Insurance Journal

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ENHANCING AGENCY VISIBILITY Tips to Increase Web Traffic

SOCIAL NETWORKING In an Insurance World

50 REASONS Why Agents Choose MGAs

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Inside This Issue May 4, 2009 • Vol. 87, No. 9 • West Region

DEPARTMENTS

WEST COVERAGE 8

| Study: Employees Undermine Data Breach Prevention Strategies Many Employees Disable Encryption Solutions on Laptops.

9

| Risk Factors for Technology Industry Changing With Economy Tech Firms Have Growing Concerns About Product Liability

6 12 14 N24

| | | |

Opening Note People Business Moves MyNewMarkets

10 | California Remains Top Spot for Vehicle Thefts Yet Overall Vehicle Thefts Declining Nationwide

N12 SPECIAL REPORT Salute to Super Regionals 2009 Super Regional P/C Insurers™ Leading Multi-State Carriers Revealed

18 | Increase Traffic to Your Internet ‘Real Estate’ Enhance Your Agency’s Online Visibility Through Search Engine Optimization

IDEA EXCHANGE NATIONAL COVERAGE N12 | SPECIAL REPORT: Salute to Super Regionals 2009 Super Regional P/C Insurers™ Leading Multi-State Carriers Revealed N18 | Risk Managers Report ‘Soft Landing’ for Market Pricing Survey Says Commercial Insurance Market Still Overcapitalized

23 | Is Your Database Holding You Back?

How to Create a Culture of E-Mail Collection in Your Organization 24 | ‘Dress’ Your Insurance Business Communications for Success From E-Mail, to Phones to Letterhead, Image Conveys a Lot to Clients N1 | Don’t Expect Top Dollar if Your House Is in Chaos Keep Financials, Book of Business in Order

N18 | Bad Economy Not Impacting Essential Insurance Coverages Industry Study Says Most Keep Auto, Homeowners Insurance

N6 | Minding Your Business How to Improve Productivity in a New Economy

N22 | Closer Look: Agency Technology Social Networking, Web 2.0 Changing the Way the Industry Does Business

N10 | Survey: Regional Carriers Agents, Rate Your Regional Carriers in a New IJ Sponsored Survey

N26 | Special Report: AAMGA Issue ‘Red Flags’ to Watch For When Choosing an MGA Partner

N36 | Closing Quote Being Prepared: Don’t Lose Sight of the Greater Risks We Face

N27 | Special Report: AAMGA Issue 50 Reasons Why Retail Agents Choose MGAs N30 | Spotlight: 2009 Premium Finance Directory

4 | INSURANCE JOURNAL-WEST REGION May 4, 2009

9 Risk Factors for Technology Industry Changing With Economy Tech Firms Have Growing Concerns About Product Liability

18 Increase Traffic to Your Internet ‘Real Estate’ Enhance Your Agency’s Online Visibility Through Search Engine Optimization

24 ‘Dress’ Your Insurance Business Communications for Success From E-Mail, to Phones to Letterhead, Image Conveys a Lot to Clients

www.insurancejournal.com

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Idea Exchange Opening Note

Welcome to Encryption Nation

Publisher Mark Wells Chief Executive Officer Mitch Dunford

EDITORIAL

T

echnology is enabling independent insurance agencies to conduct business faster than ever. With the press of the return button on a computer, agencies can launch a targeted e-mail marketing campaign to a specific customer niche in seconds.

While technology is well and good, agents that haven’t done so already need to get smart about encryption. With electronic insurance transactions and correspondence, agents and customers transfer a lot of confidential information. Moreover, insurance agencies and other businesses are fast approaching a legal mandate that they encrypt any customer information that they transmit through the Internet or store on their laptops, flash drives, backup tapes and any other devices that may contain digital records of their customers’ personal information.

Encryption — for those who have never heard of it — refers to a relatively simple process of rendering data so that only persons with a key can understand it. Without this so-called key, any information stored on a computer, tape drive or elsewhere is effectively useless. It’s simple, and relatively cheap to do. And given the extent of high-profile data breaches in the past several years, it’s a process that probably should have become routine in any insurance setting years ago.

Nevada was the first state in the nation to require businesses to encrypt any personal information that gets transmitted electronically.

Personal information includes things like names, social security numbers, credit card numbers and any other data that leaves consumers open to identity theft if that information were to fall into the wrong Stop putting hands. Although the Nevada law is fairly toothless — it doesn’t spell out fines or penalties for businesses that fail to comply — passwords it shows the direction that state governments are moving with on sticky respect to becoming proactive about protecting citizens’ personal information. notes, require Massachusetts enacted a similar law this year that goes a passwords for step farther by requiring businesses to encrypt data that is both transmitted or stored. It also mandates that businesses formaldesktops and ize their written computer security procedures for anyone who encrypt all has access to customers’ personal information. The law carries pretty significant fines — $5,000 and up — for businesses that backups. ignore it. The deadline for complying with some parts of the law in the Bay State is May 1, 2009, and Jan. 1, 2010 for other parts of the law.

Whether other states will follow Nevada’s and Massachusetts’ lead, is anyone’s guess.

But it’s fair to say that with two states’ encryption laws on the books, plus 44 states with data breach notification laws in place, the momentum is building.

The Independent Insurance Agents & Brokers of America’s ACT Working Group, which is a partnership of independent agents, companies, technology vendors, user groups and associations dedicated to enhancing the use of technology and improved work flows within the independent agency system, maintains an ongoing report about data security in the independent agencies. Most of it is pretty common sense stuff.

Among the procedures recommended: Stop putting passwords on sticky notes, require passwords for desktops and encrypt all backups. For agents looking to outsource that responsibility, the report recommends consid- Patricia-Anne Tom ering an outside data center, some of which West Editor ptom@insurancejournal.com even employ armed guards.

Editor-in-Chief Andrea Ortega-Wells | awells@insurancejournal V.P. Content/ and Interim Midwest/Southeast Editor Andrew Simpson | asimpson@insurancejournal.com East Editor Kenneth J. St. Onge | kstonge@insurancejournal.com South Central Editor Stephanie K. Jones | sjones@insurancejournal.com West Editor Patricia-Anne Tom | ptom@insurancejournal.com MyNewMarkets Associate Editor Chris Boggs | cboggs@insurancejournal.com International Editor Charles E. Boyle | cboyle@insurancejournal.com Columnists Catherine Oak, Bill Schoeffler Contributing Writers Steve Adams, Julian Aston, Daniel Price, Richard Ward, Nicole Bissett

SALES V.P., Sales & Marketing Julie Tinney (800) 897-9965 x148 jtinney@insurancejournal.com West Dena Kaplan (800) 897-9965 x115 dkaplan@insurancejournal.com South Central Eric Jeter (281) 655-0234 ejeter@insurancejournal.com

Midwest Lauren Knapp (800) 897-9965 x161 lknapp@insurancejournal.com Southeast Howard Simkin (800) 897-9965 x162 hsimkin@insurancejournal.com East Dave Molchan (800) 897-9965 x145 dmolchan@insurancejournal.com

MARKETING Marketing Administrator Gayle Wells | gwells@insurancejournal.com Advertising Coordinator Erin Burns | eburns@insurancejournal.com (619) 584-1100 x120 New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classified and Ancillary Sales Manager Nicola Coghill | ncoghill@insurancejournal.com (619) 584-1100 x125 New Media Producer Chad Reese | creese@insurancejournal.com

DESIGN/WEB Vice President/Design Guy Boccia | gboccia@insurancejournal.com Vice President/Technology Joshua Carlson | jcarlson@insurancejournal.com Graphic Designer Jamie Bethell | jbethell@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com

A D M I N I ST R AT I O N Accounting Manager Megan Sinclair | msinclair@insurancejournal.com Admin./ Marketing Asst.

Kristina Delavega | kdelavega@insurancejournal.com Cover designed by: Guy Boccia

Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Publishing, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2009 Wells Publishing, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Publishing, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 9049, Maple Shade, NJ 08052

6 | INSURANCE JOURNAL-WEST REGION May 4, 2009

FOR QUESTIONS REGARDING SUBSCRIPTIONS: please call 856-380-4176 or email subscribe@insurancejournal.com. You may subscribe or change your address online at insurancejournal.com/subscribe.

ARTICLE REPRINTS: For reprints of articles in this issue, contact Rhonda Brown at 1-866-879-9144 ext. 194 or rbrown@fostereprints.com. Visit insurancejournal.com/reprints for more information.

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West Coverage Snapshot

Study: Employees Undermine Data Breach Prevention Strategies

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any employees disable the encryption solutions on their laptops, putting their employers at risk for data breaches, according to a study by Absolute Software Corp. and The Ponemon Institute.

The study, “The Human Factor in Laptop Encryption: US Study,” examined the use of encryption on laptops by employees within U.S. corporations. Data revealed that more than half (56 percent) of business (non-information technology) managers polled disable the encryption solution on their laptops.

Ninety-two percent of IT security practitioners reported that someone in their organization has had a laptop lost or stolen, and 71 percent reported that it resulted in a data breach. Results indicated that it is employee behavior that undermines data protection efforts in corporate America.

“The data suggests that, because of user behavior, encryption alone is not enough to protect mobile devices and the sensitive data stored on them,” said Dr. Larry Ponemon, chairman and founder of the Institute. “These statistics are especially disconcerting when combined with our recent studies demonstrating that lost or stolen laptops are the No. 1 cause of data loss, with 3

out of 4 companies experiencing a data breach when a laptop has been lost or stolen.”

The report showed that many business managers fail to take precautions to secure their laptops,such as using additional security solutions, and instead are overly dependent on encryption solutions to protect the sensitive data on their laptops.

Other key findings of the study: • 56 percent of business managers had disengaged their laptop’s encryption; • Only 45 percent of IT security practitioners reported that their organization was able to prove the contents of missing laptops were encrypted; • Only 52 percent of business managers — most likely to have access to the most sensitive data (personally identifiable information and/or intellectual property) — have had employerprovided encryption; • 57 percent of business managers either keep a written record of their encryption password, or share it with others in case they forget it; • 61 percent of business managers share their passwords, compared to only 4 percent of IT managers; and, • business managers are much more likely than IT security practitioners to believe encryption makes it unnecessary to use other

security measures for laptop protection.

In the event of a theft, companies relying solely on encryption cannot be sure whether all stored data on a laptop has been encrypted, if it has been compromised or even which files have been accessed by thieves, the study said. This can leave corporations with gaping holes in security efforts, and risk exposing the company, employees, customers and consumers to data and identity theft.

To help solve security risks, companies can employ a security solution that can locate a stolen laptop, detect which data has been accessed, and remotely delete sensitive data.

“While encryption technology provides a high-degree of data protection, it must be complemented by additional security layers that are not dependent on the diligent behavior of corporate employees,” said John Livingston, chairman and CEO of Absolute.

“If I were tasked with data security, I would ... immediately assess my company’s data protection strategy ... Corporations may incorrectly assume that since it is company policy to encrypt mobile data, they are not at risk for a data breach. With more than half of business managers disabling their encryption solutions, companies are left incredibly vulnerable to theft and data loss if they do not utilize additional layers of security.”

U.S., U.K., and Canada “The Human Factor in Laptop Encryption” studies are available at www.absolute.com/humanfactor. IJ

most active on record, the risk modeling firm said.

Inc., a subsidiary of Zurich Financial Services Group. Farmers Group Inc. will sell the underlying insurance entities to the Farmers Exchanges, which Farmers Group Inc. manages but does not own.

This acquisition by the Farmers Exchanges will position Farmers as the third-largest overall personal lines insurer in the United States, and will position the Farmers Exchanges as the largest auto insurer in several states, including California. IJ

It Figures 4 to 5 Risk Management Solutions of Newark, Calif., predicts a storm season similar to 2008 could occur every four to five years on average.

Last year’s season, which included nearly 1,700 tornadoes, was the costliest in the past decade, with more than U.S. $10.5 billion in insured losses, and the second 8 | INSURANCE JOURNAL-WEST REGION May 4, 2009

$1.9 billion The acquisition price Farmers Insurance Group of Companies said it will pay for American International Group’s Personal Auto Group, which includes 21st Century Insurance Co. Under the agreement, 21st Century Insurance Group, the wholly owned subsidiaries comprising AIG’s U.S. personal auto insurance business, will be sold to Farmers Group

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Risk Factors for Technology Industry Changing with the Economy

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oday’s technology leaders face challenging times in unprecedented circumstances. Many of the risk factors that topped the list of greatest concerns for tech companies — foreign competition, intellectual property infringement, development of new products and services and talent attraction and retention — have not changed “But new risks are topping our clients’ list of concerns,” according to Julie Davis, of Aon Corp.

Speaking in Silicon Valley, Calif., Davis outlined new risk factors and trends for technology firms managing risks, gathered from a survey Aon conducted. New concerns include: changes in economic conditions, growing concerns about product liability, changes in technology risks, changes in liabilities to board members, exposures associated with international alliances and joint ventures, ability to drive strategic plans, executive compensation tied to stock prices, competition from other countries, and the need for continued research and development investments.

“Clearly, our clients had a lot on their minds over the past six months,” Davis said. She further commented that the changes in risk factors should be incentives for technology firms to broaden their view of how they manage risks.

Michael Flanagan, managing director of Aon’s National Technology Practice, added that in response to the shifting climate, new insurance products and risk services are responding. He cited two examples, which included the recent announcement of a suite of insurance coverages for middle market technology firms and the expansion of the company’s “TechAudit” diagnostic program.

Davis has served as executive vice president in Aon Technology practice group. She has a background in risk management experience for private and publicly traded companies and is responsible for the contribution to the growth of the practice in California.

The California Women’s Network is a women’s association designed for leaders of new or growing companies with fewer than 1,000 employees and leaders of autonomous business units in larger organizations. The event for which Davis was the keynote speaker attracted more than 100 professional women. IJ

www.insurancejournal.com

Declarations Financial Investment “The investment in the Hartford is purely financial, not strategic.”

— Sabia Schwarzer, a spokeswoman for Allianz of America, commenting on the company’s interest in purchasing Hartford Financial Services Group Inc. The Hartford is trying to sell its property/casualty insurance business, as the U.S. insurer reels from massive losses, according to Reuters. Allianz made a $2.5 billion investment in Hartford last October, giving it a stake, and the ability to raise its ownership.

Disciplining Doctors “The overall national downward trend of serious disciplinary actions against physicians is troubling because it indicates many states are not living up to their obligations to protect patients from bad doctors.”

— Sidney Wolfe, M.D., Public Citizen’s acting president and director of its Health Research Group. Most states, including California and Florida, are failing to adequately discipline doctors who are practicing substandard medicine, according to the most recent annual ranking of state medical boards by the watchdog group Public Citizen. According to the report, overall, the rate of discipline for doctors in 2008 was 21.5 percent lower than the peak year of 2004. In 2008, there were 2.92 serious disciplinary actions per 1,000 physicians, compared to 3.72 actions per 1,000 physicians in 2004.

Staying Power “While 90 percent of customers overall stayed with their insurance carrier during the past 12 months, those households that are potentially more impacted by the recession present a real challenge for insurance carriers. As such, keeping customers on board is absolutely critical for the long-term profitability of an insurance carrier.”

— Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, commenting on the company’s 2009 Personal Insurance Retention Special Report that found in the past 12 months, 30 percent of households with annual incomes below $50,000 shopped for a new insurance carrier and 45 percent of those customers eventually switched carriers.

Piracy Premiums “Piracy has been an issue for some time and it has already lead to higher insurance premiums. Premiums are going to go up because the pirates are going to become a little more vicious and hold out for more money” — Paul Keane, a partner at Cichanowicz, Callan, Keane, Vengrow & Textor LLP, who specializes in maritime cases. The recent rescue of an American sailor from Somali pirates by the U.S. Navy will likely make marine insurance more expensive, not least because the killing of three pirates could lead to an escalation of violence against unarmed crews, according to a Reuters report. IJ May 4, 2009 INSURANCE JOURNAL-WEST REGION | 9

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West Coverage News & Markets

California Remains Top Spot for Vehicle Thefts

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he National Insurance Crime Bureau Americans aren’t shelling out as much to cover (NICB) reported that 2008 marked the the cost of stolen vehicles in their insurance nation’s fifth consecutive year of declining premiums. We’ve also seen significant decreasvehicle thefts in the United States. Although es in key areas along the border such as San most areas experienced a reduction in vehicle Diego, where thefts dropped nearly 20 pertheft, there were several noteworthy excepcent. tions in states that border Mexico.

“The bad news is that the theft rate continCalifornia ranked No. 1 in total vehicle ues to increase in areas like El Paso and thefts, with six of the top 10 hotspots for vehiLaredo where many of the cars, trucks and cle theft in 2008 in the Golden State. The SUVs being stolen are being used to carry Texas metropolitan statistical area (MSA) of El drugs, money and weapons into and out of Paso, Laredo and San Antonio, along with Las Mexico,” Wehrle continued. “These vehicle Cruces in New Mexico, each saw an increase in thefts are helping finance the drug cartels that 2008. (See Top 10 Hotspots below) are waging war on the Mexican government.

NICB’s Hot Spots report examined vehicle “NICB has a long history of working with theft data obtained from the National Crime Information Center (NCIC) for each of the The hotspots for vehicle theft in 2008 were: nation’s MSAs. MSAs are Metropolitan Statistical Area 2008 Thefts 2007 Rank designated by the Office 1. Modesto, Calif.; 4,235 1 of Management and 2. Laredo, Texas; 1,960 6 Budget (OMB) and often 1,828 9 include areas much larger 3. Yakima, Wash.; 4. San Diego-Carlsbad-San Marcos, Calif.; 22,554 3 than the cities for which 5. Bakersfield, Calif.; 5,918 15 they are named. For 6. Stockton, Calif.; 4,963 4 example, the Modesto 7. Las Vegas-Paradise, Nev.; 13,662 2 MSA includes the entire 8. Albuquerque, N.M.; 6,182 7 county of Stanislaus and 9. San Francisco-Oakland-Fremont, Calif.; 30,735 5 other municipalities in 10.Fresno, Calif.

6,533 11 addition to the city of Source: NICB Modesto.

