench.’ mental contamination that the verdict came in at $2 milthat the policy language is ambiguous (or not) resulted in a multi-million lion,” Maniloff explained. in a much more detailed manner than just The question surrounded Allstate’s responsi- dollar settlement. The court determined that jumping to that conclusion or having a kneethe pollution exclusion did not apply. bility for anything more than $300,000. “The jerk reaction,” Maniloff said. “She takes that The case is not a true pollution exclusion plaintiffs had tried to get Allstate to agree to standard very seriously. That’s what I saw in a case, Maniloff said. The decision wasn’t based litigate the additional $300,000 they said was lot of these cases.” on coverage grounds but rather on grounds owed,” Maniloff said. Maniloff’s full review of Sotomayor’s insurthat certain forms had or had not been filed “It’s easy for a plaintiff to make the arguance-related opinions can be seen in his with the Vermont department of insurance. ment that an insurer didn’t do enough to pronewsletter titled, “Binding Authority” at “Vermont is unique in that regard, in terms tect the insured’s interest,” he said. “There was www.whiteandwilliams.com. IJ an opportunity according to the plaintiffs to protect the plaintiffs because they could have settled the case and then litigated the dispute and the insured would have had no personal exposure. The court ultimately said that reenidge v. Allstate Ins. Co., 446 F.3d 356 (2d. Cir.) (Sotomayor, J.) — rejected argument Allstate did not breach any duties and if anythat the insurer did not do enough to protect its insured’s interest to prevent a verdict body should have protected the interests, it’s in excess of policy limits. the insureds that should have protected their Hugo Boss Fashions Inc. v. Federal Insurance Co., 252 F.3d 608 (2d. Cir. 2001) (Sotomayor, J, own interest.” Dissenting) — strong dissent from majority opinion that adopted a test that expanded the Maniloff said the case involved coverage for a “duty to defend” under New York law. child that had been exposed to lead paint, Maska U.S. Inc. v. Kansa General Ins. Co., 198 F.3d 74 (2d. Cir. 1999) (Sotomayor, J.) — held which always adds a sympathetic factor, but that the insurer’s pollution exclusion was enforceable, despite regulatory and public policy ultimately the court ruled in favor of Allstate. challenges to it. In another case, Maniloff reviewed Maska Coregis Insurance v. American Health Foundation, 241 F.3d 123 (2d. Cir. 2001) (Sotomayor, J.) — U.S. Inc. v. Kansa General Ins. Co., 198 F.3d 74 (2d. held that no coverage owed based on a detailed analysis that the term “related to” is broader Cir. 1999) (Sotomayor, J.). In the opinion, than “arising out of.” Sotomayor wrote: Webster v. Mt. Vernon Fire Insurance, 368 F.3d 209 (2d. Cir. 2004) (Sotomayor, J.) — held that “We hold that the absolute pollution excluno coverage owed as the insurer did not violate New York’s very strict requirements of sions in the Zurich policies do not violate any Insurance Law Section 3420. established Vermont public policy, and that Mount Vernon Fire Ins. Co. v. Chios Constr. Corp., 1996 U.S. Dist. LEXIS 414 (S.D.N.Y.) Maska has waived its contention that Zurich’s (Sotomayor, J.) — held that there was “not even a metaphysical possibility” that a subconfailure to comply with the statutory filing tractor’s injury had to be paid by the general contractor’s insurer. requirements voids the exclusions. We further Noonan, Astley & Pearce v. Ins. Co. of Pa., 1994 U.S. Dist. LEXIS 3803 (S.D.N.Y.) (Sotomayor, J.) hold that coverage is not available under U.S. — no property coverage owed for disruption of an insured’s operations based on a very Fire’s Defender policy because the underlying strict interpretation of the policy’s “government agency” prohibition. IJ environmental liability claims were neither Source: Randy Maniloff, e-mail: email@example.com.
Sonia Sotomayor’s Pro-Insurer Coverage Cases
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N27
National Coverage News & Markets
Mystery Surrounds Air France Crash Liability Claims to Come Could Exceed $1 Billion, Some Experts Predict By Charles E. Boyle
he tragic disappearance of Air France flight 447 over the Atlantic early on June 1 remains a mystery. The plane’s 216 passengers and 12 crew members perished as all contact was lost with the Airbus 330-200 in the middle of the Atlantic Ocean. The crash site was finally located on June 6. Automatic data feeds, which were accessed hours after the plane went missing, registered an “electrical fault,” and described a succession of events that could have led to the plane’s demise between 11:10 and 11:14 p.m. local time. These included: failure of onboard computer systems (which, have backups); a loss of cabin pressure; the disengagement of the plane’s autopilot, and malfunctions in the speed and stabilization monitors. Those four minutes signaled the aircraft’s probable breakup. Whatever led to the AF447 tragedy may forever remain a mystery. Modern airliners, certainly the A330 series, which has an outstanding safety record (no fatal incidents since a test flight in 1994) don’t simply disappear in mid flight. Most fatal accidents, although there have been remarkably few lately (See chart below), occur at either landing or taking off. So far, the focus of current speculation centers on the “pitot” tubes, which monitor the speed of the aircraft. Airbus had indicated that these should be replaced with a more up to date device, as there had been reports that extreme cold made the speed readings unreli-
able. But Airbus did not make the change mandatory. Paul Louis Arslanian, the head of France’s air accident investigation agency, described the cause of the crash as stemming from “a series of events.” The series of failures, as recorded from the automatic signals, do seem to show a sequence and all of them in succession could have caused the fatal crash. However, other aircraft traversed the same zone at around the same time without having significant difficulties. If the flight recorders are ever recovered, they could provide some answers. But that seems an unlikely prospect.
