Insurance Journal West 2016-04-18

WEST EDITION California Comp Rates Task Force on Gas Leak Lying Insurance Shoppers

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WEST

Inside This Issue

On The Cover

Special Report: Sports Business Gets Personal

April 18, 2016 • Vol. 94 No. 8 • West

W6

W8

26

38

NATIONAL COVERAGE

WEST COVERAGE

IDEA EXCHANGE

8

W2 Government Task Force Will

Examine Massive California

Natural Gas Leak

29 Growing Your Property Casualty

Agency: Alan Shulman’s Final

Column

W2 Utah Employers Must

Accommodate Breast-Feeding

Workers

36 What Should I Pay My Client

Service Employees?

P/C Price Declines Slow for Buyers: Willis Towers Watson

10 Employee Vs. Contractor Debate

to Get Even Hotter: RIMS 11 Survey: Revenue Up, Independent

Agents Seeking New Carriers 11 Weather Incidents Top

Homeowners Insurance Claims

W6 Half of Insurance Shoppers Giving

Inaccurate Information

16 Spotlight: 10 Things to Know

About Social Services (Child Care)

W7 California Workers’ Comp

Committee Votes for Lower

Mid-Year Filing

19 P/C Direct Premiums Written Up

2.5% in 2015: Demotech

W7 Oregon Considers Renewal of

Lloyd’s Wildfire Insurance Policy

20 K2 Acquires MGA; Launches Comp,

Accident Programs with QBE

W8 California Court Says Employers

Can’t Deny Workers Seats

20 Zurich Completes Acquisition

of RCIS Crop Insurance Business 22 Special Report: Sports Industry

Gets Personal

38 Closing Quote: Agents Storm

Capitol Hill

DEPARTMENTS W4 People 9 Declarations 9 Figures 12 Business Moves 35 MyNewMarkets

26 Closer Look: Insuring a Lazy

Saturday Afternoon 30 2016 Premium Finance Directory 4 | INSURANCE JOURNAL-WEST April 18, 2016

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NATIONAL COVERAGE

Opening Note NFL and Brain Injury

M

ore than 40 percent of retired National Football League (NFL) players in a recent study had signs of traumatic brain injury, according to medical researchers from Florida.

The findings were based on sensitive MRI scans — called diffusion tensor imaging — of 40 retired professional football players.

“This is one of the largest studies to date of living retired NFL players and one of the first to demonstrate significant objective evidence for traumatic brain injury in these former players,” said study author Francis X. Conidi, MD, DO, of the Florida Center for Headache and Sports Neurology and Florida State University College of Medicine in Tallahassee.

Conidi said the rate of traumatic brain injury was “significantly higher” in the players than that found in the general population.

For the study, researchers conducted thinking and memory tests in 40 retired NFL players, along with the brain scans. The players were an average age of 36, ranging from 27 to 56. A majority of the players had been out of the NFL for less than five years. They played an average of seven years in the NFL, with a range of two to 17 years. They reported an average of 8.1 concussions.

Twelve players, or 31 percent, said they had several Concussions and repetitive sub-concussive hits, or head injuries are not just hits considered below the experienced by pro players. threshold of a concussion.

The MRIs measured the amount of damage to the brain’s white matter, which connects different brain regions, based on the movement of water molecules in the brain tissue.

Seventeen players, or 43 percent, had levels of movement 2.5 standard deviations below those of healthy people of the same age, which is considered evidence of traumatic brain injury with a less than one percent error rate.

Twelve of the former athletes, or 30 percent, showed evidence on traditional MRI of injury to the brain due to disruption of the nerve axons, those parts of nerve cells that allow brain cells to transmit messages to each other. On the tests of thinking skills, about 50 percent had significant problems on executive function, 45 percent on learning or memory, 42 percent on attention and concentration, and 24 percent on spatial and perceptual function.

The more years a player spent in the NFL, the more likely he was to have the signs of traumatic brain injury on the advanced MRI. Concussions and repetitive head injuries are not just experienced by pro players. More than three-quarters of the football players in the U.S. are under the age of 14 and they are just as — and perhaps more — susceptible to head injuries because their brains are still developing, researchers say. But there’s no question career players are more at risk. Researchers found the longer the career span, the higher the risk of traumatic brain Andrea Wells Editor-in-Chief injury for pro players.

6 | INSURANCE JOURNAL-NATIONAL April 18, 2016

Publisher Mark Wells | mwells@wellsmedia.com EDITORIAL Chief Content Officer Andrew Simpson | asimpson@insurancejournal.com Editor-in-Chief Andrea Wells | awells@insurancejournal.com East Editor Young Ha | yha@insurancejournal.com Southeast Editor/MyNewMarkets Associate Editor Amy O’Connor | aoconnor@insurancejournal.com South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor Lisa Howard | lhoward@insurancejournal.com Senior Editor Susanne Sclafane | ssclafane@insurancejournal.com ClaimsJournal.com Editor Denise Johnson | djohnson@claimsjournal.com Columnists Alan Shulman Contributing Writers Mary Newgard, Douglas Powell, Robert Rusbuldt SALES Chief Marketing Officer Julie Tinney (800) 897-9965 x148 | jtinney@insurancejournal.com Sales Manager Lauren Knapp (800) 897-9965 x161 | lknapp@insurancejournal.com West Dena Kaplan (800) 897-9965 x115 | dkaplan@insurancejournal.com Romeo Valdez (800) 897-9965 x172 | rvaldez@insurancejournal.com Midwest Lisa Whalen (800) 897-9965 x180 | lwhalen@insurancejournal.com South Central Mindy Trammell (800) 897-9965 x149 | mtrammell@insurancejournal.com East (NY, PA and CT only) Dave Molchan (800) 897-9965 x145 | dmolchan@insurancejournal.com Southeast & East (except for NY, PA and CT) Howard Simkin (800) 897-9965 x162 | hsimkin@insurancejournal.com New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classifieds, Jobs, Agencies Wanted/For Sale Kelly De La Mora (800) 897-9965 x125 | kdelamora@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 DESIGN/WEB Chief Technology Officer/Chief Innovation Officer Joshua Carlson | jcarlson@insurancejournal.com V.P. of Design Guy Boccia | gboccia@insurancejournal.com Audience Development Elizabeth Duffy | eduffy@wellsmedia.com Marketing Director Derence Walk | dwalk@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Tim Layer | tlayer@wellsmedia.com IJ ACADEMY OF INSURANCE V.P. of Education Chris Boggs | cboggs@ijacademy.com Online Training Coordinator Barbara Whiffen | bwhiffen@ijacademy.com ADMINISTRATION Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com

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NATIONAL COVERAGE

News & Markets P/C Price Declines Slow for Buyers: Willis Towers Watson

By L.S. Howard

T

he pricing declines enjoyed by most buyers for several renewal cycles are beginning to slow down, raising the likelihood that companies will experience some price increases in various commercial lines of insurance in the coming year, according to a report published by Willis Towers Watson.

The report, titled “Marketplace Realities 2016, Spring Update, Bringing the Pieces Together,” provides a 2016 marketplace forecast for North American insurance buyers.

“At the macro-level, the market remains stable and pricing is still considered soft, but we may be starting to see the bottom end of that softening,” said Matt Keeping, head of broking for North America, Willis Towers Watson.

“In property, for example, there’s only so much the marketplace can give back. And while we remain in a period thankfully free of huge mega-disasters, losses line by line have taken their toll on marketplace competition. Plus, with interest rates low, insurance companies remain under revenue pressure,” Keeping added.

In a section on property rates, the Willis Towers Watson report predicted these prices will fall for most buyers — but they may see single-digit decreases. Last year, they might have gotten double digit reductions, said the report.

Property rates are expected to decline 7.5 percent to 10.0 percent for companies, without great exposure to natural disasters, and 10.0 percent to 12.5 percent for those buyers with greater exposures, the report added.

General liability rates for the remainder of 2016 are expected to be down -5 percent to flat.

However, buyers with recent claims can expect increases of 5 percent to 10 percent, the report revealed.

Workers’ compensation costs are expected to remain steady, with most buyers getting small increases or decreases, the report said.

8 | INSURANCE JOURNAL-NATIONAL April 18, 2016

‘At the macro-level, the market remains stable and pricing is still considered soft, but we may be starting to see the bottom end of that softening.’

a variety of cost management strategies, including increased adoption of telemedicine services, vigilance in managing pharmacy benefits (with a focus on specialty drugs), and assessment of value-based contracting and reimbursement arrangements offered by health plans,” the report said.

On the other hand, auto liability rates are rising as much as 10 percent because of an increase in loss frequency and severity.

New Dynamics In his introductory comments to the report, Keeping addressed the recent shifts in fundamental market positions brought about by the retractions of one “super carrier” and the arrival of another.

Super-carrier AIG is poised to get smaller and may divide into several pieces in the coming years — as some have been urging, the report explained. “Meanwhile, another super-carrier is arriving on the scene following the ACE/Chubb merger. Those two changes alone can add a healthy dose of complexity to a company’s renewal strategy.”

Changes in the marketplace “will force some insurance buyers to consider moves they might otherwise have been content to ignore (for the simple fact that a risk manager cannot choose to stay with a carrier if that carrier no longer exists),” it added.

“That, in turn, will raise the question of how carrier partners are chosen in the first place,” Keeping affirmed.

“In most cases (and certainly for leading firms with billions in revenue), the selection process involves many considerations.

Price, no doubt. But also key is the financial stability of the company that will have to pay the claims should a loss occur and so are the culture and personality of the people and institution involved in the transaction,” he said. “In other words, the choice of a carrier involves the variables, tangible and otherwise, that inform this important strategic relationship,” Keeping added.

Cyber Insurance The cyber insurance marketplace is increasingly fragmented, the report noted.

“Cyber renewals are seeing primary premium increases of 5 percent to 15 percent for most buyers, and 15 percent to 30 percent for point-of-sale retailers and large health care companies with no losses.”

Middle-market firms can expect a very competitive marketplace with aggressive pricing and broad policy language, said the report.

“Meanwhile, underwriting requirements continue to tighten as carriers seek to understand the culture of an organization and how data privacy is embraced across many operational functions.”

In executive risk lines, buyers will continue to find a mix of modest increases and decreases, the Willis Towers Watson’s report went on to say.

Moving to health care and employee benefits, it noted that benefit plan costs are forecast to increase 4 percent to 5 percent for self-insured plans and 7 percent to 8 percent for insured plans.

“Employers continue to pursue

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NATIONAL COVERAGE

FIGURES

13 Million The reduction in the number of prescribed hydrocodone tablets in West Virginia last year, according to the state’s Controlled Substance Monitoring Program. The drug has been the state’s No. 1 painkiller, with nearly 63 million pills dispensed statewide last year. West Virginia has been working to reduce the opioid addiction problem in the state, which currently has the highest drug overdose death rate in the nation.

$3.6 Billion

That’s what raising the minimum wage in California would eventually cost taxpayers per year in higher pay for government employees, legislative analysts determined.

DECLARATIONS Drone Ban

“That shows how progressive we are. The whole nation is aware of the importance of implementing a drone policy.”

— Augusta, Ga., Commission member Bill Lockett on the city’s recent ban on drones over city gatherings. Augusta signed the ban into law March 30 for drone flights over areas where 100 or more people are gathered or could gather. It was passed in time for the one of the nation’s largest sporting events — The Masters golf championship — held annually in April in Augusta.

Uninsured State Vehicles

“In essence we’re driving uninsured cars.”

— Illinois state Rep. Bill Mitchell, a Republican, says the state is not paying on claims resulting from collisions with state-owned vehicles. Mitchell has called for pulling state-owned vehicles off the road until the Legislature sets aside money for settlements. There are around 225 claims worth about $615,000 on hold, according to the Department of Central Management Services.

$25,000

The amount a jury awarded to Seth Gruhn, a Grand Island, Neb., letter carrier who was bitten by a dog at a home where he was delivering mail. The jury ruled against residents, David Hernandez and Candida Rivera, whose dog bit the letter carrier’s right arm, according to Gruhn’s lawsuit against the pair.

15

The number of years in prison to which an Arkansas man, Cody Martin, was sentenced for two counts of insurance fraud. Martin, 29, pleaded guilty in Pulaski County Circuit Court in January to two counts of insurance fraud involving making a false claim in 2011 in relation to an all-terrain vehicle, and providing a judge with an altered insurance card in 2012. Both were Class D felonies.

www.insurancejournal.com

Fortified Model Home

1,901,864 The number of home insurance policies that were in force in Massachusetts as of 2014, the most recent year for which full data is available, according to the annual Home Insurance Report published by the Massachusetts Division of Insurance earlier this year. The figure included 217,183 condominium policies, 1,451,027 traditional homeowners policies and 233,654 tenant/ rental policies.

“Last year, we had nearly 800 tornadoes, hailstorms and high windstorms, which caused millions and millions of dollars in damage. We simply cannot keep rebuilding communities in the same places in the same ways and expect a different result.”

— Oklahoma Insurance Commissioner John D. Doak in a statement announcing that the first Insurance Institute for Business & Home Safety (IBHS) FORTIFIED Home utilizing its high wind and hail standards will be built in Tulsa in the coming months. Tulsa Partners and the Tulsa Habitat for Humanity are involved in the project.

Donor Disfigurement

“We don’t want people to stop donating.

This lawsuit is about informed consent.”

— Las Vegas attorney Gregory Coyer represents the daughters of Judith Bennet, who say their mother’s corpse was disfigured by an organ donor procedure. Coyer has argued that they were misled about the procedure.

Clear Guidelines

“When someone gets a tooth out and only needs medication for three days, why are they sent home from the doctor’s office with 30 Percocet?”