The rate is determined by the number of vehicle theft offenses per 100,000 inhabitants using the U.S. and Mexican authorities to recover and 2008 U.S. Census Population Estimates, the return stolen vehicles — more than 4,000 last most current figures available. year alone. We strongly support efforts at the Preliminary 2008 crime data released by the federal and state levels to reduce the flow of FBI in January indicates that 2008 will post a stolen vehicles across the border,” Wehrle said double-digit decline in vehicle theft when final The National Insurance Crime Bureau, numbers are released in the fall. If the prelimi- headquartered in Des Plaines, Ill., is a not-fornary figure of -12.6 percent holds, it will be the profit organization dedicated to preventing, largest single year percent drop in thefts since detecting and defeating insurance fraud and 1999. All the top 10 hotspots for 2008 saw a vehicle theft through information analysis, decline in the total number of vehicle thefts investigations, training, legislative advocacy for that MSA from 2007. and public awareness. The NICB is supported “This is a mixed bag of good news and bad by more than 1,000 property and casualty news on the vehicle theft front,” said Joe insurance companies and self-insured organiWehrle, NICB president and CEO. “The good zations. news is, we’re seeing steady progress in reducFor information on Hot Spots, visit ing the overall theft rate and that means www.nicb.org. IJ

Top 10 Vehicle Theft Hotspots

10 | INSURANCE JOURNAL-WEST REGION May 4, 2009

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West Coverage People

Joseph Tracy

William Krivoshik

Jim Gibbs

Guy Newman

Jeff Akers

Nancy Parsons Patterson

Joseph Tracy was named president of Travelers Inland Marine business unit. Tracy, who joined Travelers in 2006, most recently served as chief underwriting officer for the Inland Marine business unit. He previously was the head of OneBeacon Insurance’s Inland Marine operations. He also has held positions with the Chubb Group of Insurance Cos. and Kemper Insurance Cos. He succeeds Richard Rowley, who founded Travelers Inland Marine in 1982. Rowley will continue as a senior adviser with the organization.

New York-based brokerage Marsh & McLennan Cos. has named William Krivoshik chief information officer and senior vice president. In the newly created position, he will oversee MMC’s technology strategy and architecture.

Krivoshik most recently served as the chief technology officer at Thomson Financial, where he oversaw technology and information operations globally. He has also held senior technology positions with Citigroup, Travelers and American International Group, where he was chief information officer.

Der Manouel Insurance & Financial Services announced that Jim Gibbs and Guy Newman have joined the commercial lines unit as risk consultants.

Gibbs brings 30 years experience to the agency and will work on developing middle market commercial account opportunities in construction, real estate and bonding. He has previously held positions with Aetna Life and Casualty and was principal of Lundberg Insurance. He specializes in construction, real estate and bonding accounts.

Newman will lead the agency’s agriculture practice and will provide sales and operational experience. He began his career in 1971 with Industrial Indemnity/Crum & Forster Insurance Co. He formed his own brokerage firm in 1981, and joined Lundberg & Associates, the predecessor of Hilb Rogal & Hobbs, in 1983. He was president of HRH’s Central Valley operations from 2001 to 2008. He joined Der Manouel Insurance Group in April 2009. He specializes in agribusiness, food processing manufacturing and group associations.

Greg Gordon also joined Der Manouel Insurance Group to lead the Agribusiness practice. Gordon began his insurance career in the 1970s in central California. In 1979, he purchased an agency in Dinuba, Calif., which merged with Hilb Rogal & Hobbs (HRH) in 1983. He started his own agency in New York in 1993, and in 2000, returned to California to rejoin HRH. He specializes in agribusiness, manufacturing and institutional accounts.

The employee benefits department of United Risk Solutions Inc. expanded into Portland, Ore., and hired Jeff Akers as employee benefits consultant. Akers brings 20 years experience in employee benefits to his new position. Prior to joining United Risk, he was director of sales and account services for The ODS Companies in Portland.

Previous positions include vice president of sales and marketing at Complementary Healthcare Plans, and sales and

12 | INSURANCE JOURNAL-WEST REGION May 4, 2009

management roles at Providence Health Plans, Regence BlueCross BlueShield of Oregon and Regence Life and Health.

In addition, United Risk Solutions also named Nancy Parsons Patterson accounting manager, responsible for managing all accounting functions including payroll, accounts payable and receivable, and 401(K) administration.

Patterson has more than nine years experience in the insurance field, including insurance accounting. Since early 2008, she was personal lines account manager at United Risk, and previously held account manager positions at several local insurance agencies, including Western States Insurance.

Bermuda-based Everest Re Group appointed Mark Herman president of its newly created Everest Specialty Underwriters. The new division is based in New York and will focus on the professional lines markets, specifically directors and officers and errors and omissions products for the primary insurance market. Herman joins Everest from Valiant Insurance Group, where he served as non-executive chairman. Prior to that he was co-president of Ariel Holdings Ltd., and before that he was president and CEO of ACE Bermuda.

Aon Global Risk Consulting appointed Graham Heath director of Risk Control UK to help UK corporate clients to improve their business performance through effective management of their risks. Heath will support the firm’s retail broking teams in promoting and delivering risk management services as component of Aon’s overall proposition for clients. Heath has over 20 years of management experience within the insurance industry. He was previously managing director of his own company, Calculated Risks Ltd. Prior to that, he was also responsible for setting up Norwich Union Risk Services.

Swett & Crawford appointed Robert Peterson program manager for a new product, the Swett & Crawford Program for Contractors Auto, to be marketed with its carrier partner, Travelers Companies Inc. This newest collaboration with Travelers combines automobile products, loss control, claims management and financial strength with the company’s experience in automobile underwriting.

Before joining Swett & Crawford, Peterson worked with Crum & Forster in San Francisco as special accounts underwriting manager, where he managed a $17 million book of large account workers’ compensation business. His focus was exclusively on accounts with loss pick of $750,000 or more.

Peterson previously has worked for General Reinsurance Corp. in San Francisco, PAUSE Services LLC and later ACE USA as assistant vice president and public entity underwriter handling excess liability for cities, counties, pools, special districts and non-profit agencies. He also previously served in the U.S. Navy Reserve retiring with the rank of Captain. IJ www.insurancejournal.com

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速速

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West Coverage Business Moves The transaction excludes AIG’s Private Client Group, which provides property and casualty insurance to high net worth individuals.

Under the agreement, 21st Century Insurance Group, the wholly owned subsidiaries comprising AIG’s U.S. personal auto insurance business, will be sold to Farmers Group Inc., a subsidiary of Zurich Financial

Farmers, American International Group (AIG), 21st Century Insurance Co. Los Angeles-based the Farmers Insurance Group of Companies announced it will acquire American International Group’s (AIG’s) Personal Auto Group, which includes 21st Century Insurance Co. The acquisition price is $1.9 billion, subject to post closing adjustments.

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Services Group. Farmers Group Inc. will sell the underlying insurance entities to the Farmers Exchanges, which Farmers Group Inc. manages, but does not own.

FGI will pay AIG $1.9 billion, consisting of $1.5 billion in cash and $400 million in face amount of subordinated, euro-denominated capital notes backed by Zurich Insurance Co., Zurich’s principal operating unit. FGI also will assume 21st Century’s outstanding debt of $100 million.

The acquisition is expected to close no later than by the third quarter of 2009 pending customary regulatory approvals, Farmers said.

This acquisition by the Farmers Exchanges will position Farmers as the third-largest personal lines insurer in the United States, according to the company’s most current insurance industry data. The acquisition also will position the Farmers Exchanges as the largest auto insurer in several states, including California.

Currently, 21st Century, which includes the former AIG Direct business and Agency Auto business, operates in 49 states and Washington, D.C., The company has more than 2.4 million customers and insures more than 4 million vehicles across the country.

The company is the third-largest traditional direct writer of insurance in the United States, Farmers said.

“Farmers takes great pride in being a customer-focused, growth-oriented organization and this acquisition represents the perfect strategic fit,” Farmers CEO Robert Woudstra said.

“We are very pleased to reach agreement on a $2 billion transaction, especially in this market environment,” said Edward Liddy, AIG’s chairman and CEO. “In addition, we are moving forward with discussions for several other transactions, and we continue to evaluate how best to assure the continued strength and success of all of AIG’s businesses.”

Woudstra said Farmers’ national network of insurance agents will benefit from the proposed acquisition by gaining additional continued on page 16

14 | INSURANCE JOURNAL-WEST REGION May 4, 2009

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West Coverage Business Moves Business Moves, continued from page 14

multi-line product sales opportunities from 21st Century customers.

“This acquisition will be a significant win for consumers because it will enable 21st Century customers to have access to Farmers agents, who can help them with their other insurance needs, such as homeowners, business, specialty products, life insurance and financial service products,” he said.

He added that the acquisition will provide Farmers with a geographically broader and more diverse market presence across the country, including the eastern seaboard — a key target market for future Farmers growth.

Fortegra, Bliss & Glennon, Willis HRH Jacksonville, Fla.-based Fortegra Financial Corp., an insurance services company specializing in affinity marketing, payment protection, mass marketing and administration, completed the acquisition of Bliss & Glennon Inc. from Willis HRH Inc. The financial terms of the transaction were not released.

Bliss & Glennon is engaged in the business of transaction-based wholesale insurance brokerage and is a surplus lines general insurance agency with binding authority. The completion of this transaction positions Fortegra Financial to continue to expand in its insurance distribution and service business to include wholesale brokerage.

Fortegra’s President and CEO Richard S. Kahlbaugh observed, “Since recapitalizing the company with Summit Partners, we have continued to assess the strength of our platform and looked for strategic opportunities to complement the very unique nature of our product delivery systems. We are thrilled to be joining forces with the outstanding team at Bliss & Glennon. This acquisition accelerates our effort to expand our distribution platform and capabilities. In the future we will continue to focus on our distribution and administration business and look to expand our presence by entering new geographic markets and product segments.”

“We decided to look for a new home for

Bliss and Glennon because it did not fit with our long-term strategy to focus our attention and resources on our retail brokerage business in the U.S,” said Joe Plumeri, Chairman and CEO, Willis Group Holdings.

Piper Jaffray served as the exclusive financial advisor to Fortegra.

Guy Carpenter & Co., John B. Collins Associates Guy Carpenter & Co. LLC completed its acquisition of John B. Collins Associates Inc., the fifth largest reinsurance intermediary in the United States and seventh largest in the world. The acquisition strengthens Guy Carpenter’s capabilities in medical professional liability, agriculture, Florida property, program, and regional specialty lines of business. Transaction terms were not disclosed.

Peter Zaffino, president and CEO of Guy Carpenter, said, “The combination of the specialty capabilities of Collins with our existing platform will deliver better solutions for our clients.” IJ

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West Coverage Search Engine Optimization

Increase Traffic to Your Internet ‘Real Estate’ Enhance Your Agency’s Online Visibility Through Search Engine Optimization

By Stephanie K. Jones • 30 percent did no Internet advertising.

N

early half of the United States — more than 163 million people — are using the Internet, according to a recent Nielsen poll. And they are using search engines to research local businesses far more than they are looking them up in the Yellow Pages.

A survey published last fall by Nielsen Online and local online marketing specialist, WebVisible, showed that 82 percent of U.S. consumers are using Internet search engines such as Google and Yahoo to find local businesses in their communities. Meanwhile, 57 percent of survey respondents said they use the print Yellow Pages to research local business. (See “Search Engine as Local Business Research Tool” on right.)

This growing use of the Internet to find business services and products demands that small- to mid-sized insurance agencies maximize the effectiveness of their firm’s Web site to attract consumers to their piece of online “real estate,” said James Omdahl, an online marketing specialist based in Denver.

In a presentation at the Independent Insurance Agents of Texas’ Joe Vincent Management Seminar held in Austin in late January, Omdahl pointed out that the Nielson-WebVisible survey also showed a “huge gap” between what small businesses 18 | INSURANCE JOURNAL-WEST REGION May 4, 2009

are doing to make themselves “found” on the Internet and consumers’ attempts to seek them out. Some statistics Omdahl found notable: • 44 percent of small business owners have a Web site.

• 61 percent spend three hours a week or less marketing their Web site.

• 51 percent said their site’s customer acquisition capability — the ability to turn a Web site visitor into a customer — was fair to poor.

• 50 percent are spending less than 10 percent of their marketing budget on Internet advertising.

• 26 percent have invested in search engine marketing in one way or another.

Becoming Visible “Big companies will figure out how to take customers from you if you don’t figure out how to do it first,” Omdahl said. The opportunity for small- and medium-sized businesses in the insurance market lies in their ability to specialize and become visible and “findable” for that specialty on the Internet. “Be more specific on the business that you’re focusing on … if you have a specialty, you’re going to be good at that; if you work with a specific type of clients, you’re going to be good at that,” Omdahl said. “That’s where the opportunity lies in 2009.”

He noted two examples of Internet-based companies that began as narrowly focused firms and expanded exponentially later on: eBay and Amazon. Amazon began as an online site for rare books, and eBay started out as an auction site for Pez candy dispensers, Omdahl said. “Eventually they were able to expand their businesses because they built a good foundation and they were able to scale that out into other industries that were related to their industry,” he said.

“The best way to think about your Web site is that it’s a lot of things to your business,” Omdahl said. “No. 1, it’s your storefront. It really is a place online where people are going out and looking to purchase insurance these days.

And it is your piece of real estate on the Internet. continued on page 20

Search Engine as Local Business Research Tool: Nearly 4,000 U.S. Internet users and 261 small business owners participated in the Nielsen-WebVisible survey, according to Search Engine Land, www.searchengineland.com, which posted a summary of the survey results on its Web site.

Commonly used local business information resources: 82% Search engines 57% Print Yellow Pages 53% Local newspapers 49% Internet Yellow Pages 49% Television 38% Direct mail 32% White pages directories

Primary tool/resource for researching local business: • Search engines - 50% • Print Yellow Pages - 24% • Online Yellow Pages - 10% Source: www.searchengineland.com www.insurancejournal.com

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West Coverage Search Engine Optimization Internet ‘Real Estate’, continued from page 18

“It’s also your resume,” Omdahl continued.

It tells people what you know, what you’ve done and your history. It’s your public personality. … You don’t just have to be another bland insurance agent. You can really be someone with a personality, someone who stands out, and you can do that with your Web site.

It’s also your cold call, your first conversation and your sales pitch.”

So, what should a Web site do?

“No. 1, it should look professional,” Omdahl said. While that makes sense, he noted there are a lot of Web sites that don’t look professional, that look outdated. Web sites should be

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redesigned on a regular basis with new content added at least every couple of years, he recommended.

You also “want to be able to convert someone from a visitor to an actual client or a lead or a contact. A lot of people forget this,” Omdahl said. Provide as many options as you can for your visitors to turn into customers, he said. “There are companies out there that can help you with a lead form. There are companies out there that can take somebody through the application process. There are even companies out there that you can actually get to a sale with.”

The ability to add content and have some control over your Web site is also essential.

“There are plenty of platforms ... that allow you to add content, add photographs and change things up on your Web site without having to pay” someone else to do it, he said.

“Be a master of your own domain. What you want to do is you want to own that piece of real estate online,” Omdahl said. He said if you are going through another company to host your Web site, you are only borrowing your name and that space. He said for around $20 a year — $10 for a domain name and $10 for hosting — an agency can own its piece of Web real estate.

An effective Web site will also have the ability to track who’s visiting it and how they are getting to the site. That is accomplished through analytics tools, such as Google Analytics. “What analytics do is track who’s visiting and from where people are visiting your Web site. How did they get to your Web site? What did they type into Google? What type of Web site did they come from to get to yours? What pages are they visiting, how long have they spent, what are their navigation apps for your Web site? When you gather all that information, you’re going to be better able to tell what’s working and what’s not on your site,” Omdahl said.

If You Build It, Will They Come?

“Even the greatest Web site in the world is worthless if no one can find it,” Omdahl said.

But in reality, people won’t find it unless you take steps to promote it.

When someone goes to Google and performs a search for commercial auto insurcontinued on page 22 www.insurancejournal.com

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West Coverage Search Engine Optimization Internet ‘Real Estate’, continued from page 20

ance, the results page will show sponsored links, which appear at the top inside section and on the side of the page. The owners of those sites pay for those positions. The center section contains the free listings, which are also known as organic listings or natural listings. Thirty percent of the people who do

Google searches will click on the sponsored links, but 70 percent are going to be focused on that middle section. “The idea is to get your Web site to appear at or near the top of that list” in the middle section, Omdahl said.

One of the ways to do that is through search engine optimization (SEO), which is basically

creating content that will make it easy for search engines to find the site. SEO “is really the process of understanding how Google is looking at the search… it’s about doing things to your Web site to get it to rank highly in those search engines,” Omdahl said.

Spiders, Crawlers and Robots Google employs programs, sometimes called spiders, crawlers or robots, that search the Internet for Web sites. When they find a new Web site, they copy it and put it into an index, Omdahl explained. “They also follow from one link to another, from Web site to another … and they make note of the relationship between all these Web sites, so they actually understand” how one Web site links to another. Then, using about 200 mathematically based factors, they decide how a given Web site ranks where in the search engine.

Omdahl offered some general tips to enhance a Web site’s visibility on search engines: 1. Avoid generalization. Target key words and use specific terms.

2. Create valuable content for your visitors.

Post articles about problems your customers regularly encounter. Publish news and data, and sharable tips and guides, targeting your niche industries.

3. Make your title tag work for you. The title tag explains to a search engine what your Web site is about. It is located in the header, or the blue bar, above your Web site’s home page. The title tag is also the clickable string of words that describe your business and appear in blue on the Google results page.

The title tag should contain key words to convince people to click on your listing.

4. Link up. Linking is extremely important in the insurance world because the industry is so competitive. Possibilities for linking to other Web sites include professional organizations to which you belong, Web sites of clients or businesses in your niche focus, associations and professional groups that represent the types of businesses you specialize in, as well as family and friends. IJ This article was based on a presentation, “Tools of the Trade: Strategies for Marketing Your Agency Online.” For more information on search engine optimization, visit James Omdahl’s Web site at http://jamesomdahl.com/.

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Idea Exchange E-Mail Marketing

Is Your Database Holding You Back?

How to Create a Culture of E-Mail Collection in Your Organization.

By Julian Aston

T

hese are not the heady times of the lection in your agency. Set your agency manpast when you could take a flyer on agement system to require an e-mail address. an untried marketing tactic. Sales are Demand employees ask customers for an ethinner, margins are slimmer and mail address. You have to communicate with subsequently, marketing budgets have been customers and prospects, and e-mail is the slashed. It’s time for a new most economical way to do it. marketing approach — one There are more sophistiE-mail gets that applies e-mail. cated and costly ways to obtain Don’t spam a list of mile-mail addresses. If you have a results fast — lions. Instead, use a conservadecent sized list of contacts within three tive, proven approach of minbut they do not have addresses, ing your present customer can “append” them. days of delivery. you and prospect base, using eHowever, appending may only mail to do it. grab about 20 percent to 40 E-mail marketing is beneficial because: percent of the contacts, and there is a one1. According to the Direct Marketing time cost associated with it.

Association, the costs for e-mail marketing You can supplement appends with a phone will be one-tenth to one-twentieth of the cost call to each client. Your phone call should be of direct mail.

2. You can be timely. E-mail gets results fast — within three days of delivery.

3. Talking about results, you see it all: Who opened it, clicked on it, and so on. This is great for sales follow-up.

So what’s holding you back?

