Insurance Journal West 2016-12-19

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Contents December 19, 2016 • Vol. 94 No. 24 • West

West

National 8 D&O Prices Down, Auto Up in Q3; Other Commercial Lines Stable

W1 California High Court Rules Firms Must Protect Households From Asbestos

10 What Drives Satisfaction in Large Commercial Insurance Market?: J.D. Power

W2 California Commissioner Issues Auto Collision Repair Regulations W2 Washington Workers’ Comp Rates for 2017 to Increase Less Than 1%

W1 CALIFORNIA HIGH COURT RULES FIRMS MUST

PROTECT HOUSEHOLDS FROM ASBESTOS

W2 Insurance Foundation Launches Washington Chapter

22 The Charity Issue: Snapshots of Giving

Idea Exchange

26 Special Report: A Survivor’s Story: City of Hope and Marshall Cotta

28 The Wedge: Why it Sucks to Be a Sales Manager in Most Agencies

32 Why a Unique Perpetuation Model Still Stands

16 Special Report: Insurance Industry Gives Back to Those Who Served 20 Special Report: Operation Healing Forces Unique Charity Created

by Insurance Executive Markel

W3 The California Earthquake Authority 20 Years Later

30 The Corporate Citizenship Mandate

15 Cyber Market Hampered by Insurability Challenges: Report

15

CYBER MARKET HAMPERED BY INSURABILITY CHALLENGES: REPORT

34 Closing Quote: 3 Common Strategies Found in the Fastest-Growing Independent Agencies

Departments W4 People

11 Declarations

11 Figures

32

A TRUE GAME CHANGER

4 | INSURANCE JOURNAL | WEST DECEMBER 19, 2016

12 Business Moves 14 MyNewMarkets INSURANCEJOURNAL.COM

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OPENING NOTE

Write the Editor: awells@insurancejournal.com

Wanted: Young Insurance Recruiters

I Publisher Mark Wells mwells@wellsmedia.com

EDITORIAL

SALES

Editor-in-Chief Andrea Wells awells@insurancejournal.com

West Sales Dena Kaplan (800) 897-9965 X115 dkaplan@insurancejournal.com

East Editor Elizabeth Blosfield eblosfield@insurancejournal.com

Romeo Valdez (800) 897-9965 X172 rvaldez@insurancejournal.com

Chief Content Officer Andrew Simpson asimpson@insurancejournal.com

Southeast Editor/MyNewMarkets 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 L.S. Howard lhoward@insurancejournal.com Columnists

Randy Schwantz

Chief Marketing Officer Julie Tinney (800) 897-9965 X148 jtinney@insurancejournal.com

South Central Sales Mindy Trammell (800) 897-9965 X149 mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA and CT) Howard Simkin (800) 897-9965 X162 hsimkin@insurancejournal.com Midwest Sales Lisa Whalen (800) 897-9965 X180 lwhalen@insurancejournal.com East Sales (NY, PA and CT only) Dave Molchan (800) 897-9965 X145 dmolchan@insurancejournal.com Advertising Coordinator Erin Burns (619) 584-1100 X120 eburns@insurancejournal.com

Contributing Writers

Chuck Blondino, David Coons, Heath Ritenour, Tim Rohwer

Insurance Markets Manager Kristine Honey (619) 584-1100 X132 khoney@insurancejournal.com

IJ ACADEMY OF INSURANCE Online Training Coordinator Barbara Whiffen bwhiffen@ijacademy.com

Social Media Manager Ly Short (619) 890-7735 Lshort@insurancejournal.com

Chief Financial Officer Mark Wooster mwooster@wellsmedia.com

Classifieds, Jobs, Agencies Wanted/For Sale Sr. Sales & Marketing Coordinator Kelly De La Mora (800) 897-9965 X125 kdelamora@insurancejournal.com

MARKETING

DESIGN/WEB

ADMINISTRATION

Marketing Director Derence Walk dwalk@insurancejournal.com Marketing Administrator Gayle Wells gwells@insurancejournal.com

NEW MEDIA

Chief Technology Officer/ Chief Innovation Officer Joshua Carlson jcarlson@insurancejournal.com V.P. of Design Guy Boccia gboccia@insurancejournal.com

New Media Producer Bobbie Dodge bdodge@insurancejournal.com

Senior Web Developer Chris Thompson cthompson@insurancejournal.com

Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com

Web Developer Jeff Cardrant jcardrant@insurancejournal.com

CIRCULATION

Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com

nsurance industry executives and groups working to attract millennials to the sector are now actively targeting their younger colleagues to help get the word out.

On Dec. 2, the recruiting initiative held a webinar designed to appeal to younger property/casualty insurance employees to raise awareness of the industry and help recruit new applicants. According to organizers, close to 2,000 people took part in the webinar, with millennials and others logging in from the United States, U.K., Turkey, Switzerland, Mexico, Ireland, India, France, Canada and Bermuda.

The younger employees who tuned in represented 107 different companies and organizations, according to a spokesperson.

Hamilton Insurance Group Chairman and CEO Brian Duperreault hosted the town hallstyle webinar. He told his employees afterward that the event was “unprecedented,” unlike any he had seen in his 40-year career, the spokesperson said.

The event was designed to engage and encourage young insurance professionals already in the industry to take part in what is called the Insurance Careers Movement.

The idea is to have these young professionals spread the word about industry career opportunities, under the belief that folks already in the industry are the best people to help recruit new talent.

The idea seems to support what young agents revealed in Insurance Journal’s 2016 Young Agents Survey in April.

According to the exclusive Young Agents survey, 81.6 percent of young independent agents, or those 40 and under, say they would recommend a career in insurance to another young person. In fact, optimism is higher today among young insurance agents than in the recent past, the survey found. The aging of the insurance industry is one reason young professionals see a bright and secure future career.

The quest to more heavily recruit younger employees into the P/C industry is driven, in part, by statistics that show there will be 400,000 positions becoming vacant within four years. Organizers of the Insurance Careers Movement also say the sector has not been very diverse and members of the industry have struggled to recruit among high FOR QUESTIONS school and university students.

REGARDING SUBSCRIPTIONS: Call: 855-814-9547 The Institutes, MyPath, Valen Analytics, Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: The Jacobson Group, InVEST and Property insurancejournal.com/subscribe Casualty Insurers of America Association Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media are among the organizations involved in the Group, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 project. per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pub Overall, the Insurance Careers Movement lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended includes more than 600 insurance carriers, to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2016 Wells agents/brokers, trade associations and indusMedia Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. try partners.

Insurance Journal is a publication of Wells Media Group, Inc.

The idea is to have these young professionals spread the word about industry career opportunities.

Andrea Wells Editor-in-Chief

6 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 708, Northbrook, IL 60065-9967 ARTICLE REPRINTS: For reprints of articles in this issue, contact: Kelly De La Mora at 1-800-897-9965 ext. 125 or kdelamora@wellsmedia.com Visit insurancejournal.com/reprints/ for more information.

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National

D&O Prices Down, Auto Up in Q3; Other Commercial Lines Stable

P

rice decreases accelerated for directors and officers insurance in the 2016 third quarter, a period during which commercial insurance prices generally remained flat once again overall.

The latest Willis Towers Watson’s Commercial Lines Insurance Pricing Survey showed prices charged on 2016 third-quarter policies were virtually unchanged overall versus the same period in 2015. What’s more, the CLIPS survey found, carriers have reported price changes of less than 1 percent for four consecutive quarters now.

Price increases have been on an ongoing moderating trend since the 2013 first quarter.

For Q3, workers’ compensation, commercial property and surety bonds saw “modest price decreases,” according

to Willis Towers Watson, though price declines for directors and officers appeared to both grow and accelerate. Willis Towers Watson did not disclose specific D&O figures.

Aon, however, reported relatively moderate declines in its own 2016 third quarter D&O pricing index. Aon said that the D&O price per million was down 2.9 percent during the quarter compared to the same period in 2015. Price per million for clients that renewed in both the 2016 and 2015 third quarters dipped 2.8 percent, the report found.

One exception to the rule of price stagnation or decline continued to be commercial auto, which Willis Towers Watson said continues to experience “meaningful price increases” and even an acceleration of the trend in some cases. That is, of course, due

8 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

to worsening loss trends.

“Unfavorable loss trends persisted in commercial auto,” Alejandra Nolibos, director in Willis Towers Watson’s Americas Property & Casualty Insurance practice, said in prepared remarks. “But initial loss ratio indications suggest that insurers are achieving price increases that help hold the line.”

Overall, price dips for most lines dropped by the “low single digits,” according to the CLIPS report.

Price changes were similar across each segment, Willis Towers Watson said, though they were a bit negative for larger accounts and slightly positive for smaller and mid-market accounts.

Also worth noting, specialty account price changes in the aggregate continued to be slightly negative.

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Property Liability Workers’ Comp Business Auto

NATIONAL | News & Markets

Insurers’ Financial Strength, Brokers’ Expertise Drive Satisfaction in Large Commercial Insurance Market: J.D. Power

T

he profitability of an insurance company and the quality of advice given by an insured’s insurance broker make the most difference in customer satisfaction for commercial insurance, a new study revealed.

According to the J.D. Power 2016 Large Commercial Insurance Study, the key variables driving overall commercial insurance customer satisfaction are insurer profitability and broker expertise.

The most significant attribute driving that performance is quality of advice/guidance provided. “Brokers who have in-depth expertise and establish a hands-on, consultative relationship with their clients are consistently driving the highest levels of customer satisfaction,” the study found.

Among large commercial insurers, a correlation was found between customer satisfaction and insurer profitability, as measured by total commercial combined financial ratios.

The study, now in its third year, measures customer satisfaction with commercial insurers and insurance brokers.

Overall satisfaction is based on five factors: service interaction; program offerings; price; billing process; and claims.

Satisfaction with commercial insurance brokers is based on nine attributes: quality of advice and guidance provided; reasonableness of fees; ease of the renewal process; effectiveness of risk control services; variety of program offerings; effectiveness of program review; price, given services received; billing and payment process; and claims process.

