Insurancejournal west 2014 01 13

WEST Flood Maps Ail Oregonians California Top ‘Judicial Hellhole’ CFA’s Rate Regulation Gaff

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WEST On The Cover

Inside This Issue

Special Report:

Construction Outlook: Plugged into Safety, Renewable Energy

January 13, 2014 • Vol. 92 No. 1 • West

W5

W6

24

34

NATIONAL COVERAGE

WEST COVERAGE

IDEA EXCHANGE

8

W1 California Servers Awarded $5.7M

in Age Discrimination Suit

W8 Regulation Outlook: Failing to

Make the Case for Rate Regulation

14 Closer Look: 10 Things to Know

About EPLI

W1 Mother of Wyoming Student

Wrestler Sues Hospital

22 E&O Insights: Pearsall on How

‘E&O Proof’ is Your Agency?

18 Special Report: Contractors and

Subcontractors

Construction Obstruction

W1 2 New Mexico Cities Opening Car

Charging Stations

24 The Competitive Advantage:

Burand on The Profit Compression

W5 Flood Maps Still Wrong, Oregon

Homeowners Still Paying

32 Numbers Don’t Lie: MarshBerry

P/C Insurers Show Big Gain in Underwriting Profits

19 Special Report: Contractors and

Subcontractors

Renewable Energy in Construction

34 Closing Quote: Best Quotes of 2013 W6 California Tops ‘Judicial Hellhole’

List

26 2014 Insurance Industry Meetings

& Conventions Directory

DEPARTMENTS 10 10 W2 12 16

4 | INSURANCE JOURNAL-WEST January 13, 2014

Declarations Figures People Business Moves MyNewMarkets

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NATIONAL COVERAGE

Opening Note Top Insurance Stories of the Year

I

n 2013, InsuranceJournal.com readers flocked to news about insurance carriers (Travelers, Berkshire, Liberty Mutual, Tower and others) making moves, changes in Obamacare, the fate of federal flood insurance reforms and storm forecasters coming up short. The following is a list of the 25 most popular articles on InsuranceJournal.com since January, 2013.

1. Bipartisan Deal Reached to Delay Flood Insurance Premium Hikes: Waters — No deal ever passed and Congress adjourned without delaying BiggertWaters provisions.

2. Another Obamacare Requirement Delayed — As it turned out, one of many.

3. What Employees Should Know About Healthcare Changes Ahead — Turns out there was a lot about the Obamacare rollout nobody anticipated.

4. Workplace Bullying Emerging As Major Employment Liability Battleground — While there were some bullying lawsuits, there was no onslaught.

5. Federal Government Shutdown Effect on P/C Insurance Industry — What shutdown?

6. Attorney Behind $43M Award for Ohio Agent Against Nationwide Insurance to File Class Action — Nothing like a carrier-agent spat.

7. Travelers’ Q2 Profit Climbs 85% to $925M; Auto Unit Layoffs Planned — Everyone has an opinion when a major carrier makes a move.

8. Quiet 2013 Hurricane Season a ‘Head Scratcher’ for Embarrassed Forecasters — People seem to like when forecasters are off the mark.

9. 2013 Hurricane Prediction: 72% Chance on East Coast; 48% for Florida — Boy, were they wrong! See No. 8.

10. GEICO Passes Allstate to Become 2d Largest U.S. Auto Insurer: SNL — This race isn’t over.

11. Top 10 Alcohol Brands of Underage Drinkers — Parents want to know.

12. Fifty Top Apps for Independent Agents — Readers had even more suggestions.

13. New Workers’ Compensation Formula Lowers Premiums for Most Employers — But other insureds were told to brace for hikes.

14. MetLife Moving 2,600 Jobs to North Carolina from Northeast, California — Tax breaks from North Carolina could reach $100 million.

15. Travelers Launching Low Cost, Segmented Product in New Personal Auto Strategy — Independent agents are still expressing concern.

16. Liberty Mutual to Phase Out 8 Regional Insurance Brands — Insurer moved to strengthen brand name.

17. Buffett Says Berkshire to Be ‘Significant Factor’ in Commercial Insurance — Just how significant could be interesting story of 2014.

19. U.S. Commercial Insurance Prices to Firm in 2013: Marsh — Did this prediction hold up?

Andrea Wells 20. Top 10 States for Hail Claims — Editor-in-Chief Hail claims cost almost $4 billion.

6 | INSURANCE JOURNAL-NATIONAL January 13, 2014

EDITORIAL Editor-in-Chief Andrea Wells | awells@insurancejournal.com V.P. Content Andrew Simpson | asimpson@insurancejournal.com East Editor Young Ha | yha@insurancejournal.com Southeast Editor Michael Adams | madams@insurancejournal.com South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor Charles E. Boyle | cboyle@insurancejournal.com Senior Editor Susanne Sclafane | ssclafane@insurancejournal.com ClaimsJournal.com Editor Denise Johnson | djohnson@claimsjournal.com MyNewMarkets.com Associate Editor Amy O’Connor | aoconnor@mynewmarkets.com Columnists Chris Burand, Curtis Pearsall Contributing Writers Bill Gausewitz, Tommy McDonald 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 Mindy Trammell (800) 897-9965 x149 | mtrammell@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 New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classifieds, Jobs, Agencies Wanted/For Sale Ly Nguyen (800) 897-9965 x125 | lnguyen@insurancejournal.com MARKETING/NEW MEDIA Marketing Administrator Gayle Wells | gwells@insurancejournal.com Advertising Coordinator Erin Burns (619) 584-1100 x120 | eburns@insurancejournal.com New Media Producer Bobbie Dodge | bdodge@insurancejournal.com Videographer/Editor Matt Tolk | mtolk@insurancejournal.com DESIGN/WEB V.P. of Design Guy Boccia | gboccia@insurancejournal.com V.P of Technology Joshua Carlson | jcarlson@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com IJ ACADEMY OF INSURANCE Director of Education Christopher J. Boggs | cboggs@ijacademy.com Online Training Coordinator Barbara Whiffen | bwhiffen@ijacademy.com ADMINISTRATION Chairman Mark Wells Chief Executive Officer Mitch Dunford Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com

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January 13, 2014 INSURANCE JOURNAL-NATIONAL | 7

NATIONAL COVERAGE

News & Markets P/C Insurers Show Big Gain in Underwriting Profits

P

rivate U.S. property/casualty insurers’ net income after taxes rose to $43 billion in nine-months 2013 from $27.8 billion in nine-months 2012, with insurers’ overall profitability as measured by their annualized rate of return on average policyholders’ surplus increasing to 9.5 percent from 6.5 percent.

Insurers’ pretax operating income — the sum of net gains or losses on underwriting, net investment income, and miscellaneous other income — grew to $45.7 billion in nine-months 2013 from $31.4 billion in ninemonths 2012.

The increases in insurers’ pretax operating income, net income after taxes, and overall rate of return were driven by a $16.7 billion swing to $10.5 billion in net gains on underwriting in nine-months 2013 from $6.2 billion in net losses on underwriting in nine-months 2012. The combined ratio improved to 95.8 percent for nine-months 2013 from 100.7 percent for nine-months 2012.

The results were reported by ISO, a Verisk Analytics company, and the Property Casualty Insurers Association of America (PCI). The figures are consolidated estimates for all private property/casualty insurers based on reports accounting for at least 96 percent of all business written by private U.S. property/casualty insurers.

Gains in Underwriting The swing to net gains on underwriting in nine-months 2013 reflects premium growth and a decline in loss and loss adjustment expenses (LLAE).

Insurers’ overall results for nine-months 2013 also benefited from a $2.1 billion increase in net investment gains — the sum of net investment income and realized capital gains (or losses) on investments — to $40.4 billion in nine-months 2013 from $38.3 billion in nine-months 2012.

The improvement in underwriting and investment results was partially offset by a drop in mis8 | INSURANCE JOURNAL-NATIONAL January 13, 2014

cellaneous other income and higher taxes. underwriting swung to positive $10.5 bilMiscellaneous other income fell $1.3 billion lion in nine-months 2013 from negative $6.2 to $0.9 billion in nine-months 2013 from billion in nine-months 2012 as premiums $2.2 billion in nine-months 2012 as insurers’ rose and LLAE declined. federal and foreign income taxes rose $2.2 Net written premiums rose $14.7 billion, billion to $8.7 billion from $6.5 billion. or 4.2 percent, to $363.4 billion for nine Policyholders’ surplus grew $37.3 billion months 2013 from $348.7 billion for nineto $624.4 billion at Sept. 30, 2013, from $587.1 months 2012. Net earned premiums rose billion at year-end 2012. $13.4 billion, or 4 percent, to $348.3 billion “Insurers’ overall results for nine-months from $334.8 billion.

2013 were certainly better than their results Net LLAE (after reinsurance recoveries) for nine-months 2012, with insurers posting dropped $7.4 billion, or 3 percent, to $235.6 their highest annualized rate of return and billion in nine-months 2013 from $243 biltheir best combined ratio through nine lion in nine-months 2012. months since 2007,” says Michael R. Murray, The growth in premiums and the decline ISO’s assistant vice president for financial in LLAE were partially offset by increases analysis. other underwriting P/C insurers posted in Insurers’ strong expenses and dividends their highest annualized to policyholders. Other underwriting results lifted their annualized rate of return and their underwriting expenses overall rate of return best combined ratio rose $4 billion to $100.9 through nine months in nine-months through nine months billion to 9.5 percent. Benign 2013 from $96.9 billion since 2007. weather, a sharp drop in in nine-months 2012 as U.S. catastrophe losses, and special develdividends to policyholders grew $0.1 billion opments affecting the mortgage and finanto $1.3 billion from $1.1 billion. cial guaranty insurance segment account The decrease in overall net LLAE was for much of the improvement in results, largely driven by a decline in catastrophe Murray says. losses, with ISO estimating that private “The $37.3 billion increase in policyholdinsurers’ net LLAE from catastrophes ers’ surplus to a record-high $624.4 billion at dropped $4.5 billion to $12.5 billion in nineSept. 30, 2013, is a testament to the strength months 2013. and safety of insurers’ commitment to poli “Growth in overall net written premiums cyholders,” says Robert Gordon, PCI’s senior held fairly steady, accelerating only vice president for policy development slightly to 4.2 percent in nineand research. months 2013 from 4.1 percent in nine-months 2012. But written Underwriting Results premiums through nine months Insurers’ net haven’t grown this rapidly gains on since 2006, when they rose 5.1 percent compared with their level a year earlier,” said Murray.

“Underwriting profitability improved for all major sectors of the industry, reflecting the effects of premium growth and the drop in LLAE,” said Gordon. www.insurancejournal.com

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Coverages are subject to actual policy language.

NATIONAL COVERAGE

FIGURES

DECLARATIONS

$662 Million

The amount being sought in more than 100 damage claims filed by property owners and relatives of firefighters who died in the Yarnell Hill fire in Arizona in 2013.

Ninety-one property owners filed claims and 17 additional claims were filed by relatives of Granite Mountain Hotshots who perished June 30.

$55 Million

The amount that a Pennsylvania jury recently awarded to a family in a medical malpractice suit. The jury decided St. Luke’s University Hospital and one of its doctors ignored signs that Matthew Crowell, who is now 4 years old, wasn’t getting enough oxygen during his November 2009 birth.

Crowell suffers from cerebral palsy and developmental delays.

10 | INSURANCE JOURNAL-NATIONAL January 13, 2014

Free Speech Ripoff

“This case is really important because businesses should not be able to silence their customers.” — Scott Michelman of nonprofit Public Citizen Litigation Group says the case of a Utah couple who sued an online retailer over a $3,500 charge the company assessed after one of them wrote a negative review on RipoffReport.com is about protecting consumers’ rights to free speech.

5.1%

The amount by which workers’ compensation rates will decrease in Louisiana effective May 1, 2014, according to state Commissioner of Insurance Jim Donelon. The lower rates are the result of a reduction in workers’ compensation loss costs submitted by the National Council on Compensation Insurance (NCCI) and approved by Donelon. The total Louisiana workers’ compensation market is estimated at $900 million in premium.

5,300 The approximate number of names on the Ohio Department of Public Safety’s expanded online registry of repeat drunken-drivers. The registry includes drivers who have five or more DUI convictions in the past two decades. The previous list, which contained information from courts in only about half of Ohio’s counties, contained around 400 names.

Graciously Welcomed

“I have been graciously welcomed in every meeting, and each time I have been encouraged to begin offering our new private flood insurance program.”

— Flood Insurance Agency CEO Evan Hecht says he has been positively received by regulators in Florida and other states in which the company is offering its private flood insurance policy. The Gainesville, Fla.based Flood Insurance Agency began offering the private policy as an alternative to the National Flood Insurance Program.

A Prevention Mission

“The sole mission is to prevent

another West.”