Victim Compensation Given the circumstances, figuring out how to compensate the families won’t be easy. There are, however, certain international conventions and treaties that will apply. France’s AXA Group is the lead underwriter, but many other insurers are also involved, as aviation coverage is routinely spread among a number of carriers. Loretta Worters, vice president-communications of the Insurance Information Institute, provided the following summary by e-mail of the general guidelines that have been established to cover aviation disasters. For the A330200, she said it is “valued at around $180 million,” with the hull of the aircraft “insured for at least $100 million, probably more.” In terms of liability claims, there are differences between international and U.S. claims. U.S. commercial airline carriers have historically settled liability claims Worldwide Scheduled Air Service Fatal Accidents, 1998-2008 against them totaling between $1.5 million and Passenger Passenger $2 million per victim (if fatalities fatalities Fatal per 100 Fatal per 100 the accident took place in aircraft million aircraft million the U.S.). accidents Passenger passenger accidents Passenger passenger Year (1) fatalities kilometers Year (1) fatalities kilometers However, liability for personal injuries and 1998 20 904 0.03 2003 7 466 0.02 deaths involving interna1999 21 499 0.02 2004 9 203 0.01 tional flights falls under 2000 18 757 0.03 2005 17 712 0.02 the Montreal Convention, 2001 13 577 0.02 2006 12 751 0.02 2002 14 791 0.03 2007 11 587 0.01 which provides that air 2008 11 439 0.01* carriers are strictly liable for proven damages up to (1) Involving a passenger fatality only. 100,000 in “special draw*The Accident Rate decreased marginally, from approx. 0.01391 in 2007 to about 0.01370 in 2008 Source: International Civil Aviation Organization. ing rights” (SDR), a mix of
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Brazilian Navy picks debris from Air France flight AF447 out of the Atlantic Ocean, some 745 miles (1,200 km) northeast of Recife. REUTERS/Brazilian Air Force/Handout
currency values established by the International Monetary Fund (IMF). It established a payout of approximately $138,000 per passenger at the time of its ratification by the United States in 2003. As of June 2009, it had risen to around $154,800. The Montreal Convention was brought about mainly to amend liabilities to be paid to families for death or injury while on board an aircraft. As of December 2008, there were 87 signatories, including the United States, European Union (EU), Canada, China, Japan, Korea and Mexico. Where damages of more than 100,000 SDR are sought, the airline may avoid liability by proving that the accident that caused the injury or death was not due to their negligence or was attributable to the negligence of a third party. This defense is not available where damages of less than 100,000 SDR are sought. The Montreal Convention also amended the jurisdictional provisions of the Warsaw Convention. It now allows the victim or their families to sue foreign carriers where they maintain their principal residence, and requires all air carriers to carry liability insurance. Those lawsuits, however, could be costly. Plaintiffs may seek between $3 million and $4 million per passenger, according to sources in the London market, which, as a center of aviation underwriting, will have some exposures. When the A330’s value is added in, the claims could exceed $1 billion. IJ www.insurancejournal.com
Closer Look Construction
Contractor’s General Liability Coverage Limitations — A Road Filled with Landmines Grindle
By Gary Grindle
encon, a general contractor, was nearly finished constructing a five-story apartment building when an employee accidentally damaged a sprinkler head causing a leak. Gencon made an emergency call to the plumbing store next door, and Joe the plumber promptly arrived and quickly repaired the damaged sprinkler head before any significant water damage occurred. Unfortunately, one year after completing the project, the repair failed and the building experienced significant water damage. Gencon was sued and submitted a claim to its insurer. Much to Gencon’s dismay, the insurer denied coverage based on the fact that the faulty work was done by a Contractor’s subcontractor, Joe the general liability who policies, particularly plumber, did not have in the E&S marketinsurance that complied with place, often include the subcontraca variety of onerous tor’s warranty endorsements. limitation form on Gencon’s general liability policy. In its rush to fix the damaged sprinkler head, Gencon had failed to ask Joe the plumber for a COI. Gencon learned a hard lesson and worked with its agent to negotiate the removal of that form at its next renewal. This type of restriction is not uncommon. Contractor’s general liability policies, particularly in the excess and surplus (E&S) marketplace, often include a variety of onerous www.insurancejournal.com
endorsements. This article touches upon just a few of the more common and difficult. Remember different carriers apply different labels to many of these forms. Broadened Injury to Employee Endorsements The ISO Commercial General Liability Coverage Form (12/07) provides for an important exception to the exclusion for bodily injury to the insured’s employees (exclusion e, Section 1, Coverage A). The standard exclusion does not apply to liability assumed by the insured under an “insured contract.” It is not uncommon for carriers to attach forms that eliminate this