It shouldn’t be funding. E-mail marketing might cost a few cents for each e-mail deployed — a lot less than a stamp. Usually, a lack of e-mail data stalls an e-mail marketing campaign, because the only way to touch contacts is with an e-mail address.

So where do you find those addresses?

If you operate an agency management system, they are typically in the reports section.

Access your customer list and select the “export” function. Most systems export simply to a Microsoft Office Excel file.

Look in your contacts and in your own email inbox. If you’re using a program like Microsoft Outlook and maintain contacts, exporting is a piece of cake. Go to File, select Import, Export, and follow the instructions.

You also can cut and paste e-mails from messages you’ve received. This is tedious, but it is still a good way to put together a list of customers, or to supplement a list.

As a backstop, create a culture of e-mail colwww.insurancejournal.com

Aston

along the lines of, “This is the Blue Insurance Agency. We are just updating our records … can I have your e-mail address?”

If you are in a retail location and get foot traffic, set up a display offering an incentive, like two movie tickets, with the entry requiring an e-mail address. Then, enter the contacts into an Excel file each week or month.

Also offer the incentive by inserting an entry form in each renewal going out the door.

Snail mail may beget an e-mail.

Try one or all of the methods until you build a reasonable size database. As few as 50 or 100 contacts may be enough. Just don’t wait so long to start that it’s too late. IJ Aston is chief marketing coach for intouch Business Inc. Web site: www.intouchbusiness.com.

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Idea Exchange Business Communications

‘Dress’ Your Insurance Business Communications for Success From E-mail, to Phones to Letterhead, Image Conveys a Lot to Clients

By Steve Adams

T

here is an old adage in the business world that says, “Dress for the job you want, not the job you have.” In other words, if you are an associate at an insurance agency, or an assistant buyer in a manufacturing or retail company, don’t wear your old, faded jeans and world peace T-shirt from college, even though the company dress code says you can. Instead, take a look at what the partners or the merchandise manager wear every day, and make that (or better, in some cases) your guideline.

How you dress is all about making a good impression on the people who can decide your fate. If you look happy to be where you are now, you’re likely to stay there. But if you look like you aspire to something more, you might catch the eye of someone looking for an ambitious go-getter and start moving up the company ladder a bit faster than those who dress for comfort, or appear to prefer fashion sense to business sense.

24 | INSURANCE JOURNAL-WEST REGION May 4, 2009

Adams

The same thinking applies to business because it’s free, it’s easy, and they can count communications. Things that may have been on those providers to manage the back end. expedient or cheap when you started out can The problem is those addresses also say, make you look pretty insubstantial or unsta“this e-mail is coming to you direct from my ble as a potential business partner — especouch, where I am watching Oprah while cially if you’re aspiring to go writing it.” That may not after bigger fish. be true, but that’s what it Many tools are It doesn’t have to be that says — just as surely as way, though. Just as there that beat up old pair of out there now are stores where you can Birkenstocks says, “I’d that can help purchase good quality busirather be kicking back at ness clothes that don’t cost the beach sipping Mai Tais you dress up an arm and a leg, there are than stuck here at work.” your business many tools that can help Instead of settling for you dress up your business without breaking those generic e-mail identiwithout breaking your ties, tell people you’re a your budget. budget. substantial insurance busiTake your e-mail address, ness by purchasing a for example. Many consultants, when they domain name that ties into your business first start out will, use an e-mail address and routing your e-mail through it. Domain with the domain @hotmail.com, names through some providers cost less @gmail.com, @aol.com, etc. They do this than $10 per year, and they’ll give you the email address (or sometimes several variations) for free. Odds are that you spend more than $10 a year on breath mints to make a good impression. Isn’t it worth that much for customers and prospects to see your business’ name every time they receive an e-mail from you?

Then there’s your phone system. Again, nothing says “I’m doing this until I can find a real job” like a telephone that gets answered by you when you are there, and goes to an answering machine you bought at a big box retailer when you’re not. When that happens, it sounds like you’re not planning to be there very long — even if starting an insurance business has been your lifelong dream.

What you want to look at instead is a virtual public branch exchange (PBX) phone service. This is a service that provides you with all the benefits of a standard PBX, such as a professional greeting, auto-attendant, multiple extensions, voice mail, company directory, call forwarding, etc. — without the huge investment in capital equipment. www.insurancejournal.com

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A virtual PBX is particularly good for insurance companies with workers who are out of the office a lot, or who work outside the main office (such as out of town or even out of state). Unlike a standard PBX, the reach of which is limited to the four walls of the building where the equipment is housed, a virtual PBX extension can be forwarded to any phone anywhere. If the main office is in Iowa and one of your employees is in California, you can have extension 101 and 102, respectively, and no one will be the wiser.

For mobile workers, the same feature extends to cell or home phones. In fact, you can set up the phone system to ring the office, mobile, home, branch office, or anywhere else all at once or in sequences, so you’re always available to your customers and prospects (if you want to be). If not, or if caller ID shows it to be someone you don’t want to speak with at the moment, the caller is transferred to a professional voice mail system that can then notify you by e-mail that you have a voice mail waiting. The system can even e-mail a voice file to you so you can hear the message without dialing in to the office. All of this can be yours for $10 per month to $50 per month, depending on your needs. Some people spend more than that a month just on shoes.

There’s still something to be said for having professional-looking letterhead and envelopes with pre-printed logos and address information. While most communication in business is handled via e-mail these days, more formal communication (such as letters of agreement, formal welcome letters, thank you for your business notes, etc.) make a better impression when they come on a quality paper stock that has been professionally printed.

Local quick-print houses can create all of that for you at reasonable prices. There are also online companies that will do the same.

This is a small investment that can make a www.insurancejournal.com

huge impact on the people you’re trying to impress. Like a nicely pressed silk tie or earrings that sparkle, it’s often the little things that make the difference.

One last thing to consider is the content of your messages. If business writing has never been your strength, or spelling is to you as spaghetti sauce is to a white shirt/blouse, consider upgrading your skills in these areas. Many community colleges offer business writing classes that can help you learn to write better. You may not end up being William F. Buckley, but you also won’t have people wondering how you ever passed your sixth grade English class.

On the spelling front, don’t trust it all only to the built-in spell checkers in popular office software.

These programs can’t distinguish between “to,” “two” and “too,” but there’s a good oddson chance your readers can. Use the wrong one and you’ll sound foolish.

Shore up your capabilities in this area or find someone to proofread your materials before you send them. If there’s no one in your business to help you with it, English majors at local colleges or junior colleges make good candidates for this type of work.

Most will be happy to earn a few extra dollars — it beats working the all-night shift at the Quik-E-Mart. And if they catch one major gaffe a year, they’ll likely have paid for themselves many times over.

In today’s electronic world, the odds are your business communications will be seen or heard many times more than you will personally. Make sure you’ve dressed yours for success.

Leave the impress your business is the one you aspire to be, and you’ll inspire confidence in customers and prospects alike. And, they’ll help you get where you want to go a lot faster. IJ

www.AndersonMurison.com

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May 4, 2009 INSURANCE JOURNAL-WEST REGION | 25

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Ad Index

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5

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2

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63

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N20

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N8

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25

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11

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22

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26 | INSURANCE JOURNAL-WEST REGION May 4, 2009

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Idea Exchange Agency Management

Don’t Expect Top Dollar if Your House is in Chaos Get the Highest Bid When Selling Your Agency by Keeping Financials, Books in Order Price

By Daniel B. Price agreements that serve to protect business assets.

W

hether one is looking to sell, buy or grow organically, the preparation and organization of an agency’s financial, book of business and corporate information as if a sale is imminent should start today.

In reality, a sale may not be in the cards right now. However, running the agency today as if it were going on the sales block will inevitably improve management practices and overall efficiency and effectiveness; thus translating into higher earnings and undoubtedly increasing long-term shareholder value. In short, the one surefire way to increase shareholder value is to get your house in order. This is something that can be started today that does not require selling a thing.

Get your books and records in order. In an actual transaction, the amount and detail of information a particular acquirer will request varies. But one thing is for sure — the quality of information a seller is able to provide goes directly to the overall quality of the agency itself and its management team. When it comes to the sale of www.insurancejournal.com

Financial Statements Historical financial statements are often one of the best indicators of future performance of a business. To these ends, buyers will put your financial information under a microscope. Audited financial statements provide the highest level of assurance that the financial picture of an agency is in fact as it has been presented to be. The greater reliability a buyer can place on the financial statements, the more likely it is that a seller will receive additional purchase consideration either through a higher overall price and/or through a more favorable transaction structure (i.e., more upfront or an earn out with lower performance metric thresholds). This is simply the an insurance agency, all things being equal, old risk/reward trade off: By having quality the higher the perceived quality of inforfinancial statements, you are helping to mation the higher the ultimate purchase reduce the buyer’s perceived level of risk price and/or greater likelihood of improved and thus he or she is more likely to provide transaction terms. Buyers want to see that you with more return. a business is being run like a business.This It is a fact that historical financial statemeans mimicking professional standards ments of closely held businesses rarely often found within publically traded organreflect the true profitability izations and best practices industry leaders.

The one sure-fire of the business without certain adjustments. Whether Such beneficial stanway to increase the adjustments would be dards and practices to eliminate owner perks include: shareholder such as country club dues • The routine developvalue is to get or personal automobiles, or ment of accurate and to remove one-time expenstimely financial stateyour house in es related to moving or ments complete with all order. sponsorship of a local charisupporting schedules ty event, it is of no matter. and documentation; The key to getting a buyer to sign-off on • Full implementation of a first class any suggested financial statement adjustclient management system that includes ment is the amount of tangible support drill down and custom query capabilities; and justification a seller can provide.

• Thoughtfully developed business and Simply saying that 25 percent of this strategic plans, complete with budgets and expense line item and 50 percent of that management projections; and • In force and updated requisite legal continued on page N2 May 4, 2009 INSURANCE JOURNAL-NATIONAL REGION | N1

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Idea Exchange Agency Management

Chaos, continued from page N1

expense line item are “personal” and therefore these line items should be adjusted will not suffice. If a buyer is expected to give “full credit” in the purchase price for discretionary items, extensive and detailed records are required.

Buyers will only recognize and pay for earnings that are easily discernable and clearly documented. On a related note, buyers become more skeptical with each “normalizing” adjustment required to arrive at the true economic run rate of a business.

Bottom line: even if all of the supporting documentation is available, it does not always make sense to make adjustments for every little immaterial non-business item.

Revenue adjustments are related but can also sometimes come under the guise of a slightly different animal.

You may have the usual non-recurring agency and it is not required for ongoing revenue adjustments, such as a one-time operations, then mechanisms for removing gain from the sale of equipment, and these it from the balance sheet should be considadjustments are understandable. However, what is clearly unacceptable to most buyers ered.

An example of this type of adjustment is is revenue that has not been recorded on automobiles owned by the agency (includthe financial statements and tax returns.

An unrecorded revenue adjustment is clear- ing the accompanying debt), that are in reality personal automobiles of the agency ly straddling the line between tax avoidowners. By cleaning up the balance sheet a ance, which is perfectly acceptable, and tax more accurate picture of the true financial evasion, which is obviously not acceptable. position of the agency is often revealed.

This type of situation should be cleaned up Most likely a buyer is going long before contemplatto uncover the true finaning a sale, or do not Buyers will only cial picture of the agency expect a buyer to give recognize and pay at some point during his or you credit for this revher review, so you might as enue. for earnings that well approach it honestly Effectively, Uncle Sam are easily discern- right from the start. has already compensated you for this revenue able and clearly First Class Client through reduced taxes. If documented.

Management System a buyer gets wind of this I cannot tell you the type of situation the deal number of times I have asked for something will likely be stopped in its tracks as this as basic as a production report by line of type of a situation goes right to the integrity of management and the underlying quali- business and been looked at as if I were from another planet. If you cannot provide ty of the agency. reports that at least break down the book The removal of non-operating assets and of business by general and specific line of liabilities from the balance sheet is another business, producer and underwriting marimportant aspect of cleaning up financial ket, then you have substantial work to do. statements. Their presence will just comAt the same time, just because you can plicate and confuse matters if and when provide these basic reports does not mean you decide to sell. If an asset is not conthat they are accurate. Too often, records tributing to the earning power of the N2 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

in an agency’s client management system do not reconcile to what is presented by the financial statements or payroll reports.

All accounting and agency management systems should be communicating and reflecting the same information. There is nothing more frustrating to perspective buyers than to be provided with numerous reports generated from varying systems and to have the reports not reconcile with each other.

Business and Strategic Plans – Budgets and Projections You may have considered developing a business or strategic plan in the past but decided to hold off as it was determined that such planning and strategizing was unnecessary given the size of the agency and its relative level of complexity. To this I say no way — if for no other reason than the existence of a well-thought out business plan and a thorough strategic plan reflect well on an agency’s management.

What are the short and long-term goals for the agency? What are the tactics that are being employed to reach these goals?

Acquirers want to know that there is a plan and that the agency is being proactively managed for future growth. Buyers almost always request budgets and management projections. Unfortunately, these continued on page N4 www.insurancejournal.com

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Idea Exchange Agency Management Chaos, continued from page N2

requests tend to fall on deaf ears as most agencies do not prepare such information on a regular basis. When a buyer requests reasonable information and the seller comes back with “we don’t prepare that,” the buyer gets an immediate window into the sophistication level of the seller’s management team and business acumen.

Remember, more than likely the seller will be joining the acquirer for a period of time post transaction, so the entire selling process should be looked at as a prolonged job interview.

Establish and Update Requisite Legal Agreements Time and time again, sellers present themselves to the market without having property leases, employment agreements, first updated their legal agreements and underwriting market contracts, confidenlicensing files. Frankly, it is a prerequisite to sale that can easily go overlooked. When tiality agreements, compensation disclosures, etc. It is also very important to codiis the last time you updated your articles of incorporation or operating agreement, or fy and formalize any relationships your agency has with external parties such as reviewed your “standard” restrictive cross referral agreements or third-party covenant agreements (e.g., non-solicits, non-competes, confidentiality) in regard to producer arrangements.

If you take too long to gather requested current case law? Perhaps a previous shareinformation, or it is not available, the stage holder was bought out a few years ago and has been set for your corporate documents agency to be viewed as and the stock ledger If you take too long not well-organized and were never updated. not on top of its busiWhatever it may be, to gather requested ness. Remember, a there is often a need information, or it is buyer has to factor in to update legal docuthe future costs of ments in the middle not available, the organizing your busiof a transaction, stage has been set ness if you have not which does two things. for your agency to be already done so. An investment in time and One, it slows down viewed as not welldiligence today making the process as an additional element is organized and not on sure your agency is well-organized and added to the overflowtop of its business. capable of providing ing pile of things to standard information is do. And two, it raises an investment in the future value of the a red flag to buyers with respect to the business. Planning and preparation sellers’ overall organization and business throughout all stages of ownership are acumen. essential if one is to realize an agency’s full All legal documentation should be value at the time of disposition. IJ reviewed to make sure they are available and in good order prior to speaking with any potential buyers. This includes articles Price is a vice president with Hales & Co., located in Hales’ of incorporation or operating agreements, Harrisburg, Pa., office. Email: dprice@halesgroup.com. Phone: corporate and individual producer licenses, 717-541-9300, ext. 102. Web site: www.halesgroup.com.

N4 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

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Idea Exchange Minding Your Business

How to Improve Productivity in a New Economy Agencies Must Stop Money Wasting Financial Leaks

By Bill Schoeffler and Catherine Oak

T

he economy is in the tank and so is the stock market. Thousands are unemployed and many people do not know where to turn. No one is setting up charities for insurance agents just yet, but the industry is at the end of the economic wave. Even within the ranks of the agents there is a sliding scale of growth, profitability and future potential. Those that focus in certain niches, like construction are reeling and it seems that the smaller the agency, the tighter the financial squeeze.

The long-term soft market has wreaked havoc for the typical agency owner. Commission dollars earned to sell and service accounts have dropped. The problem is the client and the companies expect more and more out of the agents for less and less.

Typical agency profitability levels have dropped from 25 percent of revenue or more 20 years ago, to today’s typical profit margin range of just 15 percent to 25 percent.

The growth in expenses has outpaced the growth in revenue.

Personnel, the biggest single agency expense, typically costs 52 percent to 73 percent of revenue. In general, owner and producer compensation costs between 25 percent and 35 percent of revenue, while office staff compensation ranges from 20 percent to 28 percent of revenue, and benefits and taxes cost 7 percent to 10 percent of revenue.

Automation did not turn out to be the productivity panacea that was expected.

How many agencies have cut staffing after they bought a new computer system?

Sometimes staff was increased to add on an automation person or data entry person. Besides, automation expenses did not exist 30 years ago.

Other expenses are going up as well. Office rent has shot through the roof in many areas. Advertising, office supplies, travel and automobile expenses all have gone up.

N6 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

Oak

Schoeffler

How to Help So can anything be done to help the typical agency owner stop the erosion of profits? The answer is yes.

Plugging the financial leaks in an agency can add up to sizable savings. Performing an efficiency study is the first step to understanding where these leaks exist.

The place to start is with the people doing the work.

Employees know what works and what does not Plugging the work. Management’s role is to determine which is financial leaks the most cost effective in an agency solution, if any. To start, management should ask can add up to employees the following sizable savings. question: What three things can be done to make your job more efficient?

Bring the staff together to discuss the suggestions.

Brainstorm on the issues. Map out workflow on a wall chart. See if there are any roadblocks to getting the job done.

Is the staff double entering data? Is the agency paperless?

Is the layout of the office efficient? Does the staff have to go long distances or are they impeded when retrieving commonly used files, copy or fax machines, etc. Is the office too small?

Does the agency have enough properly functioning and up-to-date office equipment? Sometimes one extra fax machine or printer can make a big difference in productivity. Is the telephone system efficient?

Delegate some of the problem solving to the staff and have follow-up meetings. The best suggestion should win a reward, perhaps $100 or more depending upon the savings. This process should be repeated annually.

Other Areas to Review Next, the owners and management should explore other areas that might be causing financial leaks.

Compare the agency’s productivity to peer groups using one of the published benchmark studies. Is the agency overstaffed or understaffed? If overstaffing exists, why and what can be done? Get rid of under-performing employees and reward the high performers. continued on page N8 www.insurancejournal.com

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Idea Exchange Minding Your Business New Economy, continued from page N6

Has management provided the employees with a clear direction for the agency?

Employees need to be pointed in the right direction and told what their purpose is.

Having a purpose will prevent employees from getting bogged down in the minutia.

How is employee morale? Any number of

things can cause poor morale. Often it is related to perceived unequal treatment.

Make sure all employees are expected to meet the same high standards. Be consistent with your relationship. The annual performance review is the time to clearly communicate performance expectations

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N8 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

and past results.

Is the staff properly trained? On the job training is convenient, but it perpetuates the same old inefficient ways of working.