— Texas State Fire Marshal Chris Connealy, addressing an audience in Clifton, a town of 3,400 about 35 miles from West, Texas, as part of a 68-stop tour of Texas to meet with first responders and businesses about how best to store ammonium nitrate, a common but potentially dangerous chemical used in fertilizer. Connealy has spent the past eight months studying the April 17 explosion and fire in West at a plant owned by West Fertilizer Co.

Flood Buy-Out Program

“I loved my home. If I was young-

er I’d still be there, but it’s over.

There’s no sense in staying.”

— Donald Hargraves, an 87-year-old resident of Shickshinny, Pa., who sold his home in a flood-buyout program and moved in with his son on higher ground in a nearby area. At least 19 Shickshinny properties have been sold as part of buyouts after the area’s record flood in September 2011.

www.insurancejournal.com

WEST COVERAGE

News & Markets California Servers Awarded Oregon Gay Bullying Lawsuit $5.7M in Age Discrimination Suit Settled for $5,000

A

jury awarded nearly $5.7 million to four servers who alleged they were fired from a Los Angeles restaurant because of their ages.

Superior Court jurors near the end of 2013 awarded damages to the women, who range in age from 49 to 70 years old.

The four sued Cable’s Restaurant in Woodland Hills for age discrimination and wrongful termination.

The women said new owners who took over the restaurant in 2010 let them go and replaced them with women in their 20s.

Defense attorneys denied wrongdoing and said the new owners retained more than a dozen workers as old as 75.

Copyright 2014 Associated Press.

he Eugene School District has paid $5,000 to settle an Oregon lawsuit that accused it of failing to stop students at a middle school from bullying and harassing a boy they perceived as gay.

The suit was filed in federal court. It said the Cal Young Middle School student was subjected to slurs daily in the sixth through eighth grade.

It said he was diagnosed with depression, panic disorder and social phobia, and he moved to a private school where tuition was $10,000 a year.

In the settlement agreement, the district denied wrongdoing and said it settled only to avoid legal costs. It said when the suit was filed that it has a strong anti-bullying policy and works to stop any inappropriate behavior.

Copyright 2014 Associated Press.

Mother of Wyoming Student Wrestler Sues Hospital

2 New Mexico Cities Opening Car Charging Stations

T

T

he mother of a 16-year-old boy who was paralyzed after breaking two vertebrae during high school wrestling practice filed a wrongful death lawsuit against a Wyoming hospital that treated him.

The suit from Melissa Plumley alleges Cheyenne Regional Medical Center didn’t monitor Isaac Salas properly and discharged him despite difficulty breathing. The lawsuit filed in late December 2013 seeks undisclosed damages for Salas’ death, and for medical and funeral expenses. Hospital officials declined to discuss the case.

Salas was at wrestling practice in 2010 at Cheyenne South High School when he broke two vertebrae in his neck, leaving him paralyzed.

The suit says he was taken to the hospital in 2011 due to problems with his catheter, and that pain medication he was given while hospitalized made it harder for him to breathe because his paralysis reduced his respiratory strength. The suit also claims hospital staff did not update Salas’ information chart with his heart rate and breathing rate, and that he was released without being examined by his doctor despite symptoms of having a low oxygen level.

Salas stopped breathing hours later and was pronounced dead, according to the suit, which also names the medical center’s board, and the doctor assigned to Salas.

Copyright 2014 Associated Press. www.insurancejournal.com

T

wo New Mexico cities are preparing to begin operating public charging stations for electric vehicles.

In late December 2013 Gallup opened a Tesla Motors supercharger station and Farmington is scheduled to open one this month.

The two stations are part of Tesla Motors’ mission to expand its supercharger stations nationally. The Palo Alto, Calif.-based company is the maker of the all-electric Tesla.

Currently, there are 44 stations in the country, according to the company’s website. There are 18 down the West Coast, nine along the East Coast, 12 in the Midwest and five in Texas, according to the website.

According to Tesla, the cars range from $69,000 to $130,000 and can travel 265 miles before requiring charging. Supercharger stations allow Tesla owners to charge half their battery in 20 minutes.

Tesla now has enough Supercharger stations for free travel between San Diego and Vancouver, and it wants to have enough stations for cross-country driving in the U.S. soon.

Farmington Mayor Tommy Roberts said the supercharger station will give visitors another reason to visit the Four Corners.

Tesla said it sold just over 5,500 of its Model S sedans in the JulySeptember period. The company said it plans to deliver 6,000 Model S sedans in the fourth quarter, for total sales of 21,500 this year.

Copyright 2014 Associated Press.

January 13, 2014 INSURANCE JOURNAL-WEST | W1

WEST COVERAGE

People Doug Akerson

Michael Cardenas

Gil Goetz

Rob Jevens

Equity Risk Partners named four insurance industry executives to its team in California, while also establishing the firm’s physical presence in Southern California.

Equity’s new executive hires are Doug Akerson, Michael Cardenas, Gil Goetz and Rob Jevens.

Akerson joins as a senior vice president of energy risk, and is based in Equity’s San Francisco office.

He has more than 25 years of insurance experience and has knowledge of the power generation, oil and gas, petrochemical and renewable energy markets. Akerson previously held positions as managing principal at Renuity Capital, senior vice president at Jardin Lloyd Thompson, managing director at Beecher Carlson and senior vice president at Marsh & McLennan.

Cardenas is a vice president of business development and healthcare risk and leads Equity’s newly formed Los Angeles office.

He has a background in the healthcare industry with more than 20 years of experience. Prior to Equity, Cardenas was an assistant vice president of medical professional liability at Allied World Assurance Co. Goetz, vice president, is a property/casualty broker serving the due diligence requirements of private equity firms and the commercial insurance needs of publicly and privately owned businesses. He is headquartered in the San Francisco office.

Prior to Equity, Goetz was a managing director at Marsh, leading the firm’s retail wholesale food and beverage industry practice in the West.

Jevens is vice president of transactional risk and is based in San Francisco.

Jevens has more than 20 years of experience. He previously served as director of business markets and mergers and acquisitions practice at The Bensman Group, focusing on employee and executive benefits, commercial insurance and high-limit individual and professional insurance. Previously, he was a consultant at The Cochlan Group Inc., a relationship manager, a business markets at MB Financial Insurance and a financial representative for Northwestern Mutual Life.

San Francisco-based Equity is a full-service insurance brokerage, employee benefits and risk management consulting firm with additional offices in Chicago, Los Angeles and New York.

Ascension Insurance Inc. named Keri Lopez to an executive leadership position for its Northern California benefits operations.

Lopez will also continue to work with mid to large clients, designing and managing employee benefit programs that meet their business and human resource objectives.

W2 | INSURANCE JOURNAL-WEST January 13, 2014

Lopez has more than 16 years of employee benefits consulting experience. Her focus is on strategic planning, funding analysis, carrier negotiations, compliance and communication strategies.

Ascension and its affiliates have 450 employees and 35 locations nationwide.

Laurie Hoag-Winkler has been named senior vice president, employee benefits practice leader, for USI Colorado.

USI Colorado is the firm formerly known as Van Gilder Insurance Corp.

Hoag-Winkler will be responsible for managing the employee benefits practice in USI’s newly formed Rocky Mountain region and will be located in USI Colorado’s Denver office.

Hoag-Winkler was with Van Gilder from 1996 to 2010, starting out as an employee benefits manager and eventually becoming vice president of employee benefits.

Prior to USI, she was vice president of employee benefits and group programs at IMA of Colorado, a retail insurance broker and subsidiary of The IMA Financial Group.

Valhalla, N.Y.-based USI operates out of roughly 100 offices across the United States.

Poms & Associates Insurance Brokers Inc. named Andrew Valencia in the firm’s New Mexico office as vice president of employee benefits.

He specializes in the development and implementation of group health, dental, vision, wellness, life and disability plans.

Prior to Poms Valencia was a benefits consultant at The Manuel Lujan Agencies, a recently acquired division of HUB International Insurance Services. He serves as vice president of the Young Professionals of Albuquerque.

Poms has offices in California, Colorado, New Mexico and Washington.

Hub International Insurance Services Inc. named Arturo Perez-Reyes vice president and privacy and errors and omissions lead in its San Francisco, Calif., commercial division.

In addition to his production role and client executive roles, Perez-Reyes will serve as an E&O and privacy specialist in the greater San Francisco market.

Prior to Hub, Perez-Reyes was affiliated with the Barney and Barney LLC Brokerage in Oakland, where he served as a client executive and broker specializing primarily in technology E&O risks. continued on page W4 www.insurancejournal.com

WEST COVERAGE

People Rachel Ehrlich

continued from page W2 Perez-Reyes began his insurance consulting career at Marsh, where he placed technology E&O, professional liability and privacy insurance for large and complex clients.

Chicago, Ill.-based Hub provides an array of property/ casualty, life and health, employee benefits, investment and risk management products and services.

San Mateo, Calif.-based CAMICO, a CPA-focused program of insurance and risk management for the accounting profession, named Rachel Ehrlich vice president and chief claims officer.

Ehrlich has served in various legal, claim and underwriting positions, most recently as senior vice president of U.S. casualty claims for Navigators Management Co. She began her insurance claims career with an excess and surplus lines broker.

Ehrlich was in private law practice before joining The Travelers Indemnity Co., where she rose to managing counsel in the claim legal group.

CAMICO delivers insurance, risk management and related services to more than 8,300 CPA firms in 45 states. CAMICO provides professional liability insurance, employment practices liability insurance, business owners package, workers’ compensation, personal umbrella and other insurance products.

Emily Freeman

Sama Davis

Lockton is expanding its global technology and privacy practice with staffing moves in several cities.

Emily Freeman, founder and original leader of Lockton’s global technology and privacy practice, is now based in San Francisco. Freeman will continue to advise global clients Florence Levy joins Lockton as leader of the team in the U.S. Levy will be based in Lockton’s Denver office.

She previously led Aon’s commercial errors and omissions and cyber practice in the U.S. Kansas City, Mo.-based Lockton employs more than 4,900 people and reports more than 35,000 clients around the world.

Heffernan Insurance Brokers named Jeff Prout assistant vice president North Bay office in California.

Prout will focus on new business development for all Commercial Lines for Heffernan.

Prout’s background includes consulting, sales and marketing in the insurance and banking industries along with property and business ownership and management.

Walnut Creek, Calif.-based Heffernan has California W4 | INSURANCE JOURNAL-WEST January 13, 2014

offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Orange County, as well as in Portland, Ore; St. Louis, Mo. and New York, NY. Edgewood Partners Insurance Center named Sama Hershey Davis in its employee benefits consulting practice in California.

Davis has 15 years of experience in healthcare, benefits consulting, human resources, compliance, wellness and client relationship management.

Davis will provide client service leadership, including overall strategy, coverage negotiations, compliance consulting and the coordination and management of internal and external resources.

Before joining EPIC, Davis was an account executive at Woodruff Sawyer & Co in Novato, Calif.

Prior to that, she was an employee benefits account executive at ABD Insurance and Financial Services.

EPIC has more than 300 employees operating from 10 offices across California: Los Angeles; Irvine; Ontario; Fresno; Folsom; San Francisco; San Mateo; Petaluma; San Ramon; Inland Empire. EPIC also has offices in Denver, Colo., Chicago and New York.

The Arizona Insurance Council has elected its officers for 2014.

AIC’s 2014 elected officers and the companies they represent are: President: Rick Jones, executive vice president of insurance operations and president of subsidiaries for SCF Arizona; Vice president: Tim Goeller, regional vice president of business insurance for state auto insurance; Treasurer: Brad Oltmans, vice president of insurance for AAA Arizona; Corporate secretary: Melissa Crawford, assistant general counsel for Nationwide Insurance.

AIC is a non-profit, trade association dedicated to consumer education and partnership building on behalf of property and casualty insurers in Arizona.

Farmer Woods Group hired agent Mike Ginzl in the Phoneix, Ariz. Office.

Ginzl specializes in commercial insurance for the technology, landscape and manufacturing industries.

Ginzl has worked in insurance for more than 15 years in Wisconsin and Arizona for carriers and brokers.

Farmer Woods is part of the Leavitt Group. The firm’s insurance products and services include commercial insurance, insurance for individuals, life and health, commercial and personal risk management. www.insurancejournal.com

WEST COVERAGE

News & Markets Flood Maps Still Wrong, Oregon Homeowners Still Paying

By Andrea Castillo and Katherine Driessen The Oregonian

Lenders telling homeowners with properties just outside the flood zone that they need flood insurance when often they don’t.