The highest-performing insurance broker in this year’s study was Lockton, while the highest-performing insurer was XL Catlin, J.D. Power said.

The highest-performing companies in overall satisfaction were XL Catlin (773 on a 1,000-point scale); CNA (767); and Chubb (765). They had among the industry’s strongest combined ratios, suggesting

10 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

that the most profitable insurers can support more flexible underwriting standards to meet customer needs more effectively. J.D. Power found a 0.67 correlation between satisfaction and insurer profitability.

Among commercial insurance brokers, the highest-performing firms, Lockton (863) and Arthur J. Gallagher & Co. (823), outperform larger rivals by a large margin.

The study also found that among the 20 percent of customers who indicated their broker does not completely understand their business needs, satisfaction declined by an average of 136 points.

The study was conducted in conjunction with RIMS, a global nonprofit organization that has more than 11,000 risk management members located in more than 60 countries.

“As rates across the U.S. commercial property and casualty insurance market continue to decline, delivering an exceptional customer experience has become the x factor that levels

the playing field and opens up new growth opportunities for commercial insurers and brokers,” said Greg Hoeg, vice president of the U.S. insurance practice at J.D. Power. “With the potential for rate volatility in 2017 and beyond now increasing, keeping a laser focus on customer satisfaction will be a critical driver of success.”

“The key for risk professionals to effectively manage uncertainties is knowledge,” said Mary Roth, RIMS CEO. “Gaining the perspectives of their peers through this study arms practitioners with the insight to make informed strategic decisions regarding the future of their organizations’ insurance programs.”

Key Findings

The single most critical touch point between a customer and an insurance broker is the quality of advice/guidance provided, the study found.

Industry-wide, brokers receive an average rating of 8.34 on a 10-point scale for this metric.

Lockton customers rated the firm 8.89, driving its overall 40-point lead over the second-ranked broker in the study.

J.D. Power found a 0.67 correlation between insurer profitability and customer satisfaction, suggesting that the more profitable the book of business an insurer has, the more likely the insurer will also have high levels of satisfaction.

Providing flexible program design and implementation was the most impactful key performance indicator (KPI) for commercial insurers. However, the study found that is not a standard practice — the rate at which insurers deliver on this KPI is only 47 percent.

INSURANCEJOURNAL.COM

Figures

Declarations

20

Clear Pot Thinking

“The governor has been clear about the importance of the marijuana industry to Oregon’s economy.”

The number of tornadoes confirmed in Alabama during the week of November 28 to December. 2. The National Weather Service said 11 twisters hit central Alabama and nine hit the northern part of the state. The NWS said more storms could still be added to that total.

21

The number of people in eight states that were sickened by drug-resistant salmonella bacteria linked to infected dairy bull calves purchased in Wisconsin. The Centers for Disease Control and Prevention said that 21 people were infected from Jan. 11 through Oct. 24; eight were hospitalized, but no deaths were reported. Wisconsin had the most cases, with 12 people infected in eight counties.

$6.5 MILLION

The amount the Jay Peak resort in Vermont is expected to have lost in the offseason after its owner and president were accused by the Securities and Exchange Commission of massive fraud. Ariel Quiros, a Miami businessman, and former Jay Peak president Bill Stenger have been accused of misusing $200 million raised from foreign investors for developments through a special visa program. Quiros also is accused of improperly diverting $50 million for his personal use.

INSURANCEJOURNAL.COM

Cranes of New York

“I do not personally believe insurers will hustle back into New York due to these new regulations. This will not be a positive thing for insurers to want to jump back into writing cranes.”

— Jeffrey Haynes, senior vice president and crane and rigging practice leader at USI Insurance Services, on a move by New York City building officials to better regulate crawler crane operations there. New requirements issued in June 2016 resulted in a lawsuit filed against the city’s buildings department and its commissioner, Rick D. Chandler. Opponents claim the regulations are too burdensome for crane manufacturers and operators — a criticism echoed by some in the insurance industry.

Gates of Hell

“It was like the gates of hell opened up.”

— A resident of Gatlinburg, Tenn., who had to flee on Noember 28 as a major wildfire quickly engulfed the tourist town where Dollywood is located. The fire killed 14 people and damaged more than 1,400 businesses and homes.

Possible Landlord Citations

“I believe that we would have a strong case to take to the law department to see if we could move forward with citations.”

5

The number of companies being sued following a magnitude 5.0 earthquake that struck near the oil storage facility hub of Cushing, Okla. The lawsuit filed by David and Myra Reid, Valerie Branyan and Timothy Harris names White Star Petroleum, Crown Energy Company, PetroWarrior LLC, Cher Oil Company and FHA Investments LLC. It asks for more than $10,000 for property damage, market value loss to property, emotional distress and punitive damages. The Nov. 6 quake was reported to have substantially damaged 40 to 50 buildings in Cushing.

— Jeff Rhoades, marijuana policy adviser for Gov. Kate Brown, said a move by the state to ease testing requirements keeps Oregonians employed and prevents marijuana from slipping back into the illegal market.

— Akron, Ohio, Fire Chief Clarence Tucker comments on the possibility that the owner of a rental home may be held responsible after a fire at the home killed four people. Firefighters say an Akron ordinance requires homes in the city to have working smoke detectors, but investigators haven’t found any in the three-story house, where a family of five lived with a friend.

Weak Safety Protection

“This tragedy illustrates what can happen when identified weaknesses in safety protection are not addressed.”

20,000

The number of deaths linked to the superbug infections in California, the most of any state.

— National Transportation Safety Board Chairman Christopher Hart. The NTSB says crew fatigue caused by irregular work schedules and sleep apnea was the primary reason behind a deadly train crash in Arkansas in August 2014. The conductor and an engineer were killed when a southbound Union Pacific (UP) train sped through a stop signal and hit a northbound train. Two other UP workers were also injured in the crash. The panel that reviewed the crash data also noted that an automatic horn that improperly reset alarms and the lack of a system to stop trains automatically were contributing factors in the crash.

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 11

NATIONAL | Business Moves

Access Holdco Management, IAT Insurance Group

Access Holdco Management has purchased the Massachusetts non-standard auto insurance book of business of Occidental Fire & Casualty Company of North Carolina from Occidental’s parent, IAT Insurance Group (IAT).

Access Holdco Management is an Atlanta-headquartered insurance managing general agency focused on the non-standard auto market.

Occidental, a diversified property/casualty insurance company, is part of the IAT Insurance Group. IAT is transitioning its directly produced auto book to Access through the sale but will continue to act as the issuing carrier via its subsidiary, Occidental Insurance Co. The Massachusetts book of business is approximately $35 million in annual premium and is distributed through a network of independent insurance producers. The purchase of the Occidental non-standard book furthers Access’ efforts to diversify its offerings to their

producers and insureds.

During the past 22 years, Access has managed books of business for numerous insurance companies. In December of 2015, Access received a growth equity investment from Altamont Capital Partners (ACP), a middle market-focused private equity firm with experience investing within the insurance industry.

Access will work alongside ACP to pursue opportunities to strengthen its book of business with targeted acquisitions.

Hub International Ltd., Pinnacle

Global insurance brokerage Hub International Ltd. (Hub) has acquired the assets of Pinnacle Financial Group and Pinnacle Insurance Agency, a Boston-based provider of life insurance solutions and services to family offices, affluent families, and middle-market and large market companies.

Terms of the acquisition were not disclosed.

Michael Mingolelli Jr., Pinnacle’s CEO, will join Hub New England and report to

12 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

Charles Brophy, President and CEO of Hub New England.

“We are delighted to have Michael and his partners, David Hauptman, Ken Masters and Marc Mingolelli, of Pinnacle join Hub New England,” Brophy said. “We are looking forward to expanding Pinnacle’s successful platform throughout our region.”

Headquartered in Chicago, Hub International provides property/casualty, life and health, employee benefits, investment and risk management products and services from offices located throughout North America. The company is committed to growing organically and through acquisitions to expand its geographic footprint and strengthen industry and product expertise.

The company also acquired the assets of Medley/ Turrentine & Associates LLC, headquartered in Oklahoma City, Okla. Terms of the acquisition were not disclosed.

Medley/Turrentine & Associates, and principals Daniel Medley and Brent Turrentine, specialize in property/casualty insurance and employee benefits products.

Marsh & McLennan Agency, Benefits Resource Group

Marsh & McLennan Agency LLC (MMA), the middle-market agency subsidiary of Marsh, has acquired Benefits Resource Group (BRG), in Independence, Ohio. Terms of the transaction were not disclosed.

BRG, an employee benefits consulting firm, offers medical, life and disability insurance to midsize employers in Ohio.

All BRG employees will join MMA’s Midwest region and will

continue to operate out of the firm’s existing office under the leadership of CEO Charles Farro and President Ross Farro.

Acrisure, Genstar Capital

Acrisure LLC, a national insurance brokerage based in Grand Rapids, Mich., and private equity firm Genstar Capital have completed a management-led company buyout.

The $2.9 billion transaction was led by Greg Williams, Acrisure’s chief executive officer and co-founder, and a consortium of minority investors.

Williams co-founded the company with Rick Norris in 2005.

He said Genstar will remain a remain a shareholder in the company.

Genstar acquired Acrisure in 2013 and has worked with Williams and the Acrisure management team to expand Acrisure’s geographic footprint, and to broaden the size and scope of its insurance offerings.

Under Genstar’s ownership, the company acquired 138 retail insurance brokerages and generated industry-leading organic growth. The company also invested in new data and analytic tools, and strengthened the management team.

Annual revenues today exceed $670 million.

In addition to Acrisure, Genstar’s current and former investments in the insurance industry include Insurity, Financial Horizons Group, Innovative Aftermarket Systems, Palomar Specialty and Confie Seguros.

Evercore acted as exclusive financial adviser to Acrisure with J.P. Morgan leading the financing of the transaction.