— U.S. Sen. Kirsten Gillibrand, D-N.Y., said in describing how some medical providers are over-prescribing opioids for acute pain.

Gillibrand has introduced a bill that would require the Centers for Disease Control and Prevention to issue clear guidelines to safely prescribe opioids for common types of acute pain.

April 18, 2016 INSURANCE JOURNAL-NATIONAL | 9

NATIONAL COVERAGE

News & Markets Employee Vs. Contractor Debate to Get Even Hotter: RIMS

By Don Jergler

T

he employee vs. contractor debate has the potential to have a major impact on the insurance industry, according to a pair of experts speaking on the topic at a recent conference in San Diego, Calif.

It’s estimated there are 10 million independent contractors in the U.S. and that 10 percent of those people are misclassified, according to John Zeigler, an attorney with Marshall Dennehey Warner Coleman & Goggin.

“That’s a huge number of people out there who are working as independent contractors but likely are misclassified,” he said, noting that federal and state governments could swoop in with new rules and regulations. “The reality is the pressure on the government is becoming that much greater.”

Zeigler and Stephanie Watts, resolution manager at Gallagher Bassett, held an education session titled “The War on Employee Misclassification: Risks and Costs to Employers and Insurers,” at the annual RIMS conference for risk management and insurance professionals.

In the session held by Zeigler and Watts, the employer vs. contractor cloud that has arisen by way of the gig economy explosion has created an “uneven playing field” where one company does things one way and the other company another way.

10 | INSURANCE JOURNAL-NATIONAL April 18, 2016

It’s also made protections for benefits, including workers’ compensation, uneven for workers, and has created uncertain risks and exposures for insurers, they said.

They also outlined several tests federal and state governments are using to determine whether a worker is an employee or a contractor.

One such test was the U.S. Department of Labor’s economic realities test, which includes the consideration of the following factors: • The extent to which the work performed is integral to the employer’s business; • Whether the worker’s managerial skills affect his or her opportunity for loss; • The relative investments in facilities and equipment by the worker and employer; • The worker’s skill and initiative; • The permanency of the worker’s relationship with the employer; • The nature and degree of control by the employer.

The last one has been key in many legal battles that unfolded in many states.

“Ultimately when the courts are looking at this they are looking at the right to control and the actual control exercise,” Zeigler said. “That really, in many respects, is the absolute key factor.”

Other federal government entities with independent contractor tests include the

Internal Revenue Service, which includes behavior control, financial control and the relationship of the parties, and the Equal Employment Opportunity Commission.

Many states have their own tests.

A popular test for many states uses three factors: • Is the employee free from directions and controls?

• Is the work performed outside the usual course of business?

• Is the individual customarily engaged in independently established trade, occupation, profession or business as the involved service performed?

The presenters cited Alexander Vs. FedEx Ground in which the California 9th Circuit Court ruled in 2014 that drivers were not independent contractors despite drivers owning their own vans and being allowed to set their own routes.

The court in its ruling used several factors, most notably control.

“The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards,” the ruling states. “FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent.”

“At the end of the day FedEx took a big hit here,” Zeigler said.

With decisions like this being made all over the U.S., vigilance is becoming increasingly important, Watts said.

“It starts at the bottom,” Watts said. “It starts with the agents and brokers writing these policies incorrectly.”

Zeigler advised paying close attention to a topic that he believes will only become more important to businesses and insurance professionals in the future.

“You can look at the patterns, you can look at the trends, you need to look and see where it’s going,” Zeigler said. www.insurancejournal.com

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News & Markets Government Task Force Will Examine Massive California Natural Gas Leak

A

new U.S. government task force will look into the country’s biggest ever accidental release of methane, which occurred over several months in Los Angeles, Calif., hoping to prevent future leaks of the potent greenhouse gas from storage wells, the Obama administration said.

The Interagency Task Force on Natural Gas Storage Safety to look at the leak at the Aliso Canyon leak will be chaired by officials from the Department of Energy and the Department of Transportation’s pipeline safety office.

A months-long leak at the Aliso Canyon storage field made scores of people ill and forced more the temporary relocation of more than 6,600 households from the northern Los Angeles community of Porter Ranch.

Scientists said the global warming potential of the release, which began last October and was not plugged until February, was equal to the annual carbon emissions of nearly 600,000 cars.

Aliso Canyon, owned by Southern California Gas Co. a division of Sempra Energy, is the country’s fourth largest gas storage field. The utility has minimized the extent of the greenhouse gas impact of the leak, saying the release represented less than 1 percent of the state’s entire annual greenhouse gas emissions.

Copyright 2016 Reuters.

Nevada Donor Network Sued

by Family with Claims of Fraud

T

hree sisters have filed a lawsuit against the Nevada Donor Network claiming the nonprofit was misleading when a representative convinced them to allow tissue to be harvested from their mother.

Kristine Fagone and her sisters say when their mother died unexpectedly, the Nevada Donor Network called to ask if it could harvest tissue from her body despite Judith Bennett not being a registered organ donor.

Fagone said they planned an open-casket funeral and a donor network representative promised the procedure would not be noticeable, but when the funeral came, Fagone said her mother’s body was “substantially disfigured.”

Fagone and her sisters have filed a lawsuit claiming fraud, intentional infliction of emotional distress and mishandling of a decedent’s remains.

Donor Network attorney Robert McBride would not comment on pending litigation.

Fagone and one of her sisters have removed their names from the donor registry as a result of their experience with their mother.

The third sister was not a registered donor.

According to the Nevada Donor Network, the state has more than 887,000 registered donors, and 553 Nevadans out of 121,859 Americans are waiting for a transplant.

Copyright 2016 Associated Press.

$5M Deal Reached Between California and TV Component Makers

Utah Employers Must Accommodate Breast-Feeding Workers

C

U

alifornia Attorney General Kamala Harris has reached a nearly $5 million settlement with electronics manufacturers accused of fixing prices.

Harris’ office announced the deal with LG, Hitachi, Panasonic, Toshiba and Samsung in early April. The companies were accused of fixing prices on Cathode Ray Tubes from 1995 to 2007. The tubes were used on computer monitors and television screens.

Harris’ office said the companies did not acknowledge any wrongdoing as part of the settlement. Californians who purchased at least one television or computer between 1995 and 2007 are eligible to receive at least $25 each. They have until June 30 to file claims at crtclaims.com.

Copyright 2016 Associated Press.

W2 | INSURANCE JOURNAL-WEST April 18, 2016

tah is joining more than a dozen states to require businesses to offer breast-feeding and pregnant employees accommodations such as extra breaks during work.

Republican Gov. Gary Herbert signed a law earlier this month that makes it a requirement for employers with 15 or more workers. It does not require businesses to allow employees to bring their children to work to breastfeed.

The new rule comes on the heels of a law Utah passed in 2015 that made it illegal to discriminate against pregnant and breast-feeding women at work.

Copyright 2016 Associated Press. www.insurancejournal.com

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People Gary Petrosino

Sandy Harvath

Brian Sandy

Erin Syring

Gary Petrosino joined Lockton as chief operating officer of the global insurance broker’s Pacific operations in the U.S. Petrosino will be responsible for leading a team of more than 500 associates in the California offices of Los Angeles, San Francisco, San Diego, Encino, Irvine and San Jose.

Petrosino succeeds Lenny Fodemski. Fodemski was promoted to a new role as an executive vice president in Lockton’s holding company. He will serve as a business advisor to Lockton operations across the U.S. Petrosino previously spent 37 years at Chubb Group of Insurance Cos., most recently as executive vice president and Western U.S. field operations officer. He started as a marine underwriter, working in New York City, Sao Paolo, New Haven, and Long Island. He has led branch offices for Chubb and been the senior vice president for the Latin American Zone.

Kansas City, Mo.-based Lockton is a privately held independent insurance broker.

Denver-based independent insurance broker IMA Inc. promoted three people to leadership posts.

Sandy Harvath was promoted to IMA of Colorado president, Brian Sandy is now president of IMA subsidiary Signature Select, and Erin Syring is now in the newly created position of executive vice president of operations for IMA. Harvath as IMA of Colorado president and will be responsible for the region’s overall performance.

She has nearly 30 years of insurance experience.

Harvath joined IMA in 2003. She was most recently senior vice president of commercial lines for IMA’s Colorado market.

Sandy, as president of Signature Select, will oversee six markets across the country and lead coverage responsibilities for high-net-worth individuals, property/casualty insurance for small businesses throughout the Midwest and the overall performance of the IMA subsidiary.

Sandy previously led the Special Risk division of IMA. In addition, he served as the director of executive risk solutions. Sandy began his insurance career with Aetna in 1989, and served as a branch manager of commercial executive liability for Travelers in the Denver regional office before joining IMA in 2003.

Syring is responsible for resources in Denver, Dallas, Kansas City and Wichita.

Syring joined IMA in 2012 and managed IMA commercial lines in Wichita and Kansas City. Syring previously worked for a large national insurance carrier as well as in private practice as an attorney.

W4 | INSURANCE JOURNAL-WEST April 18, 2016

Boston Insurance Brokerage named Zachary Hicks vice president in the Denver Colo. office. will focus on environmental insurance.

Hicks previously was a senior environmental underwriter for Chubb Insurance Group.

Boston Insurance Brokerage is a wholesale commercial broker with offices in Boston, New York and Denver.

Real estate specialist Mark Dobbs has joined Alliant Insurance Services Inc. as vice president within the company’s real estate group.

Alliant also named Robert Schuhriemen senior vice president in its healthcare practice.

Los Angeles, Calif.-based Dobbs will focus on organizations with portfolios spanning various product types.

Dobbs’ background includes investment banking, real estate investment, insurance, risk management, and international business.

Dobbs was vice president within the construction and real estate group of a global insurance brokerage firm prior to joining Alliant. He also worked within the real estate industry as a senior investment consultant specializing in the multifamily market and within the investment banking sector in London.

Schuhriemen has 24 years of experience. He was a client executive with a global insurance brokerage firm before joining Alliant.

Newport Beach, Calif.-based Alliant provides property/ casualty, workers’ compensation, employee benefits, surety, and financial products and services.

Ted Brown has been promoted to executive vice president at Lockton’s Mountain West operation in Denver, Colo.

Brown focuses on structuring solutions to optimize clients’ total cost of risk in the real estate, development, construction, and private equity industries.

Brown has been with Lockton for more than nine years.

Kansas City, Mo.-based Lockton is a privately held independent insurance broker.

EPIC Insurance Brokers & Consultants has named Penny Miller vice president in the firm’s employee benefits consulting team. She will be based in San Francisco and report to David Wiesner, regional director of employee benefits.

Miller has 25 years of employee benefits experience.

She was previously a principal at Mercer in San Francisco.

EPIC is a retail property/casualty and employee benefits insurance brokerage and consulting firm. www.insurancejournal.com

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News & Markets Half of Insurance Shoppers Giving Inaccurate Information

By Don Jergler

I

t seems there’s no shortage of financial dishonesty. Two recent surveys seem to indicate that many of us are perfectly willing to lie to save a few bucks.

A survey of 2,115 American adults from NerdWallet released in March shows a surprising number of people will tell a financial lie, and that many would even consider lying if it could result in federal prosecution.

A more recent survey from online insurance comparison shopping site CoverHound shows 51 percent of quoted insurance shoppers provided inaccurate information either by accident or intentionally.

That survey shows Baby Boomers were “more accurate than Millennials,” with 6 percent more youngsters providing inaccurate information than their older counterparts. More than 53 percent of Millennials in the survey provided inaccurate information, while Gen Xers came in at roughly 50 always accurately portraying whether they percent followed by Baby Boomers at 47 The CoverHound survey also found that have current insurance or previous insurpercent. women and men lied equally. Nearly the ance, or are currently insured as we call Keith Moore, CEO of CoverHound, same percent of male and female shoppers it,” Moore said. sidestepped a question about whether this omitted or provided inaccurate informa The survey shows homeowners were means Millennials are big, fat liars, but he tion either intentionally or by accident. was more than willing to give That finding flies in the his take on what this means for ‘Where the downside is for the shoppers, who face of one of the findings in carriers, agents and consumers. 51 percent of the time are giving inaccurate the NerdWallet survey, which The impact, at first glance at men are sometimes information, is it’s taking them a little longer shows least, is negligible for agents and twice as willing to tell a carriers using third-party infor- to go through a true comparison shopping financial lie as women. mation to validate any informa- process and finding the best rates available.’

Roughly 30 percent of men tion before binding, Moore said. in the NerdWallet survey were more accurate than renters, with renters “Where the downside is for the shopfine with lying to the IRS compared with being 4 percent more likely to omit or propers, who 51 percent of the time are giving 18 percent of women, and 25 percent of vide inaccurate information versus homeinaccurate information, is it’s taking them men were willing to lie for lower auto owners. a little longer to go through a true comparinsurance rates compared with 16 percent The biggest surprise in the survey for ison shopping process and finding the best of women.

Moore was the small difference between rates available,” he said.

Twice as many men (16 percent vs. 8 perlower and higher risk shoppers. Only 2 The most common misrepresentation cent) were fine with lying about their income percent more of the higher risk shoppers in the survey was the indication of prior on a credit card or loan application. omitted or provided inaccurate informainsurance, whether it was dates, price tion either intentionally or by accident range or the coverage amounts.

Hear a podcast on this survey with CoverHound CEO compared with lower risk shoppers.