Part of the problem is horizontal onths after Carol Justice was wrongly mapping for what is technically a told her home needs flood insurance, vertical measurement — whether the Cornelius resident is still paying up water would likely reach a per— even though a surveyor has since deterson’s home. It’s also difficult for mined her house is not in the flood zone. homeowners to undo mapping Justice is one of hundreds of Oregon errors, requiring costly surveys homeowners caught in a faulty system in and lengthy paperwork. which lenders lump properties near flood FEMA has upped the stakes for zones with those actually in it, a designalenders, with recent legislation tion that requires flood insurance. It’s an more than quadrupling federally issue that has drawn state scrutiny along imposed fines for those failing with talk of minor federal reforms since an to insure homeowners in flood Oregonian story in April about statewide zones. Shirley said that pressure flood zone errors. Locally, the number of has led insurers to require flood Oregon homeowners challenging flood insurance for homeowners on zone designations is on the rise. the border of flood areas but not The state’s National Flood Insurance necessarily in them. The solution, Program coordinator, Christine Shirley, said though expensive, is slowly taking the system remains flawed. place in high-risk areas across the “Nothing has really changed,” Shirley nation: More accurate FEMA maps said. that take into account a home’s Justice lives on South Heather Street, elevation rather. where homes sit close to a flood hazard The number of misidentified homes in area, their backyards extending into a proOregon has increased sharply since 2008, tected wetland. Some of those homes did when Congress passed a five-year reaunot require flood insurance until 2012. That thorization and reform plan intended to May, she and other homeowners along her keep the flood insurance program afloat street received letters from their lenders and penalize lenders not insuring homes. saying FEMA had designated their resiIn 2008, there were 282 challenges to dences at high risk of flooding. flood zone designations Since then, flood ‘I don’t want to be here in Oregon (almost all insurance forcibly challenges are approved, placed on her loans and I feel stuck.’ according to FEMA). In since 2012 costs 2013, that figure reached 740. $400 per month. A surveyor, who deter Congress is now broaching possible mined in October that her home is 8 inches reforms to the National Flood Insurance outside the flood zone, cost $500. Using the Program. surveyor opinion, her revised 2014 insur Oregon Sen. Jeff Merkley, along with a ance quote lowered the payment to $700 bipartisan coalition of legislators, introper year but was due in full by November. duced the Homeowner Flood Insurance “I didn’t sign on for any of this,” she said.

Affordability Act Oct. 29, mainly tackling “I would not have bought this property if I flood insurance rates. The legislation thought flooding was an issue.” would delay looming flood insurance pre Justice’s situation illustrates a larger mium increases until FEMA completes an narrative unfolding across the country:

M

www.insurancejournal.com

affordability study. It also addresses homes wrongly placed in flood zones, reimbursing homeowners who successfully fight those designations.

That process, called a map amendment, includes bringing in a surveyor and can run a homeowner more than $500. For homeowners seeking a revision based on fill, there’s an additional $425 filing fee. Those homes, like Justice’s, would be in the flood zone if not for construction that intentionally raises their foundations above the highrisk flooding area.

Shirley said the legislation as a whole has good intentions, “but it’s a little tiny nibble on a really huge problem.”

For Justice, the map challenge reimbursement could help, though she is still wary about the outcome.

“I’m tapped out at this point,” she said. “I don’t want to be here and I feel stuck.”

Copyright 2014 Associated Press.

January 13, 2014 INSURANCE JOURNAL-WEST | W5

WEST COVERAGE

News & Markets California Tops ‘Judicial Hellhole’ List

By Don Jergler

list, as well as bad court decisions the group calls “dishonorable mentions.” The report threw in a few bright spots too. alifornia isn’t just a warm place to live, “With a legislature that is seemingly run which is often the case even in winter, by and for personal injury lawyers and but it turns out the state is considered a a wildly permissive judiciary, California “judicial hellhole.” remains ignominiously atop the Judicial The American Tort Reform Foundation Hellholes list for a second consecutive issued its annual “Judicial Hellholes” report year,” the report as 2013 was ‘It’s a little bit like Satan saying states. “The drawing to a close, and it heaven is a little too chilly for him.’ once-Golden State continues singled out to be a breeding ground for consumer class California’s civil courts as the nation’s top actions, disability-access lawsuits and asbesplace to experience extreme misery or tos claims, while also serving as something squalor — as “hellhole” is defined in the of a last-stand for a stubborn nuisance of a Merriam-Webster dictionary. liability theory.”

The annual report also named civil courts Harvey Rosenfeld, founder of Santa in Louisiana, New York City, West Virginia, Monica, Calif.-based Consumer Watchdog, Southwestern Illinois’ Madison and St. Clair sees it differently. counties, and South Florida as among the “I think California must be a tough place nation’s “most unfair.” for a corporate defendant who wants to In other words, those are places the founescape justice,” he said. “It’s a little bit like dation considers the worst in which to face Satan saying heaven is a little too chilly for a lawsuit. him.”

The report ranked six “judicial hellholes,” Rosenfeld thinks the class action proand it places 10 jurisdictions on a watch

C

W6 | INSURANCE JOURNAL-WEST January 13, 2014

cess is currently skewed toward protecting defendants, and that it helps the big corporations elude accountability for the products they make and the services they provide.

“Their principal goal is to escape any kind of legal accountability for any kind of dangerous products they make, the defective drugs they market, the food that is polluted, the chemicals that are increasingly shown to harm people’s bodies,” he said.

“These companies want a get out of jail free card and they get mad when they can’t get it.”

To support its dubious ranking on California, the report cited a surge of consumer class action lawsuits targeting the “Big Food” industry.

Roughly a dozen plaintiffs’ law firms alone have filed nearly 75 class action lawsuits over the past few years against “Big Food,” and counting filings from additional firms there were more than 100 consumer class actions filed against food makers in 2012 — five times the number filed four years earlier, according to the report.

Among the examples the report draws on is a class-action suit against Trader Joe’s accusing the Monrovia, Calif.-based specialty grocer of intentionally mislabeling several of its branded packaged foods so they appear healthier than they actually are.

Over the past 15 months companies like Chobani, and WhiteWave, which sells Horizon Organic dairy products, and Silk brand products, have seen lawsuits from plaintiffs’ lawyers claiming the companies use the term “evaporated cane juice” instead of “dried sugar cane syrup” or “sugar” to make consumers believe that there is no sugar in their product, the report notes.

Many of these suits go through the U.S. District Court for the Northern District of California, which the report states has a “reputation for receptivity to such claims.”

The Northern District of California in San Francisco has been called “the food court,” since it hosts more food-marketing and food-labeling lawsuits than any other www.insurancejournal.com

federal court, according to the report.

Beside the “Big Food” suits, the report credits the state’s plaintiff-friendly consumer laws and large population for its top tier “hellhole” status.

“Rarely has there been a week in 2013 without a report of another class action filed against a food maker,” the report states.

California groups that have been fighting to turn the state’s litigious tide weren’t shocked by the state’s top ranking.

“I’m not really surprised by the ranking,” said Kim Stone, president of the Civil Justice Association of California.

Stone noted that California often ranks near the bottom in surveys that rank states by business friendly environments, and she puts the blame squarely on the shoulders of lawmakers.

“The legislators over the years have been

‘Rarely has there been a week in 2013 without a report of another class action filed against a food maker.’ very friendly to a number of plaintiffs’ lawyers proposals and have created new and sometimes creative ways for folks to sue each other in our state,” Stone said.

She blames suits related to the Americans with Disabilities Act and Proposition 65.

“Both of those are taking off,” she said.

ADA’s federal law enables people who are personally injured in some way because of an ADA violation to sue. In California, you simply have to show an access violation to sue for an ADA violation, Stone noted.

“Because of that you’ve had this cottage industry spring up of lawyers who have made a living off of very minor and technical ADA violations,” Stone said, adding that attorneys often have the goal of getting a quick $10,000 settlement. “That, in my opinion, is a little like legalized extortion.”

Prop. 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, was www.insurancejournal.com

intended to inform and protect Californians from chemicals known to cause cancer and birth defects. The law requires the governor to annually publish a list of these chemicals.

Businesses that may have those chemicals present must post a warning sign. When the act passed there were some 30 chemicals listed. Now there are nearly 900 on the list.

“And if your business doesn’t have a sign up, they can sue your business and they often sue for $80,000, $100,000,” Stone said, adding that the signs are useless.

“They provide little or no valuable information to the consumer.”

Communities on the group’s new watch list are: Cook County, Ill.; Baltimore, Md.; Philadelphia, Penn.; Newport News, Va.; New Hampshire; St. Louis, Mo.; Clark County, Nev.; Jones County, Miss.; Spartanburg, S.C.; Atlantic County, N.J. The report calls out “dishonorable mentions,” for court decisions it disagrees with. It called out the Oklahoma Supreme Court for nullifying a tort reform law, which the group said cost the state time and money when the legislature had to reconvene and reenact each provision of the law separately. It also gave a bad nod to the Illinois appellate courts for expanding workers’ compensation liability beyond the intended scope and providing excessive compensation.

The report gives props to several state court decisions with which the authors side, including: The Colorado Supreme Court for

instructing trial courts to play an active role in reining in overly broad discovery; the Idaho Supreme Court for standing against “vexatious litigants;” the Illinois Supreme Court for going against the filing of asbestos cases with no connection to the state; the Maryland Court of Appeals for retaining a rule that a defendant is not liable when a plaintiff ’s own actions contributed to his or her injury; and the U.S. Court of Appeals for the Fifth Circuit for upholding Mississippi’s $1 million limit on noneconomic damages in general personal injury cases.

January 13, 2014 INSURANCE JOURNAL-WEST | W7

IDEA EXCHANGE

Regulation Outlook Failing to Make the Case for Rate Regulation

I

concluding that the reduction was caused n 1988 California voters enacted

by Prop. 103. Only a rigorous analysis of the Proposition 103, in one stroke changing impact of these other factors would allow the state’s law regulating insurance rates valid conclusions to be reached as to what from one of the least restrictive to one of caused the reduction. The CFA study the most restrictive in the nation. In the 25 provides no such analysis. years since the passage of The most glaring omission in Prop. 103 debate has conthe CFA study is any substantial tinued over whether this analysis of the impact of other change was beneficial or changes in California law that harmful. may have affected the cost of The most recent venauto insurance. ture into this debate is a In 1979 the California document produced in Supreme Court decided November 2013 by the

By Bill Gausewitz Royal Globe v. Superior Court, Consumer Federation 23 Cal.3d 880. Royal Globe of America, which concluded that in allowed a person with a liability California there has been over “$100 bilinsurance claim — a 3rd party lion in savings for motorists as a result of claimant — to bring a tort lower auto insurance rates driven by ... action against the liability insurProposition 103.” er for failure to handle the claim However, the analytical methodology of properly. Under this rule a claim on an the CFA report is so faulty that its concluauto policy that had a policy limit of $15,000 sions are nothing more than unsupported could result in an insurance loss that was allegations and political rhetoric. Although potentially unlimited. It is not surprising the report purports to provide statistical that under the Royal Globe rule auto insuranalysis of the issue, in fact it does nothing ance liability costs rose dramatically. of the sort.

In 1988, less than three months before The essential argument in the CFA Prop. 103 was study is that California auto ‘…the analytical methodology of enacted, the insurance rates the CFA report is so faulty that California Court have declined its conclusions are nothing more Supreme overturned since the enactRoyal Globe in ment of Prop. 103, than unsupported allegations Moradi-Shalal v. therefore Prop. 103 and political rhetoric.’

Fireman’s Fund, caused the rates to 46 Cal. 3d 287. Suddenly insurers no longer decline. This is a clear example of the invalfaced losses on Royal Globe claims, and no id logical argument form of post hoc ergo longer needed the premiums that they had propter hoc — the second event followed been collecting to pay for these losses. It is the first event, therefore the first even unsurprising that liability rates subsequentcaused the second event. In terms of statisly declined following this change in the law tical analysis, this conclusion violates the — a decline that had nothing to do with fundamental statistical rule that correlation Prop. 103. does not imply causation.

The CFA study deals with this only by Many factors influence auto insurance saying that it cannot have been a significant rates. If we accept the basic statistics in the factor in auto rate decreases because auto CFA report showing that California auto comprehensive coverage, which is unreinsurance rates have declined since 1988, lated to liability exposure, also declined there is still no logical or statistical basis for W8 | INSURANCE JOURNAL-WEST January 13, 2014

following 1988. In logical terms this is called a non sequitur — an irrelevant fact.

There is no necessary connection between the cost factors in liability insurance and those in comprehensive insurance. If fact, the statistics in the CFA study itself shows that the decline in auto liability rates was much greater than that in comprehensive insurance, suggesting that different factors were involved.

So how much of the decline in auto rates was the result of the overturning of Royal Globe? We don’t know. In 2001 the Rand Institute for Civil Justice issued a study far more statistically rigorous than the CFA study, which concluded that auto liability rates in 1997 were 35 percent lower than they would have been had Royal Globe remained in effect.

The CFA study ignores this. It also ignores the fact that in 1989 California significantly strengthened its laws against driving while intoxicated. It also ignores the fact that in 1996 California significantly restricted damages that could be collected from intoxicated drivers or from drivers committing felonies.