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Affinity Nonprofits | 1120 20th Street, NW Suite 600 | Washington, DC 20036 | www.affinitynonprofits.com The information contained in this document is for general information only. It is intended to provide a general overview of the services and products offered. Only the relevant policy can provide the actual terms, coverages, amounts, conditions and exclusions. All coverages are not available in all states. This document is not intended to be advertising or solicitation in states where the local regulations prohibit such usage. Affinity Nonprofits is the program name for the brokerage and program administration operations of Affinity Insurance Services, Inc. (TX 13695); (AR 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services, Inc.; in CA, Aon Affinity Insurance Services, Inc. (0G94493), Aon Direct Insurance Administrator and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency. © 2016 Affinity Nonprofits E-11958-0416

NATIONAL | MyNewMarkets States: Ala., Ariz., Ark., Colo.,

Ga., Ill., Ind., Iowa, Ky., Mich., Minn., Mont., Nev., Ohio, Okla., Pa., Tenn., Texas, Utah, Wis., W.Va., and Wyo. Contact: Kathleen Eaton at 713-935-4936 or email: keaton@ bhuainc.com

Cyber Liability

Market Detail: Distinguished

Physical Damage Insurance

Market Detail: International

Transportation & Marine Agency (www.itmagency. com) offers physical damage insurance, often referred to as a collision coverage policy pays to fix or replace damaged vehicles. International Transportaiont & Marine Agency specializes in writing commercial automobile physical damage coverage primarily for local and long-haul trucking, taxicabs, limos and special automobile risks.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Horrace Greene at 480-556-0200 or email: info@ itmagency.com

Property Capacity for Water Treatment, Septic and Sewer Industries Market Detail: WaterColor

Management (www. watercolormanagement. com), an Alabama-based managing general underwriter, has opened new property underwriting facilities and

has signed a new agreement with an A- VII surplus lines carrier. The agreement grants nationwide managing general agent authority with in-house rating and underwriting. The new capacity is designed for businesses in the private sector that are involved in water treatment.

The WaterColor Management is licensed to write business on a nationwide basis and has underwriting agreements with an A++ XV carrier to underwrite a highly specialized liability policy for the water treatment industry. Coverage for water treatment specialists includes protection against Legionella bacteria-based claims. Combined multiple coverages are available in one occurrence-form policy, including general liability; products and completed operations; professional liability; and broad pollution liability.

WaterColor’s clients include national and local water treatment service companies, water chemical manufacturers and distributors, as well as septic system installation and management companies.

WaterColor's customers apply biocides, scale inhibitors

14 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

and corrosion preventatives to air-conditioning cooling towers; boilers and other water-regulated heat transfer mechanisms; and to irrigation systems. The company also covers businesses offering water filtration and water softening programs.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Karen Seals at 256260-0412 or email: karen@ watercolormanagement.com

Marinas and Boat Dealers Market Detail: Houston

International Insurance Group (www.hiig.com) has an A-rated, admitted program developed for marinas and boat dealers.

Coverages include: liquor liability; care, custody and control; commercial general liability; watercraft liability; accessories, hoist and haul-out, business interruption; property; piers and docks; marina operators legal; boats; completed operations liability; and ship repairers legal.

Available limits: As needed Carrier: Great Midwest Insurance Co.

Specialty’s (www. distinguished.com) coverage targets hotels, resorts, and casinos. Coverage Option A includes $1 million aggregate limit; $5,000 deductible; 25,000 notifications per location (capped at 250,000).

Sublimits for regulatory fines/ penalties are: full limit; PCI fines and penalties: $100,000; legal and forensics: $100,000.

Coverage Option B includes: $1 million aggregate limit; $5,000 deductible; 50,000 notifications per location (capped at 500,000); sublimits of: regulatory fines and penalties: full limit; PCI fines and penalties: $100,000; and legal and forensics: $250,000.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Tara Hughes at 425213-1259 or email: thughes@ distinguished.com

This section brought to you by Insurance Journal’s sister website: www.mynewmarkets.com

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West

California High Court Rules Firms Must Protect Households From Asbestos

T

he California Supreme Court says companies can be held liable for exposing members of a worker’s household to asbestos.

The court ruled unanimously earlier this month that companies have a responsibility to prevent such exposure when they can reasonably foresee that INSURANCEJOURNAL.COM

their employees will carry asbestos on their bodies or clothing to their households.

The court limited responsibility to members of a worker’s household and no one beyond that.

The ruling came in two separate lawsuits, one of them against BNSF Railway

Co. by the family of a woman who died of cancer. The family said the woman’s ex-husband, a railway employee, exposed her to asbestos from his job, and the asbestos caused her cancer.

A BNSF spokeswoman said the company was reviewing the decision.

Copyright 2016 Associated Press.

DECEMBER 19, 2016 INSURANCE JOURNAL | WEST | W1

WEST | News & Markets

California Commissioner Issues Auto Collision Repair Regulations

C

alifornia Insurance Commissioner Dave Jones issued new Auto Collision Repair Labor Rate Survey Regulations in early December that he said will increase consumer protections when a damaged vehicle is repaired.

The California Department of Insurance over the last several years has worked on regulations regarding automobile collision repair claims with insurance companies. The reg-

ulations went through a formal public review process and were

drafted and revised with input from consumers, insurers and repair shops.

Insurers limit payments for auto collision repairs based

on labor rates derived from insurer-created labor rate surveys, which Jones said did not fairly measure labor rates. Consumers are left having to pay the difference between the actual labor cost of the repair and what the insurer was willing to pay based on its labor rate survey, according to Jones.

The new regulation sets forth voluntary standards for insurers to accurately and reliably survey auto body repair labor rates to ensure they are pay-

ing the reasonable and proper amount, he said.

The Office of Administrative Law approved the commissioner’s regulation earlier this month.

The regulation goes into effect on Jan. 1, 2017. However, these newly adopted regulations are part of the Fair Claims Settlement Practices Regulations, which contain a delayed compliance date in order to give insurers, who choose to use these voluntary regulations, additional time to comply. The earliest compliance date is Feb. 28, 2017.

Washington Workers’ Comp Rates for 2017 to Increase Less Than 1%

Insurance Foundation Launches Washington Chapter

he average premium for workers’ compensation coverage in Washington will go up less than 1 percent in 2017, according to the Department of Labor & Industries.

L&I announced this month the rate will rise by an average of 0.7 percent next year.

The 2017 increase will cost employers on average about $10 more a year per employee.

Most workers will not see an increase in what they pay.

“We’ve improved the support we provide to injured workers, and I’m pleased to say we’re seeing tangible, positive results,” L&I Director Joel Sacks said in a statement. “Injured workers are able to stay at work or return to work faster, and the number of workers on long-

he Insurance Industry Charitable Foundation Western Division has opened a Washington chapter.

This marks the introduction of the division’s third chapter, following the launch of its Colorado and Arizona chapters in 2011 and 2012.

The Washington chapter will be led by a board of industry leaders from insurance companies across the region, with Molly Hunter, senior vice president and global relationship leader of Zurich Insurance, and Jacob Decker, vice president and director of financial institutions of Woodruff-Sawyer & Co., serving as chapter

T

term disability is dropping.

That’s good for employees and employers, and it helps us hold down costs.”

L&I sets rates each fall for the following year. Over the past six years, the average annual workers’ comp rate increase has been just over 1 percent.

In September, L&I proposed the 0.7 percent rate increase and then took public input on the plan.

The agency held public hearings around the state and also took comments online and by mail before making the final decision.

The new rates take effect Jan 1.

L&I is the state’s primary workers’ comp insurance provider, and covers roughly 2.6 million workers and more than 170,000 employers.

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co-chairs.

The inaugural IICF Washington board comprises 11 industry leaders from across the state, representing companies including AIG, AFM, Berkshire Hathaway Specialty Insurance, Chubb, CNA, Great American Insurance Group, The Hartford, Swiss Re, Woodruff-Sawyer and Zurich.

IICF operates five regional divisions serving the Midwest, Northeast, Southeast and the Western U.S., along with its most recently established division in the UK. The IICF was established in 1994 and is directed and funded by the insurance industry.

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News & Markets | WEST

The California Earthquake Authority 20 Years Later

By Don Jergler

I

t was 20 years ago this month that insurers began selling California Earthquake Authority policies — two years off of a hard lesson learned by the state’s residents and its insurance market.

But 20 years later are we any better off?

Glenn Pomeroy, the CEA’s CEO, has no doubts about the change that has occurred, or the changes that will occur — one way or another.

“We’ve grown so much in terms of being able to offer a much more valuable product,” Pomeroy said.

The concept of the CEA was born from the rubble of the 1994 Northridge earthquake.

The 6.7 magnitude blind thrust quake caused roughly $24.5 billion in insured losses, and insurers began refusing to write new California residential policies to avoid a new state law mandating that earthquake policies be INSURANCEJOURNAL.COM

offered. Eventually, new home policy sales across almost 95 percent of the market were closed.

The California Legislature established the CEA in 1996 to address a home insurance market crisis that ensued.

In creating the privately funded, publicly managed nonprofit, participating carriers could sell and service CEA earthquake policies, while the CEA would bear the risk in the event of covered claims.

CEA’s participating insurers began writing its policies on Dec. 1, 1996, and over the next year the market crisis dissipated and home insurance sales returned to normal.

However, it took one more lesson following the Northridge Quake before the state could get to that point.

Between 1994 and 1996, when the market was in turmoil, the Legislature’s first attempted fix resulted in the mini-policy.

The barebones policy

offered insurance for a structure’s replacement value, but only $5,000 worth of contents coverage, one deductible (15 percent), $1,500 in additional living expense coverage and no discounts for mitigation.

“The benefits were minimal,” Pomeroy said.

Pomeroy blames all of those limitations on a lack of uptake, and said the CEA has since worked to add options and lower rates.

He noted that the CEA now offers up to $200,000 worth of personal property coverage, up to $100,000 worth of loss of use coverage, a 20 percent discount for retrofitting and a range of deductibles (5 percent, 10 percent, 20 percent, 25 percent).

He added: “And we’ve lowered our rates by 55 percent

combined over the last 20 years.”

The CEA now has 923,000 policies issued, and according to Pomeroy 2016 has been the entity’s best year yet.

“This year is by far and away the biggest growth year we’ve ever experienced,” Pomeroy said.