When possible, it is better to send the employees outside the agency for new ideas. Have the employee inform the rest of the staff on what they learned after they return from trainings.

Does the agency cross-sell on its accounts? Relationships are strengthened when an agency sells more than one coverage to its clients. Efficiencies are gained by earning more commission per account and spending less time generating the sale since they are already familiar with the firm.

Does the agency have any program business? Selling a unique product that is slot rated can be an incredible income generator. Usually these sales require less work to sell and service. The similarity of the book of business can create high productivity.

Do the producers pre-screen their prospects? Pre-screening will help eliminate business that the firm cannot write or should not write. Know the price, product and politics needed to close the sale as soon as possible. It is best to find out the quality of the prospect in the phone call before the visit, than to find out during the marketing process.

Summary Starting this process will take a commitment on the part of all owners, managers and employees. Keep in mind the first step is the hardest. Sometimes it helps to bring in an outside partner to get the process started. Oak & Associates can assist an agency in performing a Management & Organizational Efficiency study.

Small gains when compounded over time result in enormous savings. The goal is to work smarter not harder. Implementing the ideas that are laid out in this article will take some time, but will change the way you do business forever. IJ Oak and Schoeffler are partners at the international consulting firm Oak & Associates, providing services for mergers, acquisitions, management and financial consulting.

Contact: 707-935-6565. E-mail: bill@oakandassociates.com.

Web site: www.oakandassociates.com. www.insurancejournal.com

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A Perfect Fit

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Look to American Reliable Insurance Company for a perfect fit to all your specialty insurance product needs.

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Idea Exchange Survey Regional Carriers

Agents, Rate Your Regional Carriers in a New Insurance Journal Sponsored Survey C

hannel Harvest Research and Insurance Journal have announced a major new study in the independent agency system that will probe agents’ attitudes toward carrier relationships and the insurance companies they represent — with a special focus on larger regional carriers, often called “Super Regionals.”

The survey is designed for carriers seeking to understand in an unbiased fashion what agents look for from carriers, and how specific carriers and their competitors are rated by agents. The survey will provide strategic, actionable information for: • Super-regional carriers (about their peer companies).

• Smaller regionals (that are growing and/or competing with larger regionals).

• National carriers competing head-to-head with regionals in certain areas of the country.

The syndicated research — with multiple

subscribers sharing the cost — will provide an objective complement to any proprietary surveys carriers may do. This project will provide hard data and a strategic roadmap for carriers looking to boost their business in the challenging year ahead. The survey will address such key questions as: • What are the most important characteristics in agency benefits and service from carriers when agents choose those to place business with?

• How do agents rate regional carriers they have worked with — on 20 different factors?

• How do agents rate specific carriers overall compared with the industry?

• And many other important issues.

To participate in this survey of independent insurance agents, sponsored by Insurance Journal, visit: http://www.insurance journal.com/carriersurvey2009.

The survey takes just 15 minutes to com-

Turnkey Reinsurance NAS provides full turnkey reinsurance of specialty products that includes underwriting, risk management, distribution alternatives, expert claims handling, risk transfer up to 100%, and marketing, sales and PR assistance.

NAS delivers products on a reinsurance basis to insurers such as package carriers, specialty insurers and RRG’s. With NAS’ turnkey reinsurance, carriers can offer state-of-the-art products to their insureds and avoid the cost of research, development of human resources and risk of a new product.

NAS Insurance Services is an independent Underwriting Manager with full binding authority to underwrite on behalf of highly rated carriers.

For over 30 years, NAS has remained a product-oriented company, ever on the leading edge of innovation with a constant commitment to the development of specialty products.

To participate in a survey about agents’ attitudes toward regional carriers, which is sponsored by Insurance Journal, visit: http://www.insurancejournal.com/ carriersurvey2009. plete — and survey participants will receive a summary of the findings if an e-mail address is provided when taking the survey.

All agent responses are anonymous to any carrier purchasing the report of survey findings.

Data are reported only in the aggregate.

The findings also will be released in a special report, “How Independent Insurance Agents View Business with Large Regional Carriers,” in an upcoming issue of Insurance Journal.

For more information about the survey or Channel Harvest Research, go to www.channelharvest.com. IJ

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Special Report Salute to Super Regionals

T

he original criteria and objective definition for Super Regional P/C Insurersâ&#x201E;˘ were established in the Feb. 12, 2007 issue of Insurance Journal. Prior to the establishment of an industry-wide definition, a number of property/casualty insurers had referred to themselves as Super Regionals. Demotech Inc., the official research partner of Insurance Journal, has been called on to examine the criteria, make changes to the composition of that criteria and update the list of Super Regionals.

To continue the discussion on the subject of what constitutes a Super Regional and to give definition to this important group of

insurers, Demotech, an actuarial services firm based in Columbus, Ohio, analyzed year-end 2008 data. This data was utilized to classify and stratify those insurers reporting data to the National Association of Insurance Commissioners (NAIC).

Company Classification System The experts at Demotech have refined their classification system for property/casualty insurance companies. The Demotech Company Classification System categorizes all property/casualty insurers into one of 11 categories based on an analysis of data reported by the companies to the NAIC.

N12 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

The 11 categories that comprise the system are: Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus Lines Carriers, Reinsurers and companies with less than $1 million in direct written premium.

A company cannot be assigned to more than one category. Therefore, a company not designated as a Super Regional is given another classification, perhaps Near National, Regional, or State Specialist.

Super Regional Criteria and Thresholds To select the companies for the Super www.insurancejournal.com

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Regional Property/Casualty Insurer™ list, Demotech used these specific, objective qualifying criteria and thresholds: • Active, individual companies not under regulatory supervision at Dec. 31, 2008; • Reporting data to the NAIC using the property/casualty annual statement format; • At least $1 million of direct written premium in each of two to 34 states at Dec. 31, 2008; • Less than 90 percent of Dec. 31, 2008, direct written premium in any one state; • Less than 90 percent of Dec. 31, 2008 direct written premium in any one line of

business; • Policyholders surplus of at least $100 million at Dec. 31, 2008; • Net written premium of at least $50 million at Dec. 31, 2008; • Direct written premium of at least $25 million at Dec. 31, 2008.

2009 Property & Casualty Insurance Cos. Demotech Company Classifications Direct Premium Written Less than $1 million 5.2%

Nationals 1.6% Near Nationals 2.4%

Reinsurers 2.3%

Super Regionals 5.4% Surplus Lines Carriers 4.8% Risk Retention Groups 8.0%

In general, a Super Regional Property/ Casualty Insurer™ is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers and reinsurers are not eligible for the Super Regional category.

Regionals 10.7%

Strategic Subsidiaries 15.9%

State Specialists 31.3%

Coverage Specialists 12.4%

continued on page N14

2009 Super Regional Property/Casualty Insurers™ Alphabetical Listing Acuity a Mutual Insurance Co. AIG Centennial Insurance Co. AIG Premier Insurance Co. AIU Insurance Co. Alaska National Insurance Co. All America Insurance Co. American Commerce Insurance Co. American Family Home Insurance Co. American Family Mutual Insurance Co. American Hardware Mutual Insurance Co. American International Insurance Co. American Mercury Insurance Co. American Road Insurance Co. Amerisure Insurance Co. Amerisure Mutual Insurance Co. Atlantic States Insurance Co. Auto Club Insurance Assn.

Auto Owners Insurance Co. Automobile Insurance Co of Hartford CT Bankers Standard Insurance Co. Berkley Regional Insurance Co. Bituminous Casualty Corp.

Bituminous Fire & Marine Insurance Co. Brotherhood Mutual Insurance Co. Builders Mutual Insurance Co. California Casualty Indemnity Exchange Cambridge Mutual Fire Insurance Co. Canal Insurance Co. Capitol Indemnity Corp.

Central Mutual Insurance Co. Century-National Insurance Co. Chicago Insurance Co. Citizens Insurance Co. of America Columbia Mutual Insurance Co. Companion Property & Casualty Insurance Co. Concord General Mutual Insurance Co. Cornhusker Casualty Co. Country Mutual Insurance Co. Courtesy Insurance Co. Cumberland Mutual Fire Insurance Co. Cypress Insurance Co. Daimlerchrysler Insurance Co. Darwin National Assurance Co. Delos Insurance Co. Donegal Mutual Insurance Co. Erie Insurance Co. Erie Insurance Exchange Farm Bureau Mutual Insurance Co. Farm Family Casualty Insurance Co. Farmers Alliance Mutual Insurance Co.

www.insurancejournal.com

Farmers Automobile Insurance Assn.

Farmers Mutual Hail Insurance Co. of IA Farmers Mutual Insurance Co. of NE Farmington Casualty Co. Farmland Mutual Insurance Co. FCCI Insurance Co. Federated Service Insurance Co. Fidelity National Insurance Co. Fire Insurance Exchange First Colonial Insurance Co. Frankenmuth Mutual Insurance Co. General Casualty Co. of WI General Fidelity Insurance Co. Grange Insurance Association Grange Mutual Casualty Co. Guideone Mutual Insurance Co. Harco National Insurance Co. Harford Mutual Insurance Co. Harleysville Mutual Insurance Co. Harleysville Preferred Insurance Co. Harleysville Worcester Insurance Co. Hartford Insurance Co. of IL Hastings Mutual Insurance Co. Hudson Insurance Co. IMT Insurance Co. Mutual Indiana Insurance Co. Insurance Co. of North America Insurance Co. of the West Jewelers Mutual Insurance Co. Keystone Insurance Co. Lightning Rod Mutual Insurance Co. Lititz Mutual Insurance Co. Lyndon Property Insurance Co. Memberselect Insurance Co. Merchants Mutual Insurance Co. Mercury Casualty Co. Merrimack Mutual Fire Insurance Co. MHA Insurance Co. Mid-Century Insurance Co. Mid-Continent Casualty Co. Middlesex Insurance Co. Milbank Insurance Co. Mitsui Sumitomo Insurance Co. of America Motorists Mutual Insurance Co. Motors Insurance Corp.

Mountain West Farm Bureau Mutual Insurance Co. Mutual of Enumclaw Insurance Co. Nationwide Mutual Fire Insurance Co. Netherlands Insurance Co. New York Marine & General Insurance Co.

NGM Insurance Co. North River Insurance Co. North Star Mutual Insurance Co. Occidental Fire & Casualty Co. of NC Old Republic General Insurance Corp.

Old United Casualty Co. OneBeacon Insurance Co. Owners Insurance Co. Pacific Specialty Insurance Co. Peerless Insurance Co. Penn National Security Insurance Co. Pennsylvania General Insurance Co. Pennsylvania Manufacturers Assn. Insurance Pennsylvania National Mutual Casualty Insurance Preferred Mutual Insurance Co. Preferred Professional Insurance Co. Progressive Gulf Insurance Co. Progressive Northwestern Insurance Co. Protective Insurance Co. Public Service Mutual Insurance Co. Quincy Mutual Fire Insurance Co. Republic Indemnity Co. of America Republic Underwriters Insurance Co. Safeco Insurance Co. of IL Secura Insurance a Mutual Co. Selective Insurance Co. of America Selective Way Insurance Co. Seneca Insurance Co. Inc Shelter Mutual Insurance Co. Sompo Japan Insurance Co. of America State Auto Property & Casualty Insurance Co. State Automobile Mutual Insurance Co. Stonebridge Casualty Insurance Co. Technology Insurance Co. Inc. Tower Insurance Co. of NY Toyota Motor Insurance Co. Trinity Universal Insurance Co. Triton Insurance Co. Unigard Insurance Co. United Fire & Casualty Co. Utica Mutual Insurance Co. Vanliner Insurance Co. Vermont Mutual Insurance Co. Virginia Surety Co. Inc. West Bend Mutual Insurance Co. Western National Mutual Insurance Co. Westfield Insurance Co. Westfield National Insurance Co. Yosemite Insurance Co.

May 4, 2009 INSURANCE JOURNAL-NATIONAL REGION | N13

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Special Report Salute to Super Regionals Super Regionals, continued from page N13

The 2009 Super Regional Property/Casualty Insurers™ Utilizing these quantitative criteria, Demotech identified 149 Super Regional Property/Casualty Insurers™ for 2009, based upon year-end 2008 annual statement data. They are presented in this exclusive Insurance Journal Special Report both alphabetically and by size as ranked by direct premiums written as of Dec. 31, 2008.

Also included in this special report are the 14 companies that are new to the Super Regional list, as well as 17 insurers that are no longer classified as Super Regionals, but have been reclassified into another one of Demotech’s categories based on year-end 2008 information.

“Super Regional insurers are critically important to the insurance industry and to

their agents, producers and insureds,” said Joseph Petrelli, president, Demotech.

“These companies are strong, stable markets that have been working hard for their agents and insureds. This is why Insurance Journal initially expressed interest in quantifying and identifying what criteria can be used to define an insurer as a Super Regional.”

Insurance Journal and Demotech want this year’s report to continue the discussion on the role of Super Regionals, as well as the definition and criteria used in determining the classification, so that future reports can continue to refine an industry definition of Super Regional Property/Casualty Insurers™.

“Insurers and interested readers are encouraged to examine the selection crite-

NEW 2009 Super Regionals Company Name All America Insurance Co. American Road Insurance Co. Auto Club Insurance Assn.

Bankers Standard Insurance Co. Canal Insurance Co. Daimlerchrysler Insurance Co. Occidental Fire & Casualty Co. of NC Republic Indemnity Co. of America Tower Insurance Co. of NY Toyota Motor Insurance Co. Triton Insurance Co. Netherlands Insurance Co. Safeco Insurance Co. of IL Westfield Insurance Co.

2009 Demotech Company Classification

2008 Demotech Company Classification

Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional

Regional Coverage Specialist Coverage Specialist Strategic Subsidiary Near National Coverage Specialist Regional Coverage Specialist State Specialist Regional Coverage Specialist Strategic Subsidiary Coverage Specialist Near National

ria and thresholds used to determine the list of 2009 Super Regionals. Our selection criteria are quantitative and transparent.

We remain committed to setting benchmarks at levels that accurately categorize the industry,” said Barry J Koestler II, CFA, senior financial analyst and chief ratings officer, Demotech.

The authors stress that this is an objective stratification of the companies that comprise the industry, not ratings of the individual insurers. Inclusion on the list of Super Regionals is not meant to suggest that a company is superior to companies not categorized as Super Regionals.

Future issues of Insurance Journal will report on State Specialists, Coverage Specialists, Regionals and other classifications created and defined by Demotech.

Since 1985, Demotech Inc. has been providing independent Financial Stability Ratings® of property/casualty insurers and title 2007 Demotech insurance underwriters. Its services Company Classification also include statements of actuarial Regional opinion and pricing assistance. For Coverage Specialist Coverage Specialist more information, visit Strategic Subsidiary www.demotech.com.

Near National Coverage Specialist Please send suggestions, comSuper Regional ments and criticisms to Joseph Coverage Specialist Petrelli at e-mail: State Specialist Regional jpetrelli@demotech.com, or Andrew Coverage Specialist Simpson, vice president of editorial Strategic Subsidiary Coverage Specialist for Insurance Journal at e-mail: Super Regional asimpson@insurancejournal.com. IJ

RECLASSIFIED 2008 Super Regionals Company Name Alfa Insurance Corp.

Central States Indemnity Co. of Omaha EMCASCO Insurance Co. Everest National Insurance Co. Hartford Steam Boiler Inspection & Insurance Co. Lumbermens Underwriting Alliance Michigan Millers Mutual Insurance Co. National Farmers Union Property & Casualty National Liability & Fire Insurance Co. Navigators Insurance Co. OneBeacon America Insurance Co. Pennsylvania Lumbermens Mutual Insurance Providence Mutual Fire Insurance Co. Travelers Casualty Insurance Co. of America Truck Insurance Exchange Trumbull Insurance Co. US Fidelity & Guaranty Co.

2009 Demotech Company Classification

2008 Demotech Company Classification

2007 Demotech Company Classification

Reason Not 2009 Super Regional

Strategic Subsidiary Regional Regional Near National Coverage Specialist Regional Regional Regional Near National Near National Near National Regional Regional Near National Near National Regional Coverage Specialist

Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional

Super Regional Super Regional Regional Super Regional Near National Regional Super Regional Regional Super Regional Super Regional Super Regional Regional Regional Coverage Specialist Super Regional Super Regional Near National

PHS, NPW NPW PHS States > 34 LOB > 90% PHS PHS PHS States > 34 States > 34 States > 34 PHS PHS States > 34 States > 34 PHS LOB > 90%

PHS = Policyholders’ Surplus; LOB = Line of Business; NPW = Net Premium Written N14 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

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2009 Super Regional P/C Insurers

TM

As Developed by Demotech Inc. for Insurance Journal, Ranked by Direct Written Premium as of 12/31/08.

Company

12/31/08 DPW 000’s omitted

Group Name

1

American Family Mutual Insurance Co.

5,272,230

American Family

WI

2 3

Erie Insurance Exchange AIU Insurance Co.

3,146,696 2,770,742

Erie American International

PA NY

4

Nationwide Mutual Fire Insurance Co.

2,576,627

Nationwide

OH

5

Mid-Century Insurance Co.

2,461,429

Zurich

CA

6

Auto Owners Insurance Co.

2,119,833

Auto Owners

MI

7 8

Fire Insurance Exchange Westfield Insurance Co.

1,686,491 1,460,344

Zurich Westfield

CA OH

9

Safeco Insurance Co. of IL

1,352,538

Liberty Mutual

IL

10

Owners Insurance Co.

1,198,095

Auto Owners

OH

11 12

Country Mutual Insurance Co. Peerless Insurance Co.

1,146,917 1,073,459

Country Ins./Financial Liberty Mutual

IL NH

13 14 15

Shelter Mutual Insurance Co. Citizens Insurance Co. of America Netherlands Insurance Co.

931,235 927,098 790,738

Shelter The Hanover Liberty Mutual

MO MI NH

16 17 18 19 20 21

Farm Bureau Mutual Insurance Co. Acuity a Mutual Insurance Co. Mercury Casualty Co. Grange Mutual Casualty Co. West Bend Mutual Insurance Co. Automobile Insurance Co. of Hartford CT

787,823 783,483 756,465 704,217 668,505 636,607

Iowa Farm Bureau N/A Mercury General Grange Mutual Casualty West Bend Mutual Travelers

IA WI CA OH WI CT

22 23

NGM Insurance Co. State Auto Property & Casualty Insurance Co.

623,471 612,395

Main Street Amer State Auto Mutual

FL IA

24 25 26 27 28 29 30

Farmers Mutual Hail Insurance Co. of IA Central Mutual Insurance Co. Progressive Northwestern Insurance Co. Selective Way Insurance Co. Tower Insurance Co. of NY Pennsylvania National Mutual Casualty Ins. Harleysville Mutual Insurance Co.