How did these and other changes in law affect insurance costs? The CFA study is silent on this specific question, but clearly these changes would only impact insurance by causing rates to decline.

So did Prop. 103 cause auto rates to decrease? Maybe yes. Maybe no. We will have to await a logically and statistically valid study to determine this.

But it is clear that the November 2013 report from CFA is not such a report. In terms of showing the impact of Prop. 103 on auto insurance rates, CFA’s study is statistically and logically worthless.

Gausewitz is a partner in the Sacramento office of Michelman & Robinson LLP. Phone: (916) 447-4044.

Email: bgausewitz@mrllp.com www.insurancejournal.com

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Business Moves Bliss & Glennon is an excess and surplus lines wholesale insurance broker and managing general agency. eReinsure is an online platform used by clients to manage the placement of facultative reinsurance.

AmWINS Group Inc. is a wholesale distributor of specialty insurance products and services.

Brown & Brown, ICA Brown & Brown Inc. has acquired certain assets of insurance claims adjusting firm ICA Inc., based in Charlotte, N.C. Terms were not disclosed.

With annualized net revenues of approximately $13.2 million, ICA provides insurance claims adjusting and related services, including third party administration (TPA) services, nationally.

CEO Troy Brown founded ICA in 1991.

Following the transaction, the acquired ICA operations will continue to operate from their existing locations in Charlotte,; Richardson, Texas; and Gold River, Calif., under Brown’s leadership.

Sam R. Boone Jr., regional executive vice president of Brown & Brown, says the deal will “broaden and strengthen” insurance claims adjusting operations.

Brown & Brown offers insurance and reinsurance products and related services.

Certain Brown & Brown subsidiaries also offer risk management, third party administration and other services.

AmWINS, Bliss & Glennon, eReinsure AmWINS Group Inc. completed its acquisition of Bliss & Glennon and eReinsure.

AmWINS signed an agreement to acquire the firms from Fortegra Financial Corp. on Dec. 2. Terms were not disclosed.

12 | INSURANCE JOURNAL-NATIONAL January 13, 2014

Arthur J. Gallagher Arthur J. Gallagher & Co. (AJG) made several acquisitions in December 2013.

AJG acquired McIntyre Risk Management LLC in Cherry Hill, N.J. Terms of the transaction were not disclosed.

Established in 2002, McIntyre Risk Management is a retail insurance broker providing retail commercial property/ casualty and risk management insurance products and services for the upper middle-market U.S. and international clients.

In addition, McIntyre Risk Management offers insurance support services including risk control strategies, contract reviews, claims management, loss control and modification modeling. McIntyre’s President Anthony McIntyre and his colleagues will continue to operate in their current location under the direction of Douglas Brown, head of Gallagher’s Northeast retail property/ casualty brokerage operations.

AJG also acquired Barmore Insurance Agency Inc. in Houston, Texas. Terms of the transaction were not disclosed.

Founded in 1952, Barmore Insurance Agency) is an insurance broker providing retail and wholesale commercial property/ casualty, employee benefits and risk management insurance products and services for middle-market clients throughout the south central United States. The agency specializes in construction, engineering, industrial, nonprofits and public entity coverage.

Mike Barmore, Bill Barmore and their associates will continue to operate at their current location under the direction of Mike Henthorn, head of Gallagher’s South

Central retail property/casualty brokerage operations.

AJG also acquired Jenkins and Associates in Springfield, Mo. Terms of the deal were not disclosed.

Jenkins and Associates offers employee benefit brokerage and consulting services for corporate clients in the Midwest. The firm specializes in services for public school consortiums and association plans.

Douglas Jenkins and his associates will continue to operate in their current location under the direction of William Ziebell, head of Gallagher’s North Central employee benefit brokerage and compensation consulting operations.

AJG also acquired Cleaveland Insurance Group in Rock Island, Ill. Terms of the deal were not disclosed.

Cleaveland Insurance Group is a retail insurance broker providing property/casualty, employee benefits and risk management insurance services for middle-market clients throughout the central United States.

Phyllis Schwindt, Tom McGovern, Kevin O’Hara and their associates will operate in their current location under Thomas J. Gallagher, head of Gallagher’s Midwest property/casualty brokerage operations, and William Ziebell, head of Gallagher’s North Central employee benefit brokerage and compensation consulting operations.

BUA, Weather Insurance Agency BUA LLC, a managing general agency based in Portsmouth, N.H., has agreed to purchase Weather Insurance Agency of East Setauket, N.Y. BUA says Weather Insurance Agency’s weather coverage will complement its event cancellation insurance offerings.

Weather Insurance Agency provides weather coverage for events, such as outdoor fairs, festivals and concerts; film and television shoots that require a certain number of dry hours to complete production; and retail promotions that offer customers a refund if a particular weather circumstance happens on a particular day.

Weather Insurance Agency’s president John Perugini will oversee all aspects of the acquired agency’s business. www.insurancejournal.com

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CLOSER LOOK

10 Things to Know About Employment Practices Liability Insurance Until recently, EPL insurers had resisted providing any type of coverage for wage and hour claims. Virtually all EPLI policies now include a restrictive exclusion for claims alleging violation of the Fair Labor Standards Act (FSLA) or similar state laws. Some insurers provide sub-limited defense-costs-only coverage (often no more than $250,000) to

The employment practices liability insurance (EPLI) line has been showing the largest price hikes in U.S. commercial insurance. The EPL line’s year-over-year price increases spiked into double digits during the 2013 third quarter. (Towers Watson’s Commercial Lines Insurance Pricing Survey)

The cost of EPLI coverage depends on the type of business insured, the number of employees at the company and various risk factors such as whether the company has been sued over employment practices in the past.

(Insurance Information Institute)

In Chubb’s survey of 450 private companies, 25 percent said they had an EPL-related event in the past three years and 45 percent said they are concerned about a lawsuit for wrongful termination, sexual harassment, discrimination or retaliation. (Chubb’s 2013 Private Company Survey)

In the 12 months ending March 31, 2012, 7,064 FLSA suits were filed in federal court; the highest for any 12-month period. That represented a nearly 350 percent increase from the same period in 2002.

(Seyfarth Shaw LLP) Even the bestrun companies are vulnerable to EPL charges because they engage in normal employment-related activities such as hiring, firing and promoting employees, all of which carry some EPL risk. (Chubb’s 2013 Private Company Survey) Employees and other plaintiffs won 67 percent of all EPLI litigated cases. (U.S. Department of Labor)

The U.S. Equal Employment Opportunity Commission received 99,412 private-sector workplace discrimination charges during 2012, down slightly from the record high of 99,947 set in the previous year. In 2012, EEOC filed 122 lawsuits including 86 individual suits, 26 multiple-victim suits (with fewer than 20 victims) and 10 systemic suits. (U.S. EEOC)

14 | INSURANCE JOURNAL-NATIONAL January 13, 2014

Among the 99,412 charges received

by EEOC in 2012, retaliation (37,836), race (33,512) and sex discrimination (30,356), which includes allegations of sexual harassment and pregnancy discrimination, were the most frequently filed charges. (U.S. EEOC)

A survey of 450 U.S. for-profit private companies showed only 30 percent purchase EPLI. And among non-buyers, 60 percent mistakenly believe their general liability policy covers EPL-related events. (Chubb’s 2013 Private Company Survey) www.insurancejournal.com

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With International Advantage® from ACE Commercial Risk Services®, you’re just 9 questions and 60 seconds away from an international policy that extends liability, property, medical, workers compensation, travel and executive-assistance benefits internationally. Prices start at just $1,250, so your clients can afford to go abroad without going underinsured.

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© 2013 ACE Group. ACE®, ACE logo®, and ACE insured are trademarks of ACE Limited. Insurance is provided by ACE American Insurance Company (Philadelphia, PA) or, in some states, other insurers within the ACE Group of Companies or its allied distribution associates. All products may not be available in all states and surplus lines products can only be offered through licensed surplus lines brokers. Not all applicants are eligible for a policy.

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Market Detail: Charity First (www.charityfirst.com) offers comprehensive insurance coverage including property, general liability, workers’ comp, abuse or molestation, umbrella, auto and miscellaneous professional liability.

Available limits: As needed Carrier: Travelers States: All states except Hawaii Contact: Riley Binford at 415-536-8438 or email: riley_binford@ charityfirst.com

Market Detail: VGM Insurance (www.vgminsurance.com) offers liability, property, and surety bond coverage for: home medical equipment providers; durable medical equipment providers; medical equipment distributors; medical equipment manufacturers; medical equipment manufacturers reps; orthotic and prosthetic cos.; mastectomy cos.; pharmacies and other businesses in the medical equipment or device industry.

Available Limits: Minimum $300,000, maximum $5 million Carriers: Benchmark Insurance Co. States: All states Contact: Warren G Freeman at 800-362-3363 or email: warren. freeman@vgm.com million in excess liability follow-form capacity for over 500 different ISO codes.

Vacant Property & General Liability Market Detail: JH Insurance Services (www. jhinsurance.com) offers property and general liability coverage for vacant commercial and residential buildings nationwide. Target risks include: builders standing inventory; bank owned /foreclosed properties; and investor properties/portfolios. Program highlights include 17.5 percent commission; retailers can quote online themselves (please ask for details); 24-hour turnaround on quotes; buildings valued up to $3 million; commercial liability limits of $1 million/$2 million; and residential liability limits of $1 million.

Available Limits: As needed Carriers: Lloyd’s of London States: All states except Ky. Contact: Janet Beaver at 877-544-4399 or email: janet.beaver@ jhinsurance.com

Workers’ Compensation Market Detail: The Mechanic Group (www.mechanic group.com) offers workers’ comp and all other lines for security guards, alarms and investigators. Phone inquiries accepted. Brokered business accepted. Minimum premium starts at $2,500.

Available limits: As needed Carrier: The Hartford, Chartis, Magna Carta and ACE States: All states Contact: Marc Katz at 800-214-02027 or email: mkatz@ mechanicgroup.com

Small Business Package - BOP Market Detail: Next Wave Insurance Services LLC (www.nextwaveins.com) writes direct with carriers who specialize in offering a range of coverage for small-business owners. Next Wave’s markets offer comprehensive business owners policy (BOP) options, which include the standard property and liability coverages such as building, business income, business personal property, computer equipment, valuable papers, accounts receivable, money and securities, and more. Professional liability coverage is available standalone or as an endorsement with certain carriers for many classes of business.

Available limits: As needed Carrier: CNA, Amtrust, AIG, Travelers States: All states Contact: Jeff Ward at 619-993-5333 or email: jward@nextwaveins.com 16 | INSURANCE JOURNAL-NATIONAL January 13, 2014

Employment Practices Liability Market Detail: Bentley-Wholesale Insurance Solutions Inc. (www. the-brokers-broker.com) has an A-rated EPLI program targeting, but not limited to: public and private companies with employee counts below 10,000; companies involved in manufacturing, distributing, wholesale operations, and select retail. EPL policy features include: both duty-to-defend and non-duty-to-defend options; no mandatory binding arbitration; leased workers and independent contractors coverage; seasonal and temporary workers coverages; loss includes pre- and post-judgment interest, back pay, and front pay.

Available limits: As needed Carrier: Multiple, admitted States: Ariz., Calif., and Colo.

Contact: Paul Byrne at 949-415-7726 or e-mail: paul.byrne@bentley-wholesale.com

Difference-in-Conditions Market Detail: Gray-Stone & Co. (www.gray-stone.com) is a full service E&S broker with a specialty in professional liability including E&O, agents E&O, D&O, EPLI, law firms, property/DIC, commercial auto, package, GL, workers compensation, and homeowners -standard, preferred, high value and hard to place.

Available limits: As needed Carrier: Unable to disclose States: All states except Alaska, Wyo., and D.C. Contact: Customer service at 805-494-4440 www.insurancejournal.com

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January 13, 2014 INSURANCE JOURNAL-NATIONAL | 17

SPECIAL REPORT

Contractors & Subcontractors

Construction Obstruction

Skilled Labor Shortage and Lax Safety Could Injure Construction Insurance Market

By Andrea Wells

F

or agents and brokers serving the contractors and subcontractors market that barely scraped by during the recession, the year 2013 brought some improvement and the new year 2014 promises more of 18 | INSURANCE JOURNAL-NATIONAL January 13, 2014

the same — provided a shortage of skilled labor and related safety concerns can be overcome.

For the first 11 months of 2013, total construction starts came in at $475.3 billion, up

6 percent from the same period a year ago, according to McGraw Hill Construction.

2014 looks even better. “We see 2014 as another year of measured expansion for the construction induswww.insurancejournal.com

try,” says Robert Murray, McGraw Hill Construction’s vice president of Economic Affairs. Total U.S. construction starts for 2014 will rise 9 percent to $555.3 billion.