Over the last 10 years, the CEA’s average annual new policy growth rate is around 12,000 per year. In first 10 months of this year, more than 43,000 new policies have been sold.

“We’re more than tripling the annual average in annual policy sales,” he said.

He credited that in part to the new options and lower rates introduced at the start of the year. He also credited increased public awareness of earthquake potential due to recent highly publicized disasters from temblors in other countries.

The latest figures show the state’s current residential earthquake uptake is now 12.45 percent, which is up over a steady 10-percent market penetration that’s held over the past several years, according to the California Department of Insurance.

Pomeroy thinks that’ll be a bigger number — someday.

“Frankly, I think we’re going to have weathered an earthquake over the next 20 years,” he said. “I think the value of earthquake insurance protection will be even more evident then.”

‘Frankly, I think we’re going to have weathered an earthquake over the next 20 years.

I think the value of earthquake insurance protection will be even more evident then.’

DECEMBER 19, 2016 INSURANCE JOURNAL | WEST | W3

WEST | PEOPLE

Jeff Huebner

AAA insurer, CSAA Insurance Group, has named Jeff Huebner chief risk officer.

Huebner will be responsible for managing all aspects of enterprise risk for the company, including traditional risk management, reinsurance, corporate insurance and business resilience.

Huebner joined CSAA in 2001 as manager of risk finance and captive operations, and most recently served as the vice president of treasury overseeing an insurance and pension assets investment portfolio of $7 billion.

CSAA Insurance Group offers automobile, homeowners, and other personal lines of insurance to AAA members through partnerships with AAA clubs in 23 states and the District of Columbia.

Jared Banes

Will Spong

Reno, Nev.-based LP Insurance Services Inc. has named Jared Banes a shareholder and director of risk management.

Banes will also continue as a sales executive at LP Insurance, a role he’s held since 2013. He will also assume oversight of the risk management services group.

Banes now oversees the teams providing property/casualty claims management, risk transfer and contract review services, workers’ compensation claims management, loss control and safety services, as well as online risk services.

Barnes was previously a broker with the Leavitt Group.

LP Insurance is a risk management and insurance brokerage firm.

Scott Muzzy

Linda Brobeck

Rick Haycock

Lovitt & Touché in Arizona recently hired Will Spong as senior vice president of employee benefits.

The firm also recently hired Scott Muzzy as sales executive.

Spong will oversee business development, with a focus on self-funding and employee communication platforms.

He was previously a market leader at CBIZ, a vice president of employee benefits at Brown and Brown Insurance and a sales consultant at The Hartford.

Muzzy will help his clients create a sound insurance program by implementing risk and claims management, cost containment and detailed structuring of policy form.

He was previously a producer at Reseco Insurance Advisors LLC, and Alliant Insurance Services.

Lovitt & Touché is an Arizona-based independent insurance brokerage and benefits solutions provider.

Pinnacle Actuarial Resources Inc. has named Linda

W4 | INSURANCE JOURNAL | WEST DECEMBER 19, 2016

K. Brobeck a senior consulting actuary in the firm’s San Francisco, Calif. office.

Brobeck has been in the property/casualty insurance industry since 1986 and has been providing actuarial consulting services since 2011. Her consulting career has focused on ratemaking and predictive modeling for several lines of insurance, including personal and commercial automobile, homeowners and professional liability.

Prior to consulting, she worked for Allstate and Kemper National Insurance Co. Brobeck’s core services include ratemaking, predictive modeling, and regulatory support for personal and commercial lines with a focus on California.

Bloomington, Ill.-based Pinnacle also has offices in Atlanta, Chicago, Indianapolis and San Francisco.

EPIC Insurance Brokers & Consultants has hired Rick Haycock as a property/casualty insurance producer in Northern California.

Haycock will be responsible for new business development and the design and management of insurance and risk management programs for clients in the Sacramento area and across the Western U.S. He will be based in EPIC’s Sacramento office and report to Tom McCready, regional director or property/casualty operations.

Haycock joins EPIC from Mackie Insurance Brokerage, where he spent more than seven years as a commercial insurance broker and risk management consultant. He was previously vice president and commercial account manager for The First American Corp.

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

DUAL Commercial has named Melanie Nesterenko and Brian Lynch to their environmental team.

Nesterenko and Lynch, both senior underwriters, will be based in San Francisco, Calif.

Nesterenko has more than 25 years of experience in the environmental consulting and insurance industries. She was previously associate vice president in underwriting and a West Coast manager for Rockhill Insurance Co. Lynch has more than 25 years of experience in the environmental consulting and insurance industries.

He was previously president of Environmental & Construction Services.

DUAL Commercial is a specialty program administrator offering property/casualty products through several subsidiary companies.

INSURANCEJOURNAL.COM

Discover the Difference Helping employers achieve long-term workers’ comp cost savings.

Learn more about what sets us apart at CompWestInsurance.com

CompWest Insurance Company is a member of AF Group. All policies are underwritten by a licensed insurer subsidiary of AF Group.

News & Markets | NATIONAL

Cyber Market Hampered by Insurability Challenges: Report

By L.S. Howard

W

hile insurance against cyber risk represents a tremendous new business for the insurance industry, numerous problems with the insurability currently impede the development of the market, according to a new report published by the Geneva Association.

The report, titled “Ten Key Questions on Cyber Risk and Cyber Risk Insurance,” said the main insurability problems are “the lack of data, risk of change, accumulation risk, loss sizes, availability of risk capital, and potential moral hazard problems.” “[A]necdotally it is not only the challenge of insurability but also the demand for products that is hampering the market’s development,” said Anna Maria D’Hulster, secretary general of the Geneva Association, the Zurich-based insurance think tank.

“Either way, the successful development of a cyber risk insurance market is an important goal for the further INSURANCEJOURNAL.COM

development of society,” she commented.

In a discussion of cyber risks’ insurability problems, the report said, losses are difficult to measure because of a lack of data. “Moreover, even if there are data available, it is questionable whether or not historical data are a meaningful indicator for the future, due to the dynamic nature of cyber risks and thus the risk of change,” the report continued.

Adverse Selection

Another significant problem in cyber insurance is “information asymmetry,” as a result of adverse selection and moral hazard.

The report explained that companies that have experienced a serious cyber attack are more likely to buy insurance, which results in adverse selection.

“The insurers in the market try to alleviate adverse selection effects by screening (e.g. up-front audits), self-selection (e.g. questionnaires in the underwriting process), and signaling (e.g. certificates for

IT-compliance),” the report explained.

Further, moral hazard occurs when there is a change of behavior after purchasing insurance. “One example is the insured’s lack of incentive to invest in self-protection measures … if full coverage is offered,” the report added.

While insurers use instruments such as screening (e.g. audit) and risk sharing (e.g. deductibles, cover limits) to reduce moral hazard, the GA report said, information asymmetries still pose a significant problem for the insurability of cyber risks.

“For instance, because of complex interrelations in modern IT systems, firms might be vulnerable to cyber risk even though they have invested in self-protection. Thus, the benefit of self-protection investments in one company highly depends on the investments in other, connected firms,” the report explained.

Coverage Limits, Exclusions

The development of a cyber insurance market is also being hindered by coverage limits, the report said, noting that policies tend to cover only limited maximum losses (US$10 to $500 million) and contain

several exclusions, including those for self-inflicted losses, accessing unsecure websites, or terrorism.

Therefore, extreme scenarios – also known as “Cybergeddon” – cannot be covered well by existing insurance policies, the report emphasized.

“Additionally, there might be indirect effects of cyber losses that cannot be measured and thus are not covered (e.g. reputational losses and their impact on stock prices).”

Policy complexity is another problematic aspect of coverage limits, GA continued. “Given the large number of exclusions and the dynamic nature of cyber risk, there is uncertainty about what the cyber policy actually covers. Worse yet, the policies in the market have no agreed-upon terminology, which makes the offerings very difficult to compare,” the report explained.

“While the cyber insurance market is currently in its early stages, as market development continues, the risk pools will become larger and more data will be available,” it said, noting that several new competitors have entered the market and more are planning to do so.

“Additionally, it will lead to a more uniform terminology and standardization of products.”

The report suggested that the industry should establish standards with regard to definitions, coverages and pre-coverage risk assessment, which will help to reduce some of the problems of insuring cyber risk.

The report compiles and analyses a database of 211 of the most significant industry reports and academic papers on cyber risk and cyber risk insurance.

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 15

NATIONAL | Special Report | Charity Issue

By Don Jergler

M

any property/casualty insurance carriers have focused their charitable efforts on veterans, and they’ve done so for a number of good reasons.

One important reason for adopting veterans causes was explained by Glenn Elmore, director of sales training for Combined Insurance, a Chubb company.

“I think that by giving back to those folks, in return hopefully we get more military veterans as employees,” he said.

In other words, it’s easier to recruit veterans if that group ranks high on your list of charitable causes.

Combined Insurance has a strong interest in hiring veter-

ans. Elmore himself is a veteran. He was a gunner’s mate first class in the U.S. Navy and a rescue swimmer from 1998 to 2007.

“There’s quite a few of us ... in the organization that can stand up and say, ‘This is who we are and this is who we gave back to this year,’” he said.

The company likes to hire veterans because they are used to structure, they are disciplined and are trained to excel at a high level, Elmore said.

Elmore’s sales program, for example, puts people in a highly structured learning environment, which is just what military personnel thrive in.

Veterans are also highly adaptable thanks to their expe-

rience in the service, he said.

“They’re very comfortable in a changing, new environment,” Elmore said. “When you’re in the military, you go someplace new every three years, aside from all deployments in between.”

The industry’s interest in veterans isn’t new. San Antonio, Texas-based USAA, which was founded in 1922 by a group of U.S. Army officers, is almost synonymous with veterans, noted Russell Lee, an executive at a competing carrier.

“Their whole business model is obviously geared toward people who are in the military,” said Lee, the vice president of product management for Los Angeles-based Farmers Insurance. “This has always

served as a model.”

Farmers has made veterans a target market in more than one way, and Lee said there are good reasons for that.

“They self-selected to join the armed forces, to defend the country,” he said.