555,396 525,862 507,064 505,944 469,578 462,920 433,462

Farmers Mut Hail Central Mutual Progressive Selective Tower Pennsylvania National Harleysville

IA OH OH NJ NY PA PA

31

State Automobile Mutual Insurance Co.

427,502

State Auto Mutual

OH

32 33

Motorists Mutual Insurance Co. American International Insurance Co.

413,035 412,201

Motorists Mutual American International

OH NY

34 35 36 37

Erie Insurance Co. Selective Insurance Co. of America Frankenmuth Mutual Insurance Co. General Casualty Co. of WI

407,630 407,016 399,711 399,301

Erie Selective Frankenmuth Mutual QBE

PA NJ MI WI

38

Virginia Surety Co. Inc.

399,183

Warranty

IL

39 40 41 42

Amerisure Mutual Insurance Co. Memberselect Insurance Co. Farm Family Casualty Insurance Co. Technology Insurance Co. Inc.

398,301 389,425 380,728 359,553

Amerisure Automobile Club MI American Natl. Financial Amtrust

MI MI NY NH

43

Bituminous Casualty Corp.

345,575

Old Republic

IL

www.insurancejournal.com

State of Domicile

Number/States with Greater Than $1 Million DPW 12/31/2008 18 - AZ,CO,ID,IL,IN,IA,KS,MN,MO,NE,NV,ND,OH,OR, SD,UT,WA,WI 10 - DC,IL,IN,MD,NC,OH,PA,TN,VA,WI 25 - AL,AK,CA,CO,CT,DE,GA,KS,LA,ME,MD,MI,MO, NJ,NY,OH,OR,PA,TN,TX,VT,VA,WA,WV,WI 31 - AL,AZ,AR,CA,CT,DE,DC,FL,GA,IL,IN,KY,ME,MD,MI, MS,NH,NY,NC,OH,OK,OR,PA,RI,SC,TN,TX,VT,VA,WA,WV 30 - AL,AZ,AR,CA,CO,ID,IL,IN,IA,KS,MI,MN,MO,MT, NE,NV,NM,ND,OH,OK,OR,SD,TN,TX,UT,VT,VA,WA,WI,WY 25 - AL,AZ,AR,CO,FL,GA,ID,IL,IN,IA,KS,KY,MI,MN, MO,NE,NC,ND,OH,SC,SD,TN,UT,VA,WI 14 - AL,CA,CO,MI,MO,MT,NE,NV,ND,SD,TX,UT,WI,WY 34 - AZ,AR,CO,DE,FL,GA,ID,IL,IN,IA,KS,KY,LA,MD,MI,MN,MS, MO,MT,NE,NM,NC,ND,OH,OK,PA,SC,SD,TN,TX,VA,WA,WV,WI 29 - AL,AK,AR,CA,CT,FL,GA,ID,IL,IN,KY,MD,MI,MN,MS,MO, MT,NE,NV,OH,OR,PA,TN,TX,UT,VA,WA,WI,WY 24 - AL,AZ,AR,CO,FL,GA,ID,IL,IN,IA,KS,KY,MN,MO,NE,NC,ND, OH,SC,SD,TN,UT,VA,WI 14 - AK,AZ,CO,IL,IA,KS,MN,MO,NV,ND,OK,OR,WA,WI 32 - AR,CA,CT,DE,DC,GA,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN, MO,NE,NH,NY,NC,OH,OK,PA,RI,SC,TN,TX,VT,VA,WI 13 - AR,CO,IL,IN,IA,KS,KY,LA,MS,MO,NE,OK,TN 15 - CT,GA,IL,IN,ME,MA,MI,NH,NJ,NY,OH,PA,RI,VA,WI 32 - AR,CA,CT,DE,GA,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MO, NE,NH,NJ,NY,NC,OH,OK,PA,RI,SC,TN,TX,VT,VA,WI 8 - AZ,IA,KS,MN,NE,NM,SD,UT 17 - AZ,CO,ID,IL,IN,IA,KS,KY,MI,MN,MO,NE,ND,OH,SD,TN,WI 5 - AZ,CA,NV,NY,VA 6 - GA,IL,IN,KY,OH,TN 7 - IL,IN,IA,MI,MN,OH,WI 34 - AL,AZ,AR,CO,CT,DC,GA,ID,IL,IN,KS,KY,LA,ME,MD,MI,MN, MS,MO,MT,NV,NH,NY,NC,OH,OK,OR,PA,SC,TN,UT,VA,WA,WI 16 - CT,DE,FL,ME,MD,MA,NH,NY,NC,PA,RI,SC,TN,TX,VT,VA 26 - AL,AZ,AR,FL,GA,IL,IN,KS,KY,MD,MI,MN,MS,MO,NC,ND, OH,OK,PA,SC,TN,TX,UT,VA,WV,WI 15 - AR,CO,IL,IN,IA,KS,MI,MN,MO,NE,ND,OH,OK,SD,WI 18 - AZ,CO,CT,GA,IL,IN,MA,NH,NJ,NM,NY,NC,OH,OK,SC,TN,TX,VA 17 - AK,AZ,AR,CT,HI,ID,IN,KS,ME,MO,MT,NV,NY,ND,RI,VA,WA 10 - DE,DC,GA,MD,MI,NJ,NY,PA,SC,VA 17 - AZ,AR,CA,CT,FL,GA,ID,IL,MA,MN,NV,NJ,NY,PA,SC,TX,WA 12 - AL,DE,GA,MD,NJ,NY,NC,PA,SC,TN,TX,VA 21 - AL,AR,CA,CT,DE,DC,FL,GA,LA,MD,MA,MS,NJ,NC,OH,PA, RI,SC,TN,TX,VA 24 - AL,AZ,AR,CO,GA,IL,IN,IA,KS,KY,MD,MI,MN,MS,MO,NC,OH, PA,SC,TN,TX,VA,WV,WI 5 - IN,KY,OH,PA,WV 34 - AL,AK,AZ,AR,CO,DE,DC,FL,GA,ID,IL,IN,IA,KY,LA,MD,MA, MI,MN,MS,MO,MT,NE,NV,NH,NM,NY,OK,PA,RI,SC,TX,UT,WA 10 - IL,IN,MD,NY,NC,OH,PA,TN,VA,WI 11 - CA,DE,DC,GA,HI,MD,NJ,NY,PA,SC,VA 9 - GA,IL,IN,MI,NC,OH,SC,TN,WI 20 - AR,CO,CT,IL,IN,IA,KS,KY,MA,MI,MN,MO,NE,NY,ND,OH, PA,SD,TX,WI 30 - AZ,AR,CA,CT,DE,DC,FL,GA,IL,IN,IA,KS,LA,MD,MA,MI,MN, MO,NE,NY,NC,OH,OK,PA,SC,TN,TX,VA,WA,WI 19 - AL,AR,CA,FL,GA,IL,IN,KS,KY,LA,MI,MS,MO,NC,OK,SC,TN,TX,WI 7 - IL,IN,IA,MI,NE,ND,OH 10 - CT,DE,ME,MA,NH,NJ,NY,RI,VT,WV 26 - AL,AZ,AR,CT,DE,FL,GA,ID,IL,IN,KS,MD,MA,MN,MS,MO, MT,NH,NY,NC,PA,SC,TN,TX,VT,VA 31 - AL,AZ,AR,CO,FL,GA,IL,IN,IA,KS,KY,LA,MD,MI,MN,MS, MO,MT,NE,NM,NC,OK,OR,PA,SC,TN,TX,UT,VA,WI,WY

May 4, 2009 INSURANCE JOURNAL-NATIONAL REGION | N15

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Special Report Salute to Super Regionals Company

12/31/08 DPW 000’s omitted

Group Name

44

Pennsylvania Manufacturers Assn. Ins.

337,846

PA Manufacturers

PA

45

Delos Insurance Co.

319,717

Lightyear Delos

DE

46 47 48 49

Auto Club Insurance Assn.

Mutual of Enumclaw Insurance Co. Indiana Insurance Co. United Fire & Casualty Co.

302,054 300,844 298,040 297,973

Automobile Club MI Mutual of Enumclaw Liberty Mutual United Fire & Casualty

MI WA IN IA

50

Motors Insurance Corp.

296,305

GMAC Insurance Holding

MI

51 52

Hastings Mutual Insurance Co. Guideone Mutual Insurance Co.

291,534 286,655

N/A Guideone

MI IA

53 54

Merrimack Mutual Fire Insurance Co. Hudson Insurance Co.

286,580 269,567

Andover Fairfax Financial

MA DE

55 56 57 58

Progressive Gulf Insurance Co. Harleysville Worcester Insurance Co. Quincy Mutual Fire Insurance Co. Farmington Casualty Co.

269,379 264,127 263,152 261,958

Progressive Harleysville Quincy Mutual Travelers

MS PA MA CT

59 60 61

Insurance Co. of the West Westfield National Insurance Co. Old Republic General Insurance Corp.

258,771 257,473 257,086

ICW Westfield Old Republic

CA OH IL

62

California Casualty Indemnity Exchange

256,312

California Cas Mgmt

CA

63 64 65 66

Companion Property & Casualty Insurance Co. Unigard Insurance Co. Secura Insurance a Mutual Co. Triton Insurance Co.

252,624 252,292 239,263 231,299

BCBS of SC QBE Secura Citigroup

SC WA WI TX

67 68

FCCI Insurance Co. Utica Mutual Insurance Co.

228,471 227,234

FCCI Mutual Utica

FL NY

69 70 71

Amerisure Insurance Co. Vermont Mutual Insurance Co. AIG Centennial Insurance Co.

225,241 215,176 212,890

Amerisure Vermont Mutual American International

MI VT PA

72 73 74 75 76

Mid-Continent Casualty Co. Western National Mutual Insurance Co. Preferred Mutual Insurance Co. Farmers Automobile Insurance Assn.

Brotherhood Mutual Insurance Co.

211,459 211,280 208,502 208,013 207,725

American Financial Western National N/A Pekin N/A

OH MN NY IL IN

77 78 79

Donegal Mutual Insurance Co. Farmers Mutual Insurance Co. of NE American Road Insurance Co.

207,332 204,169 199,326

Donegal N/A American Road

PA NE MI

80 81

Alaska National Insurance Co. Canal Insurance Co.

196,913 196,538

N/A Canal

AK SC

82

American Family Home Insurance Co.

191,855

Munich Re

FL

83

Courtesy Insurance Co.

189,417

JM Family

FL

84

Sompo Japan Insurance Co. of America

187,516

Sompo Japan

NY

85

Mitsui Sumitomo Insurance Co. of America

185,003

Mitsui Sumitomo

NY

86

North River Insurance Co.

182,574

Fairfax Financial

NJ

87 88

American Commerce Insurance Co. Stonebridge Casualty Insurance Co.

179,965 179,672

Commerce Aegon US Holding

OH OH

89 90

North Star Mutual Insurance Co. Vanliner Insurance Co.

175,720 172,041

North Star N/A

MN MO

91

New York Marine & General Insurance Co.

164,797

New York Marine & General NY

92

Lyndon Property Insurance Co.

162,031

Protective Life

N16 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

State of Domicile

MO

Number/States with Greater Than $1 Million DPW 12/31/2008 31 - AL,AZ,AR,CA,CO,CT,DE,FL,GA,IL,IN,KS,KY,MD,MA,MI,MN, MS,MO,NV,NH,NJ,NY,NC,PA,SC,TN,TX,VA,WV,WI 30 - AL,AZ,AR,CA,CT,DE,DC,FL,GA,HI,IL,IN,KS,LA,MD,MI,MN, MS,MO,NE,NV,NJ,NY,OH,PA,TN,TX,VA,WA,WI 5 - MI,MN,NE,ND,WI 4 - ID,OR,UT,WA 7 - IL,IN,KY,MI,NJ,OH,TN 22 - AL,AR,CO,FL,ID,IL,IN,IA,KS,LA,MN,MS,MO,NE,NM,ND,SD, TN,TX,UT,WI,WY 26 - AL,AR,CA,CO,FL,GA,IL,IN,IA,KS,LA,MI,MN,MO,NE,NJ,NM, NY,NC,OH,OK,PA,SC,TN,TX,WI 5 - IL,IN,MI,OH,WI 34 - AL,AZ,CA,CO,CT,DC,FL,GA,IL,IN,IA,KS,KY,LA,MD,MI,MN, MS,MO,NE,NJ,NY,NC,ND,OH,OK,OR,PA,SC,TN,TX,VA,WA,WI 8 - CT,IL,ME,MA,NH,NJ,NY,RI 30 - AL,AZ,AR,CA,CO,DC,FL,GA,HI,IL,IN,LA,MD,MA,MI,MN,MO, NV,NJ,NY,NC,OH,OR,PA,SC,TN,TX,UT,VA,WA 3 - GA,MS,VA 7 - CT,ME,MA,NH,NY,RI,VT 5 - CT,MA,NJ,NY,RI 26 - AL,CA,CO,CT,DE,DC,GA,IL,IN,IA,KS,KY,MD,MI,MN,MS,MO, NM,NY,NC,OK,OR,PA,SC,TN,TX 14 - AK,AZ,CA,CO,FL,ID,MS,MO,NV,OR,TN,TX,UT,WA 9 - CA,IL,IN,IA,KY,MN,OH,PA,TN 22 - AZ,CA,CO,CT,DC,FL,GA,HI,IL,MD,MA,MO,NV,NH,NJ,NY, NC,PA,RI,SC,TX,VA 22 - AL,AZ,CA,CO,CT,DE,GA,ID,IN,IA,KS,KY,MD,MN,NV,NM,OK, PA,TN,TX,VA,WA 17 - AL,FL,GA,IL,IN,KY,LA,MD,MS,NJ,NC,PA,SC,TN,TX,VA,WI 8 - AZ,CA,ID,MT,NV,OR,UT,WA 12 - AZ,CO,IL,IN,IA,KS,KY,MI,MN,MO,ND,WI 25 - AL,AZ,CA,CO,DE,FL,GA,HI,IN,IA,KS,MN,MO,NJ,NM,NC,OH, PA,SC,TN,TX,VA,WA,WV,WI 10 - AL,FL,GA,IL,IN,KY,MI,NC,SC,TN 25 - CO,CT,DE,FL,GA,IL,IN,KY,MD,MA,MI,MN,MO,NH,NJ,NY, NC,OH,PA,SC,TN,TX,VA,WA,WI 15 - AL,AR,FL,GA,IL,IN,KS,KY,MI,MS,MO,NC,SC,TN,TX 7 - CT,ME,MA,NH,NY,RI,VT 31 - AL,AZ,CT,DE,DC,FL,GA,IN,KS,LA,ME,MI,MN,MO,MT,NH, NJ,NY,NC,OH,OK,PA,RI,SC,TN,TX,VT,VA,WA,WV,WI 14 - AR,CO,FL,KS,MI,MO,MT,NM,ND,OK,OR,TX,UT,WY 5 - IA,MN,ND,SD,WI 4 - MA,NH,NJ,NY 4 - IL,IN,IA,WI 25 - AZ,AR,CA,CO,GA,IL,IN,IA,KS,KY,MD,MI,MS,MO,NM,NC,OH, OK,OR,PA,SC,TN,VA,WA,WV 5 - DE,MD,OH,PA,VA 2 - NE,SD 28 - AL,CA,CO,FL,GA,IL,IN,KS,KY,LA,MD,MA,MI,MN,MS,MO,NE, NJ,NY,NC,OH,OK,PA,SC,TN,TX,VA,WI 6 - AK,CA,ID,LA,OR,WA 29 - AL,AZ,AR,CO,CT,DE,FL,GA,IL,IN,KY,ME,MD,MS,MO,NV,NC, OH,OK,OR,PA,RI,SC,TN,UT,VA,WA,WV,WI 30 - AL,AZ,AR,CA,CO,FL,GA,IL,IN,KS,KY,LA,MD,MI,MS,MO,NV, NJ,NM,NY,NC,OH,OK,OR,PA,SC,SD,TN,VA,WA 21 - AZ,AR,CA,CO,FL,GA,IL,ME,MD,MN,MS,MO,NC,OH,OK, OR,PA,SC,TN,VA,WI 31 - AL,AR,CA,CT,FL,GA,IL,IN,IA,KY,LA,MD,MA,MI,MN,MS,MO, NH,NJ,NY,NC,OH,OK,OR,PA,SC,TN,TX,VA,WA,WI 28 - AL,AZ,CA,CO,CT,FL,GA,HI,IL,IN,KY,LA,MA,MI,MO,NV,NJ, NY,NC,OH,OR,PA,RI,SC,TN,TX,VA,WA 29 - AL,AZ,CA,CO,CT,DE,FL,GA,HI,IL,IN,KY,LA,MD,MA,MI,MN, MO,NJ,NY,NC,OH,OK,PA,SC,TN,TX,VA,WI 14 - AZ,CT,ID,IL,IN,KY,NJ,OH,OK,OR,PA,RI,TN,WA 29 - AL,AZ,CA,CO,CT,FL,GA,IL,IN,IA,LA,MD,MA,MI,MN,MO, NV,NJ,NY,NC,OH,OR,PA,SC,TN,TX,VA,WA,WI 5 - MN,NE,ND,OK,SD 32 - AL,AK,AZ,CA,CO,CT,FL,GA,IL,IN,KS,KY,MD,MA,MI,MN,MO, MT,NE,NJ,NY,NC,OH,OR,PA,SC,TN,TX,VT,VA,WA,WI 25 - AL,CA,CO,CT,FL,GA,IL,KS,KY,LA,MA,MO,NV,NJ,NM,NY,NC, OH,OK,PA,SC,TN,TX,VA,WA 27 - AL,AZ,CA,CO,CT,FL,GA,IL,IN,IA,KY,ME,MD,MI,MN,MO,NE, NJ,NC,OH,OR,PA,TN,TX,VA,WA,WI

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Company

12/31/08 DPW 000â&#x20AC;&#x2122;s omitted

Group Name

State of Domicile

93 94 95 96

Century-National Insurance Co. Concord General Mutual Insurance Co. Trinity Universal Insurance Co. OneBeacon Insurance Co.

161,406 159,637 156,401 153,157

N/A Concord Unitrin White Mountain

CA NH TX PA

97

Protective Insurance Co.

151,242

Baldwin & Lyons

IN

98 99 100 101 102 103 104 105

Hartford Insurance Co. of IL Fidelity National Insurance Co. Cypress Insurance Co. Merchants Mutual Insurance Co. Builders Mutual Insurance Co. Pacific Specialty Insurance Co. Public Service Mutual Insurance Co. First Colonial Insurance Co.