But a rise in construction activity in a post-recession world doesn’t come without its own challenges, some experts say. As the economy grows and construction employment surges, contractors face another hurdle — finding experienced contractor labor to meet the growing demand.

“There’s clearly a concern in the construction industry about skilled labor,” says Michael Anderson, managing director and CEO of the U.S. Construction Practice for Marsh. Throughout the recession both experienced construction labor and younger construction workers left the business, Anderson says.

Almost 75 percent of construction firms surveyed in September 2013 by the Associated General Contractors of America (AGCA) reported trouble finding qualified craft workers to fill key spots and fear that labor shortages will only get worse.

The most frequently reported difficulties are in filling such onsite construction jobs as carpenters, equipment operators and laborers, the survey revealed. Fifty-three percent are having a hard time filling professional positions — especially project supervisors, estimators and engineers “Many construction firms are already having a hard time finding qualified workers and expect construction labor shortages will only get worse,” says Stephen E. Sandherr, CEO of AGCA. In the case of experienced workers, many chose to retire or entered other industries such as oil and gas, which has common elements to construction, Anderson says.

Many younger construction workers left to pursue other interests as well, meaning they now lack the experience desired by employers. “They would have had five or six years of experience by now,” he says.

Some skilled workers may return to construction now that times are better; others may not.

“If you talk to any construction company, of any size, there is a concern about the depth of skilled labor in the workforce, and www.insurancejournal.com

the challenges of finding that labor as more work becomes available in the market,” Anderson says.

Also, some in the industry worry about the impact that trend will have both on the pricing of construction work and the safety in performance.

History dictates that the more experience held on a construction job, the better the chances are for a safe job site. “It’s clearly a challenge,” Anderson adds.

Fatalities Rise Meanwhile, some see the shortfall of skilled workers triggering the recent increase in industry-related fatalities.

Private construction sector deaths in the U.S. climbed 5 percent to 775 in 2012, the highest number of fatal work injuries in

any industry sector, according to the U.S. Bureau of Labor Statistics (BLS). Although the figures are preliminary — and could increase when final data is released in April 2014 — they mark the first annual increase in work-related fatalities in the private construction sector since 2006, according to a Marsh Risk Management Research Briefing titled, “Building Safety and Leadership in the U.S. Construction Industry.”

According to the report, a shortage of experienced construction workers has resulted in unskilled workers being moved into supervisory roles faster than before.

This trend has led to problems as new managers and supervisors are unfamiliar with the industry’s views on safety and risk management. continued on page 21

Construction’s Growing Role in Renewable Energy

By Andrea Wells

T

he energy sector’s march toward renewable sources is driving business to contractors and their insurance suppliers, who have thus far managed to keep up with the changes and growth.

Power generation from hydro, wind, solar and other renewable energy sources worldwide will exceed that from gas and be twice that from nuclear by 2016, predicts the International Energy Agency (IEA). Despite tough economic conditions worldwide, growth in the renewable energy sector will increase by 40 percent in the next five years.

The construction world is among the beneficiaries.

“There is a lot of changing going on in the construction industry as well as other industries as a result of growth in the renewal energy industry,” says Aaron Kock, underwriting consulting director at CNA. In Kock’s view the insurance industry has done a good job keeping up with how renewable energy is creating new

industries and how it affects existing industries as well.

Even traditional artisan contractors are getting into the action. Kock says that general contractors, roofers, electricians, HVAC contractors, landscapers, pool contractors and other contractor trades touch the renewable energy sector even if the work they perform is not billed as a renewable energy project.

“If someone is renovating an existing building and a big part of that is improving the energy of the HVAC system, or installing some solar panels on a roof, those contractors may not be what you usually think of as green or renewable energy contractors, but today’s jobs are requiring contractors to do those jobs,” he says.

Roofers need to be proficient at either installing solar panels, or even if they are not installing solar panels they need to know how to work on roofs that have solar panels, Kock says. “Today’s roofers need to be able to function a little bit like electricians,” he says. continued on page 20 January 13, 2014 INSURANCE JOURNAL-NATIONAL | 19

SPECIAL REPORT

Contractors & Subcontractors

continued from page 19 Every construction trade is becoming more and more involved in renewable energy, according to the underwriter.

Energy Efficiency Renewable energy construction is no longer found only in new construction either. Energy efficient retrofits are on the rise.

“Commercial office building owners, as they renovate for new tenants, are willing to spend the extra money to achieve some LEED certification or at least make that space energy efficient,” Kock says. Many businesses today are seeking only environmentally responsible buildings to lease. “You are going to be redoing the HVAC system, lighting system, smart features and adjust the energy consumption according. That affects a lot of contractors.”

Kevin J. Kaminski, senior vice president, Alternative Energy Solutions, for Energi Inc., which specializes in insurance programs for the energy industry, sees the energy efficiency marketplace as a growing market for contractors.

The latest craze in this segment is something that was done 15 years ago, he says. It’s the concept of a shared sav20 | INSURANCE JOURNAL-NATIONAL January 13, 2014

ings agreement for energy efficiency: “So I come into your building as the contractor or essentially as a developer, and I say that I will do these 10 things and you are not going to pay me a dime today. You are going to pay me every month for the next three, five, or seven years — whatever the number is — a percentage of the savings that you receive [by installing energy efficient elements to a building.]”

After the construction work is completed, if the building owner saves $100, then the owner would pay the developer 85 percent of that savings, for example.

“So for the building owner, it’s zero risk,” Kaminski says. “You’re always going to save something because you are getting newer, better, more efficient technology. But you get all this new equipment, more efficient, and it doesn’t cost you anything.”

But what if the savings don’t add-up to what’s promised by the contractor? That’s where a warranty insurance program comes into play.

“We are seeing more and more financial mechanisms, lenders, that are going into the energy efficiency marketplace and making requirements for the insurance,” Kaminski says. This is opening new doors for contractors and developers to sell projects deemed as more energy efficient to

building owners.

To help insure the savings an owner will receive as a result of reduced energy costs delivered by the retrofit, Energi developed warranty programs, or contractual liability policies, to backstop performance obligations promised by contractors, designers, engineers or even product manufacturers.

“We have an energy efficiency warranty program, which is to backstop an energy efficiency contractor’s guarantee of energy savings in a retrofit,” he says.

“We have the same thing for solar and we also have a product for manufacturers.”

Energi began developing the warranty programs about three years ago, but last year was the banner year, Kaminski says.

Today, Energi covers about $80 million to $90 million worth of warranty projects.

“We’ve gotten good traction on providing these contractual liability backstops for not only energy efficiency but also energy production,” Kaminski says.

“It’s the financial institutions looking at the developer, who acts as the project owner, and they say, ‘OK how do you generate revenue to repay the loan if the project doesn’t achieve its [energy] savings? … It comes from properly structuring a guarantee and the insurance behind that guarantee.”

While many of the projects covered by Energi’s warranty programs are still in their infancy, just one to two years old, so far the loss history is nonexistent.

“There is [claims] opportunity being that these are long-term covers, going up to 10 years,” Kaminski says. “But we have had projects mature past their first measurement period and most of them are showing quite well right now.”

CNA’s Kock foresees the trend of traditional contractor trades getting more involved in the renewable energy segment strengthening in 2014. “Contractors are seeing more and more of their work related to renewable energy and anyone who is involved in the construction industry, if they are not seeing that trend currently, they will going forward.” www.insurancejournal.com

Construction Obstruction, continued from page 19 At the same time, contractors today are being forced to pay higher wages and offer additional benefits to attract and retain workers, putting additional strain on their financial resources. This can result in managers and frontline supervisors cutting corners when it comes to safety, according to the Marsh report.

“As the economy grows and the number of new construction projects pick up, now is not the time to be lax on safety,” says John Moore, a construction safety specialist in Marsh Risk Consulting’s Workforce Strategies Practice. “Inadequate safety performance can lead to employee turnover and various legal, financial, and reputational risks. Investing in high-quality leadership will go a long way toward retaining valued workers and maintaining a safe work environment.”

Moore says history has shown that over periods where claims have been down so has construction activity. But when construction business starts to pick up again, claims begin to rise, substantially.

“And that’s the growing concern,” Moore says.” It’s not affecting pricing or placement at this point but it very well could in the future.”

claims advisory group, says that while the availability of skilled labor in the construction industry varies considerably, some cliEmployee Turnover ents had more trouble finding experienced According to the Marsh report, concern workers during the construction boom. over employee turnover has rarely been so “Interestingly enough some contractors widespread in construction as it is today actually had a more difficult time five to and this concern is likely to continue into seven years ago,” Primavera says. “They the future. “High turnover can be extremely would tell you, ‘We just couldn’t find good harmful to a contractor, affecting budgets, skilled labor because we had so much going scheduling and productivity, quality, safety on and so did the industry.’” and the environment. This is especially true Whether skilled construction labor is if skilled workers are being replaced by available depends mostly on the location novices,” the report says. of the project and the type of expertise Cost-cutting is another concern when it needed. “There’s certainly a good amount of comes to safety and construction, Moore our construction clients at Lockton that are says, adding that leaders must understand not having a problem in regards to finding the impact cost-cutting and a lax safety skilled labor,” he says. environment can have on the business. Not Primavera also doesn’t see much claims all companies address these issues with activity being generated from a lack of skillfront line supervisors, especially those with set in the construction industry today. less experience in the construction indus “We don’t particularly hear that and try. we don’t see the adverse effects from a While Marsh is concerned, not every loss standpoint,” he says. “At least from a insurance broker has concerns over a lack Lockton perspective, there’s not a lot of of skilled labor in the overall construction outliers in regards to vast trends in higher market. fatalities or even serious injuries from a Paul Primavera, senior vice president USA12043.qxd 1/4/08 2:26 PM Page 1 bodily injury standpoint.” at Lockton who leads the firm’s national do today to pursue greener pastures.”

Managing Changes in the Workforce Moore says there are different values in today’s construction workforce that not only impact safety but affect all aspects of a construction firm’s operations.

“It’s a different landscape today in the construction market,” he says. “For the longest time construction’s been all about compliance and managing to that compliance level but with changing values in the workforce, companies have to relate more to the ‘person’ if you will.”

That means the days of managing construction labor by “command and control” have to change.

“The ‘command and control’ style was prevalent in the leadership of construction and it worked because of the values people held,” Moore says.

“They valued their job and they weren’t going to leave companies as readily as they www.insurancejournal.com

January 13, 2014 INSURANCE JOURNAL-NATIONAL | 21

IDEA EXCHANGE

Errors & Omissions E&O Insights: How ‘E&O Proof’ is Your Agency?

A

nother year is in the books. As your agency reflects on the past year, how would your answer the following question: Are you a better errors and omissions (E&O) risk today than compared to a year ago?

Many issues factor into

By Curtis M. making this determinaPearsall tion.

In recent industry surveys, the overwhelming majority of agencies reported an improvement over the previous year. This should be every agency’s goal.

A key aspect of E&O loss prevention involves maintaining a culture of constant improvement, so it is best to evaluate your agency on a continuum. Because you may not know where the end is, the goal is to be confident that you are making progress and improving.

Look at the following areas and determine whether your agency realized some E&O growth in the past year.

Management and Leadership An insurance agency’s E&O culture starts with its management.

Is management clearly and frequently showing its E&O commitment by “walking the walk” and “talking the talk?”

Without this commitment from leadership, it is highly questionable whether staff will embrace a strong E&O culture and achieve the desired level of commitment.

Staff Commitment and Education In the world of agents’ E&O, this is a significant area because agencies don’t make mistakes, people do. Very simply, every staff member must perform his or her duties ethically and professionally.

The work of an agency’s staff involves many different functions and disciplines, so assessing the culture requires an assessment of each person.

Ideally, each member of your agency 22 | INSURANCE JOURNAL-NATIONAL January 13, 2014

had an “E&O goal” in the past year. Maybe this involved technical or sales training, or attending an E&O class.

Did every member of the staff accomplish his or her E&O objectives and grow in his or her E&O commitment?

Technical proficiency is vital, and the start of a new year is the perfect time to assess each staffer’s technical level. Your customers count on the staff’s expertise on a variety of insurance matters. How your staff responds to customers’ questions is important. In addition, training in the areas of sales, customer service and systems is imperative.

As you develop goals for the new year, identify educational opportunities based on your assessment.

For producers and customer service representatives, look to make effective use of

the agency’s exposure analysis checklists.

Checklists are excellent tools for becoming educated on more than 650 different SIC codes, as well as the various insurance issues and exposures.

Educating Your Customers Was your agency more active this past year in educating customers on the various coverages and how these coverages respond?

There are many approaches to accomplish this,

Ex

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Program Benefits Program Benefits including newsletters and using social media. Consider sending a weekly “Did you know?” message.

Another great approach for educating customers is to perform an annual agency review for each of them. This will help your customers understand their coverages and may also identify any exposures that are not properly insured.