“That says a lot about a person’s character. We’ve seen great success with insuring those folks at Farmers,” Lee said.

Because most veterans are considered reliable and trustworthy, he believes they make great policyholders, who in turn might be attracted by the company’s charitable deeds for veterans.

“I think a lot of insurance companies that know that reach out and want to give back,” he said.

Combined Insurance volunteers served meals to more than 350 military personnel and their families at the USO Great Lakes Center on Naval Station Great Lakes, Ill.

16 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

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Farmers Insurance’s Suits for Soldiers program enables people to support veterans by donating gently used and dry cleaned suits or professional attire at Farmers agencies.

‘I think that by giving back to those folks, in return hopefully we get more military veterans as employees.’

“Our veteran agency owners … they do really well as Farmers agents,” Lee said.

Lee grew up with both parents in the U.S. Army, and he served from 1996 to 2005, and then left the service at the rank of captain.

When Lee was discharged, one of the first things he realized was he needed nice clothing — as he mostly wore uniforms for all of those years.

“I was institutionalized,” he said. “When I was transitioning at the age of 30 into the civilian world, I had no idea what I was doing.”

‘They’re very comfortable in a changing, new environment.’

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He had to go to a civilian friend to ask for help. They went to Dillard’s department store in search of dress clothes.

“I probably spent over $1,000 that day,” he said, adding that the hefty spend only got him two suits.

So when Farmers launched its Suits for Soldiers program, which aims to collect 50,000 suits to help make veterans' transition into the civilian workforce easier, he was on board immediately.

“This is a great opportunity for people to donate gently used suits,” he said. “It’s a really easy way to support veterans.”

Mark Oppenheim, claims general manager for Mayfield Village, Ohio-based The Progressive Corp., said he actively seeks to hire veterans for the carrier’s claims department.

“When we’re able to hire veterans, it really provides benefits on many fronts,” Oppenheim said. “It’s benefi-

cial to customers, I think it’s beneficial to the communities in which we operate, and I think it’s good for Progressive as well.”

Like the others, he said veterans make good employees thanks to the skills and training they get in the military.

Claims representatives often handle multiple claims at a time, so they need excellent organization abilities as well as good communications and analytical skills, he said.

“I think all those are skills that individuals learn and gain in the military, and the vast majority of them apply those skills to claims roles and other roles at Progressive,” said Oppenheim, whose son Michael served in the U.S. Marine Corps from 2003 to 2008, including a deployment to Iraq.

One of Progressive’s pet programs is Keys to Progress, which provided refurbished vehicles to military families on Veterans Day. Progressive teamed up with

Enterprise Rent-A-Car, which provided six months of automobile insurance through Progressive for each donated vehicle.

“That way, when the recipients drive away from our facilities, everybody feels better about that,” Oppenheim quipped.

‘They self-selected to join the armed forces, to defend the country. That says a lot about a person’s character. We’ve seen great success with insuring those folks at Farmers.’

That’s just three carriers among a sea of insurers, which have long been recognized as among the country’s most military-friendly firms, carving out large portions of their budgets devoted to hiring veterans.

continued on page 18

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 17

NATIONAL | Special Report | Charity Issue

Progressive Insurance helps support military members and their families as part of the annual Keys to Progress program. The one-day event this year provided more than 100 refurbished vehicles to military families across the country on Veterans Day. continued from page 17 A Big Pool

The P/C industry has often struggled to compete with other industries for recruits.

Insurance executives and consultants have blamed this situation on a poor reputation, lack of appeal of insurance careers among high school and college students, and a limited pool of trained talent.

At least one of those issues maybe readily fixable. There’s a big pool of veterans.

According to the latest data available from the Bureau of Labor Statistics, 21.2 million men and women were veterans, accounting for roughly 9 percent of the civilian population age 18 and up.

Following is a sampling of charitable acts toward veterans from carriers. It wasn’t possible to include all the carriers that support veterans, nor all of each carrier’s charitable giving to veterans. If you would like your carrier listed in an online version of this story, please email djergler@ insurancejournal.com before December 31.

IICF

The Insurance Industry Charitable Foundation consists of many insurers giving time and money to charitable causes. During the IICF’s 2016 Week of Giving, industry volunteers in the Southeast Division engaged in cleanup and repair service projects at veterans cemeteries throughout Texas.

Activities included cleaning headstones and gardening.

‘I was institutionalized. When I was transitioning at the age of 30 into the civilian world, I had no idea what I was doing.’

The IICF’s annual Week of Giving each October brings together industry professionals for a weeklong series of volunteer projects.

Nearly 350 volunteers went to national cemeteries in Houston, Austin, and San Antonio, Texas.

18 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

The volunteers cleaned and polished more than 12,000 headstones in one day.

Volunteers in Austin focused on polishing more than 400 bronze VA plaques, state seals and statues. Other activities included mulching, weeding, repairing tree rings and painting. Volunteers also placed wreaths and flags throughout the grounds.

USAA

USAA and the nonprofit PsychArmor Institute in September unveiled the “School for Military and Veteran Caregivers and Families,” which is an online program that covers a range of subjects that military and veteran caregivers identified as educational needs.

This educational and proactive support program provides free educational content for military and veteran caregivers who voluntarily care for wounded, ill or injured military service members or veterans.

The courses cover a range

of subjects that have been identified by military and veteran caregivers as educational needs.

One course is titled “Understanding Invisible Wounds of War at Home,” which is comprised of seven online sessions that educate caregivers on supporting those with injuries like post-traumatic stress disorder, depression and substance abuse.

The school’s online education content will be featured on The Elizabeth Dole Foundation’s HiddenHeroes. org website.

Progressive

Progressive Insurance and Enterprise Rent-A-Car for the past four years have helped support military members and their families as part of the annual Keys to Progress program.

The one-day event this year provided more than 100 newly refurbished vehicles to military families across the country on Veterans Day. Enterprise Rent-A-Car INSURANCEJOURNAL.COM

provided six months of automobile insurance for each donated vehicle through Progressive and helped transport families to the giveaway events as needed.

The vehicles were fully restored as an extension of the National Auto Body Council’s Recycled Rides program, an industry-wide collaboration to repair and donate vehicles to those in need.

The vehicle giveaways took place at 63 locations across the country, including Progressive’s service centers.

Farmers

Farmers Insurance recently launched its nationwide Suits for Soldiers program to help active duty military personnel transition to civilian work and life.

The program helps enable people across the country to support veterans by donating gently used and dry cleaned suits or professional attire at Farmers agencies. It was launched at a kick-off event in Southern California, during which Los Angeles Mayor

Garcetti declared October 18 “Suits for Soldiers Day.” Farmers, in creating the initiative, cited Department of Defense statistics that show more than 1 million military personnel will be making the transition from the military in the next couple of years, many of whom may not own appropriate business attire to go to networking events, interviews or work. Farmers' goal is to collect 50,000 suits.

Combined Insurance

Combined Insurance, a Chubb company, recently sponsored a No Dough Dinner, a year-round program that offers a free, hot meal to military and military families.

During an event hosted by the USO of Illinois, Combined Insurance volunteers served meals to more than 350 military personnel and their families at the USO Great Lakes Center on Naval Station Great Lakes.

USO No Dough Dinners are normally served the evening before a military pay day, when funds for service mem-

During the Insurance Industry Charitable Foundation’s Week of Giving, industry volunteers in the Southeast Division engaged in clean up and repair service projects at veterans cemeteries throughout Texas.

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QBE North America’s business resource group supporting veterans, Valor, partnered with the American Red Cross to send care packages to American soldiers overseas. bers and their families may be running low. All of the No Dough Dinners are funded by companies, clubs or other organizations who then provide the volunteers to serve the food on site.

Many of the military personnel that utilize the USO Great Lakes Center and come to the No Dough Dinners are junior sailors attending military specialty schools on the Naval station, but all branches of military service are welcome.

QBE

QBE North America’s business resource group supporting veterans, Valor, has partnered with the American Red Cross to send care packages to American soldiers overseas.

The Valor group posted flyers in its New York City, Denver and Sun Prairie, Wisconsin, offices to request donations of everyday care products not readily available to deployed troops.

Items collected were those commonly requested by military personnel, including detergent pods, shampoo and conditioner, baby wipes, tooth-

paste, deodorant, shave gel and feminine products.

The program sent hundreds of items to various military instillations in the Middle East and Africa.

‘When we’re able to hire veterans, it really provides benefits on many fronts. It’s beneficial to customers, I think it’s beneficial to the communities in which we operate and I think it’s good for Progressive as well.’

Valor was created in 2013 to serve as an internal source of information about veterans and reservists who have served in the armed forces within QBE North America.

Valor promotes QBE North America as an employer of choice to veterans in the communities where they do business.

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 19

NATIONAL | Special Report | Charity Issue

Operation Healing Forces Unique Charity Created by Insurance Executive Markel

By Don Jergler

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ary Markel was at home one evening watching a television show on volunteers helping wounded veterans scuba dive in St. Thomas in the U.S. Virgin Islands.

Some had missing limbs, and others had severe disabilities. They and the volunteers persevered and took the plunge.

And that struck Markel, whose name is attached to one of the largest property/ casualty insurance companies in the U.S., in a profound way.

He soon after picked up the phone and reached out to his friend, Gen. Doug Brown, a four-star general and commander of U.S. Special Operations Command at MacDill Air Force Based in Tampa, Fla. Markel wanted to see what he could do.

He was referred to the U.S. Special Operation Command Care Coalition, which supports special operations forces who are wounded, ill or injured, as well as their families.

What came out of those conversations prompted Markel to offer his 155-foot yacht to take wounded veterans and their spouses on getaways to help them heal and get reconnected.

The first trip aboard Markel’s yacht nearly six years ago in the British Virgin Islands included a counselor and five couples who were members of Care Coalition.

“The feedback we got from the counselor was so positive that I decided to start a charity called Operation Cruise,” Markel said.