144,298 142,296 139,637 138,021 136,928 135,050 130,126 118,390

Hartford Fire & Casualty Fidelity Natl. Financial Berkshire Hathaway Merchants Mutual Builders Western Service Contract Public Service Allstate

IL CA CA NY NC CA NY FL

106 Jewelers Mutual Insurance Co.

117,289

N/A

WI

107 108 109 110 111

116,609 116,545 115,768 114,174 111,596

American Financial Mercury General N/A Andover N/A

CA OK WY MA MI

112 Harleysville Preferred Insurance Co 113 Grange Insurance Association 114 Preferred Professional Insurance Co

110,041 109,540 108,894

Harleysville Grange N/A

PA WA NE

115 Farmers Alliance Mutual Insurance Co. 116 Chicago Insurance Co.

105,693 103,396

Alliance Allianz

KS IL

117 118 119 120 121 122 123 124

101,957 101,255 100,747 99,651 96,326 93,110 92,474 90,926

Donegal Fairfax Financial Van Enterprises Cumberland IAT Reins Columbia Fincor Holdings Federated Mutual

PA NY KS NJ NC MO MI MN

125 Toyota Motor Insurance Co.

90,700

N/A

IA

126 IMT Insurance Co. Mutual 127 Harco National Insurance Co.

89,804 88,967

IMT Mutual Holding IAT Reins

IA IL

128 Darwin National Assurance Co.

85,574

Allied World Assur. Holding DE

129 Middlesex Insurance Co. 130 AIG Premier Insurance Co. 131 American Hardware Mutual Insurance Co.

84,259 83,715 83,062

Sentry American International Motorists Mutual

WI PA OH

132 Harford Mutual Insurance Co. 133 Farmland Mutual Insurance Co.

77,359 74,882

Harford Nationwide

MD IA

134 Capitol Indemnity Corp.

73,876

Alleghany

WI

135 136 137 138 139 140 141 142 143 144 145 146 147 148 149

72,396 72,194 70,472 68,797 62,652 57,090 56,782 56,231 53,558 43,608 41,419 39,350 38,521 31,353 29,209

Ace Ltd. White Mountain State Auto Mutual Western Reserve AAA Mid Atlantic Pennsylvania National Central Mutual WR Berkley Lititz Mutual Berkshire Hathaway American International Delek Old Republic Ace Ltd Bankamerica

PA PA SD OH PA PA OH DE PA NE IN TX IL PA SC

Republic Indemnity Co. of America American Mercury Insurance Co. Mountain West Farm Bureau Mutual Ins. Co. Cambridge Mutual Fire Insurance Co. Daimlerchrysler Insurance Co.

Atlantic States Insurance Co. Seneca Insurance Co. Inc. Old United Casualty Co. Cumberland Mutual Fire Insurance Co. Occidental Fire & Casualty Co. of NC Columbia Mutual Insurance Co. MHA Insurance Co. Federated Service Insurance Co.

Insurance Co. of North America Pennsylvania General Insurance Co. Milbank Insurance Co. Lightning Rod Mutual Insurance Co. Keystone Insurance Co. Penn National Security Insurance Co. All America Insurance Co. Berkley Regional Insurance Co. Lititz Mutual Insurance Co. Cornhusker Casualty Co. Yosemite Insurance Co. Republic Underwriters Insurance Co. Bituminous Fire & Marine Insurance Co. Bankers Standard Insurance Co. General Fidelity Insurance Co.

Number/States with Greater Than $1 Million DPW 12/31/2008 4 - AZ,CA,IL,NV 3 - ME,NH,VT 8 - AL,AR,ID,LA,MT,OK,TX,UT 30 - AZ,AR,CA,CO,DC,FL,IL,IN,IA,KS,KY,LA,MA,MI,MN,MS,MO, MT,NJ,NM,NY,OH,OK,OR,PA,SC,TX,VA,WA,WI 21 - AZ,CA,CO,FL,GA,IL,IN,MD,MI,MO,NJ,NY,NC,OH,OR,PA, TN,TX,UT,WA,WI 4 - CT,IL,NY,PA 15 - AZ,CA,FL,HI,LA,MS,MO,NE,NV,NY,PA,SC,TX,VA,WA 3 - AR,CA,GA 9 - MA,MI,NH,NJ,NY,OH,PA,RI,VT 4 - NC,SC,TN,VA 4 - AZ,CA,GA,TX 13 - AZ,CA,CO,CT,IL,MA,NJ,NY,OR,PA,RI,TX,WA 30 - AZ,AR,CO,FL,GA,IL,IN,IA,KS,KY,LA,MD,MA,MI,MN,MO,NE, NV,NJ,NM,NC,OH,OK,PA,SC,TN,TX,UT,VA,WA 30 - AL,AZ,AR,CA,CO,CT,FL,GA,HI,IL,LA,MD,MA,MI,MN,MO, NV,NJ,NM,NY,NC,OH,OK,PA,SC,TN,TX,VA,WA,WI 10 - AK,AZ,CA,CO,GA,IL,NV,NM,OH,UT 6 - CA,CO,FL,GA,OK,TX 2 - MT,WY 7 - CT,IL,ME,MA,NH,NY,RI 28 - AL,CA,CO,FL,GA,IL,IN,KS,LA,MD,MA,MI,MN,MS,MO,NE, NJ,NM,NY,NC,OH,OK,PA,SC,TN,TX,VA,WA 9 - CT,DE,MD,MA,NJ,NC,PA,TN,VA 6 - CA,CO,ID,OR,WA,WY 20 - CA,CO,FL,IL,IN,IA,KS,KY,LA,MD,MO,MT,NE,NJ,NY,OH, PA,TX,WA,WI 9 - CO,ID,KS,MO,MT,NE,ND,OK,SD 24 - AZ,CA,CO,CT,DC,FL,GA,HI,IL,IN,IA,MD,MA,MI,MO,NJ,NY, NC,OH,PA,TN,TX,VA,WA 7 - DE,GA,MD,NY,OH,PA,VA 17 - AZ,CA,CO,CT,FL,IL,KY,MD,MA,MI,NV,NJ,NY,NC,OH,PA,VA 7 - AZ,CA,FL,KS,MI,MO,TX 4 - DE,MD,NJ,PA 17 - AL,AZ,CA,FL,GA,IL,IN,KY,LA,MO,NV,NJ,OH,SC,TN,TX,VA 8 - AR,IL,IA,KS,MO,NE,OK,SD 8 - IA,KY,MI,MN,ND,OH,SD,WI 28 - AL,AR,CA,CO,GA,IL,IN,IA,KS,KY,MI,MN,MO,NE,NV,NM,NC, ND,OH,OK,PA,SC,SD,TN,TX,VA,WA,WI 19 - AZ,AR,CA,CO,FL,IN,KY,MD,MA,MI,MS,NV,NJ,OK,OR,PA, TN,VA,WA 5 - IL,IA,NE,SD,WI 25 - AZ,CA,CT,FL,GA,IL,IN,LA,MI,MS,MO,NE,NV,NJ,NY,NC,ND, OH,OK,OR,PA,TN,UT,WA,WI 21 - AZ,CO,CT,FL,GA,IL,MD,MA,MI,MN,NJ,NY,NC,OH,OK,OR, PA,TX,VA,WA,WI 15 - CA,CO,CT,FL,GA,IL,IN,KS,MN,MO,NJ,OH,TN,TX,WI 16 - CA,CT,FL,ME,MI,MN,MO,MT,NV,NJ,NY,OH,PA,VA,WA,WY 19 - AZ,CA,CO,ID,IL,IA,KY,MA,MI,MN,NV,NJ,NY,OH,OR,PA, TX,WA,WI 7 - DE,DC,MD,NC,PA,TN,VA 24 - AL,AR,GA,ID,IL,IN,IA,KS,KY,MN,MS,MO,MT,NE,NC,ND,OH, OK,SD,TN,TX,WA,WI,WY 20 - AZ,CA,CO,GA,IL,IN,KY,MI,MN,MO,MT,NV,ND,OH,OK,OR, PA,SD,WA,WI 5 - CA,FL,MA,NY,WA 8 - CA,CT,MA,NH,NM,NY,RI,TX 6 - AZ,IN,MN,ND,SD,UT 2 - IN,OH 5 - DE,MD,NJ,PA,VA 8 - AL,DE,MD,NC,PA,SC,TN,VA 14 - AZ,CT,GA,IL,IN,MA,NJ,NY,NC,OH,OK,SC,TN,VA 8 - FL,GA,ME,NV,NY,NC,TN,TX 9 - DE,KS,MD,MO,NC,PA,SC,VA,WV 10 - AK,CO,ID,IA,KS,NE,NC,SC,VA,WA 15 - AZ,CA,CO,FL,GA,IL,IN,KY,NC,OH,PA,SC,TN,VA,WI 5 - LA,MS,NM,OK,TX 12 - FL,IL,IA,MI,MO,NE,NC,OK,PA,TX,VA,WI 7 - CT,FL,GA,IL,NJ,NY,PA 11 - AL,FL,GA,IN,LA,MO,NJ,NM,NY,OH,WA

Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from a Highline Data product. The NAIC and Highline Data do not endorse any analysis or conclusion based upon the use of its data. www.insurancejournal.com

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National Coverage News & Markets Risk Managers Report ‘Soft Landing’ for Market Pricing

I

nsurance premiums for businesses continued to slide towards a “soft landing” rather than an abrupt reversal resulting in rate increases, according to risk managers.

While banks and other financial institutions bought directors and officers (D&O) insurance at substantially higher rates, the rest of the commercial insurance market in the first three months of 2009 saw a continuing trend of little or no change in rates, according to RIMS Benchmark Survey, a survey of policy renewal prices as reported by North American corporate risk managers.

General liability premiums fell 3.8 percent for policies renewing during the first quarter of 2009, as compared to a 5.9 percent decline in the fourth quarter of 2008, risk managers reported. The average workers’ compensation premium fell 2.5 percent, which is similar to price decreases in the past several quarters.

The average property renewal was flat for the first quarter as compared to a decline of

3.8 percent in the fourth quarter of 2008, the survey revealed. Also noted was a wide range of changes in recent renewal premiums for individual property risks: Premium changes ranged from a decrease of 11 percent to an increase of 14 percent.

Risk managers said the D&O market continued to be split between financial institution (FI) risks and all other (commercial) risks. Overall, the average D&O premium increased by 3 percent, but the increase was driven entirely by financial companies.

Excluding FI firms, the average renewal was down 3 percent, the survey found.

Higher FI premiums are the outcome of massive losses from the meltdown of the subprime mortgage market and the ensuing credit crisis. By comparison, overall D&O rates fell 1.2 percent in the fourth quarter of 2008 and fell 4.5 percent during that period excluding FI firms.

“Even though the credit crisis and the

N18 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

continued on page N20

Bad Economy Not Impacting Essential Insurance Coverages

M

any Americans have taken steps to reduce personal insurance costs in response to the economic downturn, but a new industry study suggests that maintaining essential auto and homeowners coverage remains a priority for the most consumers.

Twenty-eight percent of those with auto insurance coverage surveyed by the Insurance Research Council (IRC) reported shopping for lower rates when they normally would not have done so. Among those with auto or homeowners insurance, 15 percent said they had increased their insurance deductibles or reduced the amount of coverage to reduce premium costs.

Most Americans, however, have maintained essential homeowners and auto insurance coverage despite the challenges posed by the ecocontinued on the bottom of page N20

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National Coverage News & Markets Risk Managers, continued from page N18

global recession have had a negative impact on insurers’ top and bottom lines, so far financial institution D&O is the only segment tracked by RIMS Benchmark Survey to respond with higher premiums,” said Dave Bradford, Advisen’s executive vice president and editor-in-chief of RIMS Benchmark Survey. “Insurers struggle against falling rates, increased losses in some lines, and sharply lower investment income due to the credit crisis, but the commercial insurance industry is still overcapitalized.”

RIMS Benchmark Survey is produced by Advisen Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey’s online services. IJ Bad Economy, continued from page N18

nomic downturn, according to the study. Nine percent of those with at least one household vehicle reported canceling or not renewing coverage for a household vehicle in response to the economic downturn. However, almost one-third (31 percent) of those canceling auto insurance coverage also reported selling a vehicle as a way to save money, so many of those vehicles for which insurance coverage was canceled were also likely sold.

Five percent of homeowners and 14 percent of renters reported canceling homeowners or renters insurance coverage.

The study also reported on the frequency with which consumers have taken other steps in response to the downturn. For example, 65 percent reported greatly reducing their expenditures on entertainment. Thirty-seven percent reported postponing the purchase of a major household appliance.

“These findings confirm that most Americans recognize the importance of maintaining essential insurance coverage on their homes and cars,” said Elizabeth A. Sprinkel, senior vice president of the IRC. “But they also show that Americans are willing to shop and reevaluate their insurance needs in order to reduce insurance costs.”

The results of the IRC’s report, “Public Attitude Monitor 2009, Consumer Response to the Economic Downturn,” are based on 1,000 telephone interviews conducted with adults age 18 and older in December 2008 by GfK Custom Research North America.

Copies of the study are available for $65 each in the U.S. at: www.ircweb.org. IJ www.insurancejournal.com

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Closer Look Agency Technology

Social Networking in an Insurance World Web 2.0 Tools Enhance the Face-to-Face Interactions in the Industry

By Nicole Bissett

I

nsurance firms that have used the tools with their agents and prospective clients. of Web 2.0 appear to be won over for They are experimenting with Twitter to keep good, and have little to say that is negatheir agents up-to-date with what’s happentive. ing in the markets.

Snyder says social McAuley, Woods & Associates, a privately networking tools held boutique wholesale brokerage based in only enhance facePalm Beach, Fla., is one company that has to-face interaction benefitted. McAuley, Woods & Associates, between customers. which uses a select group of retail agents “You can start a conthroughout the United States, began using a versation and relawiki, a internal collection of Web pages that tionship in person allows anyone in the company to contribute and then continue it content,just nine months ago. in the community So far reviews from the McAuley, Woods & getting input from Associates’ employees are positive. everyone,” he said.

Jim Snyder, a property/casualty broker who heads up marketing efforts for McAuley, Community Woods & Associates says, the brokerage is Benefits currently putting all of its corporate knowlMike Wise, the edge into the wiki. “We have our corporate vice president of IdeaStar, also believes agents processes there as well as training videos and will benefit from these tools. marketing information for all of our carriers,” “My opinion is the social web is really putSnyder says. The wiki, Snyder says, can be ting the agents back in the driver’s seat after updated by anyone in the company. Everyone being sort of disenfranchised a little bit over contributes by entering their knowledge in to the past few years because of search engines,” the firm’s wiki.

Wise said. “Everybody’s focused on going and Their main use for it is to market, and to doing a search on a particular insurance share their success stories. They also receive product or need. The big direct consumer updates from underwriters on a daily basis marketers were dominating the search concerning their appetites and where they are results and the agents were open and closed. The brokerkind of left out when it came age also uses the wiki for ‘The social web to all that traffic.” forums and blogs to share IdeaStar, based in information with each other. is really putting Cleveland, Ohio, provides Snyder says it is now faster the agents back Web-based software applicaand easier to access informations to help customers create tion when answering quesin the driver’s online initiatives. Wise says tions over the phone. “We can seat ...’

Web 2.0 tools such as Twitter, look into the wiki and see blogs, podcasting, videocastwhat we’ve done in the past,” ing, YouTube, and others, are excellent from a he said. “It helps us market faster and give prospecting standpoint. them answers quicker.”

These tools are appreciated by other Snyder believes the wiki will be an excelexperts in the field of technology as well. lent teaching tool for new employees. He also Rick Morgan, a board member for the believes the firm’s underwriting guides will Agents Council for Technology (ACT), who become more robust as they build the library has four decades of experience in technology, of risks and how to place them. marketing, and publishing in the independThe firm also uses LinkedIn to keep up N22 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

ent insurance agency system, says these tools are easy to use, and very inexpensive. He believes in the concept of social networking, not just because the tools are inexpensive.

“When you engage in the social networking world, you build relationships, and relationships are important,” Morgan said.

“In the agency world of sales, service, and marketing, what they do in small, home-town, Main Street businesses, is they depend a great deal on relationships and on trust. Part of what social networking does is help in that area. It enables, in a digital way, relationship.”

Morgan’s message is that social networking is not a fad; it is a way of tapping in to a core, human desire to belong to a community.

Downsides So with all the benefits of Web 2.0, is there a downside?

As with anything, Snyder believes there are some concerns. Loss of control and mis-information are always possible contingencies.

“For our internal wiki, if you have rogue employees that deliberately want to try and put false information in, they can certainly do it,” he said.

Future revenue possibilities can’t yet be determined from the use of these tools. Even so, Snyder believes they increase the company’s marketing efficiency. “We’re looking for ways to open this up to our retailers and underwriters so we can all communicate as one team in the future,” he said. “This is a bit far off since there are many issues to consider, but it is my vision to help make our business more transparent to our customers.” IJ www.insurancejournal.com

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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.

Products Liability for Roller Coasters and Rides Market Detail: MarketScout (www.marketscout.com) offers agents access to products and completed operations coverage for amusement ride manufacturers and importers. In addition to general liability, the insured can purchase protection for discontinued products, excess liability and workers’ compensation. Minimum premiums begin at $20,000 and the insured can apply as high as $10,000 SIR’s.

Available Limits: $1 million to $5 million.

Carriers: Unable to disclose. “A++” rated

by A.M. Best. Non-admitted.

States: All. Contact: John Gaskill at 972-934-4212 or e-mail jgaskill@marketscout.com.

Workers’ Comp Programs Market Detail: Chamber Insurance Agency Services (www.chamberagent.com) makes it easier for agents to find workers’ compensation coverage for hard-to-place risks. This featured program provides access to coverage for accounts with high experience modification factors, multi-state operations and what are usually considered difficult risks.

Available Limits: As needed.

Carriers: Various carriers. Ratings not provided. Admitted.

States: All except where not allowed.

Contact: John P. Ferreira at 973-669-2309 or e-mail jpferreira@chamberagent.com.

offered for claims in connection with professional and pollution liability; 4) Coverage for independent contractors; 5) A worldwide coverage territory; 6) “Innocent insured” and mediation credit coverage offered; 7) The availability of an aggregate deductible endorsement; and 8) An available blanket waiver of subrogation.

Minimum premiums begin at $2,500 and deductibles begin at $2,500.

Available Limits: $500,000 to $10 million.

Carriers: Ace, Admiral, AIG, Beazley, CNA, Hiscox, Houston Casualty, Lloyds

rated by A.M. Best. Admitted and nonadmitted.

States: Ala., Ariz., Ark., Calif., Colo., Conn., Del., Fla., Ga., Idaho, Ill., Ind., Iowa, Kan., Ky., La., Mich., Minn., Miss., Mo., Mont., Neb., N.H., 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. and Wyo. Contact: Josh Hancock at 800-977-9884 or email underwriting@transportationrisk.com.

Bringing Market Seekers and Market Providers Together

Market Detail: Professional Program Insurance Brokerage (www.ppibcorp.com) offers professional liability coverage to interpreters and translators. Coverage is offered on a claims made basis and protects against claims alleging errors, omissions or negligent acts arising out of professional interpreting or translating services.