Do you know when and where the next “Superstorm Sandy” will occur?

No one does, but by taking the time to discuss these issues before a loss occurs, you stand a much better chance of your customers not experiencing any “surprises” should a claim develop.

Consistency is important.

• Have your proposals been enhanced with some explanations and definitions of key words and phrases? This will not only help educate your customers, it will help make your customers more accountable for their buying decisions.

• Are your producers securing sign-offs from customers for unwanted coverages?

• Does your agency have an audit program?

To truly assess the E&O culture and commitment of your agency staff, it is necessary to review their files to determine how well they are adhering to agency procedures.

• Is your agency holding periodic staff meetings? These have been shown to be effective in ensuring that all staff members are on the same page on various issues.

These points are just some of the areas that will help to determine whether your agency is making progress in its E&O commitment.

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Hopefully, you can reflect on the past Contact QSR Today While Involved in • If your documentation was displayed for year and feel good about the progress your S Subpoena Defense D Ex xpense a Joint Venture a jury to read, you wouldn’t cringe at agency has made. If you believe your agency Phone C Coverage fo or800-447-4180 Acts While Involved d " Project Specific the revelation of it. went backward, which Fax 732-223-9072 i n a Joint Ve enture An insurance agency’s does happen, work to Other questions to conwww.QSR-insurance.com Coverage Available Spe ecific Coverrage sider include: E&O culture starts with make 2014 a year of sig- PProject " Underwritten by A Available • Did your agency insti- its management. nificant improvement.

ProSight Specialty tute a cover letter Identify three or four U Underwritte en by ProSig ght Speciallty that goes out with all policies? strategic improvements you want to make • Do you have any procedures that are a for the new year, and assess your insurcause for concern? If so, this is the ance agency’s E&O culture each quarter Contac ct QSR Today T time to resolve these issues. to determine whether progress is being Phone e 800-447-4 4180 • Does the agency provide limit options made.

Phone 800-447-4180 Fax 732-223-90 072 for customers? This forces customers Fax 732-223-9072 SR-insuran ce.com www.QS to make a decision on what limit they Pearsall is president of Pearsall Associates Inc., www.QSR-insurance.com want and those they don’t. a risk management consulting firm specializing • Does your agency have a procedure helping agents protect themselves. He is also a that attempts to perform an account special consultant to the Utica National Agents review for each customer?

E&O program. Phone: 315-768- 1534.

• Is your agency using a standard temEmail: curtis@pearsallassociates.com. Blog: plate for the proposals you provide? www.agentseotips.com.

Contact QSR Today

www.insurancejournal.com

January 13, 2014 INSURANCE JOURNAL-NATIONAL | 23

IDEA EXCHANGE

The Competitive Advantage The Profit Compression

T

he bad news is independent agency profits are and will continue to be compressed. The good news is that for independent agencies willing to abandon the traditional model, great opportunity exists.

Profits will stay compressed because revenue increases will be suppressed unless new account sales are made. Revenue will be

By Chris Burand suppressed because of the following.

Predictive Modeling. Predictive modeling requires a company to choose a loss ratio. My guess is most companies are choosing around a 55 percent loss ratio. A major misconception agents have is that companies all want great loss ratios. If all companies aim for a 55 percent loss ratio, but if one achieves a 45 percent loss ratio, that company will likely have charged more than other carriers (or somehow developed a much smarter predictive modeling system), thereby losing market share.

Companies only want really good loss ratios if those loss ratios do not cost them market share. Agents don’t often understand this point.

The problem for agents is that a 55 percent loss ratio is often out of the money for contingencies. On the other hand, if predictive modeling fails, loss ratios will likely rise even further, so agencies will still be out of the money.

If companies using predictive modeling gain market share and your companies do not use it, you will lose commissions and contingencies.

Activity Based Rating. The best example of activity based rating is personal auto policies based on driving habits.

Commercial auto policies will follow. As much as insurance companies have historically tried, they have never previously succeeded in rating the best drivers low enough and the worst drivers high enough.

This new technology seems to be a leap 24 | INSURANCE JOURNAL-NATIONAL January 13, 2014

forward. Because independent agencies generally write more good drivers than bad drivers, the result will be lower rates for their drivers and lower commissions.

Carrier Results. Such considerable disparity exists between different carrier’s results that not all companies need to increase rates. Additionally, the industry has a record amount of surplus. The strongest carriers then may prefer to let their loss ratios rise a little while grabbing market share from the carriers that truly need rates to

opportunities presented. They understand that their personality that made them successful, yet they also know that the personality that led to success is now limiting their future.

increase materially.

Revenue is suppressed for all these reasons, and yet agency expenses will continue to rise. Quality people will cost more.

Advertising and producer development will cost more. Meanwhile, IT and agency management expenses are not going to decrease.

Most agency owners will not do anything with these facts.

Even if they agree with these facts, they will not execute the necessary changes. For some, complacency has gone too far.

Historically agencies have sloppily executed plans. Even today, 80 percent of agencies still do not require producers to follow the agency’s procedures. For others that recognize the reality, the execution required is too difficult and too overwhelming.

Others, however, will tackle this opportunity. Understanding that execution is difficult, due to the personalities of many agency owners. They feel the urgent need to progress and they are excited about the www.insurancejournal.com

Solutions When profits are compressed, only four solutions exist.

First, sell out.

Second, ride the horse to the ground.

Third, build a niche where profits are not being squeezed. This is currently a popular solution being proposed by many sales consultants.

Fourth, execute daily your policies and procedures, including sales procedures, precisely.

Precise policy and procedure execution, whether staff procedures or producer sales procedures, are not only tactics most agency owners cannot deal with. Procedures are anathema to most. I am not being condescending. It is a fact.

If all agency owners were tested using a test such as Kolbe, most would be shown to be fast starts and slow follow-throughs. In other words, they are not very good at executing their ideas or plans.

The key then for moving forward and thriving is high-quality execution of plans and procedures.

For example, the insurance industry is not

Accept Reality different than any other. When profits This article is truly aimed at those agency are being compressed, a company has to owners who do accept reality. become more efficient.

Regardless of the fact that the proposed To become more efficient, an insurance solution is easier said than done, just agency has to have good procedures for accepting reality is a huge progression and everyone. Once good procedures are in a gigantic advantage. place, everyone By accepting reality, has to follow Only four solutions will solve instead of using all of them. profit compressions; the hard a person’s energy to market isn’t one of them. fight the inevitable, an Accountability agency principal will To increase discover many resources to help him or her profitable sales (and the sales have to be execute more easily. profitable because when profits are com In other words, agency principals don’t pressed, not all sales are profitable), agency have to do it all on their own. owners have to execute their producer Labor unions, Detroit and a myriad of management plans. This means absolutely manufacturers made the mistake of believholding producers accountable to make new ing that profit compression would not quality sales. affect them. The insurance industry has If the business model bypasses produchopefully learned from its mistakes, but I’m ers, then make sure producers are truly not sure. bypassed and your sympathy does not I am sure, however, that insurance agents result in paying them anyway. who “get it” have more opportunity than Using a non-producer model requires ever. even better execution because to compete against $5 billion in advertising, an agency will have to execute its advertising and Burand is the founder and owner of Burand & marketing with extreme precision to be Associates LLC based in Pueblo, Colo. Phone: 719effective.

485-3868. Email: chris@burand-associates.com.

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January 13, 2014 INSURANCE JOURNAL-NATIONAL | 25

2014

Insurance Industry Meetings & Conventions Directory

Welcome to Insurance Journal’s 2014 Insurance Industry Meetings and Conventions Directory. The information in this directory is taken from a larger database containing additional information on these and other meetings, including industry-related seminars, conferences and workshops. The online Insurance Journal events database can be found at www.InsuranceJournal.com/events. Meeting planners are invited to add new meetings, conventions and seminars to the database free of charge, all year long.

2014 40th Anniversary PIMA Annual Meeting Jan 23-26 Eden Roc Hotel Miami, FL Professional Insurance Marketing Association www.pima-assn.org

Agency Management CIC Institute Jan 29-31 Doubletree Guest Suites Seattle, WA PIA Western Alliance www.piawest.com

NIIA’s 6th Annual Tradeshow Jan 23 The Atlantis Reno, NV Nevada Independent Insurance Agents www.niia.org/

IIA of Iowa Rural Agents/Small Town Agency Conference Jan 29-30 Airport Holiday Inn Des Moines, IA Independent Insurance Agents of Iowa www.iiaba.net/IA/default?ContentPreference=I A&ActiveTab=STATE&ActiveState=IA?ContentPre ference=IA&ActiveState=IA&ActiveTab=NA&Cont entLevel1=

PIANY’s MetroRAP Jan 23 New York Marriott at the Brooklyn Bridge Brooklyn, NY Professional Insurance Agents of New York State Inc. www.pia.org/NY/ Joe Vincent Management Seminar Jan 26-28 Renaissance Austin Hotel Austin, TX Independent Insurance Agents of Texas www.iiat.org Windstorm Insurance Conference 2014 Jan 27-30 Rosen Shingle Creek Orlando, FL Windstorm Insurance Network, Inc. www.windnetwork.com KAIA’s Rural & Small Agents Conference Jan 28-30 Hutchinson Ramada Conference Center Hutchinson, KS Kansas Association of Insurance Agents www.kaia.com/About/Pages/default.aspx 2014 PLUS D&O Symposium Jan 28-29 Marriott Marquis New York City, NY Professional Liability Underwriting Society plusweb.org/default.aspx

ABA Insurance Risk Management Forum 2014 Feb 2-5 Hilton La Jolla Torrey Pines La Jolla, CA American Bankers Association www.aba.com Inter-Company Marketing Group Annual Meeting 2014 Feb 4-6 Talking Stick Resort Scottsdale, AZ Inter-Company Marketing Group www.icmg.org/ IIA of Iowa Insurance Day on the Hill Feb 4 Capital Hill Des Moines, IA Independent Insurance Agents of Iowa www.iiaiowa.com/default.aspx IIAN Winter Conference Feb 5-6 Ramada Inn Kearney, NE Independent Insurance Agents of Nebraska www.iian.org/default.aspx

26 | INSURANCE JOURNAL-NATIONAL REGION January 13, 2014

IIAG 2014 YAC Sales & Leadership Conference Feb 5-7 Classic Center Athens, GA Independent Insurance Agents of Georgia www.iiaba.net/ga/default?ContentPreference=GA &ActiveTab=STATE&ActiveState=GA Young Insurance Professionals of Louisiana Annual Winter Conference Feb 6-8 Hilton Lafayette Lafayette, LA Young Insurance Professionals www.piaoflouisiana.com/YIPs.php Xactware User Conference 2014 Feb 11-12 The Grand America Hotel Salt Lake City, UT Xactware www.xactware.com NIIC Northern Trust Open Feb 11-14 Riviera Country Club Los Angeles, CA City of Hope www.cityofhope.org/ AIMS-ACT-AUGIE Meeting Feb 12-14 Embassy Suites Phoenix-Scottsdale Phoenix, AZ Big “I” ACT www.independentagent.com/Resources/AgencyManagement/ACT/Pages/events/events.aspx AIMS Pro-to-Pro Feb 13-14 Embassy Suites Phoenix-Scottsdale Phoenix, AZ AIMS Society www.aimssociety.org/ Houston “I” Day Feb 18 Marriott Houston Westchase Houston, TX Independent Insurance Agents of Houston www.iiah.org/index.cfm

www.insurancejournal.com

Personal Lines CIC Institute Feb 19-22 Sheraton Portland Airport Hotel Portland, OR PIA Western Alliance www.piawest.com

Los Angeles I Day 2014 Mar 6 Los Angeles Universal Hilton Hotel Universal City, CA IIABA Burbank, Glendale, Pasadena, San Fernando Valley & IIABA Los Angeles

IICF’s 10th Annual Club 100 Dinner Mar 20 Los Angeles Union Station Los Angeles, CA Insurance Industry Charitable Foundation www.iicf.org

IIAM Agency Management Conference Feb 19-20 Country Club of Jackson Jackson, MS Independent Insurance Agents of Mississippi www.msagent.org/default.aspx

NetVU Conference 2014 Mar 6-8 Gaylord Opryland Nashville, TN NetVU www.netvu.org

NAMIC Commercial Lines Seminar Feb 26-28 Renaissance Chicago Hotel Chicago, IL NAMIC www.namic.org

IICF’s 2nd Annual Lone Star Legends Benefit Mar 6 TBA Dallas, TX Insurance Industry Charitable Foundation www.iicf.org

IIAG Will Weston IV YAC Classic Mar 21 University of Athens Golf Course Athens, GA Independent Insurance Agents of Georgia www.iiaba.net/ga/default?ContentPreference=GA &ActiveTab=STATE&ActiveState=GA

PIA of Florida Agent Expo Feb 27-28 Embassy Suites Lake Buena Vista South Kissimmee, FL PIA of Florida www.piafl.org