So he put

Editor's Note: Read the full version of this story on: www.insurancejournal.com

together a 501(c)3 and started calling on fellow yacht owners to lend their vessels to the cause. However, using yachts proved to be costly — they had to reimburse yacht owners’ expenses, such paying for the large crews required on these vessels — so the operation began soliciting vacation homes and resorts to the cause.

Horseback riding is one of the therapeutic activities designed to Operation Healing Forces help couples bond at the healing retreats put on by Operation Inc. in Clearwater, Fla., Healing Forces Inc. was born. The organization This is why he had no problem donating treats active duty and recently discharged his yacht. wounded veteran special operations “That’s the reason I have my toys, that’s forces and their spouses, who have been the reason I have the houses I live in,” screened and nominated by Care Coalition, Markel said. “Those guys are protecting to a week-long rehabilitation retreat that that.” typically includes six couples.

The charity funds all the administrative The charity has helped 150 couples since costs, so “all donations go to these heroes,” its inception in 2011, and is gearing up to Markel added. help many times that number in the next One of those heroes is Lt. Col Jeff few years. They are expecting to hold 100 Hudson, who went with his wife, Melissa retreats from 2017 to 2019.

Hudson, on the one of the early retreats in When asked to explain why the TV 2011. Hudson injured his back during duty, show moved him so much, Markel replied: and the injury had him to the point where “Unfortunately, all of the military, I he could no longer continue his primary believe, is overlooked, especially the spefunctions, so he left the service in 2013. cial operations forces.”

“I knew I could not go back,” he said.

That took a mental toll on Hudson.

Before long he grew bitter, and he felt abandoned because all he had known was service since age 18. At age 47 and out of the military, he was lost.

“You kind Scuba diving is an activity that’s familiar to many in special operations of get lost in the forces.

20 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

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darkness,” Hudson said.

He connected with Care Coalition, which turned him on to Operation Healing Forces.

They took Hudson and his wife along with other couples on a retreat to the Caribbean on Markel’s yacht.

“And it made a tremendous, positive difference in our lives,” he said.

Hudson said he was taken aback that someone was providing such an opportunity for he and his wife to be together.

“They were actually sharing their home, sharing their property, sharing their own bed with you,” he said.

Following the trip, he stayed in touch with Markel and they soon realized they both lived in the Tampa area. They sat down one day and Markel informed him that he wanted to grow the program and he wanted to bring Hudson on to run it.

After working as a defense contractor following his retirement from the service, Hudson became the executive director of Operation Healing Forces in 2015.

This gave him an opportunity to help his comrades, some of whom had endured burns over their entire body, and others who had been shot multiple times, as well as soldiers with pent up anger and post-traumatic stress disorder.

“Everybody kind of comes in at a different level,” Hudson said. “And they all leave on a better level.”

Therapeutic activities are designed to help a couple bond, such as parasailing, or riding ATVs, horseback riding, dolphin encounters, scuba diving and zip-lining.

Hudson explained that quite often these couples have marriage difficulty, and trouble returning to their past lives, so such activities serve as an icebreaker.

Hudson used as an example a paratrooper, who is familiar with being strapped into a harness and floating high in the air. They take that veteran and spouse parasailing.

‘Unfortunately, all of the military, I believe, is overlooked, especially the special operations forces.’

“Most spouses have never been in a INSURANCEJOURNAL.COM

The spouses are one of the biggest beneficiaries from these trips, said Tony Markel, Gary’s brother, who is a big part of the charity efforts.

“The wives are every bit as positively impacted as the soldiers, if Gary Markel lent his yacht to wounded members of the special operanot more,” Markel tions, an act that led to the creation of the charity Operation Healing said. “We had a Forces Inc. number of instances where we were parachute rig nor suspended floating in the told the week-long retreat saved some air,” Hudson said. “A look of excitement marriages.” and fear fills their face, whereas, the veter Although he’s never have been in the an is quite comfortable and laughing. Now, military, Markel said it shouldn’t be hard she grabs him for security and reassurance. for anyone to comprehend why a charity The emotional ice is broken, and the coulike this is important. ple begins talking.”

“I am very sensitive to the role that the They may also put the pair on recremilitary plays, and the threats we’ve got ational vehicles that happen to be special staring us in the face now,” Tony Markel operations forces infiltration vehicles. said. “The sacrifices that these young men “Many special operations forces are and women make in terms of separating trained on how to ride in the most arduous from their spouse, and in terms of injury, terrain. For the spouse though, it’s usuin terms of death, in terms of suicide, in ally their first time on an ATV, jet ski, or terms of stress on the marriage, the kids, is snowmobile,” Hudson said. “The pair take unbelievable.” turns driving and holding onto each other Tony Markel isn’t a stranger to taking on as the passenger. The veterans remember charitable causes. In 2014, he was honored their training and their experiences, and for his work to raise $1 billion for cancer begin to share that with their spouse. Often research as national chair for the City of times, this is something they don’t disHope’s Power of Hope campaign. He was close, but now they are.” touched by the disease when his wife, Sue, Maureen J. Denlea, development direcwas diagnosed with ovarian cancer. tor of Operation Healing Forces, said it’s Now, he said he feels just as strongly not unheard of for spouses to find out about Operation Healing Forces as he did during a retreat exactly what the veterans with his efforts to help they married actually did in the military. fund cancer research.

One man had told his wife for years “This one has a really that his primary function in the military special place in my heart was to hand out supplies. During the trip, as well,” he said. she found out he was actually involved in secretive special operations missions, Share this article with Denlea said. a colleague.

“He never told her until they were on the trip,” she said. “It helps the wives IJMAG. understand these guys, because they’re COM/1219BX not the same people who left.”

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 21

NATIONAL | Special Report | Charity Issue

NSM Insurance Group Wells Media Group NetVU (Network of Vertafore Users)

During their annual convention in March, more than 50 members of NetVU (the Network of Vertafore Users) devoted a day to serving at the San Antonio Food Bank. Volunteers sorted 12,000 pounds of food, enough for 10,000 meals: big numbers that illustrate the magnitude of the need to help those with hunger. Shown: NetVU partners, board members and volunteers sort food during the organization's Day of Caring in March 2016 at the San Antonio Food Bank.

On Oct. 14, 2016, Wells Media Group staff, publisher of Insurance Journal, volunteered at Father Joe's Villages to distribute lunch to those in need.

Julie Tinney, chief marketing officer, whipped up some grub in the kitchen, Mark Wooster, chief financial officer, distributed drinks and Barbara Whiffen, operations manager, served not only lunch but smiles as well.

Aartrijk

Peter van Aartrijk (left in photo) of the Fairfax, Va.-based insurance marketing firm Aartrijk, heads each summer to Romney, W.Va., for volunteer work with Jeremiah Project (jeremiahproject.org). The Jeremiah Project takes middle school students on mission trips to make homes drier, safer, warmer and more accessible for families in Virginia and West Virginia.

For the past 12 years, NSM Insurance Group has been involved in the Irish Pub Tour de Shore by producing a team of riders and volunteers as well as being a sponsor. This year, NSM riders and volunteers raised $30,000.

The tour is a 65-mile charity bike ride from an Irish Pub in Philadelphia to one in Atlantic City. It supports the Irish Pub Children’s Foundation, a non-profit that supports first responders and their families who are killed or severely injured in the line of duty, improving relationships between law enforcement and the community they serve and encouraging children through education and recreation.

Heffernan Insurance Brokers Shepherd Insurance Frank H. Furman

It is important to the staff at Furman Agency to give back to children’s charities that will help advance their education and give them an opportunity to succeed in life. The agency gives back by sponsoring local walks and runs, hosting school supply drives and holiday toy drives, funding college scholarships, along with supporting local events.

Shepherd employees and family at the Alzheimers Walk in Indianapolis, Ind. In October 2015, a group of approximately 80 Shepherd employees gathered to support The Walk to End Alzheimer’s. The team raised over $12,500. The team, named the "Shepherd Unforgettables" was featured on local area billboards thanking us for our hard work, fundraising tactics, and team spirit. The money raised went toward research that will one day end Alzheimer’s for future generations. In 2016, Shepherd will make a corporate donation to the Alzheimer's Association in lieu of spending funds on trinkets and goodies for clients.

22 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

Haylor, Freyer & Coon

Haylor, Freyer & Coon Inc. incorporates community support as a core value of the agency. This comes in the form of financial support and volunteering. Staff is afforded time off with pay to support charities important to them. In 2016, over 75 employees took part in a three-day project to improve the facilities at one of PEACE Inc.’s Head Start Schools. The entire school was repainted, book shelves were constructed. Carriers partners also play a role. The Chubb Charity Classic is an annual event that provides funding for local communities.

Heffernan has been involved in the community since its inception in 1988.

In the past 10 years, Heffernan has donated over $6.5 million to charity.

Heffernan has been among the Top Greater Bay Area Philanthropists since 2003. Heffernan believes giving back, whether through volunteer opportunities or donations, is a way to improve the communities where we live and work for the future. Heffernan employees average $2,500 in donations per employee and sponsor five official avenues for charitable giving: employee matching; Garee Lee Smith Scholarship Award; up to four paid days off of volunteer time; grant donations and Grant-a-Wish — a program that grants wishes to families with children ages 4-18.

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MJ Insurance

Higginbotham Answer Financial

In June, associates from Answer Financial celebrated its annual Month of Service by donating more than 600 hours of time at seven non-profit organizations across the country.

Answer Financial’s Month of Service aligns with that of its parent company Allstate, with the intention of making a concentrated impact in the community. Shown: Answer associates working with MEND in Southern California's San Fernando Valley. The volunteer-powered organization offers a foodbank, clothing center, health care center, job training, homeless programs and more.

In partnership with the North Texas Community Foundation, the firm created the Higginbotham Community Fund in 2011 to provide monetary support to nonprofits operating in its markets throughout Texas. Grants from the fund are distributed to nonprofits selected by an advisory committee comprised of Higginbotham employees.

All employees have the opportunity to influence how much money gets put into their local community. Since inception, the Higginbotham Community Fund has generated $1.04 million in employee contributions and pledges, $764,945 of which has been granted to more than 200 nonprofits in Texas.

Risk Strategies Co.