Coverage can be included for the applicant, applicants owned company, employees and contractors. The option to include general liability protection is also available.

Applications, quotes and purchase requests can all be done online. Minimum premium begins at $275.

Available Limits: $250,000 to $1 million.

Carriers: Lloyds of London. “A” rated by A.M. Best. Non-admitted.

States: All except Alaska and Mississippi.

Contact: Susan Preston at 415-475-4300 or e-mail susan@medispa-ins.com.

• Find markets in our database • Promote your markets on our site • Join our community forums • Membership is free! and Navigators. “A” rated by A.M. Best.

Admitted and non-admitted.

States: All. Contact: Robert J. McIntyre at 610-3373200 or e-mail rmcintyre@apogeeinsgroup.com.

Architects & Engineers Market Detail: Apogee Insurance Group, a Berkshire Hathaway Co. (www.apogeeins group.com) offers a broad architects and engineers program with the following coverage features: 1) Definition of professional service includes engineering, architecture, construction management and environmental consulting; 2) Offerings can include cyber liability, pollution liability and an option for first dollar defense; 3) Bodily injury and property damage coverage

Interpreters and Translators Professional Liability

Household Goods Truck Cargo

Mortgage Broker/Banker Professional Liability

Market Detail: Transportation Risk Underwriters Inc. (www.transportation risk.com) brings agents a cargo market for all household goods movers. Less than two years experience, no problem. Insureds can also get contingent auto liability, contingent cargo, and commercial general liability for brokers. Deductibles begin at $1,000.

Available Limits: $25,000 to $100,000.

Carriers: Multiple carriers. “A-” to “A+”

Market Detail: Gresham & Associates (www.greshaminc.com) has facilities for mortgage broker/banker professional liability which includes sub-prime loans and prior acts coverage. Investor required errors and omissions coverage is also available through a Special Mortgage Bankers Bond naming the investor as the loss payee.

Minimum premiums begin at $2,500.

Available Limits: $1 million to $5 million.

N24 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

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Carriers: Unable to disclose. “A” rated by A.M. Best. Non-admitted.

States: All. Contact: Art Hays at 888-473-7444 or email ahays@greshaminc.com.

Fire Protection Contractors Market Detail: McNeil & Co. (www.mcneilandcompany.com) brings agents the FireWatch Program. This is a comprehensive insurance and risk management program offering high quality, specialty insurance products to the complete fire protection market including firms that engage in the sales, service, and installation of fire suppression systems, fire extinguishers, burglar and fire alarm systems, and those involved in selling or distributing fire equipment or emergency apparatus. The program can be tailored to provide an unequaled coverage portfolio.

Available Limits: As needed.

Carriers: Arch Insurance Co. “A” rated by A.M. Best. Admitted.

States: Alaska, Ariz., Ark., Calif., Colo., Conn., Del., Fla., Ga., Idaho, Ill., Ind., Iowa, Kan., Ky., La., Maine, Md., Mich., Minn., Miss., Mo., Mont., Neb., Nev., N.H., N.J., N.M., N.Y., N.C., N.D., Ohio, Okla., Ore., Pa., R.I., S.C., S.D., Tenn., Texas, Utah, Vt., Va., Wash., W. Va. and Wis. Contact: Shawn Yingling at 717-646-8886 or e-mail syingling@mcneilandcompany.com.

Medical Property Protection Market Detail: RPS of New York (www.rpsins.com) offers agents a property protection program designed specifically for the healthcare industry equipment. The medical diagnostic equipment coverage form is crafted to provide protection for: MRI’s, CAT scanners, X-ray equipment and

other portable diagnostic equipment.

Power units and specialized trailers part of mobile units can also be covered. Blanket limits of $250,000 are also available on items such as accounts receivable, EDP (including extra expense), extra expense, food spoilage and contamination, loss data preparation costs, personal property of patients and valuable papers and records.

Minimum premiums and deductibles begin at $5,000.

Available Limits: $1 million to $100 million.

Carriers: Unable to disclose. “A” rated by A.M. Best. Admitted.

States: All. Contact: Robert Hecht at 631-969-1900 or e-mail bob_hecht@rpsins.com. IJ Submit your company’s property/casualty markets to the industry’s leading searchable database at www.mynewmarkets.com.

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From Dude Ranches to Pizza Delivery, we have markets covered. Stop Searching and Start Finding. Our database of over 25,000 markets makes it quick and easy to find that obscure market you are searching for. Best of all the service is FREE! So sign up today!

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May 4, 2009 INSURANCE JOURNAL-NATIONAL REGION | N25

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Special Report AAMGA Issue

‘Red Flags’ to Watch For When Choosing an MGA Partner in a Bad — and Good — Economy or Market

I

n today’s tough economy and proaround for a long time with a few differWhat should agents watch out for longed soft market, some insurance ent markets, then it’s generally one of the when questioning whether an MGA is firms are likely to get into stronger players,” he added. in good financial health or if they are financial trouble. Smaller Donoghue advises agencies to a good firm to partner with? wholesalers and managing always have backups to their priAre there ‘red flags’ to consider? general agencies (MGA) maybe mary markets, Kevin Donoghue: Not havat risk. Their ability to stay especially ing much experience in If they keep afloat with working capital when they are the business is a flag. It’s could be a challenge, says placing surswitching markets, very difficult for an agent Kevin Donoghue, managing plus lines to assess the financial sitit’s an indicator director for Mystic Capital business uation of an MGA or Advisors Group LLC, a New because “anyMGU because financials that they might York-based firm that provides thing can hapare not shared, just as an Kevin Donoghue not be the best financial consulting services to pen.” agency generally doesn’t the retail insurance, wholesale insurance In this interview share their financials. …

MGA to be doing and financial services industries. with Insurance Journal’s Check on references business with.

Andrea Wells, and experience. Checking If an MGA loses a market or loses key Donoghue outlines a with the markets they insurance lines, the fallout could make it few “red flags” agents should be aware of represent is always good due diligence, if difficult for those groups to stay in busiwhen trying to gauge the health of their they (agents) are not familiar with a cerness, Donoghue says. “But if it’s a sizeable MGA partners. Here’s what he had to say: wholesaler or MGA, or one that’s been continued on page N28

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Special Report AAMGA Issue

50 Reasons Why Retail Agents Choose Managing General Agency Partners In an Insurance Journal online survey, 304 independent agents wrote criteria on how they choose their MGA partners. Here’s what some of those agents had to say: 1. As a large broker, this is decided based on relationships, successes, volumes, commissions levels, service. In other words we are dictated by volume.

2. Service, service, service, markets, price, service.

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4.Must know their products and give quick turnaround on quotes.

5. It’s very important to work with someone who will walk me through situations I may be unfamiliar with.

6. Basically we have two MGAs with relationships but will use others for exclusive specialty programs. Sometimes response time can be an issue as to who we write the business with.

7. If they have been in business a long time and have markets that we know are competitive and cutting edge, we give them a chance. If they do their job quickly and accurately, we continue to use them. If their underwriters are fickle and sometimes incoherent, we go elsewhere. We prefer to not swim upstream. Any difficulty in dealing with them is the quickest way for them to lose our interest.

8. What other agents say about the MGA and how they are treated and services offered.

9. Contract with known brokers. Specialty programs influence use. When known agents move, we will follow them to their new MGA.

18. Dedicated underwriters is crucial.

19. The more the MGA can automate their services including upload and download the more we would want to work with them.

20. Ease of submission. Sense that MGA understands nature of risk and will respond accordingly.

21. Financial ratings of companies used, expertise and knowledge of products/markets by brokers/assistants, ease of doing business with my CSRs after I have bound the business as the producer.

22. I like MGAs that are in the Midwest because that’s where my agency is. I feel that puts me in touch with an underwriter who may be feeling the same issues as my customers.

23. I consider those who can provide good service, quick response time and a good selection of companies.

24. Expertise and ease of doing business.

25. The three things all agents want: competitive markets, ease of doing business and the highest rate of commission possible.

40. Service, reputation and recommendation of other agents.

41. I only want to work with a couple. We receive tons of e-mail, mail and advertising, but I tend to stay with MGAs I have used in the past.

43. Met personnel at convention or conference, gained insight to their markets and experience. Tried and liked.

44. Print ads.

26. I choose them based on commitment to service, response time and access to markets.

27 We prefer to limit the number of E&S brokers and MGA/program adminstrators with whom we work; believing that carefully selected relationships will be more rewarding in the long term.

11. Their honesty, expertise, quickness, and quality of the carriers they offer. Their pleasantness in personality is also always preferred.

28. Experience and expertise are very important. They need to have good markets and they need to respond quickly.

12. I work with MGAs who respond quickly to our requests and try to earn our business by strong communication.

29. Most important to me is the ease to work with a particular MGA.

13. Reputation and how quickly they respond to inquiries along with market availability. Customer service has been decreasing over the years.

30. Here’s the priority list: 1) availablity of markets; 2) reliable response; 3) expertise; 4) price; 5) compensation. Everything else is a consideration, but not critical.

14. To place business that can’t be written in the standard market. Most of our MGAs have been around for many years. We only pursue new MGA relationships to gain a market for placement.

31. The relationship with a wholesaler/MGA is dependent on the carriers they represent as well as the responsiveness of their organization.

15. Continuing to place additional business with an MGA does depend on the relationships and service that are given.

32. We go to an MGA because we have a client with a need that our markets cannot handle.

16. Length of time in market. Reputation. Good reports from other agents that use them. Good working relationship with the underwriter staff.

33. Consistent quality level of service is most important.

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38. Three reasons: expertise, product or price.

39. I choose them via peer referrals. I stay with them according to the response time.

42. We select our wholesalers based upon their expertise, references and our employees’ past working experiences with a wholesaler or MGA.

10. Early response to my needs extremely important. In the future being able to quote online with MGAs will become more and more important.

17. Most important factors are the ability to have the most attractive markets for our clients, in conjunction with providing top level service and to believe that the number one priority is taking care of the client.

37. Recommendation of peers is very important and the input of company reps who pass along comments and/info from multiple sources.

34. Service, response time and and a competitive premium are a must.

35. Ease of doing business, service, and financing.

36. We discuss with similar agencies outside our marketing territory and also evaluate their market representation.

45. I work primarily with construction related accounts so even in the soft market it is important to work with brokers and MGAs who know the markets, have good relationships with the companies and understand the need for a timely response to all requests. Those that can do this will keep our business even when their price is slightly higher.

46. In my experience, over many years, wholesalers make a lot of promises in their ads that they will respond quickly to quote requests but for the most part they do not. Their underwriters are overwhelmed and do not respond to newly appointed producers. This is counterproductive and I don’t have time to deal with them. My quote requests die on their desks.

47. We work with the brokers who have expertise in a niche and expect quick response and results.

48. I look for a firm who has good relationships with their carriers and can provide expertise when it comes to questions regarding the quotes. I also look for a good response time for new business, renewals and for everyday service problems.

49. I appreciate brokers that take the time to help me understand the some of the peculiarities of a particular coverage form or company’s way of doing business.

50. Choice. Variety. Access. Today, the little guy can’t obtain many appointments by himself/herself. Agents must band together to meet quotas via MGAs. IJ

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Special Report AAMGA Issue Red Flags, continued from page N26

When a wholesaler or MGA is having tain MGA and they want to write with financial difficulties, what happens? Is them. … the department of insurance involved?

Ask for a company referral. Say XYZ Donoghue: A lot of times when they get in managing general agency underwrites on trouble they sell themselves. They try to get behalf of the Lexington. Don’t be hesitant out of trouble via sale. If there’s been a misto ask for a reference from Lexington.

If an agent is talking to an MGA and that appropriation of funds, then the insurance department would definitely be alerted to MGA tells them that they represent XYZ (carrier), a follow up question is, “How long it.

And then there’s just that gray area where have you represented them?” And if the they are not able to sell answer is a year or two, or they haven’t found the the agent should find out sale so they are kind of who they represented With the times, using fiduciary funds to before that and how long and the soft maroperate their business, they represented them.

And here’s the point, if ket, if you get into having yet been caught to playing the float. they represent a company financial hardships due So sometimes it’s difficult that they have only represented for a few years, there’s more pres- to know who’s in solid financial shape and who’s and did the same previsure to do somenot. ous to that, it’s a bad business practice because thing that is probaGiven the current they are probably burnbly inappropriate. financial crisis and ing markets. That’s a soft market, and huge red flag. heightened pressure to increase revWe look at that when we look at the enues, is it more likely for someone to value of an MGA. If they keep switching be dishonest now than in the past? markets, it’s an indicator that they might Donoghue: I don’t know that it’s more likely not be the best MGA to be doing business for someone to be dishonest if they weren’t with. It certainly begs the question, “Why dishonest to begin with. It’s almost like are you changing markets?” “what cloth are you cut out of?” With the times, and the soft market, if you get into Any examples of failed companies you financial hardships there’s more pressure to can share? do something that is probably inappropriate.

Donoghue: None that have been made public But for the most part, in insurance, you are but we work with some that have been in still dealing with the 90 percent plus that trouble and they needed to secure financare honest folks but there’s 10 percent out ing, working capital to stay afloat. None there that give the rest a bad name. that have gone out of business, but in the past we have seen situations where you If an MGA or even a retail agency is have unscrupulous individuals that misaphaving financial difficulty, what propriate funds, on both the retail side and chance do the owners have of securing the MGA side. capital to help given today’s credit It’s always important to do your due dilimarkets? gence on a group before starting to write Donoghue: Well there are good operations out with them. It’s always good to know that there that lend. So to the extent that they your client, your insured, is actually in are in trust and they have solid business place with the insurance company. The practices and they just need working capiMGA may have been paid but you always tal, there’s potential that they can get there. want to make sure that that payment was If they need money tomorrow, they are remitted on to the company and your poligoing to have a difficult time finding it. cy is in force.

But if they are looking ahead and saying “I N28 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

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might need a working capital loan in 90 days” and plan ahead, I think some of the banks out there, InsurBanc being one of them, could try to see if they could bridge the gap.

On the retail side, another bank out there, Westfield Bank in Ohio, lends to agencies. There are groups out there that will lend to an agency that will make it a little easier than going through a traditional banking facility.

But for the most part, as long as the agent verifies that the underlying insurance is in place and it’s with a credible company, the agent should be in good shape. They have done their job. They have maintained the confidence of their client to the extent that there is an intermediary that went

under during the course of business.

To the extent that agents don’t do due diligence, and they haphazardly place risk with groups that they are unfamiliar with, then they would have exposure. … It’s always important to do some background on the owners and their experience. IJ

Are you seeing an uptick of firms looking for capital these days?

Donoghue: Yes, in the last couple of years I think there’s been somewhat of an uptick just because revenues are soft and people haven’t maybe downsized their staff appropriately. But lately there seems to be less softening going on. If anything it seems to be bottoming out so that could be helpful.

So to the extent that they have right-sized themselves right now they might benefit from an uptick in pricing.

If an MGA did go under, closed its doors, or was selling, how should the clients be handled? Would the MGA look for another firm to buy the book?

Donoghue: Ideally they would. So to the extent that they have the ability to sell, they are not financially impaired to where a sale price would be less than the debt they are in, they can generally find an avenue to sell and maybe make some money on it.

If an MGA goes under, it’s not necessarily the end of the world as long as that underlying insurance has been placed with a company. You know, it’s when they went under and didn’t place the coverage (that’s a problem). For the most part, the underlying insured shouldn’t be at risk if the policy was placed and underwritten properly.

If the MGA fails the policy is still in force.

If an MGA were to fail, how might the end customer view the retail agent who placed the account?

Donoghue: I think anytime you have a change in a market, the underlying insured is going to wonder why, so it could look bad on the agent. www.insurancejournal.com

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W

elcome to Insurance Journal’s 2009 Premium Finance Directory, a comprehensive listing of premium finance companies able to assist agents and brokers with their clients’ financing needs.

All company information listed in this directory was directly submitted to Insurance Journal. To be listed in future editions of Insurance Journal’s Premium Finance Directory, or any other directory, contact Kristine Honey at: khoney@insurancejournal.com.

We hope you find this directory to be a valuable resource when searching for financing options for your clients. Feel free to send us comments and suggestions on how we might improve this directory, or for additional help, e-mail: editorial@insurancejournal.com.

Acuret Premium Finance

AFS/IBEX Financial Services, Inc.

All Island Credit Corp.

7050 Woodbine Ave., Ste. 401, Markham ON L3R 4G8 Canada Phone: (905) 886-1674, Fax: (905) 886-7855 Email: service@acuretfinance.com www.acuretfinance.com

750 N St. Paul, Ste. 1500, Dallas, TX 75201 Phone: (800) 299-5626, Fax: (214) 954-0537 Email: service@afsibex.com www.afsibex.com

534 Broad Hollow Rd., Melville, NY 11747 Phone: (631) 777-1377, Fax: (631) 777-1388 Email: info@allislandcredit.com www.allislandcredit.com

· High tech, high touch approach to premium financing · Professional, knowledgeable, and friendly customer service personnel located in Dallas, TX and Newport Beach, CA · Offering creative solutions and flexibility for all your commercial financing needs

· Outstanding Customer Service · Flexibility · Multiple Options for Quoting

· Finance commercial lines, personal lines, including facility · Available through select insurance brokers in Ontario · Interactive website allows for online quotes

Agents & Brokers Premium Finance Company

AFCO 310 Grant St., Ste. 1600, Pittsburgh, PA 15219 Phone: (412) 402-3853, Fax: (412) 402-3048 Email: promptservice@afco.com www.afco.com ; www.cafo.com · Cananwill has joined forces with AFCO to create one strong team · We offer Expertise, Capacity, Flexibility in premium financing across North America · Currently, Chapter 11 financing offers great value-added to your clients

P.O. Box 4312, Woodland Hills, CA 91365-4312 Phone: (888) 875-4000, Fax: (818) 598-2296 Email: russ@abpfc.com www.abpfc.com · Website allows payments, cancellation status, renewal dates, pay-by-check, ach, etc. · Commercial Premium Financing of Property & Casualty Insurance – Nationwide · On-Line Anytime

N30 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

Aviation Premium Finance, LLC P.O. Box 18067, Kansas City, MO 64133 Phone: (877) 353-1047, Fax: (816) 353-1048 Email: kw@aviationpremiumfinance.com www.aviationpremiumfinance.com · APF provides aviation insurance buyers with payment options for their annual insurance premiums. · Customers traditionally put 20% down and then make 9 monthly payments. · Our goal is to make aviation affordable for everyone!

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Premium Finance Directory Birch Financial, Inc.

COST Financial Group, Inc.