Commercial Property CIC Institute Mar 12-14 Embassy Suites Lynnwood Lynnwood, WA PIA Western Alliance www.piawest.com

AAMGA Automation Conference Mar 1-4 Hilton Lake Buena Vista Resort Orlando, FL American Association of Managing General Agents www.aamga.org/

NIIC Campus Tour Mar 12 City of Hope Campus Duarte, CA City of Hope www.cityofhope.org/

IRMI Energy Risk and Insurance Conference 2014 Mar 4-6 Royal Sonesta Houston Houston, TX IRMI International Risk Management Institute Inc. www.irmi.com/ 2014 NAPSLO Mid-Year Leadership Forum Mar 5-8 Fairmont Scottsdale Princess Scottsdale, AZ National Association of Professional Surplus Lines Offices www.napslo.org/imispublic/AM/Template.cfm MAIA Day at the Capitol Mar 5 Capitol Plaza Hotel Jefferson City, MO Missouri Association of Insurance Agents ww2.iiaba.net/MO/default?ContentPreference=M O&ActiveTab=STATE&ActiveState=0?ContentPre ference=MO&ActiveState=0&ActiveTab=NA&Con tentLevel1=

www.insurancejournal.com

IAIP Region V 2014 Annual Conference Mar 27-30 Holiday Inn Sioux Falls, SD International Association of Insurance Professionals www.internationalinsuranceprofessionals.org MAIA 2014 Small Agency Conference Mar 27-28 Holiday Inn Columbia, MO Missouri Association of Insurance Agents ww2.iiaba.net/main/CB_Website/Affiliated/StateAssociation/mo/default?ContentPreference=MO& ActiveTab=STATE&ActiveState=MO?ContentPrefe rence=MO&ActiveState=MO&ActiveTab=STATE&C ontentLevel1=

NIIC Annual Dinner Mar 12 The Landham Huntington Pasadena, CA City of Hope www.cityofhope.org/ PIACT Annual Convention Mar 13-14 MGM Grand at Foxwoods Mashantucket, CT Professional Insurance Agents of Connecticut Inc. www.pia.org/CT/ IICF’s Midwest’s 3rd Annual Blazing the Trail Benefit Dinner Mar 13 Union Station Chicago, IL Insurance Industry Charitable Foundation www.iicf.org NAMIC Personal Lines Seminar Mar 19-21 Renaissance Chicago Hotel Chicago, IL NAMIC www.namic.org

Commercial Casualty CIC Institute Mar 26-29 Sheraton Portland Airport Hotel Portland, OR PIA Western Alliance www.piawest.com

National Association of Insurance Commissioners Spring Meeting Mar 29-Apr 1 Hilton Orlando Bonnet Creek and Waldorf Astoria Orlando, FL National Association of Insurance Commissioners www.naic.org The Institutes Executive Education Seminar at Darden School of Business, University of Virginia Mar 30-Apr 4 Darden School of Business, University of Virginia Charlottesville, VA The Institutes www.theinstitutes.org/ 2014 Louisiana Surplus Lines Association Annual Meeting Apr 2-4 Beau Rivage Resort Biloxi, MS Louisiana Surplus Lines Association www.lasurpluslines.com/

January 13, 2014 INSURANCE JOURNAL-NATIONAL REGION | 27

2014 Insurance Industry Meetings and Conventions Directory PCI Human Resources Conference Apr 6-9 Don CeSar Hotel St. Petersburg Beach, FL PCI www.pciaa.net NIIC Hoops for Hope, Los Angeles Apr 7 TBA Los Angeles, CA City of Hope www.cityofhope.org/ NIIC Hoops for Hope, San Francisco Apr 7 TBA San Francisco, CA City of Hope www.cityofhope.org/ NIIC Hoops for Hope, Des Moines Apr 7 TBA Des Moines, IA City of Hope NIIC Hoops for Hope, Chicago Apr 7 TBA Chicago, IL City of Hope www.cityofhope.org/ NIIC Hoops for Hope, Philadelphia Apr 7 TBA Philadelphia, PA City of Hope www.cityofhope.org/ Personal Lines CIC Institute Apr 9-11 Embassy Suites Lynnwood Lynnwood, WA PIA Western Alliance www.piawest.com Big “I” Legislative Conference & Convention Apr 9-11 Hyatt Regency Washington Washington , DC Independent Insurance Agents & Brokers of America Inc. www.independentagent.com/ Philly I-Day Apr 9 PA Convention Center Philadelphia, PA Insurance Society of Philadelphia www.insurancesociety.org

FIWT 2014 Leadership & Education Mid Year Expo Apr 11-12 Omni Austin Hotel Southpark Austin, TX Federation of Insurance Women of Texas www.fiwt.com

28th Annual Blue Ribbon Conference May 4-8 Mauna Lani Bay Hotel & Bungalows Kohala Coast, HI Independent Insurance Agents & Brokers of California www.iiabcal.org

NIIC Honoree Steve DeCarlo Golf Challenge Apr 21 Atlanta Athletic Club Atlanta, GA City of Hope www.cityofhope.org/

ACORD LOMA 2014 May 4-6 Rosen Shingle Creek Orlando, FL ACORD LOMA www.acordlomaforum.org/events/ acord-loma-forum/event-summary-7f87bbee718148b5a25d236e6ae26723.aspx

NAPSLO Executive Leadership School Apr 22-25 Darden School of Business Charlottesville, VA National Association of Professional Surplus Lines Offices www.napslo.org/imispublic/AM/Template.cfm RIMS 2014 Annual Conference & Exhibition Apr 27-30 Colorado Convention Center Denver, CO RIMS www.rims.org PCI Marketing and Underwriting Professionals Seminar Apr 27-29 Westin Kierland Scottsdale, AZ PCI www.pciaa.net IIABNJ’s Annual Trusted Choice Charity Golf Outing Apr 28 Trenton Country Club Trenton, NJ IIABNJ www.iiabnj.org IIA of Iowa Young Agents Conference Apr 30-May 1 Drury Inn West Des Moines, IA Independent Insurance Agents of Iowa www.iiaiowa.com/default.aspx BIG Independent Group Convention Trade Expo May 1-4 Riverside Convention Center Riverside, CA BIG Independent Group www.biginsusa.com PIANY Long Island RAP May 1 Crest Hollow Country Club Woodbury, NY Professional Insurance Agents of New York State Inc. www.pia.org/NY/

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ACT Meeting May 5-6 Rosen Shingle Creek Orlando, FL Independent Insurance Agents and Brokers of America Inc. www.independentagent.com/ Directors Education: Boot Camp and Advanced Courses May 5-7 Seelbach Hilton Louis Lousiville, KY NAMIC www.namic.org NCCI’s Annual Issues Symposium May 8-9 Hyatt Regency Grand Cypress Resort Orlando, FL NCCI www.ncci.com TMPAA 2014 Mid Year Meeting May 12-14 Hilton Baltimore Baltimore, MD Target Markets Program Administrators Association www.targetmkts.com NAIC International Insurance Forum May 13-14 Park Hyatt Washington Washington, DC National Association of Insurance Commissioners www.education.naic.org Commercial Casualty CIC Institute May 14-15 Doubletree Guest Suites Seattle, WA PIA Western Alliance www.piawest.com

www.insurancejournal.com

IICF’s Western Division Annual Benefit Dinner May 15 TBA San Francisco, CA Insurance Industry Charitable Foundation www.iicf.org

PIANJ-YIP Fun Run Jun 14 Boardwalk Atlantic City, NJ PIANJ-YIP www.younginsuranceprofessionals.org/nj/

NIIC West Coast Golf Challenge Jul 14 Annandale Golf Club Pasadena, CA City of Hope www.cityofhope.org/

AAMGA Annual Meeting 2014 May 18-21 Hilton Waikoloa Village Waikoloa, HI American Association of Managing General Agents www.aamga.org

PIA OR/ID EXPO Jun 15-16 Red Lion on the River at Jantzen Beach Portland, OR PIA Western Alliance www.piawest.com

NAMIC Agricultural Risk Inspection School Jul 15-17 Sheraton Indianapolis Keystone Crossing Indianapolis, IN NAMIC www.namic.org

IIAV Annual Convention & Exhibition Jun 15-17 The Boar’s Head Charlottesville, VA Independent Insurance Agents of Virginia Inc. www.iiaba.net/VA/ default?ContentPreference=VA

Missouri Joint Leadership and Young Agents Conference Jul 16-18 Tan-Tar-A Resort Osage Beach, MO Missouri Association of Insurance Agents ww2.iiaba.net/main/CB_Website/Affiliated/StateAssociation/mo/default?ContentPreference=MO

San Diego “I” Day 2014 May 21 Town & Country Convention Center San Diego, CA Insurance Brokers and Agents of San Diego www.ibasandiego.com/ NAPSLO E&S School Jun 1-4 The Eric P. Newman Education Center St. Louis, MO National Association of Professional Surplus Lines Offices www.napslo.org/imispublic/AM/Template.cfm IIAT 117th Annual Conference & Tradeshow Jun 4-6 TBA San Antonio, TX Independent Insurance Agents of Texas www.iiat.org/ PIANJ/PIANY Joint Annual Conference Jun 8-10 Trump Taj Mahal Casino Resort Atlantic City, NY Professional Insurance Agents of New Jersey and New York State www.pia.org IIAM Annual Convention and Trade Show Jun 8-11 Sandestin Hilton Destin, FL Independent Insurance Agents of Mississippi www.msagent.org/default.aspx 2014 Western States Surplus Lines Conference Jun 11-13 TBA Scottsdale, AZ The Surplus Line Association of Arizona www.sla-az.org/ 117th IIAG Annual Convention & Trade Show 46th YAC Annual Conference Jun 12-14 Omni Amelia Island Plantation Resort Amelia Island, FL Independent Insurance Agents of Georgia www.iiaba.net/ga/default?ContentPreference=GA &ActiveTab=STATE&ActiveState=GA

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IIAV YAC Convention Golf Tournament Jun 18 Falcon’s Fire Golf Club Orlando, FL Florida Association of Insurance Agents www.faia.com/

PIA of Louisiana’s 71st Annual Convention Jul 19-22 The Grand Hotel Point Clear, LA Professionals Insurance Agents of Louisiana www.piaoflouisiana.com/

FAIA’s 2014 Annual Convention & Education Symposium Jun 19-21 Gaylord Palms Resort Kissimmee, FL Florida Association of Insurance Agents www.faia.com/

TSLA 2014 Mid-Year Meeting Jul 20-23 Four Seasons Resort Whistler Whistler, BC Texas Surplus Lines Assn., Inc. tsla.org

NAMIC Management Conference Jun 22-25 Colonial Williamsburg Hotels Williamsburg, VA NAMIC www.namic.org

ACIC General Counsel Seminar Jul 22-24 Encore Las Vegas, NV PCI www.pciaa.net

NIIA’s 68th Annual Convention Jun 23-25 Harrah’s Lake Tahoe Stateline, NV Nevada Independent Insurance Agents www.niia.org/

2014 FSLA Annual Convention Jul 23-25 Ritz Carlton Sarasota, FL Florida Surplus Lines Association www.floridasurpluslinesassociation.com/

PIACT-YIP Golf Open Jun 24 Lyman Orchards Middlefield, CT PIACT-YIP www.younginsuranceprofessionals.org/ct/

James K Ruble Graduate Seminar Jul 29-30 Sheraton Portland Airport Hotel Portland, OR PIA Western Alliance www.piawest.com

PIA of Georgia & Alabama 2014 Annual Agent’s Convention Jul 12-14 The Westin Savannah Harbor Savannah, GA PIA of Georgia & Alabama www.piaga.com

2014 LAAIA Annual Convention Jul 30-Aug 2 Westin Diplomat Resort & Spa Hollywood, FL Latin American Association of Insurance Agencies www.laaia.com/

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2014 Insurance Industry Meetings and Conventions Directory City of Hope’s Inaugural Midwest Insurance Committee Golf Outing Aug 4 Bryn Mawr Country Club Lincolnwood, IL City of HopeMidwest Region, Chicago Regional Headquarters www.cityofhope.org/ Jacupke Memorial Golf Tournament Aug 4 Lochland Country Club Hastings, NE Independent Insurance Agents of Nebraska www.iian.org/Information/Pages/default.aspx 46th Trusted Choice Big “I” National Championship Aug 5-8 Pete Dye Club Bridgeport, WV Independent Insurance Agents & Brokers of America Inc. www.independentagent.com/default.aspx James K Ruble Graduate Seminar Aug 13-14 Doubletree Guest Suites Seattle, WA PIA Western Alliance www.piawest.com National Association of Insurance Commissioners (NAIC) Summer Meeting Aug 16-19 Hyatt Regency Louisville and Kentucky International Convention Center Louisville, KY National Association of Insurance Commissioners www.naic.org PIANY-YIP Golf Open Aug 18 TBD TBD, NY PIANY-YIP www.younginsuranceprofessionals.org/ny/ NIIC Tony Markel Golf Tournament Aug 18 Hermitage Country Club Richmond, VA City of Hope www.cityofhope.org/ IIABAZ’s 80th Annual Convention & Trade Show Aug 20-21 Renaissance Phoenix Glendale Hotel & Spa Glendale, AZ Independent Insurance Agents and Brokers of Arizona Inc. www.iiabaz.com