The Chicago office of Risk Strategies Co.'s community service initiative called Risk Strategies Cares, headed up by Diane Walsh, Dawn Woodring-Mosley, Alex Krause and Sherman Reynolds, took part in a Veteran’s Day Celebration at the Jesse Brown VA Medical Facility in Chicago.

In addition to being an event sponsor, volunteers served pizza to veterans in attendance and delivered pizzas to those unable to attend. The event was coordinated with Pizzas4Patriots (www.sgtpizza.org), and the Voluntary Service Department at the Veterans Administration.

MJ Insurance exists to inspire the success, fulfillment and well-being of each person served: associates and their families, business partners, clients and the community. The organization chooses two key "charities of choice" in which to focus its efforts in each office. Any fundraising efforts go to support these two charities.

Whether it be putting on a fall festival at a local homeless shelter, hosting a food drive for the families in the ICU at a local children's hospital, or serving meals to the homeless, the MJ Insurance team joins together to give back throughout the year.

LassiterWare Insurance Norman-Spencer Agency

Norman-Spencer employees this year have spent 1,050 hours using both company and personal time volunteering in their local communities for causes. In 2015, the agency established NS Cares, a nonprofit foundation that has raised over $200,000 in donations. In 2016, NS Cares donated more than 147,000 meals to charitable organizations. Future plans include a possible attempt to break the world record for most relief meals packaged in a one hour time period.

The current record was set in 1993 and is more than 530,000 meals.

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The IMA Financial Group

Shortly after the incorporation of IMA Financial Group Inc., the company’s founders created the IMA Foundation, which consistently receives 2.5 percent of IMA’s annual profits. In 2015, IMA donated 6,852 hours of community service. New this year is IMA’s first #SprinkleGoodwill social media campaign designed to brighten someone’s day while sharing it on Facebook, Twitter or Instagram using the #SprinkleGoodwill hashtag.

The IMA Foundation will award one #SprinkleGoodwill participant with a $1,000 donation to the 501c3 nonprofit of their choosing. Visit www. sprinklegoodwill.com.

Fisher Brown Bottrell Insurance

Community involvement means a lot to the employees of Fisher Brown Bottrell Insurance Inc. In September, associates gathered at Trustmark Park in Jackson, Miss., and walked in support of the Leukemia & Lymphoma Society's "Light the Night Walk." A bake sale was held and balloons were sold to raise funds for the event. The Bottrell Division came in second place in overall fundraising and raised $3,241 in support of this event.

In 2008, LassiterWare’s Foundation, LassiterWare Cares, was formed and

by LassiterWare and its employees.

The foundation is operated by the employees and a large portion of the funding comes from monthly employee donations. The mission of the foundation has primarily focused on helping out fellow employees of LassiterWare in times of financial hardship, however LassiterWare Cares has introduced the inaugural LassiterWare Day of Service. Since 2015, LassiterWare employees have put in more than 2,200 volunteer hours within their communities, and contributed $30,000 to the foundation as well as local charity events. LassiterWare has donated $16,000 to the foundation and provides additional support for other local charity events.

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 23

NATIONAL | Special Report | Charity Issue

Chubb

Crest Insurance Group Lockton Cos.

Lockton associates in the Houston office plated meals to serve to women and children at the Star of Hope Women and Family Emergency Shelter. The shelter serves three meals a day to about 300 people daily.

Women In Leadership, a group that supports women’s career development at Lockton, organized the volunteer event where Lockton associates alternated shifts and served families hot meals. Associates who were unable to volunteer donated prizes for the shelter’s Harvest Festival. The associates also donated toys and toiletries for the families.

Dick York, vice president of administration at Crest Insurance and his wife Myrna are volunteers with the Tubac Presideo State Park. Opened and dedicated Sept. 28, 1958, this historic state park is known as Arizona’s first state park. The park was due to close in March 2010 when the Arizona Legislature swept Arizona State Parks funds. Dick and Myrna York are among the Tubac residents who answered the call to volunteer and keep the historic site open and preserve Arizona’ history. They are leaders of the “Botanic Brigade,” working evenings and weekends to keep the gardens fresh, colorful and inviting to enhance visitors' experience.

York International Agency

York International has a history of community involvement, specifically with a focus on Westchester County.

In 2011, York’s Branding Committee asked employees to submit their nominations to create a charity name for York, and “York International Cares” won. All employees currently receive a “York International Cares” t-shirt when participating in a sponsored charity event. One way employees help raise money for charities is by participating in the monthly “Dress Casual for Charity” day. After a $5 donation, an employee has the option of dressing in casual attire.

Starley-Leavitt Insurance Agency

Bouchard Insurance Insgroup

When cancer touched one of Insgroup's employees for the third time, her co-workers showed their support by participating in MD Anderson’s Annual 5K Sprint supporting Colorectal Oncology Prevention and Education in March 12. Employees formed “Team Stacy” to make posters in support of those that participated in the 5K sprint. The personal reward of going the distance with a co-worker far outweighed the physical effort that Saturday morning. In addition to the sprint, our co-worker was honored that day for her courage and strength in her fight with cancer.

Bouchard Insurance has been a community partner of Paint Your Heart Out Clearwater for the past 10 years.

Team members assisted with improving the quality of life for disadvantaged homeowners by volunteering to paint houses. Bouchard is also a team sponsor of the Gramatica Family Foundation, supporting its mission to provide energy efficient housing initiatives and development assistance to disabled military veterans. One employee makes an annual mission trip to Africa to work with children in orphanages. Team members rally around this employee through various fundraisers and donations.

24 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

The Chubb Charity Challenge began in 1996 as a local golf tournament hosted at the Metedeconk Golf Club in New Jersey, where clients and brokers raised $25,000 for local charities.

Since then the challenge has grown to include over 6,000 teams of five who golf for a local nonprofit of their choice. It has raised nearly $13 million.

The tournament is centralized with teams from each local Chubb branch competing at the local level, and winners advancing to the finals. The local level tournaments begin in May with the finals taking place in mid-fall.

Bolton & Co.

Bolton & Co. launched its own philanthropic arm in 2014 called The Bolton Foundation, a nonprofit that operates as a component fund of the Pasadena Community Foundation. Employees help support the foundation through internal fundraising campaigns and events, and they are encouraged to donate and volunteer their time toward causes they are passionate about. Employees are allotted paid volunteer hours. This year, the foundation launched its IMPACT Committee, which was developed to facilitate even more opportunities to volunteer and suggest future beneficiaries.

Allen Starley with Starley-Leavitt Insurance Agency in Twin Falls, Idaho, is heavily involved with the Bonneville County Sheriff’s Search & Rescue unit.

He is part of the dive and repel teams and is involved with rescue or recovery about 16 times per year. Twin Falls is a beautiful area with the Snake River providing many recreational activities that unfortunately result in many accidents, requiring both rescue and recovery.

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Auto Insurance Specialists

QBE North America Alper Services

Alper Services marks its 50th year in business in 2016 with a challenge to its more than 50 employees — each person was asked to volunteer their time or donate money, food, etc., to their charity of choice. The goal was to see every team member complete at least one act so there were 50 acts — or more — that could be demonstrated. The Team took the 50 Acts of Charity Challenge seriously with more than 90 acts of service and kindness reported.

QBE North America invests in the communities where it does business and where employees live and work.

QBE invested in the community through a number of initiatives in 2016. In June, QBE employees located in the Sun Prairie, Wis., office participated in a panel build for Habitat for Humanity of Dane County to provide affordable housing for a local family.

QBE volunteers built all interior and exterior wall panels. Once construction was complete, Habitat for Humanity representatives transported the panels to the build site on Sweet Grass Drive in Sun Prairie.

Bryan Insurance Agency

Bryan Insurance Agency in 2012 started Bryan Cares. Each employee is given up to one paid day off per quarter to participate in volunteer work.

Employees are encouraged to team up on projects when possible. This program has been very successful.

BIA Account Manager Ashley Gibson and Receptionist Charlotte Buckmaster spent a day delivering meals.

Operations Manager Sonya Edwards and Account Manager Ann Ratcliff volunteered at a camp that provides children with physical disabilities, diabetes and cancer with a camping experience.

The Hilb Group

Woodruff-Sawyer & Co. Gibson

At Gibson, GIVE is a program designed to improve and assist colleagues, clients and communities.

Katie Tryniecki, marketing specialist, has a passion for serving the community and working with nonprofits: from coordinating event sponsorships and volunteer opportunities to planning fundraising events. She planned an annual holiday party hosted for kids at a local Boys & Girls Club, orchestrated a food drive that collected over 57,000 pounds of food, and helped raise more than $111,000 in the Great Big Kid campaign for the Boys & Girls Clubs of St. Joseph Country.

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Woodruff-Sawyer supports the community through its CARE program.

The CARE group, which stands for Community, Action, Responsibility, Enhancement, collaborates with local non-profit organizations to help improve lives. It is entirely employee-based. Employees get to nominate charities they would like to support and build events or volunteer opportunities around them. This year, events included: Institute on Aging Christmas Caroling at senior centers (pictured), Corporate Challenge race to support YearUp, San Francisco Food Bank volunteer day, Gift drive for Raphael House , Bake Sale for Bill Wilson Center, Volunteer Day at Boys and Girls Club, and much more.

Auto Insurance Specialists and its employees participated in several charitable events. This year, AIS fielded a team for MuckFest MS Los Angeles 2016. With a company match, the team of 50 employees and friends raised over $9,000 to support the work of the National Multiple Sclerosis Society. Working with Stop Hunger Now, AIS employees and their families packed food boxes for people in developing nations. In support of U.S. Troops, AIS employees collected items and filled care packages for deployed members of the U.S. Armed Forces.

HUB Northeast

The 2016 Insurance Industry Charitable Foundation “Week of Giving” took place Oct. 8-15. HUB International Northeast has participated in this event annually since 2010. For the second straigth year, HUB Northeast chose Volunteers of America as their charity of choice. HUB Northeast hosted a drive to collect items needed by residents in VOA’s shelters/ facilities, such as soap, shampoo, toothbrushes, deodorant, diapers, socks and moisturizer. Week-long efforts included bake sales, Chinese auctions, raffle sales, $5 jeans day and other original fundraising ideas.