20946 Devonshire St., Ste. 200 Chatsworth, CA 91311 Phone: (818) 772-4244, Fax: (818) 772-2221 Email: info@birchfinancial.net www.birchfinancial.net

784 Wall St., Ste. 110, O’Fallon, IL 62269 Phone: (800) 844-2678, Fax: (618) 206-3223 Email: daveg@costfinancial.com www.costfinancial.com

· Finance Commercial Lines for the Landscape Industry · Serving California, Arizona and Nevada · Interactive website allows for confirmation of payments, cancellation status, renewal dates, etc.

Budget Installment Corp (BIC) A Webster Bank Company 1050 Franklin Ave., Garden City, NY 11530 Phone: (800) 557-3000, Fax: (877) 678-2235 Email: ahanes@bicfinance.com www.bicfinance.com

FIRST Insurance Funding Corp.

· COST makes it easy for YOU TO OWN your own Premium Finance Company · COST does the set-up, COST runs the back room, YOU EARN ALL THE PROFIT · Let COST’s 20 years experience put the PROFIT from YOUR premium financing IN YOUR POCKET!

Cypress Premium Funding, Inc. 30448 Rancho Viejo Rd., Ste. 100, San Juan Capistrano, CA 92675 Phone: (949) 487-0602, Fax: (949) 487-0640 Email: info@cypressfunding.com www.cypressfunding.com

450 Skokie Blvd, Ste. 1000, Northbrook, IL 60062 Phone: (800) 837-3707, Fax: (800) 837-3709 Email: marketing@firstinsurancefunding.com www.firstinsurancefunding.com · Competitive rates, flexible payment terms, multiple funding and payment options with the only written service guarantee in the industry. · On-line quoting with secure paperless loan acceptance and funding and on-line, real-time access to accounts. · Professional agency lending program for agency acquisitions, buildings and equipment, lines of credit, perpetuation and producer development.

Focus Finance, LLC · Nationally authorized commercial premium finance provider · BIC's advanced quoting and account management technology includes integration with all AMS systems · Providing exemplary service and excellent rates to your agency and your insureds

Capital Premium Financing 12235 S 800 E, Draper, UT 84020 Phone: (800) 767-0705, Fax: (800) 700-3170 Email: info@capitalpremium.net www.capitalpremium.net · Industry leading Agency Revenue Programs · Highest level of Agent/Client service available in the industry · Local presence, multiple payment options, and online access

ClassicPlan Insurance Premium Financing 13750 Pipeline Ave., Chino, CA 91710 Phone: (800) 347-6481, Fax: (909) 628-5490 Email: info@classicplan.com www.classicplan.com · Commercial & Personal Lines Premium Financing · Internet based point of sale and inquiry system with electronic loan submission · Superior service and technology for our producers

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· Internet Account Viewing, Quoting, Reporting and On-Line Payments · Immediate Funding · Cancellation Prevention Programs

1300 Sawgrass Corporate Pkwy, Ste. 300 Sunrise, FL 33323 Phone: (800) 432-3072 Ext. 4825 Email: info@focusfinance.net www.focusfinance.net

ETI Premium Finance 2825 N University Dr., Coral Springs, FL 33065 Phone: (800) 995-7001, Fax: (800) 995-7002 Email: info@etifinance.com www.etifinance.com · Free Acord Form Software for Our Customers · All Accounts Called Prior To Cancellation · ETI–AutoPay – Automatic Monthly Payments From Customer’s Checking Account

Express Premium Finance 5601 N Classen Blvd., Oklahoma City, OK 73118 Phone: (800) 728-2902, Fax: (888) 413-8898 Email: info@expresspremium.com www.expresspremium.com

FINCO Premium Finance Company P.O. Box 26009, Greensboro, NC 27420 Phone: (800) 873-4626, Fax: (336) 379-7792 Email: travis@finco.biz www.finco.biz

· Courtesy calls made to Agents prior to every cancellation · Friendly, professional staff of bilingual account specialists · Complete online services include quoting, account inquiry and payment posting

gotoPremiumFinance.com 21820 Burbank Blvd., Ste. 300 Woodland Hills, CA 91367 Phone: (888) 875-4000, Fax: (818) 610-2066 Email: information@gotopremiumfinance.com www.gotopremiumfinance.com · Nationwide premium finance provider for agents, MGAs & insurance companies. · Online quoting, e-submission of finance agreements, online payment options, real time account status, scheduled reporting, customized notice delivery & more. · Highly attractive producer compensation programs are available in fee legal states.

· Independently Owned and Operated in North Carolina · Premium Financing available in all 50 States · Web based software allows for 24 hour total online access

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Premium Finance Directory IUI Premium Financing, Inc.

Imperial A.I. Credit Companies 101 Hudson St., 33rd Fl, Jersey City, NJ 07302 Phone: (877) 902-4242, Fax: (201) 631-5484 Email: marketing@iaicc.net www.iaicc.com · Financing programs customized for the specific needs of your insured. · Branch offices distributed throughout the U.S. & Puerto Rico to provide local, efficient service. · Web based account access, quoting and contract submission. Integration with a wide variety of agency management software. · Partnership that goes way beyond the numbers.

27970 Crown Lake Blvd., Ste. 3 Bonita Springs, FL 34135 Phone: (727) 864-0816, Fax: (727) 867-7087 Email: TCulley1@tampabay.rr.com www.IUIPremiumFinancing.com · Financing Commercial Insurance: Trucking, Property, E&O, etc. · No Waiting for Quotes (instant quotes/contracts) · Competitive Rates: Can meet or beat with commissions available

LG Premium Finance

Imperial Finance & Trading, LLC

Life Endeavors Financial Solutions, LLC

701 Park of Commerce Blvd., Ste. 301 Boca Raton, FL 33487 Phone: (866) 664-9303, Fax: (561) 995-4201 Email: info@imprl.com • dbenaim@imprl.com www.imprl.com

6430 Rockledge Dr., Ste. 500 Bethesda, MD 20817 Phone: (301) 803-7553, Fax: (301) 803-7570 Email: konstantin.zvereff@lefinance.com www.lefinace.com

· The premier provider of premium financing in the U.S. · Explore financial strategies to create wealth without using money set aside for retirement · Visit Imperial on the Web at www.imprl.com

· Life Insurance Premium Finance Program Administrator · Perfect for Estate Planning and Wealth Management · Designed as a financial Planning tool; low loan origination fee, low interest rates and no prepayment penalty

P.O. Box 315, Des Moines, IA 50306-1315 Phone: (800) 247-4190, Fax: (515) 223-0226 Email: Brian@ifcorp.biz www.ifcorp.biz · Completely independent, IFC has no ties to insurance companies, agencies or other financial institutions. · The agent has the option to control any and all cancellations and reinstatements of policies financed. · Every agent is assigned its own personal account rep and when you call IFC during normal business hours you’ll always talk to a real person, not an automated attendant.

8530 La Mesa Blvd., Ste. 208 La Mesa, CA 91941 Phone: (888) 280-0235, Fax: (619) 697-0326 Email: info@financepremium.com www.financepremium.com · We look for ways to say “yes” to financing any commercial account. · Aggressive Cancellation Prevention Program with ALL forms of payment accepted. · Premium Finance Licensing and Third Party Administration available (www.pfcaptive.com).

16438 Vanowen St, Ste 205, Van Nuys, CA 91406 Phone: (800) 452-8505, Fax: (800) 209-0120 Email: info@lgpf.net www.lgpf.net · Better retention & servicing of insured resulting in lower cancellation rates · Productivity gains related to streamlined quotation & activation of financing agreements · Superior client services for the agency

Insurance Finance Corp.

Mountain West Premium Finance Group of Companies

Monarch Premium Resources, Inc. 30448 Rancho Viejo Rd., Ste. 100 San Juan Capistrano, CA 92675 Phone: (800) 731-7890 Email: info@MonarchPremium.com www.monarchpremium.com · Exclusive financing arrangements for brokers of Monarch E&S · Interactive Web site for account viewing, reports and On-line payments · Financing Commercial and Personal Lines Insurance Premiums

N32 | INSURANCE JOURNAL-NATIONAL REGION May 4, 2009

NCMIC Finance Corporation 14001 University Ave., Clive, IA 50325 Phone: 1-(800) 600-9250, Fax: 1-(800) 630-9250 Email: rmiller@ncmic.com www.nfcfinance.com · Custom solutions – even for smaller insureds or niche markets. · Flexible plans that can include reduced down payments and extended terms. · State-of-the-art software, immediate funding and web-based account management.

Prem Finance 1230 B.12th St., Far Rockaway, NY 11691 Phone: (718) 301-5940, Fax: (718) 301-5940 Email: lifepremium@gmail.com www.premfinance.com · High commissions for agents and brokers · Completely legal · Backed by a State Charter Bank

Premium Assignment Corporation 3522 Thomasville Rd., Ste. 400 Tallahassee, FL 32309 Phone: (800) 342-0991, Fax: (800) 286-8999 Email: marketing@premiumassignment.com www.premiumassignment.com · Premium Financing Made Easy · Superior Service · Competitive Rates

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Premium Finance Directory

Premium Finance Associates 7603 First Place Dr., B-12, Cleveland, OH 44146 Phone: (866) FRIEND-0 (374-3630) Fax: (866) 839-3090 Email: info@PremFinAssociates.com www.PremiumFinanceAssociates.com

Premium Payment Plan

SIUPREM, Inc.

One Hudson City Centre, Hudson, NY 12534 Phone: (800) 677-3648, Fax: (518) 828-5729 Email: info@prempay.com www.prempay.com

P.O. Box 105611, Atlanta, GA 30348 Phone: 1 (800) 925-2546, Fax: (678) 498-4747 Email: info@siuprem.com www.siuprem.com

· Commercial and Personal Insurance product lines including Assigned Risk · Customizable program support to meet your agency needs · Full service website allowing for quoting, payment and account view 24/7/365

· Independently owned, full service online premium finance company servicing independent agents for over 40 years. · Industry leading technologies providing real-time data for online policy service by the insured or the agent. · Call or visit us online to learn more about the many more benefits SIUPREM can offer.

· Licensed in all 50 states · 24/7 Access to Online Quoting and Viewing system – same day payment posting · Automatic ACH monthly installment withdrawal from insured checking or savings account

Prime Rate Premium Finance Corp.

Premium Finance Brokerage, LLC

· Financing Commercial & Personal Lines Nationwide · 24/7 Web based access · Pre-approval of loans up to $100,000 & no minimum premium.

2012 S Tollgate Rd., Ste. 204, Bel Air, MD 21015 Phone: (866) 381-6501, Fax: (866) 381-6502 Email: tlarsen@premiumfinancebrokerage.com www.premiumfinancebrokerage.com

2141 Enterprise Dr., Florence, SC 29501 Phone: (866) 669-0937, Fax: (800) 677-9850 Email: info@primeratepfc.com www.primeratepfc.com

· Guaranteed Lowest Interest Rates · Access to several national premium finance companies through one point of contact · Flexible payment options, cutting edge technology and a service pledge that’s put in writing P.O. Box 817099, Hollywood, FL 33081 Phone: (800) 491-8937, Fax: (866) 632-9776 Email: marketing@pro-premium.com www.pro-premium.com

Premium Financing Specialists

· Premium Simplicity; most premium finance quotes available within minutes with no financial information required. · Premium Security; we offer national expertise, without compromising the local service you value (PFS has over twenty full service branch offices). · Premium Access; our comprehensive website allows you to access accurate information whenever you need it, but a friendly representative is always just a phone call away.

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21535 Hawthorne Blvd., Ste. 275 Torrance, CA 90503 Phone: (800) 393-2012, Fax: (888) 328-6747 Email: contact@sbac-finance.com www.sbac-finance.com · Interactive and user-friendly state of the art website · Producer compensation up to 3% · Flexibility to meet all your financing needs!

Specialty Risk Premium Finance

Pro Premium Finance Co., Inc.

427 W 12th St., Ste. 100, Kansas City, MO 64105 Phone: (800) 838-2350, Fax: (816) 627-0502 Email: jen.newhouse@premiumfinance.com www.premiumfinance.com

South Bay Acceptance Corp.

· Achieving excellence in the premium finance industry · Interactive web application providing turnkey agency management system · Competitive agent marketing incentives with flexible rate structures

Royal Premium Budget, Inc. 30833 Northwestern Hwy, Ste. 220 Farmington Hills, MI 48334 Phone: (800) 477-7889, Fax: (248) 932-9043 Email: financing@royalpremium.com www.royalpremium.com · Online Payments & Account Status – make payments or review insureds' accounts, including payment history, 24/7. · Same-day turnaround on finance quote requests and quote revisions. · Online Quotes system gives agents the option of producing finance quotes and finance contracts anytime.

7600 Fern Ave., Bldg. 600 Shreveport, LA 71105 Phone: (318) 683-6206, Fax: (318) 683-3846 Email: frances.lee@specialty-risk.com www.specialty-risk.com · 1st Class Service with in house finance through Specialty Risk Associates! · In house finance allows for immediate credit to your broker statement · 24 hour “real time” account access for you and your clients

Standard Funding Corp 335 Crossways Park Dr. Woodbury, NY 11797 Phone: (800) 526-2470, Fax: (800) 203-2547 Email: info@standardfunding.com www.standardfunding.com · Fully automated web-based online services · Personalized customer service & experienced field representatives nationwide · Competitive rates & loan structures

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Premium Finance Directory Tepco Premium Finance 1333 S Rustle Rd., Spokane, WA 99224 Phone: (800) 571-0843, Fax: (509) 622-4702 Email: info@tepcofinance.com www.tepcofinance.com · Easy to use online system for quoting & account management · Free online payments · Licensed in 9 western states

TWG Capital 6666 E 75th St., Ste. 500, Indianapolis, IN 46250 Phone: (877) TWG-CPTL (894-2785), Fax: (317) 813-1701 Email: sales@twgcapital.com www.TWGcapital.com · Trusted by agents as leading financial solutions provider for 10 years · Providing capital to P&C Agents · Free valuations & customized business solutions

US Premium Finance 1255 Lakes Pkwy, Bldg 200, Ste. 201 Lawrenceville, GA 30043 Phone: 1 (866) 246-9691, Fax: 1 (866) 246-9692 Email: customerservice@uspremiumfinance.com www.USPremiumFinance.com · SERVICE: Creatively Structured Premium Finance Loans. · TECHNOLOGY: User-friendly software, easy access to your customer database any where in the world 24/7. · PRICING / RATES: Flexible, Fair Market Pricing.

UPAC Premium Finance 8245 Nieman Rd., Ste. 100, Lenexa, KS 66214 Phone: (800) 877-7848, Fax: (913) 984-4988 Email: marketing@upac.com www.upac.com · Financing insurance premiums since 1954 nationwide. · Industry-leading web site offering unlimited flexibility and options that will save you time AND money. · Paperless e-commerce, reduced cancels, flexible payment options, endorsements in a just matter of seconds and total account management are just some of the benefits you will enjoy. · Agency management system integration for seamless financing. · 10 - Ways for your insureds to pay. · Old-Fashioned Service with Leading-Edge Technology provides you with the one-stop, effortless financing you can count on.

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BE HERE...

...NOT HERE

YOU DONâ&#x20AC;&#x2122;T NEED TO TRAVEL TO LEARN Get your questions answered instantly from your desk.

Insurance Journal webcasts allow you to interact with the experts in real time.

Live and On-Demand Webcasts on www.insurancejournal.com/webcasts

Check out the next webcast TransUnion presents: Protecting Your Portfolio Against Foreclosure and Vacancy-Related Claims Date: May 5, 2009 Time: 10:00AM PT / 1:00PM ET Register at: www.insurancejournal.com/webcasts Are you interested in having your own webcast or custom video? Give us a call: 800-897-9965 ext. 148

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Idea Exchange Closing Quote

Being Prepared Don’t Lose Sight of the Greater Risks We Face

By Richard Ward

N

o one could fail to have noticed that we are in the grip of a recession. With unemployment affecting 2 million in the United Kingdom, interest rates almost at zero and a deflationary environment, there is a lot for businesses to deal with.

While the financial crisis has certainly been front-of-mind for many around the world, it would be disastrous for us to lose sight of the greater risks that we face, particularly as insurers.

This has been recognized at the highest level during the recent G20 meeting in London when the communiqué agreed by all of the world leaders reaffirmed their commitment to address the threat of climate change.

As our understanding of climate change and its impact develops, it is clear that it will have major implications, not only on our environment but also on how our societies and economies operate in the future.

Indeed, it is likely climate change will pose a threat to the future security of the world.

For example, we could see a time when because of changes in our climate, nations cease fighting over ideology and instead compete for control of natural resources. As a result, the world map could be significantly redrawn as borders are decided on the availability of food, water and oil. Whereas prospectors left their homes centuries ago to search for gold and land, water shortages could force mass migration on a previously unseen scale. Nations could be held to ransom as energy pipelines become crucial bargaining tools in world politics and finally the exotic foods that we have all come to know and love could become a thing of the past.

Climate Change and Security Our new report on Climate Change and Security, produced in conjunction with the International Institute for Strategic Studies, examines how climate change will affect global security by exploring four key interrelated issues —

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Ward

water scarcity, food supply, energy security and demographic pressures. To read more, visit our Web site at www.lloyds.com/360.

We are also investing in research to better understand the current threat of political risk. The recession is likely to lead to greater instability across the world — the increased incidences of piracy are just one recent manifestation of this.

Incidences of piracy in the Gulf of Aden and off the coast of Africa have been increasing since 2005, but the number and scale of recent attacks is a real cause for concern. To set things in context, since June 2007 there have been more than 200 reported acts of marine piracy there and 30 percent of Europe’s oil goes through this route.

We are also likely to see a rise in businesses and their executive being targets from threat groups, terrorists and disgruntled populations following the financial and economic turmoil we are witnessing — which could long outlast the recession. We will be exploring this in more detail in a report in June.

Blame Culture It’s not just changing weather and violent actions that the world seems to be facing more of, but a blame culture that, in this current financial environment, may spiral out of control. Boards now spend 13 percent of their time discussing litigation, and most companies believe that stakeholders outside the United States are now more willing to litigate generally.

Globally, actions brought by employees and customers are the most frequent, but actions from shareholders, regulatory authorities and special interest groups will grow as people take stock of the subprime and credit crunch crises.

Added to this, there is a perception that U.S. courts are becoming more willing to rule on cases that might have once been considered extraterritorial. Concerns about liability risk — whether real or perceived — are constraining entrepreneurship in business at a time when we need the best and brightest to stand up.

But it’s not all doom and gloom. Risk is not a dirty word.

The insurance industry deals within it every single day and we have made it our business. We manage many risks — big and small; immediate and long term; simple and complex — but the most important thing is, when managing these, we don’t forget the others. IJ Ward joined Lloyd’s as CEO in April 2006. www.insurancejournal.com

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Joe Santini, Master Mechanic.

Keeps classic cars running smoothly.

Relies on Applied Underwriters to help run his business the same way. ®

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©2007 Applied Underwriters, Inc. A Berkshire Hathaway Company.