“We’re seeing that consumers are not Keith Moore on InsuranceJournal.tv W6 | INSURANCE JOURNAL-WEST April 18, 2016

www.insurancejournal.com

WEST COVERAGE

News & Markets California Workers’ Comp Committee Votes for Lower Mid-Year Filing

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he governing committee of the California Workers’ Compensation Insurance Rating Bureau voted unanimously in early April to authorize the WCIRB to submit a mid-year pure premium rate reduction filing to the California Department of Insurance The filing will propose a July 1 average advisory pure premium rate of $2.30 per $100 of payroll, which is 10.4 percent lower than the corresponding industry average filed pure premium rate of $2.57 as of Jan. 1 and 5.0 percent less than the insurance

commissioner’s approved average Jan. 1 advisory pure premium rate of $2.42.

The governing committee’s decision was based on the WCIRB actuarial committee’s analysis of insurer loss and loss adjustment experience as of Dec. 31, 2015, which was reviewed at public meetings of the actuarial committee held on March 22 and April 5.

The actuarial committee noted that allocated loss adjustment expense in the

post-workers’ comp reform environment is emerging higher than projected and the count of liens increased sharply in 2015.

Cumulative trauma claims continue to increase, particularly in the Los Angeles region, according to the committee.

Despite these upward pressures on system costs, the governing committee believed that lower frequency, lower medical severity and favorable loss development warranted a reduction in the industry average pure premium rate as of July 1.

Oregon Considers Renewal of Lloyd’s Wildfire Insurance Policy

O

regon is considering another year of insurance coverage to help pay for catastrophic wildfire seasons.

British insurance giant Lloyd’s is offering the state another year of coverage despite three consecutive years of expensive, drought-fueled wildfires.

The policy could protect the state from financial problems if 2016 is another expensive year for firefighting. The policy would also be available to private landowners.

Oregon fire officials and landowners would share the $3.5 million premium and up to $50 million deductible before Lloyd’s contributes up to $25 million. The premium is down $300,000 from last year.

Last year, the state nearly lost its coverage for the first time in four decades after maxing out its policy in 2013 and 2014. The 2015 Oregon fire season was bad enough to trigger federal reimbursements that covered the cost for most severe fires.

Oregon still needs to pay off $10 million in fire costs from last season.

State lawmakers have expressed interest in creating a fund for firefighting and finding money for it. It could hold as much as $60 million.

Sen. Bill Hansell, a Republican from Athena, says he’d sponsor a bill proposing such a trust fund, but he wants to see if

there’s a way to protect the fund from being used on other programs when money is tight.

“A trust fund, I can support that. I would. And I would be happy to introduce it,” Hansell said, adding, “I would want protections on it so that it couldn’t be robbed.”

Copyright 2016 Associated Press.

“There is little success where there is little laughter.”

-Andrew Carnagie

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News & Markets California Court Says Employers Can’t Deny Workers Seats

E

mployers cannot deny a worker a place to sit just because they prefer the person stand, and they must consider the employee’s work station, not their overall duties, when determining whether to provide a seat, the California Supreme Court said in early April.

The court’s opinion stemmed from lawsuits brought by cashiers at the CVS drugstore chain and tellers at Chase Bank who said they were wrongly denied a place to sit while working. Experts called the opinion a victory for the cashiers and tellers.

The ruling is aimed at clarifying state labor regulations that require employers in California to provide workers with “suitable seats” when the nature of their work reasonably permits the use of seats.

CVS and Chase Bank argued the rules require a holistic approach that determines the nature of employees’ work by considering the entire range of tasks they perform.

In CVS’ case, cashiers also stock shelves and perform other tasks that require them to stand. The company’s holistic approach would allow CVS to classify their jobs as

Integrity

Service

“standing jobs” and deny them seats while working, the California Supreme Court said.

But the court rejected that interpretation, saying it ignored the “duration of those tasks, as well as where, and how often, they are performed.” It instead called for an assessment of employees’ tasks and duties at particular work stations, such as

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a cash registers or teller windows, when determining whether they should get a place to sit.

The court did find that some situations might make seating at work unfeasible, like if it interferes with standing tasks or affects overall job performance. CVS and Chase had argued employees provide better customer service while standing.

Suzanne Alexander, a spokeswoman for JP Morgan Chase, declined to comment.

CVS Health spokesman Michael DeAngelis said CVS was pleased with the California Supreme Court’s ruling. The company’s policies are consistent with the “long-understood, reasonable interpretation of the law” that employers can consider factors such as their desire to provide prompt and efficient customer service when deciding whether seating is appropriate.

The CVS and Chase Bank lawsuits are now before the 9th U.S. Circuit Court of Appeals. That court asked the California Supreme Court to determine whether each task employees perform must be evaluated to determine whether it qualifies for a seat.

The 9th Circuit also asked whether the employer’s judgment about whether the employee should stand must be taken into consideration.

Copyright 2016 Associated Press. www.insurancejournal.com

NATIONAL COVERAGE

News & Markets Survey: Revenue Up, Independent Agents Seeking New Carriers

I

ndependent insurance agents continue to grow and want to grow more with the help of new carrier appointments.

This is one of the initial findings of a new national survey of agents conducted by Channel Harvest Research and sponsored

by Insurance Journal. The study, “The Carrier Relationship: What Matters Most to Agents & Brokers,” is the ninth in an annual series examining agents’ views on property/casualty insurers and various marketplace issues.

Revenue Is Up 2015 was a good year for independent agents: Two-thirds report their firm’s revenue was higher in 2015 than it was in 2014.

In fact, 44 percent of agents — better than two in five — say revenue increased by 5 percent or more.

Another 16 percent say their agency’s revenue was about the same in 2015, and just 12 percent report a decrease in agency revenue.

New Carriers Wanted Agents want to build on their 2015

growth by adding new carriers.

Most agents who work in personal lines say they are interested in adding new carriers. Thirtyseven percent are “very interested” and 40 percent are “somewhat interested.” Altogether, more than three in four personal lines agents are interested in adding new personal lines carriers over the coming year. Just 23 percent say they are not interested (9 percent “somewhat uninterested” plus 14 percent “very uninterested”).

Similarly, most agents who work in commercial lines want to add new carriers: 37 percent say they are “very interested,” and 41 percent say they are “somewhat interested,” for a total of 78 percent — again, three in four — who are interested in adding new companies. Just 22 percent of agents say they are not interested in adding new commercial lines carriers (11 percent “somewhat uninterested” plus 11 percent “not at all interested”).

To date, more than 1,500 independent

agents have taken the survey.

The full Channel Harvest report, due out in late April, will explore how carriers can capitalize on agents’ interest in adding new companies. It also will report agents’ ratings and rankings of the carriers with which they presently do business, and examine views on a variety of issues.

For a copy of the full report, contact John Campbell at john@channelharvest.com.

Weather Incidents Top Homeowners Insurance Claims

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eather incidents account for more than half of all homeowners insurance claims, with wind, pipes freezing and bursting, roof and flashing leaks and ice dams among the major causes of home damage during weather events.

Fire-related claims are the most expensive, however.

That’s according to The Travelers Companies Inc., which released information identifying the most common and costliest homeowners claims based on a review of its U.S. homeowners insurance claims made from 2009 to 2015.

The five most common causes of home claims are: • Exterior wind damage: 25 percent of all losses.

• Non-weather-related water damage (e.g., www.insurancejournal.com

plumbing or appliance issues): 19 percent.

• Hail: 15 percent.

• Weather-related water damage (e.g., rain, melting ice, snow): 11 percent.

• Theft: 6 percent.

“Any number of things can go wrong with a home, and it’s impossible to predict them all,” said Pat Gee, senior vice president, Personal Insurance Claim, Travelers. “But if consumers focus on these particularly common risks and take preventive steps and perform routine maintenance, it may help lessen the likelihood of damage.”

While weather-related claims are most common, fire causes the most

expensive claims, accounting for nearly one quarter of the total claim costs.

Fires are often caused by appliance and machinery misuse or failure, electrical problems, including wiring or outlet issues, and cooking.

Hail, wind, and plumbing or appliance leaks followed fire as the most expensive claims.

Water Damage There are typically two main causes of water damage — weather events, such as rain or snow melt, and other issues, such as pipes bursting or leaking. By comparison, more water damage is caused by events such as a pipe bursting, or plumbing or appliance issues, than from the weather.

April 18, 2016 INSURANCE JOURNAL-NATIONAL | 11

NATIONAL COVERAGE

Business Moves

Arthur J. Gallagher, Joseph Distel, Continuum Solution Arthur J. Gallagher & Co. has acquired Joseph Distel & Co. Inc. in Farmington, Conn. Terms of the transaction were not disclosed.

Founded in 1955, Joseph Distel & Co. is a managing general agent and wholesale insurance broker that specializes in the transportation industry.

Ken Distel and his associates will continue to operate from their location in Farmington under the direction of Joel Cavaness, president of Risk Placement Services Inc., a subsidiary of Arthur J. Gallagher & Co. In addition, Arthur J. Gallagher Risk Management Services Inc., the retail property/casualty brokerage operation of Arthur J. Gallagher & Co., has acquired Continuum Solutions Ltd. in New York City. Terms of the transaction were not disclosed.

Continuum Solutions’ Managing General Partner and Founder Robert A. Perlman and his associates will operate under the direction of Patrick Kennedy, regional executive vice president of Gallagher’s New York City office.

Carlyle Group, Wholesale Trading, JenCap Wholesale Trading Co-Op Insurance 12 | INSURANCE JOURNAL-NATIONAL April 18, 2016

Services, a wholesale brokerage based in New York City, announced that its assets will be acquired by private-equity giant Carlyle Group. Terms of the transaction were not disclosed.

Wholesale Trading Co-Op Insurance Services will be renamed Wholesale Trading Insurance Services LLC (WTIS). Its approximately 40 employees will all stay on. The firm was previously owned by its management team and external private investors.

WTIS will become part of Carlyle Group’s JenCap Holdings LLC in New York City and lead its transactional wholesale brokerage operation.

John F. Jennings, who has been serving as president and CEO of Wholesale Trading Co-Op Insurance Services, will be named president and CEO of JenCap Holdings. Kristopher Bauer, co-head of Casualty Practice at Wholesale Trading Co-Op Insurance Services, will be named president of WTIS. JenCap Holdings will serve as a consolidator of specialty insurance distribution and program management businesses, and will continue to operate from its current locations in New York City, San Francisco, Atlanta and Princeton, New Jersey.

Risk Strategies, Maggs & Associates Risk Strategies Co., a privately held, national insurance brokerage and risk management firm based in Boston, has acquired Maggs & Associates in Schenectady, N.Y. Terms of the transaction were not disclosed.

Established in 1987, Maggs & Associates is a brokerage specializing in serving the insurance placement and risk mitigation needs of colleges and universities.

Maggs & Associates’ owner and principal, Thomas Maggs, along with the firm’s approximately six staff members, will join Risk Strategies and continue to operate from their Schenectady location under the name Maggs & Associates, a Risk Strategies Co.

Risk Strategies has offices in 22 locations across the United States and more than 550 employees.

Confie, Axiom Insurance Confie, a national provider of personal and commercial lines insurance, has entered the Massachusetts market with the acquisition of Axiom Insurance Agency based in Springfield. Terms of the transaction were not disclosed.

Founded in 2000 and specializing in personal lines insurance, Axiom Insurance Agency has five locations in central Massachusetts. Axiom Insurance Agency’s 18 employees will all join Confie as part of the transaction.

Established in 2008, Confie is a California-based national insurance distribution company primarily focused on personal lines and small commercial insurance.

Marsh, Corporate Consulting Service Marsh & McLennan Agency LLC, the middle market agency subsidiary of Marsh, has acquired Corporate Consulting Services Ltd., a New York City-based insurance brokerage and human resource consulting firm. Terms of the transaction were not disclosed.

Established in 1989, Corporate Consulting Services specializes in providing employee benefits, retirement planning, and human resource consulting services.

Corporate Consulting Services generates $6 million in annual revenues and has 20 employees, all of whom are joining Marsh & McLennan Agency’s Northeast region.

Corporate Consulting Services will continue to operate out of its New York City office under the leadership of its President and CEO Grant Dougherty. It will operate under the Marsh & McLennan Agency name.

R-T Specialty, Hartan Brokerage R-T Specialty LLC, the wholesale brokerage unit of Ryan Specialty Group LLC in Chicago, has reached an agreement to acquire substantially all of the assets of Hartan Brokerage, a wholesale insurance continued on page 14 www.insurancejournal.com

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As a coverholder at Lloyd’s, we can now provide touring musicians, special event producers, equipment rental companies, venue owners, and large corporate event producers up to $5 million of additional General Liability coverage, either on an annual or short-term basis, with minimum rates starting at $750 per million dollars of coverage over your existing $5-million umbrella policy.

In an era of weather, security, and fire-related tragedies, your clients need that extra protective General Liability coverage that Take 1 is offering. For more information, visit us at take1insurance.com or call 800.856.7035.

Take 1 or take your chances. © 2016 Take1 Insurance Take1 is a division of U.S. Risk, Inc., a specialty lines underwriting manager and wholesale broker headquartered in Dallas, Texas.

Operating 12 domestic and international branches, it offers a broad range of products and services through its affiliate companies.

NATIONAL COVERAGE

Business Moves continued from page 12 brokerage operation based in New York City. Terms of the transaction were not disclosed.

Established in 1986, Hartan Brokerage is a wholesale broker and managing underwriting agent. Hartan Brokerage President Ed Pray and the firm’s approximately 30 employees will all join R-T Specialty as part of the transaction. Pray will serve as president of RT NY, the R-T Specialty office located in New York City.

Founded in 1889, Pioneer Bank is the only mutual bank serving New York’s Capital Region, the metropolitan area surrounding Albany. Pioneer Bank said this acquisition represents the bank’s first foray into the insurance brokerage business.

Pioneer Bank has approximately 240 employees and 21 branches throughout the Capital Region.