important exception to the employee exclusion, particularly for contractors operating in New York where “action over” claims are relatively common. These endorsements are often referred to as “labor law” exclusions, and their intent is to preclude coverage for claims by injured employees. These typically involve claims made against the general contractor and/or job owner, alleging that they violated “safe place to work” requirements (e.g., N.Y. Labor Law S240 commonly referred to as “the scaffolding act”). The general contractor or owner would then typically look to the employee’s employer (i.e., the general contractor or subcontractor) for continued on page N30
June 15, 2009 INSURANCE JOURNAL-NATIONAL REGION | N29
Closer Look Construction Contractor’s, continued from page N29
coverage via the indemnification agreement in the construction agreement. The elimination of coverage for these “action over” type claims presents a major gap in coverage, and every attempt should be made to have this type of limitation removed. Classification Limitation Carriers will use this type of endorsement in an attempt to restrict coverage to the specific operations/exposure that they’ve classified and rated for on the policy. One carrier’s form reads as follows: “This insurance applies to ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ not otherwise excluded herein, arising out of only those operations which are described by the classification shown on the Commercial General Liability Coverage Declarations, its endorsements and supplements.” The problem with these forms is that ISO commercial lines classifications were never intended to be fully descriptive of a contractor’s operations and as a result, they leave significant room for coverage disputes in situations in which a contractor is involved in ancillary activities not clearly described by the classification itself. If possible, attempts should be made to have these limitations removed or to have the carrier utilize a manuscript form that more clearly outlines the covered activities.
It’s important to note that there are exceptions to this section; refer to the policy language for details. This is the section of the definition most applicable to contractors utilizing construction and subcontractor agreements. Carriers, particularly in the E&S markets, often attach ISO form CG2139 (10/93), Contractual Liability Limitation, which eliminates section “f.” of the definition of “insured contract.” By eliminating section “f.” most all contractual coverages are removed. There would be no coverage for liability assumed in a construction agreement or for “action over” type claims. This is a major gap in coverage and every attempt should be made to negotiate for the removal of this endorsement.
Contractual Limitation The ISO Commercial General Liability Coverage Form (12/07) provides relatively broad contractual coverage within the basic contract. Most notably, item “f.” within the definition of “insured contract” (12/07) specifies that an insured contract includes: “That part of any other Cross Suits Exclusion contract or agreement perResidential These endorsements are taining to your business sometimes very broad and (including an indemnification exclusions can be of a municipality in connecvery broad or more may exclude coverage for suits by any insured against tion with work performed for narrowly focused. any other insured. There are a municipality) under which also examples where carriers you assume the tort liability include language that precludes coverage for of another party to pay for ‘bodily injury’ or ‘propsuits by employees (with no exception for liaerty damage’ to a third person or organization. bility assumed under an “insured contract” Tort liability means a liability that would be — a major concern in states such as New imposed by law in the absence of any contract or York where employee “action over” claims are agreement.” N30 | INSURANCE JOURNAL-NATIONAL REGION June 15, 2009
common). Language that excludes coverage for suits by any insured against any other insured should be avoided, most notably because it could exclude coverage for a suit brought by any party included as an additional insured under the named insured’s policy. If this type of endorsement cannot be removed, every attempt should be made to limit its applicability to suits by one named insured against another named insured, or at least only to suits between organizations in which the named insured has a controlling interest. Exclusion – Damage to Work Performed by Subcontractors on Your Behalf ISO form CG2294 (10/01) or a carrier’s equivalent endorsement eliminates the exception to the exclusion for damage to “your work” (exclusion l., Section I, Coverage A of the Commercial General Liability Form 10/07) for work performed on the insured’s behalf by subcontractors. If your insured utilizes subcontractors, this type of restriction presents a significant gap in coverage. If your insured is a general contractor, it virtually eliminates completed operations property damage coverage, at least in terms of the work done by or on behalf of the insured. Once again, this type of restriction needs to be understood and, if subcontractors are utiwww.insurancejournal.com
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Berkley Regional Specialty Insurance Company 14902 North 73rd Street Scottsdale, AZ 85260
Vanliner Insurance Company One Premier Drive St. Louis, MO 63026
Express Scripts Insurance Company One Express Way St. Louis, MO 63121
The above company has made application to the Division of Insurance to obtain Surplus Lines Authority to transact Property and Casualty insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Life, Accident, and Health insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, One South Station, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, One South Station, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, One South Station, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
June 15, 2009 INSURANCE JOURNAL-EAST REGION | 43
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