NIIC Strike Out Cancer, Atlanta Aug 20 TBA Atlanta, GA City of Hope www.cityofhope.org/

IIA of Iowa 108th Annual Convention Sep 17-18 Sheraton Hotel West Des Moines, IA Independent Insurance Agents of Iowa www.iiaiowa.com

Big “I” Fall Leadership Conference Sep 10-14 Amway Grand Plaza Hotel Grand Rapids, MI Independent Insurance Agents & Brokers of America Inc. www.iiaba.net/ga/default?ContentPreference=GA &ActiveTab=STATE&ActiveState=GA

CPCU Society Annual Meeting 2014 Sep 20-23 Hilton Anaheim Anaheim, CA CPCU Society www.cpcusociety.org/

Big “I” Young Agents Leadership Institute Sep 12-13 Amway Grand Plaza Hotel Grand Rapids, MI Independent Insurance Agents & Brokers of America Inc. www.iiaba.net NIIC Spirit of Life Gala Sep 13 Ritz Carlton Buckhead Atlanta, GA City of Hope www.cityofhope.org/ PCI Investment Seminar Sep 14-17 The Wigwam Resort Scottsdale, AZ PCI www.pciaa.net AICP 2014 Annual Conference Sep 14-17 Marriott Desert Ridge, Phoenix, Arizona Phoenix, AZ AICP Association of Insurance Compliance Professionals www.AICP.net NAPSLO Annual Convention Sep 15-18 TBA Atlanta, GA National Association of Professional Surplus Lines Offices www.napslo.org BIG Independent Group MiniVention Part II Sep 16 TBA Oakland, CA BIG Independent Group www.biginsusa.com/

PCI Information Technology Conference Sep 21-24 Hyatt Regency Tamaya Resort & Spa Albuquerque, NM PCI www.pciaa.net IIA of New Mexico Annual Convention Sep 24-25 Sandia Resort & Casino Albuquerque, NM Independent Insurance Agents of New Mexico American Agents Alliance Convention Sep 25-28 JW Marriott Desert Springs Resort & Spa Palm Desert, CA American Agents Alliance agentsalliance.com/ PIANJ Golf Classic Sep 29 Cherry Valley Country Club Skillman, NJ Professional Insurance Agents of New Jersey www.pia.org/NJ/ IIA of Illinois 2014 Convention & Showcase Sep 30-Oct 2 TBA Tinley Park, IL Independent Insurance Agents of Illinois www.iiaofil.org/Home.aspx PIA WA Joint Conference Oct 1-3 Skamania Lodge Stevenson, WA PIA Western Alliance www.piawest.com IIA of Nebraska Annual Convention Oct 1-3 Embassy Suites Lincoln, NE Independent Insurance Agents of Nebraska www.iian.org

Life & Health CIC Institute Sep 17-19 Doubletree Guest Suites Seattle, WA PIA Western Alliance www.piawest.com

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IIABSC Annual Convention Oct 5-7 Wild Dunes Resort Charleston, SC Independent Insurance Agents & Brokers of South Carolina

MCIEF Annual Conference Oct 16-17 Hyatt Regency Orlando International Airport Orlando, FL Motor Carrier Insurance Education Foundation www.transportationriskspecialist.com

TSLA 2014 Annual Meeting Nov 9-10 Four Seasons Hotel Austin, TX Texas Surplus Lines Assn. Inc. www.tsla.org

IIABNJ’s 120th Annual Business Meeting & Networking Event Oct 5-7 Congress Hall Cape May, NJ IIABNJ www.iiabnj.org

FIWT 2014 Annual Convention Oct 17-19 Waco Convention Center Waco, TX Federation of Insurance Women of Texas www.fiwt.com

IIABCal Kern County Trade Show Nov 12-13 TBA Bakersfield, CA Independent Insurance Agents & Brokers of California www.iiabcal.com

Sacramento “I” Day Oct 7 Sacramento Convention Center Sacramento, CA Insurance Brokers and Agents of Sacramento www.ibasacramento.com/

14th Annual TMPAA Summit Oct 20-22 Westin Kierland Resort Scottsdale, AZ Target Markets Program Administrators Association www.targetmkts.com

NIIC Strike Out Cancer, Chicago Oct 9 TBA Chicago, IL City of Hope www.cityofhope.org/

Commercial Property CIC Institute Oct 22-25 Sheraton Portland Airport Hotel Portland, OR PIA Western Alliance www.piawest.com

Insurors of Tennessee 121st Annual Convention Oct 11-14 Omni Nashville Nashville, TN Insurors of Tennessee www.insurors.org

PCI Annual Meeting Oct 26-29 Westin Kierland & Fairmont Princess Scottsdale, AZ PCI www.pciaa.net

NIIC Swing For The Cure Oct 11-12 Caves Valley Owens Mill, MD City of Hope www.cityofhope.org/

Commercial Casualty CIC Institute Nov 5-7 Embassy Suites Lynnwood Lynnwood, WA PIA Western Alliance www.piawest.com

2014 AIIAB Convention & Trade Show Oct 14-16 Captain Cook Hotel Anchorage, AK Alaska Independent Insurance Agents & Brokers (AIIAB) www.aiiab.org

2014 PLUS International Conference Nov 5-7 TBA Las Vegas, NV Professional Liability Underwriting Society www.plusweb.org

PIA of MT Producer Seminar Oct 15-17 Holiday Inn Bozeman Bozeman, MT PIA Western Alliance www.piawest.com NIIC Strike Out Cancer, Tampa Oct 15 Splitsville Tampa, FL City of Hope www.cityofhope.org/

www.insurancejournal.com

IIA of Indiana Annual Convention Nov 16-18 Westin Hotel Indianapolis, IN Independent Insurance Agents of Indiana ww2.iiaba.net/main/CB_Website/Affiliated/StateAssociation/in/default?ContentPreference=IN National Association of Insurance Commissioners (NAIC) Fall Meeting Nov 16-19 Washington Marriott Wardman Park Washington, DC National Association of Insurance Commissioners www.naic.org Agency Management CIC Institute Dec 3-6 Sheraton Portland Airport Hotel Portland, OR PIA Western Alliance www.piawest.com

Massachusetts Association of Insurance Agents Annual Convention & Trade Show Nov 6-9 Marriott Copley Place Boston, MA Massachusetts Association of Insurance Agents www.massagent.com InsurFEST 2014 Nov 6-8 Sheraton Fisherman’s Wharf San Francisco, CA Independent Insurance Agents & Brokers of California www.iiabcal.com/default.asp

January 13, 2014 INSURANCE JOURNAL-NATIONAL REGION | 31

IDEA EXCHANGE

Agency Management Numbers Don’t Lie: Agency Best of the Best Grofit: Balancing Growth & Profit Creates Value

By Tommy McDonald

I

f there is anything that exists in the insurance distribution industry, its ego.

This is why agency performance benchmarking is so important. The industry is also fortunate to have a level playing field.

Most independently held and bank-owned insurance agencies operate and are built with similar business models, organizational charts, and expense models. Quality benchmarking that provides an “apples to apples” comparison is readily available.

Agency scorecards are valuable in setting goals for firms who employ strong, competitive leadership teams. These leadership

Advertisers Index Readers, browse, contact, or do product searches on any of our full page advertisers at: www.insurancejournal.com/adshowcase/ ACE Insurance www.acelimited.com Agency Ideas www.agencyideas.com Applied Underwriters www.applieduw.com Burns & Wilcox Ltd. www.burnsandwilcox.com Catlin US www.catlinus.com Demotech www.demotech.com Great American Insurance Group www.GreatAmericanInsurance.com McClelland & Hine www.mhi-tx.com Monarch E&S Insurance Services www.monarchexcess.com PersonalUmbrella.Com www.personalumbrella.com Philadelphia Insurance Companies www.phly.com QBE www.qbededicated.com Quaker Special Risk www.qsr-insurance.com Texas Mutual Insurance Company www.texasmutual.com Universal Service Agency, Inc. www.universalbonds.com

15 25 2, 36 7 11 3 13

teams use benchmark reports to enhance their business model and to ensure they are peak performers (the best of the best).

Sifting through all of the metrics available to industry leaders to gauge an agency’s performance is simple. Top-line revenue growth and agency profitability are two of the most simplistic, and important, measures of performance. Building long-term value requires a balance between the two metrics.

Given that investing in growth can hurt short-term profitability and a heavy margin can hinder future growth, maximizing agency value (performance) is comparable to riding a teeter totter. The best firms can maximize both growth and profitability without sacrificing the balance.

Where do you stack up against the best, most balanced firms in the business?

McDonald is vice president, MarshBerry. Phone: 440-392-6700 Email: Tommy.McDonald@MarshBerry. com. Grofit is a proprietary metric created by Marsh Berry to measure a firm’s ability to balance agency top line revenue growth with profitability. The calculation takes into consideration year-over-year

growth, which includes both acquired and organic growth. Profitability is calculated by removing miscellaneous income from agency contingency or overrides and is taken as a percentage of total commission and fees.

Source: MarshBerry proprietary financial management system Perspectives for High Performance (PHP); MarshBerry 2013 Market & Financial Outlook.

Classifieds Insurance Journal National • 3570 Camino del Rio North, Ste. 200 • San Diego, CA 92108-1747 email: classifieds@insurancejournal.com Fax: 619/584-1200 • Phone: 800/897-9965 x125 For Ad rate and Information

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IDEA EXCHANGE

Closing Quote itized.” — The McKinsey report, “Agents of the Future: the Evolution of Property and Casualty Insurance Distribution,” chapter, “The End of An Era for the Local Insurance Agents.”

“The debate on climate change and global warming has been intensely polarized. A great deal of this ‘noise’ has clouded the very real and emerging issues that we as an industry and society need to address.” — Johnny Chan, director, Guy Carpenter AsiaPacific Climate Impact Centre “I must tell you every time I do one, you say to yourself, ‘God I hope this is the last one.’” — Kenneth Feinberg, manager of The One Fund for victims of the Boston Marathon bombing

The Best Quotes of 2013

“Guys network a lot. Women don’t do it that well.

We tend to go home after work, especially if we have children, and it is important — it is important both internally as well as externally.” — Seraina Maag, CEO of the EMEA region for AIG, and a participant in the Women in Insurance Global Conference.

new year is a chance to look back and review the past. Here’s a view at some of the best quotes found on InsuranceJournal.com in 2013.

What was your favorite quote of the year?

A

“It certainly looks like pretty much of a forecast bust.” — Jeff Masters, director of meteorology at the Weather Underground on the 2013 hurricane season

“If you like your health care plan, you can keep it.” — President Barack Obama

“Our country will, at some point, face a major cyber event that will have a serious effect on our lives, our economy, and the everyday functioning of our society.” — Janet Napolitano, Homeland Security chief

“I think you will see us become a very significant factor worldwide in the commercial- insurance business. It could be a business that reaches into the billions.” — Berkshire Hathaway’s Warren Buffett “It’s critical — absolutely critical — for long-term success now in this business [auto insurance] to be a low-cost producer with a very effective pricing segmentation. Those are going to be the keys for a long term success.” — Travelers’ CEO Jay Fishman

“The report … recommends a hybrid approach to insurance regulation that provides a practical, factbased roadmap to modernize and improve the U.S. system of insurance regulation.” — Michael McRaith, director, Federal Insurance Office

“Auto insurance will have more to do with information that comes from the car than the classical segmentation with regard to characteristics of the driver.” — Progressive CEO Glenn Renwick

“Neither Democrats nor Republicans envisioned it would reap the kind of harm and heartache that may result from this law going into effect.” — Rep. Maxine Waters, (D.-Calif.), co-author of the Biggert-Waters Flood Insurance Reform Act

“Where agents once served as the front line in risk selection and pricing, advances in predictive models are making this role obsolete. The agent was once the face of the insurance brand; now, customers increasingly use multiple channels to connect with their carrier. Perhaps most disruptive to the traditional agent value model, auto insurance — which accounts for 70 percent of personal lines premiums — is fast becoming commod-

“I’m looking for the silver lining, because this is a big enough event [Target credit card breach] that there should be a greater realization within the industry for developing policies for covering all of the potential consequences of cyber threats and data breaches.” — Martin Frappolli, senior director of knowledge resources, The Institutes

34 | INSURANCE JOURNAL-NATIONAL January 13, 2014

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