Element Risk Management, Barnett Insurance Pioneer Bank, Anchor Agency Element Risk Management, an indepen Pioneer Bank, based in Troy, N.Y., has dent agency based in West Chester, Pa., reached an agreement to acquire Anchor with an additional office in Bel Air, Md., Agency Inc., an independent insurance has acquired Barnett Insurance Inc., an agency in Albany, N.Y. Terms of the transacindependent agency in Pittsburgh. Terms of tion were not disclosed. the transaction were not disclosed.

Established in 1960, Anchor Agency will Founded in 1957, Barnett Insurance keep its name and continue serving its will continue to operate at its Pittsburgh existing client base from its Albany localocation under the name Element Risk tion. Anchor Agency’s 23 employees will Management. Barnett Insurance’s two Negley IJad5-16.pdf 1 3/28/16 10:20 AM join Pioneer Bank as part of the transaction. staff members will join Element Risk

Management as part of the transaction.

Established in 2011, Element Risk Management focuses on personal lines, plus real estate & construction, sports & recreation, manufacturing and long haul trucking in commercial lines. Element Risk Management has 12 employees.

CBIZ, Savitz CBIZ Inc., a professional business services firm based in Cleveland, has acquired the Savitz Organization in Philadelphia.

Terms of the transaction were not disclosed.

Founded in 1968, Savitz is an employee retirement and health and welfare benefits firm that provides actuarial consulting and administration outsourcing services. Savitz has 110 employees and recorded approximately $20 million in revenue in 2015.

CBIZ provides financial services and employee services through more than 100 offices in 33 states.

What’s currently trending in behavioral healthcare is on our radar, too.

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Management & Professional Liability

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SPOTLIGHT

10 Things to Know About Social Services (Child Care) Average monthly child care costs for a onechild household range from $344 in rural South Carolina to $1,472 in Washington, D.C. The median hourly wage for child care workers in the U.S. in 2014 was $10.31, 39.3 percent below the $17 median hourly wage of workers in other occupations. — Economic Policy Institute

Sexual abuse claims are a child care operation’s biggest exposure. A good child care insurance program should ALWAYS include sexual abuse and molestation liability insurance. — Riley Binford, executive vice president, Charity First Insurance Services Inc.

The three-person rule should also apply in vehicles providing transport for the children (field trips, etc.) — Riley Binford, executive vice president, Charity First Insurance Services Inc. Underwriters for this class will want to know: What is the ratio of attendants to children? Are there criminal background checks on all employees?

Are there previous or pending allegations of sexual or physical abuse? — Sharron Johnson, senior underwriter, Monarch E&S Insurance Services

Adult males should not be allowed to accompany children to the bathroom. — Riley Binford, executive vice president, Charity First Insurance Services Inc.

A child care operation should practice the “three-person” rule, where there are always two adults present with the child or children.

The two adults preferably would be two women; second choice — a woman and a man. The two adults should never be two men. — Riley Binford, executive vice president, Charity First Insurance Services Inc.

16 | INSURANCE JOURNAL-NATIONAL April 18, 2016

Eleven million children under the age of five spend an average of 36 hours per week in some form of child care in the United States; 35 percent are in center-based care; other care options include home-based child care operations, relatives and friends. — “Parents and the High Cost of Child Care: 2015,” Child Care Aware of America

Whether or not a child care facility has swimming pools, hot tubs or wading pools is important to underwriters. Some questions to ask: Are hot tubs and pools in compliance with the federal Virginia Graeme Baker Pool and Spa Safety Act? Are hot tubs and pools fully fenced with a self-latching gate?

Is there life safety equipment poolside or is there a diving board or slide? Are there any wading pools? — Sharron Johnson, senior underwriter, Monarch E&S Insurance Services An underwriter will want to know: if a facility is a 24-hour operation; if it provides for autistic or special needs children; or if there are any inflatable devices or trampolines on the premises. — Sharron Johnson, senior underwriter, Monarch E&S Insurance Services

Regarding transportation: Do they participate in any off premises activities? Does the facility transport children; if so, do they operate a vehicle that is larger than a 15-passenger vehicle? — Sharron Johnson, senior underwriter, Monarch E&S Insurance Services

www.insurancejournal.com

17

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NATIONAL COVERAGE

News & Markets P/C Direct Premium Written Up 2.5 Percent in 2015

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irect premium written (DPW) for property/casualty (P/C) insurance companies continues to increase, albeit gradually.

At year-end 2014, more than $570 billion of DPW was reported. For 2015, total DPW for all P/C insurers aggregately increased 2.5 percent over 2014, an increase of $14.4 billion.

Nearly 90 percent of this premium growth is attributed to the

By Douglas A. Powell top 25 P/C insurers in terms of growth.

For the 12 months ending Dec. 31, 2015, P/C companies comprising the top 25 insurers leveraged their experience and increased their DPW 11.3 percent over 2014, or $12.8

billion. This continues the top 25 insurers’ impressive display of premium growth and financial stability. In contrast, the remainder of the industry reported an increase in DPW of less than 1 percent, or $1.6 billion, year-over-year.

It is important to note that while increasing DPW, P/C companies have aggregately maintained a sufficient level of policyholders’ surplus (PHS). One measure that indicates P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without considering the effect of reinsurance. Since 2010, this ratio for P/C companies has remained stable at approximately 70 percent.

Although the market continues to exhib-

it signs of firming and DPW continues to increase, P/C insurers should not expect a traditional hard market in the near future.

More importantly, it is possible that the double-digit premium growth experienced in the historical hard market cycles may have created unrealistic premium growth expectations for this current recovery.

It is more realistic that expectations should relate to gradual, stable growth.

If the industry continues to hold to its 10-year historical pattern, growth in 2016 would again result in the highest level of year-end DPW ever reported by the P/C industry.

Powell is a senior financial analyst with Demotech Inc., Insurance Journal’s official research partner.

Email: dpowell@demotech.com.

Top 25 Property/Casualty Companies Based Upon Dollar Amount of Direct Premium Written (DPW) Growth Year-to-Date Results Dec. 31, 2015 versus Dec. 31, 2014

Company Name

DPW 12/31/2015

DPW 12/31/2014

$ Growth

% Growth

Allstate Northbrook Indemnity Co. Allstate Fire and Casualty Insurance Co. American Home Assurance Co. Liberty Insurance Underwriters Inc. State Farm Mutual Automobile Insurance Co. Continental Casualty Co. GEICO General Insurance Co. Zurich American Insurance Co. Wesco Insurance Co. Allstate Vehicle and Property Insurance Co. USAA General Indemnity Co. American Bankers Insurance Co. of Florida LM General Insurance Co. GEICO Casualty Co. State Farm Fire and Casualty Co. GEICO County Mutual Insurance Co. Ohio Security Insurance Co. USAA Casualty Insurance Co. Standard Fire Insurance Co. Auto-Owners Insurance Co. Nationwide Agribusiness Insurance Co. Nationwide General Insurance Co. Farmers Insurance Exchange Liberty Insurance Corporation Government Employees Insurance Co. Top 25 P/C Companies by DPW Growth All Other P/C Companies Total

$1,797,953,602 $6,987,428,733 $575,534,571 $1,573,028,797 $34,588,540,295 $6,375,416,729 $7,910,456,898 $6,161,913,817 $2,086,948,271 $1,474,604,228 $2,811,299,487 $3,216,931,085 $2,407,623,003 $3,239,766,178 $19,149,206,049 $696,440,376 $1,263,200,819 $5,222,821,998 $1,629,133,277 $2,687,546,986 $1,283,489,114 $903,882,261 $3,596,689,805 $2,688,955,843 $5,034,131,012 $125,362,943,234 $459,315,718,475 $584,678,661,709

$479,911,937 $6,077,906,988 -$211,370,773 $803,178,762 $33,908,724,033 $5,758,297,913 $7,351,890,431 $5,618,429,222 $1,554,170,358 $944,316,241 $2,289,183,264 $2,717,875,596 $1,918,965,899 $2,760,589,273 $18,736,861,871 $312,629,995 $908,235,643 $4,872,219,217 $1,279,869,173 $2,347,133,943 $990,313,770 $622,843,844 $3,325,686,627 $2,427,416,869 $4,800,657,601 $112,595,937,697 $457,732,269,324 $570,328,207,021

$1,318,041,665 $909,521,745 $786,905,344 $769,850,035 $679,816,262 $617,118,816 $558,566,467 $543,484,595 $532,777,913 $530,287,987 $522,116,223 $499,055,489 $488,657,104 $479,176,905 $412,344,178 $383,810,381 $354,965,176 $350,602,781 $349,264,104 $340,413,043 $293,175,344 $281,038,417 $271,003,178 $261,538,974 $233,473,411 $12,767,005,537 $1,583,449,151 $14,350,454,688

274.64% 14.96% N/A 95.85% 2.00% 10.72% 7.60% 9.67% 34.28% 56.16% 22.81% 18.36% 25.46% 17.36% 2.20% 122.77% 39.08% 7.20% 27.29% 14.50% 29.60% 45.12% 8.15% 10.77% 4.86% 11.34% 0.35% 2.52%

Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from an SNL product.

The NAIC and SNL do not endorse any analysis or conclusion based upon the use of its data. www.insurancejournal.com

April 18, 2016 INSURANCE JOURNAL-NATIONAL | 19

NATIONAL COVERAGE

News & Markets K2 Acquires MGA; Launches Comp, Accident Programs with QBE

By Andrew Simpson

P

rogram specialist K2 Insurance Services (K2) has acquired New Jersey-based High Point Underwriters, a managing general agency (MGA) specializing in workers’ compensation alternatives. K2 also launched a nationwide workers’ compensation program with another Kentucky program manager and QBE North America.

High Point Underwriters specializes in occupational accident and workers’ compensation products for independent contractors. Occupational accident insurance policies are an alternative to traditional workers’ comp policies. They are used by employers who opt out of the workers’ comp system in states such as Texas to provide benefits to workers injured or killed on the job. They are also used by some transportation companies to fund benefits for owner-operators who are independent contractors. The policies permit an employer to choose benefit amounts, liability limits, deductibles and other terms, often at lower cost than if they provided the benefits set by state workers’ comp laws.

David King, High Point’s CEO and lead underwriter, will remain with the firm along with Roman Atkielski, senior vice president, who has worked with King in underwriting this business for 15 years.

Concurrently with the acquisition, High Point is partnering with Midwestern Insurance Alliance and QBE North America to administer a combined national workers’ comp and occupational accident insurance program.

Louisville, Kentuckybased Midwestern Insurance Alliance, led by Marc Risen, is Patrick Kilkenny a national workers’ comp program administrator focused on the transportation industry.

The coverage will be provided through QBE North America companies on both an admitted and non-admitted basis.

High Point will also continue to write occupational accident insurance on behalf of Lloyd’s of London.

San Diego, Calif.-based K2 was formed in 2011 Bob Kimmel

by Bob Kimmel, chairman, and Pat Kilkenny, CEO, with investment firm Endeavour Capital. Kilkenny formerly ran and owned Arrowhead General Insurance, a general agency with more than $1 billion in written premiums. Kimmel served as executive vice president and MGA practice leader at Guy Carpenter, a division of Marsh & McLennan.

K2 acquired a majority stake in Midwestern Insurance Alliance in March, 2012. It was K2’s first investment. Later that same year, K2 invested in a new Texas MGA, Mission Select Insurance Services, which focuses on residential property.

Zurich Completes Acquisition of RCIS Crop Insurance Business

Z

urich American Insurance Co. said it has completed its acquisition of Rural Community Insurance Agency (RCIA) and its subsidiary Rural Community Insurance Co. (RCIC) from Wells Fargo Insurance for $700 million.

The two crop businesses, which are collectively known as Rural Community Insurance Services (RCIS), are among the country’s biggest crop insurance providers, recording approximately $1.9 billion in gross written premiums in 2015, or about 20 percent of the estimated $10 billion market.

RCIS will now operate as a stand-alone unit within Zurich N.A.’s Commercial Programs & Direct Markets business unit.

RCIS will continue to offer federal crop insurance programs and private crop insur20 | INSURANCE JOURNAL-NATIONAL April 18, 2016

ance products. RCIS has a network of more than 3,800 agents, conducting business in all 50 U.S. states. It continues to hold memberships with National Crop Insurance Services and the Crop Insurance and Reinsurance Bureau Inc. Zurich has been in the U.S. crop insurance business for more than 20 years, including a relationship with RCIS. The acquisition shifts its long-standing position

from a reinsurer into a 100 percent owner of an Approved Insurance Provider through the Federal Crop Insurance Program.

The Zurich-Wells Fargo transaction is one deal among a number that is reshaping the specialty crop insurance marketplace.

Last December, Cargill Inc. agreed to sell its crop insurance unit to Silveus Insurance Group for an undisclosed amount. Last August, OneBeacon Insurance Group exited the crop insurance business when it sold Climate Crop Insurance Agency to AmTrust Financial Services. Also, HCC Insurance Holdings Inc. agreed in 2014 to buy Producers Ag Insurance Group from CUNA Mutual Group, while Farmers Mutual Hail Insurance Co. of Iowa reached a deal to buy Deere & Co.’s crop-insurance unit. www.insurancejournal.com

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SPECIAL REPORT

Sports

By Andrea Wells

T

he health and fitness industry has exploded in recent years, a trend that experts expect will continue.

Gym memberships jumped 18.6 percent in the United States from 2008-2014. More than 54 million Americans belonged to at 22 | INSURANCE JOURNAL-NATIONAL April 18, 2016

least one of the 34,460 health clubs nationwide while total U.S. industry revenues increased 7.4 percent to $24.2 billion in 2014, according to the International Health, Racquet & Sportsclub Association, a trade association serving the global health club and fitness industry.

Jobs in the industry are expected to climb as well. According to the Bureau of Labor Statistics, fitness and recreational

sports centers employed 533,200 people in 2014, and jobs will grow another 8 percent by 2024.

According to Scott Grieco, president of middle market at The Hanover Insurance Group, the overall sports and fitness industry is an $800 million market that is projected to grow by 6 percent through 2018.

Smaller, studio fitness and personal fitness training facilities in particular have www.insurancejournal.com

“We’ve seen tremendous growth with the number of smaller health clubs and exercise studios as well as with individual fitness instructors,” he said.

Sadler, whose firm specializes in insuring sports and recreation industries, says there has been a “big movement” in the health and fitness sector away from traditional “expensive machinery” and toward more high-intensity, interval training and bodyweight exercises with minimal equipment.

That trend is contributing to the growth in the studio fitness market.

Jennifer Urmston Lowe, national accounts manager at Sports & Fitness Insurance Corp., says the fitness industry has undergone a transformation in the past 10 years. “The traditional health club market has shrunk,” she said. “There are fewer big box (fitness clubs), but there are a lot more studios.”

Lowe has been insuring fitness facilities for about 18 years, but grew up in the fitness equipment manufacturing side of the industry. In her opinion, the birth of studio fitness facilities has changed the nature of the entire fitness industry.

“Manufacturers (of fitness equipment) are trying to market to these studios, but obviously, the studios are different risks than a traditional health club. I think carriers and programs like ours are trying to respond to that,” Lowe said.

seen steady growth.

“Whether it’s Pilates, yoga, personal training studios, or even CrossFit, smaller fitness facilities are becoming more commonplace in the industry,” Grieco said. “We have seen a shift toward more group-based training programs with personalization for each participant.”

John Sadler, president of Columbia, S.C.based Sadler & Company Inc., agrees. www.insurancejournal.com

Big vs. Small The nature of the fitness world is constantly in flux, she said, adding that fitness trends and the popularity of studio franchises come and go. “One grows really big and then maybe shrinks back a little, but then another one grows and then it may shrink back a little,” Lowe said. “It really started with Curves for women, then Anytime Fitness and Snap Fitness and then CrossFit, Barre, the cycle studios, and now Orangetheory is huge.”

Big box gyms have suffered since 2008,

according to Lowe, where studio fitness facilities have driven much of the market growth over the past seven years. One perk with the new trend, she said: “People tend to spend a lot more money in a studio than they would have spent in the big box gym.”

Another perk: studio fitness facilities are better risks than their bigger box siblings.

Lowe says studio fitness facilities don’t have the more concerning risk characteristics of their big brother counterparts, which makes them more attractive overall from an underwriting perspective in her view.

“One of the things to realize is that a lot of the exposures that are traditional to health clubs are not there in studios,” she said. Studio gyms generally do not have “wet areas” and some do not even have the locker rooms, according to Lowe. “They don’t have saunas and jacuzzis. They don’t have tanning beds. They don’t have a swimming pool. They don’t have (tennis/racquetball/basketball) courts. They’re a much different risk.”

Those differences make boutique studio gyms less risky to insure, she said. “The major exposure in any business is a slip and fall, almost always, even in the health club business. Wet areas are a slip and fall risk, steps (step machines) are a slip and fall risk, treadmills are a slip and fall risk,” she continued on page 24 April 18, 2016 INSURANCE JOURNAL-NATIONAL | 23

SPECIAL REPORT

Sports continued from page 23 said. “The studios eliminate the wet areas that are a source of slip and fall claims in traditional health clubs.”

But one downside, according to the AJ Morgan, area senior vice president at RPS Bollinger Sports & Leisure, is size.

“Small studio fitness businesses are cropping up all over the place. The good news is those are business opportunities from an insurance standpoint,” Morgan said. “The problem is that those businesses are not always lasting; so you see these small studios crop up but not all of them make it.”

Also, from a profitability standpoint, the small studio sector is small premiums, he adds. “Right now, we think the rates are not adequate for the losses we’re seeing in that area.”

Market Conditions The insurance market for sport and fitness entities — large and small — has been fairly healthy and competitive, the experts say.

“The market conditions are favorable,” said Sadler. Few standard carriers wrote business in this niche 20 years ago but over the past 10 years more and more carriers have entered. “Now, there are almost too many carriers chasing the limited premium volume in the niche,” Sadler said.

Currently, according to Sadler, profitable accounts are experiencing rate increases on general liability ranging from 0 percent to 8 percent. Excess accident policies are not driven as much by market cycles and the rates are much more closely correlated to individual account loss experience, Sadler said.

Exposures “The biggest exposures from a severity point of view are sex abuse and molestation, as well as concussion/brain injury,” Sadler said. “The frequency claims continue to be spectator injuries from slips/trips/falls and participant injury from lack of supervision or hazardous facility conditions.”

Concussions in sports, which is prominent in the media today, is a topic agents should discuss with current and potential 24 | INSURANCE JOURNAL-NATIONAL April 18, 2016

clients, says Mark Beck, senior vice president, Mass Merchandising Division, at K&K Insurance, which offers coverage for amateur sports teams, leagues, associations, camps, tournaments and other sports events.

“It’s particularly important for agents to make sure that the policies that they’re purchasing for their clients have the coverage that the clients are looking for,” Beck said. “If they are interested in protecting themselves against concussion claims, then the agent needs to be conscious of that and discuss that with the carriers, be it K&K or one of the others.”

Beck says concussion coverage in particular can vary by carrier. “We’ve seen in the marketplace that different companies are taking different approaches,” he said. “Some have outright exclusions for brain injuries, others are limiting it, and others are providing full coverage. Again, it’s just something the agent needs to be very conscious of.”

Beck says agents should pay close attention to coverage for allegations of sexual abuse or molestations when placing coverage for sports and fitness facilities because coverage may not be there to protect the insured for those allegations.

The concern over concussion related injuries could be driving change in the sport and fitness industry, according to Morgan.

“Kids are still playing sports, in fact more kids are playing sports, but now we’re seeing a lot of competition for those sports,” he said. “Football’s not growing and soccer may be leveling” while lacrosse on the other hand is still growing. “And depending on what insurer you talk to sports such as golf and even tennis are diminishing.”

But, Morgan says, there is growth in numbers and premiums and there’s also growth in businesses.

“I would say the number one thing I see, besides growth in studios, is growth in amateur sports and individual training businesses out there for specific sports,” Morgan added. That includes teams contracting with individual trainers to make their players better and stronger at their sport.

“Those businesses are definitely growing.”

Multi-Sport Facilities Brandon Schall, chief marketing officer and senior vice president of client services at American Specialty Insurance & Risk Services Inc., says another trend in the sports and fitness industry is the growth of multi-sport complexes.

“We’re seeing facilities trying to offer more rather than being specific to a singular focus. They’re really multi-purpose in scope,” Schall said. “Say 10 years ago you had a number of facilities that were indoor soccer facilities, and that was really their bread-and-butter. They offered soccer programming, but today those same facilities might have evolved into a sports training component. They might have batting cages in one area of the field. They may use it as an indoor golf driving range during the lunch hour or something like that. It’s really evolving.”

Some of these same facilities have expanded by adding a small sports bar and grill area. “So when you’re done playing your adult sports league, you might stick around with your buddies and have a couple beers,” he said. “So now you’ve got the liquor liability component to be aware of and underwrite.”

Multi-sport facilities often use subconwww.insurancejournal.com

tractors on site so agents should be aware of that exposure.

“Maybe you’ve got a subcontractor in there that uses an area of the facility; the insured sublets that space to a subcontractor,” Schall said.

“There’s definitely a continuing trend toward offering more appeal. Maybe there’s a turf field that could really be used for baseball practices, especially in the winter months, or batting cages at one corner of the facility to have an additional revenue stream. That space is really multi-dimensional.”

Waivers The real problem with the sports insurance industry right now is lawyers, said RPS Bollinger’s Morgan, laughing. “There used to be assumed risk in sports, and now it’s just always someone’s fault … from an insurance perspective.”

Signed liability waivers are the first line of defense, said Beck, although their effectiveness to hold-up in court depends heavily on geography.

“There’s sometimes a misunderstanding that waivers aren’t enforceable,” Beck said.

But enforceability depends on state and jurisdiction. “There are certain areas where it’s harder to enforce waivers, but they should be the first line of defense. There should be a waiver that you can point to that say, ‘Listen, you signed an agreement that says you understand there are risks involved with this.’” www.insurancejournal.com

Agents should make sure their clients understand that sports liability waivers are written properly and include all the right content, Beck adds. “That is where they should definitely consult a lawyer, because a lawyer/attorney is going to know that state’s particular nuances that are needed to make the waiver more likely to be enforced in any given situation.”

Beck even believes that it’s good practice to have all sports participants, even minors, sign liability waivers. “The parent or legal guardian is going to have to sign the waiver, but it’s still a good practice to have minors sign it as well. In many cases, it’s a little tougher to enforce a waiver that applies to a minor, because obviously the minor has until the age of maturity to still make claims.”

Morgan cautions that waivers are certainly not fool-proof in today’s litigious society but they help. “They’re helpful in some states for frivolous lawsuits, but if you’re going to do sports insurance, you call a lawyer and ask them whether they can get around a waiver when sued for a sports injury.”

It’s frustrating from a cost control standpoint when waivers don’t hold up in court, but it does happen, Morgan said. “We really see people looking to get a paycheck out of an injury that could have been expected as a result of entering a sport or a training session.”

Overall the market seems on track for future growth, said Hanover’s Scott. “This is a market that has significant upward potential given the additional focus surrounding the need to live healthier lifestyles and there’s a tremendous opportunity for agents who are looking to specialize in this industry.”

For Lowe, a fitness enthusiast herself, the sports and fitness insurance market is a great place to work.

“I’m passionate about fitness,” she said.

“Fitness can change lives, improve the health and fitness of our country. But to stay in business and to keep helping people, they have to have the right aspects of their business in place, too, and insurance is an important part of that.”

Is Football Safe? Issue Not Limited to NFL Players

A

recent article in the New York Times (March 24, 2016) said that the NFL’s concussion research was flawed once again calls in to question the safety of professional foot-

ball.

However, concussions and repetitive head injuries are not just experienced by pro players. In fact, more than three-quarters of the football players in the United States are under the age of 14 and they are just as — and perhaps more — susceptible to head injuries because their brains are still developing.

Should these three million youngsters be playing the sport?

“Most pro football players probably began playing the game as children, so it is imperative that we conduct more scientific research to fully understand the effects of repeated hits to the brains of children and teens,” said Joel Stitzel, Ph.D., chairman of the Wake Forest School of Biomedical Engineering and Science. “But completely banning children from playing football is not the best option. Team sports, including football, have many positive benefits for kids, so finding ways to make these sports safer should be our objective.”

Stitzel and his team at Wake Forest Baptist Medical Center are collaborating with researchers at Virginia Tech and two other universities on the largest and most comprehensive biomedical study of youth football players to date. The five-year project is being funded by a $3.3 million grant from the National Institute of Neurological Disorders and Stroke, part of the National Institutes of Health. The potential impact of this study is significant because of the large number of — more than three million — youth football players across the country. (Wake Forest Baptist Medical Center) April 18, 2016 INSURANCE JOURNAL-NATIONAL | 25

CLOSER LOOK

Entertainment Insuring a Lazy Saturday Afternoon: Insurance for Entertainment

W

hile predictive models may not always hold up as well as we hope, luckily the weather forecast did for this sunny Saturday. After a hard week in the office, I was taking my boys out for a day at the local carnival and a ballgame, and the closest thing we’d have to a vegetable was popcorn. Little did I know that the inquisitive minds of children would have me contemplating some of the unique

By William Carbone aspects of the insurance coverages used in these industries.

In general, insurance is governed by the law of large numbers, allowing for comparisons between insureds, standardized policy forms, and actuarial approaches. When it comes to the world of entertainment, this is often thrown out the window. Most coverages need to be tailored to the individual insured, and actuarial assumptions need to be re-evaluated given the unique business model of each insured. Industry benchmarks are typically non-existent. This creates a need for non-standard approaches when working in these fields.

On Long Island, traveling carnivals pop up in parking lots all summer long, attracting kids of

all ages and fans of Americana. On this sunny Saturday, I packed up the family and we headed down to the train station, the site of this weekend’s festival. My oldest son let us know definitively that our first stop would be the bouncy houses he loves so dearly. Much to our dismay, this particular carnival had all sorts of rides, games, and food, but did not have a single inflatable attraction. “Where is the bouncy house?!”

“Well, not all carnivals have the same rides,” I tried to explain.

This example highlights the difference between providing coverage for traveling carnivals, theme parks, and other one-off facilities compared with a franchised location. With few exceptions, each of these entertainment spaces was tailored to maximize profit.

For small, mobile operations, this means selecting the rides and games that will make them attractive to the host facility.

For the insurer providing cover for the carnival, this means that the pricing needs to be done on a more granular level. Typically, the approach is to price the coverage for each attraction rather than for the collective carnival. A premium is determined for each attraction, and the cost of coverage is based on the sum of the premiums for the attractions at the carnival. This simplifies the underwriting efforts as a unique quote is only needed once for each attraction

and does not need to be tailored to each insured.

Pricing individual rides becomes difficult when the ride itself is a unique risk. Larger scale operations seek to provide the big thrill that will draw in crowds. Those big thrills are coming not from tried-and-true roller coasters but from the cutting-edge rides that are considered a “one-of-a-kind” experience. By definition, these rides don’t have a credible history on which underwriters can gather data and price the risk, increasing the challenge of pricing these facilities.

When it comes to the world of entertainment, most coverages need to be tailored to the individual insured, and actuarial assumptions need to be re-evaluated given the unique business model of each insured.

Despite the tragedy of the missing bouncy house, we went to the main booth to purchase tickets for the attractions. My youngest son pointed out that the young lady helping us had a walking boot on and the older man helping the other line had his arm in a sling. “Seems like the ticket booth is more dangerous than the haunted house!”

Workers’ compensation can be a costly and uncertain line of business, but many entertainment facilities have found ways to cut down the tail of their compensation books. Extensive use of back-to-work programs allow for employees to return to active employment, although often in a different role than they originally performed.

For example, a ride mechanic with an injured shoulder may not be able to perform his daily duties, but can be brought back to work as a ride operator or concessionaire until his injury has healed. The impact of these back-to-work programs is a notable

26 | INSURANCE JOURNAL-NATIONAL April 18, 2016

www.insurancejournal.com

extended the protective netting from behind home plate to reach down to the ends of the dugouts, now in our line of sight.

decrease in the tail of the indemnity losses and lower loss costs in general.

After a fun morning at the carnival, we headed over to the minor league stadium to catch a ballgame. We always grab a spot down the third baseline just behind the dugouts, although this year our view was a bit different. The team had

Historically, landowners have been protected from liability claims when objects leave the area of play and enter the crowd by what is commonly known as the baseball rule. As long as a reasonable level of protection was in place, fans were considered to have assumed the risks inherent in watching the game being played in front of them. However, in a world where “distracted” can be used to describe how most activities are performed, the question of what is considered a reasonable level of protection is more debatable than ever. This is at least part of the reason why stadium and arena property managers have sought to increase the protection

afforded fans in premium seats. As lawsuits from injured fans become more prevalent and some jurisdictions increase the standard of care required, the prudent move is to redesign the property with enhanced safety measures.

This has become a hot topic for Major League Baseball, where teams have been encouraged to increase the amount of protective netting used to protect fans from foul balls and broken bat splinters. While the impetus for these moves is likely a good faith reaction to the increased number of injuries in recent years, it would not be surprising to hear that insurers were pushing for the change as well.

In the second inning, we overheard the season ticket holders in front of us lament the loss of last year’s star pitcher. Tommy John surgery would have him sitting out the whole year. My sons had just started figuring out how to leverage chores continued on page 28

Insurance and loss prevention go hand-in-hand.

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April 18, 2016 INSURANCE JOURNAL-NATIONAL | 27

CLOSER LOOK

Entertainment continued from page 27 into allowance, so the logical question for them followed. “Daddy, does he still get paid even if he doesn’t play?”

As injuries during sporting events are so common, professional athletes universally have clauses in their contracts guaranteeing their base salary in the event of an injury. Like any contract, there are certain terms and conditions involved that may prevent them from collecting. The primary example of this is if the injury was sustained during a specifically forbidden activity such as snowboarding or BASE jumping. The team owners do not want to take on additional risk, much like an insurer would deny coverage on a homeowners policy if the insured were found to have contributed to a fire by storing large quantities of fireworks in the basement.

As the annual value of professional athlete contracts has grown, owners have mitigated the risk of spending a significant portion of their payroll on an injured, and thus non-contributing, member of the team. They do this by purchasing insurance to cover themselves should a key player miss a substantial amount of time. In many ways, these coverages are similar to catastrophe insurance. There is typically an event trigger with the injury being the notification to the insurer that a claim may be coming. The indemnity trigger would be the amount of lost service time required to trigger a claim, whether that is a certain number of games or performances or a certain portion of the season. Most of these policies have limits related to the value of the contract being insured and are reinsured as no one insurer would want to hold all of the risk for each policy and instead diversify the risks.

Performance-based policies are not unique to the sporting world. Event coordinators take out policies to cover themselves should performances need to be cancelled.

An example is the coverage of concert tours, where a performer’s illness can lead to several cancelled shows and substantial costs to either repay or reschedule the events.

28 | INSURANCE JOURNAL-NATIONAL April 18, 2016

The seventh-inning stretch reached us with the home team ahead by two, but all the kids cared about was the dancing mascot and whether or not Chris from Massapequa could win everyone in the crowd a free pizza and himself a new truck.

All he had to do was throw a ball from the right field corner into a garbage can set up at third base.

have to pay out, it may be a substantial hit to its bottom line.

For this reason, the contests seen during half-time shows and charity golf events are typically run by a promotional company. The sponsor pays a fee to the promotional company, locking in the cost of this advertising, and the promoter bears the risk involved in paying out the potentially substantial prizes. This essentially works as an insurance policy, with the fee acting as a premium to indemnify the sponsor against paying out the jackpot or grand prize.

Similar to underwriting unique theme park exposures, the historical data available to set a price on these events is not substantial.

Many of these promotions require the participant to successfully complete a very difficult task, such as making a half-court shot or hitting a hole-in-one. The promoters often try to include exclusions to keep the odds in their favor, e.g., not allowing former college basketball players to participate in half-court shot events.

However, accurately selecting the frequency with which these feats are successful given a random participant with no practice and the pressure of the moment is a fool’s errand.

Fortunately for the promoting company, these events are increasingly run through promotional companies, and this has allowed for more data collection and a more credible historical database to be used in pricing them.

Insurance coverage is necessary in many aspects of the sports and entertainment industries, and the unique nature of these experiences creates a need for non-standard actuarial and underwriting approaches.

This allows the minds pricing these coverages to be almost as creative as the minds designing the experiences.

Promotional events often have long odds but big payoffs. While the advertising may be great for business, should the sponsor

Carbone, FCAS, is a consulting actuary with the New York office of Milliman. Email: william.carbone@milliman.com.

As lawsuits from injured fans become more prevalent and some jurisdictions increase the standard of care required, the prudent move is to redesign the property with enhanced safety measures.

www.insurancejournal.com

IDEA EXCHANGE

Growing Your Property Casualty Agency Farewell: Alan Shulman’s Final Column the “Alan–Shulman Agency” (note the hyphen), so our ad would be near the front of the listings.

So what did you do after those 10 years?

My parents retired and I became a partner in a larger Rochester, N.Y., office. In my seven years there, we grew quickly from about 15 people to over 50. Much of my time was dedicated to operations and new producer management, while simultaneously managing my own book of business. I left the agency side of the business after 17 years, and decided to go off on my own.

By Alan Shulman

S

it down... This is going to be a strange column.

First, it’s my last one, as I have just retired.

Second, it’s structured as a self-interview.

And third, it’s written in the first person; something I have fastidiously avoided throughout my entire writing career.

Hey Alan, how did you get started in the business?

In 1973, my father, a career life agent, left his partnership to start his own P/C agency. My mother and I joined him to initiate one tiny insurance office. In the 10 years I worked there as a producer/principal, I earned my CPCU designation and learned the business old school. Agents didn’t utilize personal computers until the 1980s, so rating and policy issuance was done by hand.

Our primary marketing devices were direct mail and The Yellow Pages. We became www.insurancejournal.com

Is this when you began to output your ideas?

Yep. In 1990, I started publishing the Agency Ideas newsletter for P/C agents. In 2004, when Insurance Journal magazine went national, I was invited to write this column.

It’s been a wonderful run.

Furthermore, during my 26-year career as a writer, I had the pleasure to work

In 2004, when Insurance Journal magazine went national, I was invited to write this column. It’s been a wonderful run.

with some fine agent groups and company people. They all contributed to Agency Ideas longevity, in addition to the support of many loyal individual subscribers.

What are the five most important tips you can pass on to the next generation of insurance agents?

Read a lot — especially non-business books. Regularly read history and quality fiction to become a more informed person and to germinate original thoughts that you can use in your agency and everyday life.

Older insurance pros actually know something about how to survive and grow in this competitive industry. They’ve been through myriad hard and soft markets, understand how to underwrite, market, sell, and more. Listen to their take on things. Your success, while more technologically driven, isn’t entirely about social media and digital marketing.

Continuously educate yourself about insurance and how to market and sell it.

Industry designations, like CPCU and CPIA, are helpful in this regard.

Appreciate the value of real human interaction. Successful producers often credit their relationships with insureds, company people, and others for their winning careers. Digital connections, while more numerous, are typically ephemeral.

Remember the importance of humor in business and in life. Just because the industry thrives on fear, you can’t let yourself be enveloped by it.

Use insurance humor as both a coping mechanism and as a marketing tool. It helps to get you noticed in the marketplace — and it’s fun!

Farewell. This is my final column as I enter retirement. Thank you to everyone who has taken the time to read my ideas. Be well and enjoy life. Email: agencyideas@gmail.com.

April 18, 2016 INSURANCE JOURNAL-NATIONAL | 29

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elcome to Insurance Journal’s 2016 Premium Finance Directory, a comprehensive listing of premium finance companies able to assist agents and brokers with their clients’ financing needs. All company information listed in this directory was directly submitted to Insurance Journal. To be listed in future editions of Insurance Journal’s Premium Finance Directory, or any other directory, contact Kristine Honey at: khoney@insurancejournal.com. We hope you find this directory to be a valuable resource when searching for financing options for your clients. Feel free to send us comments and suggestions on how we might improve this directory, or for additional help, e-mail: editorial@insurancejournal.com.

S t a n d a rd F u n c t i o n a l i t y i s a G i ve n .

I t ’s t h e N u a n c e s T h a t S e t U s A p a r t .

The 2016 Premium Finance Directory is Sponsored By:

www.thirdeyesolutions.com

AFCO Credit Corp.

All Island Credit Corp.

14 Wall St., Ste. 8a-19, New York, NY 10005 Phone: (212) 401-4491, , Toll-free: (800) 288-6901 Email: promptservice@afco.com www.afco.com

80 Skyline Dr., Ste. 100, Plainview, NY 11803 Phone: (516) 605-2835, Fax: (516) 605-2841 Email: info@allislandcredit.com www.allislandcredit.com

· AFCO provides premium financing to support growing agencies, brokerages and their insureds, in tandem with personal lines financing expertise provided by sister company Prime Rate PFC · Unparalleled underwriting, legal and support resources complement proven reliability, strong capacity, flexible terms and the ability to support insureds with non-standard needs · Unsurpassed technology advantages with EPF Plus for paperless financing, Intelligent Mail Tracking for reducing unnecessary cancellations, and AFCO’s user-friendly QIV system for online quoting and execution of finance agreements

A d i vi s i on of Met a B a n k ®

AFS/IBEX Financial Services, Inc. 750 N. St. Paul, Ste. 1500, Dallas, TX 75201 Phone: (800) 299-5626, Fax: (214) 954-0537 Email: service@afsibex.com www.afsibex.com · High-tech, high-touch approach to premium financing · State-of-the-art quoting system and online account info makes financing easier than ever · Creative, flexible commercial financing solutions delivered with the highest standard of customer care you expect and deserve

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· Outstanding Customer Service · Competitive Rates · 24/7 Online Access

Aviation Premium Finance, LLC 621 NE Rushbrook Dr., Lee’s Summit, MO 64064 Phone: (816) 260-0889, Fax: (816) 353-1048 Email: am@aviationpremiumfinance.com www.aviationpremiumfinance.com · APF provides aviation insurance buyers with payment options for their annual insurance premiums. · Customers traditionally put 20% down and then make 9 monthly payments. · Our goal is to make aviation affordable for everyone! www.insurancejournal.com www.insurancejournal.com

Premium Finance Directory Bulldog Premium Finance

ClassicPlan Insurance Premium Financing

Express Premium Finance Company, LLC

6971 W. Sunrise Blvd., Ste. 206, Plantation, FL 33313 Phone: (877) 537-8454, Fax: (877) 537-8455 Email: customerservice@financebulldog.com www.financebulldog.com

13750 Pipeline Ave., Chino, CA 91710 Phone: (800) 347-6481, Fax: (909) 628-5490 Email: info@classicplan.com www.classicplan.com

21 E. Main St., Ste. 103, Oklahoma City, OK73104 Phone: (800) 728-2902, Fax: (888) 413-8898 Email: quote@expresspremium.com www. expresspremium.com

· World Class Customer Service · Highly competitive rates · Ability to finance contracts with any MGA

· Commercial & Personal Lines Premium Financing · Internet based point of sale and inquiry system with electronic loan submission · Superior service and technology for our producers

· Premium Service · Premium Solutions · Premium People

CAC Acceptance Corporation 3673 Westcenter Dr., Houston, TX 77042 Phone: (888) 422-7755, Fax: (800) 486-1049 Email: info@cacacceptancecorp.com www.cacacceptancecorp.com · We are a Family Company with no obligations to Wall Street or “Big Banking” · More customer service centric to your insured’s & you, the agent, than a wholesaler’s finance company · More liberal payment terms than many insurer plans

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

FIRST Insurance Funding Corp.

· COST makes it easy for YOU TO OWN your own Premium Finance Company · COST does the set-up, COST runs the back room, YOU EARN ALL THE PROFIT · Let COST’s 26 years experience put the PROFIT from YOUR premium financing IN YOUR POCKET!

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

Elite Premium Finance 395 Alhambra Cir., Coral Gables, FL 33134 Phone: (305) 442 7227, Fax: (305) 461 -0131 Email: info@elitepremium.com www.elitepremium.com · Financing Commercial & Personal Lines since 1990 - Latin Agent Premium Finance of Choice · Low and High Premiums at Convenient APR Rates · Web Based Software - Excellence in Customer Service

52 Corporate Circle, Albany, NY 12203 Phone: (866) 639-1333, Fax: (518) 862-7522 Email: sternj@cappay.com www.cappay.com · Committed to helping insurance agents maintain their competitive edge through premium financing solutions since 1979 · Leading local experts to address the unique needs of the personal lines business · State-of-the-art products and programs that maximize efficiency in quoting, leaving more time to focus on your customers

www.insurancejournal.com

· Best turnaround time & flexibility in the industry · Online quoting and account management with completely paperless options including e-signature, online acceptance, and emailed notices and billing statements · Through Wintrust Financial, Agency lending, Life Insurance financing, 401K management, Treasury Management, and Capital Leasing programs

Flatiron Capital, a division of Wells Fargo Bank, N.A. 1700 Lincoln St., 12th Fl, Denver, CO 80203 Phone: (800) 800-2767, Fax: (303) 571-1811 Email: flatironcommunications@flatironcapital.net www.flatironcapital.net

ETI Premium Finance

Capitol Payment Plan

450 Skokie Blvd, Ste. 1000, Northbrook, IL 60062 Phone: (800) 837-3707, Fax: (800) 837-3709 Email: marketing@firstinsurancefunding.com www.firstinsurancefunding.com

1551 Sawgrass Corporate Pkwy, Ste. 130 Sunrise, FL 33323 Phone: (800) 995-7001, Fax: (954) 510-8042 Email: info@etifinance.com www.etifinance.com · All contracts Called Prior to Cancellation · Electronic Signature and Credit Card down payment options available · Auto Pay – Automatic Monthly Payments from Customer’s Checking Account

· Premium financing programs for commercial P&C agents to help maximize revenue and optimize cash flow for clients. · When you work with us, you have a dedicated team by your side through the entire premium finance process, creating tailored programs to meet your needs. · We have relationships with more than 1,700 agent clients, including eight of the top 10 brokers and offer competitive rates and terms. · Convenient and easy-to-use online platform puts information at your fingertips for maximum program efficiency.

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Premium Finance Directory Focus Finance, LLC

Insurance Payment Company

P.O. Box 451899, Sunrise, FL 33345-1899 Phone: (800) 432-3072 Ext. 4825 Email: info@focusfinance.net www.focusfinance.net

3025 Windward Plaza, Ste. 400, Alpharetta, GA 30005 Phone: 678-578-6600, Fax: 866-922-0691 Email: newbiz@inspayco.com www.inspayco.com

· Save time and money by letting us do the work for you; ready to sign Premium Finance Agreements sent via email or fax. · Our payment email reminders and direct customer calls help save over 50% of policies from cancellation. · Payments can be made by phone or online using check or credit card.

GBC Premium Finance, Inc. 110 E. 9th St., Ste. A-1126, Los Angeles, CA 91214 Phone: (213) 244-9535, Fax: (213) 236-0759 Email: info@gbcpf.com www. gbcpf.com · We specialize in Trucking Insurance Premium Finance, but Finance all Commercial and Personal Lines. · 24/7 Online Access, we are partnered with one of the top software companies in Premium Finance. · We are currently Licensed in CA, TX, NV, AZ, IN, VA, NJ and NY and expending fast.

General Agents Acceptance Corporation 23441 S. Pointe Dr., Ste. 220, Laguna Hills, CA 92653 Phone: (800) 470-9647, Fax: (800) 568-5462 Email: james@mygaac.com www.mygaac.com · 30 days to pay before cancellation in most states with 5 payment methods · Late payment call made directly to insured · Ask us about rates & see what you are missing

Imperial PFS 1055 Broadway, 11th Fl, Kansas City, MO 64105 Phone: (800) 838-2350, Fax: (816) 627-0502 Email: marketing@ipfs.com www.ipfs.com · The size and independence of Imperial PFS® provides the financial strength and flexibility to handle a wide range of accounts from large, complex deals to those that are smaller and more streamlined. · As a nationally-recognized premium financing leader, Imperial PFS® is committed to developing technology resources and services to best meeting the needs of Agencies and their Insureds. · Nationwide strength, local service – Imperial PFS® is powered by a network of 23 local offices strategically located across the United States and in Puerto Rico.

Insurance Finance Company, LLC P.O. Box 315, Des Moines, IA 50306-1315 Phone: (800) 247-4190, Fax: (515) 223-0226 Email: Brian@ifcorp.biz www.ifcorp.biz · IFC is independently owned with no ties to insurance companies, agencies or other financial institutions. That gives us flexibility! · We’ve been providing innovative premium finance solutions to agents and insured’s since 1969. We’re experienced! · Outstanding customer service that truly separates us from the big boys. We’re different!

· State of the art technology allowing ease of doing business for both agent and insured · Personalized customer service –supported by knowledgeable staff with extensive experience in insurance industry as well as premium finance · Flexible payment options most national companies can’t/won’t offer

Johnson & Johnson Preferred Financing, Inc. 200 Wingo Way, Ste. 200, Mt. Pleasant, SC 27464 Phone: (800) 868-5573, Fax: (843) 724-7085 Email: finance@jjpf.com www.jjpf.com · Finance most lines of coverage both Commercial and Personal lines · Online software for 24/7 access to quoting, account management and reporting · Multiple funding options for Money in & Money out!

Liberty Premium Finance, Inc. 4 Centerpointe Dr., Ste. 300, La Palma, CA 90623 Phone: (800) 229-8793, Fax: (562) 685-0215 Email: sporter@libertypf.com www.libertypf.com · Flexible monthly payment options for commercial insurance policies · Quote, bind and archive your contracts with our easy-to-use online quoting center · Pay by mail, phone, online or in person with credit card, check or check by fax

gotoPremiumFinance.com 6200 Canoga Ave., Ste. 400, Woodland Hills, CA 91367 Phone: (888) 875-4000 Ext. 2135, Fax: (818) 610-2066 Email: sales@gotopremiumfinance.com www.gotopremiumfinance.com

· A unique one of a kind service designed to help agents grow their insurance business and increase their income. · Nationwide premium finance provider for agents, MGAs & insurance companies. · Online quoting, e-submission of finance agreements, online payment options, real time account status, customized notice delivery & more.

Insurance Financing, Inc. P.O. Box 968, Edmonds, WA 98020 Phone: (425) 670-3999, Fax: (425) 771-9165 Email: sandy@insurancefinancing.com www.insurancefinancing.com · We keep your insured’s insured · Legendary service · Flexible plans & web-based management

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Mountain West Premium Finance Group of Companies 2535 Kettner Blvd., Ste. 3-b3, San Diego, CA 92101 Phone: (888) 280-0235, Fax: (619) 697-0326 Email: dan@financepremium.com www.financepremium.com · We look for ways to say “yes” to financing any commercial account. · Aggressive Cancellation Prevention Program with ALL forms of payment accepted. · Premium Finance Licensing and Third Party Administration available.

www.insurancejournal.com

Premium Finance Directory

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

PREMCO Financial Corporation 2453 Union Blvd., Ste. 20B, Islip, NY 11751 Phone: (516) 668-1234, Fax: (269) 375-6913 Email: dhofmann@go-premco.com www.go-premco.com · We finance all Commercial & Personal lines with same day funding · Rate Share, Profit Sharing, Stock Dividends & Referral Fees · FREE Online payments and the option to pay with Credit/Debit cards

Premins Company 1407 Avenue M, Brooklyn, NY 11230 Phone: (800) 599-3279, Fax: (718) 376-8330 Email: info@preminsco.com www.preminsco.com · Commercial and personal financing for over 50 years · Batched once-a-week cancellations · Get answers and quotes quickly with our fast and effective customer service on the phone and on our customized website

Premium Assignment Corporation P.O. Box 8800, Tallahassee, FL 32314-8800 Phone: (800) 342-0991, Fax: (800) 286-8999 Email: marketing@premiumassignment.com www.premiumassignment.com

Premium Finance Associates

Providence Bank Agency Finance

7603 First Place Dr., B-12 Cleveland, OH 44146 Phone: (866) 374-3630, Fax: (866) 839-3090 Email: info@PremiumFinance.net www.PremiumFinance.net

7434 Shadeland Station Way, Indianapolis, IN 46256 Phone: (877) 894-2785, Fax: (317) 813-1701 Email: agencyfinance@myprovidencebank.com www.pbagencyfinance.com

· Licensed in all 50 states · Insurance Agency Acquisition, Perpetuation and Capitalization loans · Short term loans for Insureds with cash flow issues

Premium Finance Brokerage, LLC P.O. Box 623, Jarrettsville, MD 21084 Phone: (866) 381-6501, Fax: (866) 381-6502 Email: tlarsen@premiumfinancebrokerage.com www.premiumfinancebrokerage.com · Guaranteed Lowest Interest Rates · Access to several national premium finance companies through one point of contact · Flexible payment options, cutting edge technology and a service pledge that’s put in writing

· Loans and lines of credit for insurance agencies · Working capital, acquisition capital, debt consolidation · Free quotes

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

Premium Finance Corporation P.O. Box 1827, Eau Claire, WI 54702-1827 Phone: (800) 843-7788, Fax: (715) 836-9196 Email: info@pfcins.com www.pfcins.com

SIUPREM, Inc.

· Experienced premium financing with friendly, quality service · Minimal paperwork, agent online access in real time · Flexible payment plans and payment options for insureds

Prime Rate Premium Finance Corporation 2141 Enterprise Dr., Florence, SC 29501 Phone: (866) 669-0937, Fax: (800) 677-9850 Email: info@primeratepfc.com www.primeratepfc.com · Financing personal lines and commercial accounts nationwide · Pre-approved loans up to $100,000 with no minimum premium · User-friendly 24/7 Web-based access and multiple payment options for insureds

P.O. Box 105611, Atlanta, GA 30348 Phone: 1 (800) 925-2546, Fax: (678) 498-4747 Email: info@siuprem.com www.siuprem.com · Independently owned, full service online premium finance company servicing independent agents since 1969. · Industry leading technologies providing real-time data for online policy service by the insured or the agent. · Siuprem Cares. Each time a commercial policy is financed with Siuprem in 2016, $5 of the proceeds will be committed toward the new goal of $70,000 for Breast Cancer Awareness and Research.

· Exceptional Service · Online Quoting – Ease of Use · Competitive Rates – Flexible Terms www.insurancejournal.com

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Premium Finance Directory Skipjack Premium Finance Company 10150 York Rd, 5th Fl, Hunt Valley, MD 21030 Phone: (800) 611-0955, Fax: (410) 630-1132 Email: info@skipjackpfc.com www.skipjackpfc.com · TECHNOLOGY: Our full service online platform allows your agency to easily manage accounts, create quotes, process Credit Card Down Payments & more! · PRICING/RATES: Competitive rates & terms that can be specifically designed to fit your agency’s book of business. · SERVICE: We deliver the service you deserve!

Our dedicated customer service staff goes the extra mile to insure your experience is “smooth sailing”.

South Bay Acceptance Corp.

Specialty Risk Premium Finance 7600 Fern Ave., Bldg. 600, Shreveport, LA 71105 Phone: (318) 683-6206 or (318) 683-6222 Email: flee@sramga.com or afulco@sramga.com www.sramga.com

A Division of Premier America Credit Union · In house financing for policies written through Specialty Risk Associates · 24-hour web access to accounts for you and your clients · Payment methods like check by phone, Echeck and AUTO PAY are available

10151 Deerwood Park Blvd., Bldg 100, Ste. 330 Jacksonville, FL 32256 Phone: (800) 393-2012, Fax: (888) 328-6747 Email: contact@sbac-finance.com www.sbac-finance.com

Superior Payment Plan, LLC

· Flexible premium financing programs with multiple benefits for your agency and their insured’s! · 24/7 Online Quoting access, account status verification, activate your own quotes immediately! · Creative Producer compensation options ready to provide you additional income!

· Fully functional website that allows Brokers and Insureds to easily manage accounts - quoting, inquiry, payments, and reporting. · Best in class customer service team that will personally assist you, as well as an automated response phone system to meet all your customer service needs. · Competitive rates and flexible options for down payments, installments and funding - JUST ASK.

6450 Transit Rd., Depew, NY 14043 Phone: 1 (866) 856-1112, Fax: (716) 206-8237 Email: info@superiorpayment.com www.superiorpayment.com

Tepco Premium Finance

Standard Premium Finance 13590 SW 134th Ave., Ste. 214, Miami, FL 33186 Phone: (800) 592-7753 or (305) 232-2752 Email: Robert@standardpremium.com www.standardpremium.com · Personal and commercial lines. · No minimum, no maximum premiums. · Our personal service and attention to detail make the difference. · ACH, EFT and credit card payments and down payments. · Revenue-Sharing and traditional commission programs. · Simple one-page online quoting. · E-Sign documents. · The best loyalty rewards program in the business! · If you’re not 100% satisfied, we won’t accept your business.

Top Premium Finance Company 19867 Prairie St., Chatsworth, CA 91311 Phone: (800) 458-2228, Fax: (818) 721-3840 Email: TopMarketing@toppremiumfinance.com www.TopPremiumFinance.com · Competitive Rates · Flexible 0-4% Producer Fee (Fully earned after 1st payment) · Finance Broker Fees

US Premium Finance 280 Technology Pkwy, Ste. 200, Norcross, GA 30092 Phone: 1 (866) 246-9691, Fax: 1 (866) 246-9692 Email: customerservice@uspremiumfinance.com www.USPremiumFinance.com · SERVICE: Creatively Structured Premium Finance Loans · TECHNOLOGY: User-friendly software, easy access to your customer database anywhere in the world 24/7 · PRICING / RATES: Flexible, Fair Market Pricing

1405 S. Rustle Rd., Spokane, WA 99224 Phone: (800) 571-0843, Fax: (509) 622-4702 Email: info@tepcofinance.com www.tepcofinance.com · Easy to use online system for quoting & account management · Free online payments · Licensed in 9 western states plus CO, FL, IL, GA, MI & TX

Thrifty Financial Services, Inc. 1691 Main St., Springfield, MA 01103 Phone: (800) 987-1011, Fax: (800) 736-5177 Email: thriftyfin@aol.com www.thriftyfinancial.com · The premium finance solution for Massachusetts insurance agents for 25 years. · State of the Art online technology. · Customer service that’s the best in the business and a full time local marketing manager.

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NATIONAL COVERAGE

MyNewMarkets Community/Social Services Market Detail: Charity First’s (www.charityfirst.com) coverage includes crime, professional liability, business income, CGL, workers’ comp, abuse & molestation, inland marine, property, umbrella, auto commercial-standard, EPLI, blanket additional insureds, and non-profit D&O. Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All states Contact: Russel Kester at 415-536-8523 or e-mail: russel_kester@ charityfirst.com

Agricultural Equipment Market Detail: Agricultural Insurance Management Services (www.aimscentral.com) matches broker with carrier to provide a range of farm and farm-related coverage for the homes, property, auto, business and operational assets of America’s farmers and ranchers. AIMS is positioned as a specialist that fully understands the agribusiness industry and the challenges brokers must meet to support it.

Available limits: As needed Carrier: Various, admitted States: Ariz., Calif., Ark., Calif., Colo., Conn., Dela., Fla., Ga., Ill., Ind., Iowa, Ky., La., Maine, Mass., Md., Mich., Minn., Miss., Mo., N.C., N.H., N.J., N.M., N.Y., Ohio, Pa., R.I., S.D., Texas, Utah, and Vt. Contact: Jan Pouliotte at 877-552-2467 or e-mail: jlp@aimscentral. com

General Contractors - Commercial Market Detail: Southern Insurance Underwriters’ (www.siuins. com) Property and Casualty department offers competitive and quick quotes on both Artisan and General Contractors.

Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: Ala., Fla., Ga., Miss., N.C., S.C., and Tenn.

Contact: SIU Marketing at 678-498-4619 or e-mail: marketing@ siuins.com

Self Storage Risks Market Detail: MiniCo Insurance (www.minicoinsurance.com) offers property and casualty insurance coverage for self storage businesses. Specialty coverage includes: customers goods legal liability (optional); sale and disposal liability ($10,000 included); limited pollutant removal (optional). Business Property & Business Income coverage includes: replacement cost coverage; no co-insurance clause; deductible options of $1,000, $2,500, $5,000, $10,000 and $25,000; business income coverage includes extra expenses; extended business income is included up to 180 days beyond the date of repair or replacement. Crime coverage options include: $10,000 money on premises and $5,000 money off premises; $15,000 employee dishonesty; and $10,000 forgery. Business liability limits available include $1 www.insurancejournal.com

million occurrence/$2 million aggregate or $2 million occurrence/$4 million aggregate limits available; personal injury and advertising injury; hired and non-owned auto liability; medical expenses ($10,000 limit). Umbrella coverage up to $10 million.

Available limits: As needed Carrier: Unable to disclose, non-admitted States: All states Contact: Customer service at 800-447-8383

Life and Health Agents’ E&O Market Detail: EOforLess.com (www.eoforless.com/products) offers errors and omissions insurance for life/health agents starting at $497. Fast forms with ability to click and bind in five minutes. Preferred risk group rates sponsored by the National Ethics Association. Administered by Mercer.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Customer service at 866-795-2041

Environmental Consultants (ECPL) Market Detail: Legends Environmental Insurance Services, LLC’s (www.legends-enviro.com) Environmental Consultant’s Professional Liability (ECPL) policy provides coverage for the exposures that are inherent to environmental professionals, including consultants, engineers, design professionals and laboratories. ECPL protects against third-party claims resulting from specified professional services.

Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All states Contact: Customer service at 800-992-6999

Inflatable Insurance Market Detail: Cossio Insurance (www.cossioinsurance.com) offers inflatable insurance coverage for inflatable rentals & indoor centers; as well as for mechanical bulls, bounce houses, inflatable slides, velcro walls, bungee trampolines, and eurobungy. Cossio also insures indoor inflatable fun centers with special rates.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Larry Cossio at info@cossioinsurance.com April 18, 2016 INSURANCE JOURNAL-NATIONAL | 35

IDEA EXCHANGE

Agency Mangement What Should I Pay My Client Service Employees?

I

ndianapolis Colts quarterback Andrew employee to the Colts and his compensaLuck will be up for a new contract after tion sets the bar for the entire organization. the upcoming season. In 2012 he joined the An agency’s top client executives do the Colts who were coming off of a 2-14 season same within the service team. the year prior and Placing a key employee’s compensation managed to go 11-5 in at the top creates an individualized bandeach of his first three width for your agency where every employseasons before battling ee falls around or below it. A hierarchical some injuries this past compensation philosophy, not based on season. Along the way tenure but on value to the company, builds he set several rookie appropriate internal equity. Everyone in an and career beginning organization knows the star players. Seeing

By Mary Newgard records, helping the the star players excel motivates others to Colts to the playoffs in each season he was healthy. Saying Andrew Luck is pretty good is putting it mildly.

A hierarchical A few weeks ago Colts owner compensation Jim Irsay commented on predicphilosophy, not tions for Luck’s new contract based on tenure by stating, “It’s going to be a big number. It’s going to be a shockbut on value to ing number.” In the world of high the company, stakes negotiations usually neither builds side likes to make bold statements. appropriate Critics might say Irsay just cost himself more money, but he’s internal equity. smart. He’s taking care of his best player and putting himself ahead of 31 other NFL teams that would love to discuss compensation with Luck.

Insurance agencies can learn a lot about their own compensation philosophy through this example, particularly when it comes to client service positions. Without consistent data available, or utilization of uniform titles, owners lack confidence and second guess money as an effective way to attract and retain people in these roles.

Let’s take a look at simple ways to address compensation in account management positions.

reach their level in the same way competition motivates. It is the old adage, iron sharpens iron.

Simply being around for the longest amount of time should not merit being the highest earner. Your business has limited financial resources so allocating in such a manner as to receive the most return on your investment is just good business.

Overpaying New Employees Grossly underpaying or overpaying new hires is mostly a myth. The insurance indus-

What Is the Employee Worth to YOU Assume your highest paid client service manager is also your organization’s most valuable. This is the person who has the most responsibility, the person that producers cannot live without and the person who has the most impact on clients. Luck is that 36 | INSURANCE JOURNAL-NATIONAL April 18, 2016

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try finds a way to self-regulate within a narrow margin.

Client managers seek out a fair, competitive increase in what I call “The Rule of 10.”

Most service professionals want a 10 percent or $10,000 increase. If the desired pay is greater than this rule it must come with good reason for both the agency and the candidate.

Any employee’s value to the organization is somewhat derived from replacement cost.

Think about it like supply and demand meets the endless quest for the needle in the haystack. Only, in this instance, some haystacks have several needles, while others have just a few, and not everyone needs needles equally. Now answer two questions for your organization: How bad do you need a needle? How many needles are in this particular haystack?

If you have to have one, for instance client management if you run an insurance agency, we know the first answer. Then you have to assess the supply. A generalist commercial lines account manager for instance is a haystack with a lot of needles. These people are essential to your organization’s success but they are not overly difficult to replace so there is no need to act as though you cannot, under any circumstances, lose one and congruently, you should not overpay to acquire one. Now a highly specialized account executive or consultant who specializes in oil and gas business and excels in front of clients in high pressure situations comes from an entirely different haystack; one with far fewer needles. If you need one, and have the good fortune to identify one, you have to work hard to hire and retain them because the rarity makes replacement very difficult.

The $200,000 Account Executive Three decades ago, no one in the NFL thought a player would make $20 million per year. Andrew Luck will soon join that club. The same is true for the consultant level service position.

Regional agencies have ignored the existence of account executives earning more than $150,000 because they cannot conceive paying such a figure in comparison to their www.insurancejournal.com

current staff. However, a trend is emerging where regional brokers with separate risk management practices want client consultants. These talented individuals are asked to wear multiple hats in service, marketing, team leadership, sales and management.

Although starting the salary with a “two” is a difficult compensation shift, that shift is necessary for progressive firms with a national platform to acquire the type of talent necessary in large account divisions.

Compensation is an inexact science.

The best advice I can offer is to trust your instincts. Rely on the information you’ve gained from interviews with professionals from similar agencies. Don’t be afraid to discuss the topic with current employees.

If you find candidates who, in terms of skills, abilities and/or pedigree, fit what you’re looking for but want more than

A trend is emerging where regional brokers with separate risk management practices want client consultants that wear multiple hats in service, marketing, team leadership, sales and management.

you feel you should pay, it is possible you are not in tune with the market and may have to adjust either your budget to make the hire or your expectations of what a candidate will look like. Above all else be thankful that your compensation negotiations won’t be monitored by ESPN or that it takes $20 million to get the deal done.

Newgard is partner and senior search consultant at Capstone Search Group. Email: mnewgard@ csgrecruiting.com. Website: www.csgrecruiting. com.

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Academy of Insurance www.ijacademy.com 39 Accident Fund www.accidentfund.com SE5 Affinity Nonprofits www.affinitynonprofits.com 17 Applied Underwriters www.auw.com 40 Burns & Wilcox Ltd. www.burnsandwilcox.com 7 Charity First www.charityfirst.com 18 Fujitsu www.fcpa.fujitsu.com 21 Golden Bear Insurance Company www.goldenbear.com W5 K&K Insurance Group www.kandkinsurance.com 3 M.J. Hall & Company www.mjhallandcompany.com W7 Monarch E&S Insurance Services www.monarchexcess.com W1, W3

MUSIC www.music-ins.com 2 Negley Associates www.jjnegley.com 14 PersonalUmbrella.Com www.personalumbrella.com 5 Philadelphia Insurance Companies www.phly.com 15 Quirk & Company www.quirkco.com W8, SC4 Siracusa Staffing & Leasing www.ssandlnow.com SE4 South & Western www.southandwestern.com SC1 Take1 Insurance www.take1insurance.com 13 Texas Mutual www.texasmutual.com SC3 United Educators www.ue.org 27 United Fire Group www.ufgsolutions.com E5

April 18, 2016 INSURANCE JOURNAL-NATIONAL | 37

IDEA EXCHANGE

Closing Quote

Agents Storm Capitol Hill

I

By Robert Rusbuldt

ndependent insurance agents and brokers from all 50 states convened in Washington, D.C., last week for the biggest and most effective industry gathering of its kind: the Big “I” Legislative Conference. Our members met with almost every U.S. Senate and House office to discuss the association’s top legislative priorities. Here’s why.

We support a reformed and modernized National Flood Insurance Program (NFIP) and called upon Congress to extend the NFIP prior to its Sept. 30, 2017 expiration. We urge consideration of modernized mapping technologies; increased use of private reinsurance; reforms to incentivize mitigation efforts and consideration of risk-based rates, where appropriate.

The private market should act as a complement, but not a replacement to the NFIP and therefore we support S. 1679 and H.R. 2901, the “Flood Insurance Market Parity and Modernization Act,” by Sens. Dean Heller (R-NV) and Jon Tester (D-MT) and Reps. Dennis Ross (R-FL) and Patrick Murphy (D-FL). The legislation strikes a balance between private market involvement and the flood program, clarifies that a private policy can satisfy the mandatory purchase requirement, and ensures that policyholders can move seamlessly between the private market and the NFIP and not lose their grandfathered status.

38 | INSURANCE JOURNAL-NATIONAL April 18, 2016

We strongly support the Federal Crop Insurance Program (FCIP) and agents as the sole sales force of the program. The Big “I” opposes reopening the Farm Bill to cut the budget baseline for the FCIP and opposes S. 2244 and H.R. 3973, the “AFFIRM Act,” which would result in cuts to private sector delivery of crop insurance and would discourage farmers from purchasing adequate coverage for their farmland.

The Affordable Care Act’s misguided “Cadillac tax” assesses a damaging 40 percent tax on health plans that exceed a fixed annual cost. At the end of 2015, with Big “I” support, a two-year delay of the “Cadillac tax” was enacted to move the effective date of the tax from 2018 to 2020.

The delay was a good first step, but the Big “I” will continue to fight for full repeal.

We also support excluding agent compensation from the ACA’s Medical Loss Ratio (MLR) formula. We support S. 1661, the “Access to Independent Health Insurance Advisors Act,” by Sens. Johnny Isakson (R-GA) and Chris Coons (D-DE), and its House companion, H.R. 815, the “Access to Professional Health Insurance Advisors Act,’’ by Reps. Billy Long (R-MO) and Kurt Schrader (D-OR).

We staunchly support state regulation of insurance and are concerned with federal encroachment. Big “I” agents went ‘We staunchly to Capitol Hill in support of S. support state 1086, the “International Insurance regulation of Capital Standards Accountability Act,” by Sens. Dean Heller (R-NV) insurance and and Jon Tester (D-MT), and H.R. are concerned 2141, the “International Insurance with federal Standards Transparency and encroachment.’

Policyholder Protection Act,” by Rep. Sean Duffy (R-WI).

We are concerned that a Department of Labor proposal regarding overtime requirements for “white collar” workers will be overly burdensome for small businesses including thousands of Big “I” members and their customers.

We advocated for S. 2707 and H.R. 4773, the “Protecting Workplace Advancement and Opportunity Act,” by Sens.

Tim Scott (R-SC) and Lamar Alexander (R-TN), and Reps.

Tim Walberg (R-MI) and John Kline (R-MN), which would halt the proposal. We also hope Congress will reverse or amend the DOL regulation to expand the application of the ERISA “fiduciary” standard which threatens to harm investors and limit consumer access to professional advice.

Although the work continues, another successful Big “I” Legislative Conference is in the books.

Rusbuldt is president and CEO of the Independent Insurance Agents & Brokers of America.

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