Over the years, the Hilb Group has been proud to support many local non-profits and charitable organizations through both employee-driven efforts and organized events. This year, Hilb Group agencies have been considerably dedicated to contributing their time. After the devastating flood in West Virginia, the Hilb Group of West Virginia’s employees raised funds, matched by the corporate office, for United Way. The money raised was used to buy school supplies for the children that were affected by the floods. In October, locations in New England organized a team for the Strides Against Breast Cancer walk, and with matching company funds were able to make a $10,000 donation to the American Cancer Society.

DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 25

NATIONAL | Special Report | The Charity Issue

Marshall Cotta attending his first City of Hope fundraising event with his parents, Pamela and Jeff Cotta

A Survivor’s Story: City of Hope and Marshall Cotta

By Andrea Wells

M

ore than 10,000 children in the United States under the age of 15 were diagnosed with cancer in 2016. And the rate of childhood cancer has been rising slightly for several decades, according to the American Cancer Society.

It’s an illness that no parent wants their child to experience – ever.

The City of Hope, a research and treatment center for adult and childhood cancer, diabetes and other life-threatening diseases, works to “combine science with soul” to make miracles every day. One miracle is the story of young Marshall Cotta who at 11 months old was diagnosed with a rare brain cancer tumor that left his parents searching for hope when many doctors said there was none.

Marshall, now 19 years old, was advanced for his age, says his mother Pamela Cotta. “He’s our third son and started walking at 10 months, which we thought was amazing because our two other children didn’t walk until 12 months,” Pamela said. Marshall’s growth and development seemed right on track until one morning when he woke up and suddenly couldn’t walk or move.

normally seen in adults and very rarely in children. The bad thing was they had no treatment for it. They told us there was nothing they could do,” his mother said.

This was 1998 and while the doctors at Children’s Hospital in San Diego had a pediatric chemotherapy protocol, they feared it wasn’t going to work on Marshall’s tumor. Even so, they said they would try.

“The goal was that if they could stop the tumor from growing then they could go in and do radiation and there was a possibility that it would stop the growth,” Pamela explained.

But treatment came with heavy risk to Marshall’s health.

“They told us that because of his age and because he hadn’t grown yet, the radiation would cause his body growth to be stunted but his arms and legs would continue to grow and he would have learning disabilities.”

But most disheartening was that the doctors didn’t believe such treatment would even work, she said.

That’s when a friend of a friend recommended City of Hope.

It was just doom and gloom until Marshall arrived at City of Hope, Pamela said. “Every time we spoke to a doctor they would tell us it wasn’t going to work, this isn’t a tumor that can be treated. Then we went to City of Hope and it was the

“I took him out of his crib and put him on the floor and he just stood there and couldn’t move so I called the pediatrician,” Pamela said. The pediatrician sent Marshall immediately to a neurologist. That was the first of many difficult days to come for Marshall and the Cotta family.

The pediatric neurologist told Pamela and her husband that the prognosis was dire. “I remember him saying to us, ‘I wish I could tell you that everything was going to be OK but I can’t.’”

Marshall’s first MRI revealed a brain tumor that was causing hydrocephalus, or water on his brain.

“They took him right into surgery to put in a shunt. I remember it was my dad’s 70th birthday,” Pamela said.

The surgeons removed a portion of the brain tumor but couldn’t get it all because of its location next to the brain Marshall Cotta during his year-long stay for brain cancer treatment at the City of Hope in Duarte, Calif. Marshall’s baby brother Landis (shown) stem. “They told us was born right after his last chemo therapy treatment and just before that this particular his proton beam radiation. Marshall completed his last treatment just kind of tumor was days before his second birthday.

26 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

INSURANCEJOURNAL.COM

Today Marshall is a vibrant, widow of Liam McGee, the past chairman healthy freshman studying and CEO of The Hartford who battled a music at San Diego State form of brain cancer as well. “This is the University. first time in the brain tumor’s program for He is here today thanks to the them to receive dedicated funds,” said Ken research and treatment offered Birkett, director of development of NIIC for by the City of Hope and the the City of Hope. generous efforts of companies The Cotta family has also made it a priorand supporters that continue ity to give back to the place that saved their to finance new research, treatson. “After Marshall was home about a ment and educational programs, year we started a fundraising group called Marshall Cotta with his three brothers (left to right: Landis, including longstanding contribu- Marshall’s Roundup and have been fundMarshall, Brendan and Jared Cotta) tions from the insurance indusraising for the past 16 years,” Pamela said. try. The City of Hope industry Pamela and Jeff also dedicated a life insurmost incredible thing. They didn’t make us group, the National Insurance Industry ance policy’s benefits to the City of Hope. any promises but there was hope.”

Council, consists of representatives from “How do you put a price on what you “As soon as the doctors from City of the property/casualty industry and has pay back for a place that saved your child?”

Hope walked in, they took off their white raised close to $30 million to help fund she added. “You really can’t.” coats so they wouldn’t scare Marshall. the Duarte, Calif.-based center’s research To learn more about the City of Hope or Marshall was so calm,” Pamela said. The efforts throughout the past 38 years. to find out more about the NIIC’s efforts, City of Hope doctors told Pamela and Jeff This year alone the City of Hope’s brain visit: www.cityofhope.org. Share this Cotta that while there wasn’t a treatment tumor program will receive more than $1 article with a colleague. option for their son’s cancer, they were million from the NIIC and Lori McGee, the IJMAG.COM/1219DE willing to try but not if doing so meant destroying Marshall. “Their whole motto is that there’s no point in curing the body if in the process you destroy the soul.”

City of Hope knew that radiation treatment would cause learning disabilities so full body radiation was not an option.

Instead they moved forward with proton beam radiation directed only at the tumor site. “They basically made up a treatment plan for him, harvested his stem cells, did stem cell rescue after every treatment because the treatment was so harsh it helped him recover,” said his mother.

And it worked.

Nonprofits “We were there almost a year. He had Insur ance three cycles of the chemotherapy and then Alliance Group the stem cell rescue after each one. The A Head for Insurance. A Heart for Nonprofits. whole time we would live in their Village.

My husband went back home with the othA Head for Insurance. A Heart for Nonprofits. er two boys,” Pamela said.

It was an interesting time, Pamela recalled. Throughout Marshall’s stay at City of Hope, Pamela was pregnant with her fourth son. “There were so many harsh chemicals in everything that I spent a lot Outside California of time in a chemo suit that the doctors In California would wear so I wouldn’t be exposed.

Nonprofits Insurance Alliance Sometimes when I think back on it, it of California (NIAC) doesn’t even seem real,” she said.

Different in a Good Way

Nonprofits Insurance Alliance Group

www.insurancefornonprofits.org

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DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 27

Idea Exchange

The Wedge

Why it Sucks to be a Sales Manager in Most Agencies

By Randy Schwantz

W

hile it’s not always true, most sales managers get stuck with dealing with under-performers.

Under-performers come in a lot of different packages. It could be the underwriter who was hired to be a producer. This could be a smart individual who just can’t deal with rejection so he or she makes a lot of excuses when it comes to prospecting.

Maybe it’s the legacy guy, who’s burned out and came up the ranks doing business

the “old-school way.” You know the story, build relationships, find coverage gaps, get a quote, present the proposal and hope to win the business (copy, quote and pray).

He’s tired of writing small crappy accounts, hasn’t saved enough money to quit, but makes too much money to walk away.

Oftentimes it’s just an under-achiever, living the dream of having inherited a book of business. They make decent money, their spouse works, and the combined income is enough to raise a family and get by. Occasionally, these producers will prospect enough to make up for a lost account, but never have enough sales activity to grow the book by 7 percent to 10 percent year-over-year.

pipeline. He’s a good guy, we like him, but he’s not really making his numbers.”

He’s not making his numbers because he has no discipline, he’s afraid to pick up the phone and make a call. He would never ask a client for an introduction, so he hides behind a desk loaded with stacks of paper.

You can sit with a baby all day long, but at the end of the day, it’s still a baby.

You can motivate, train, coach and counsel these people all day long, but it doesn’t make them a producer. That’s why being a sales manager in most agencies sucks.

You’re trying to get production out of people who aren’t producers.

On the other hand, being a sales leader is a different job.

Babysitting

Great Sales Leaders

What’s the sales manager’s job when half or two-thirds of the producer force is either non-performing or low performers just getting by?

They become professional babysitters.

I know, I’ve done it. “Randy, go sit with Roger and see if you can help him figure out how to get more active prospects in his

28 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

A sales leader lays out a sales strategy that rewards performers and squeezes out non-performers (they can become account managers or leave the firm).

It includes goal setting, sales training, sales meetings, value proposition and accountability systems.

Producers sign an agreement (separate from their employment agreement) that delineates activity, responsibilities and revenue generation.

Everyone becomes really clear that a producer’s job is to prospect, sell and retain. Growing your book is expected and rewarded. Sitting on your book is discouraged and has consequences.

Great sales leaders know that they must provide training for their producers to develop extraordinary prospecting and selling skills. They know they must drive quality activity (working on right size, right type of account that appreciates the agency’s value proposition). They coach for high-performance as they stretch the belief systems of their producers.

Meanwhile, they set up a system to improve the recruiting and hiring of extraordinary producer talent. When newbies get hired, they are injected into this exact same high-performance system.

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Move the Burden

A great friend of mine, Louis Berman, taught me this phrase: “Move the burden.”

For most sales managers, the burden is on them to turn a non-performer into a high performer. For sales leaders, the burden has been moved to the producer themselves.

A sales leader lays out a sales strategy that rewards performers and squeezes out non-performers.

When the systems are in place, the agreements in writing, the reward system established, it becomes easier to move the burden to the producers.

When there are no systems, no performance agreements, and no consequences for doing your job well or not doing it at all, the burden is on the sales manager.

If you’re the agency sales manager, I encourage you to resign your job today.

That business is just too difficult. Once you’ve done that, prepare to be the sales leader. Write out your strategic action plan that includes the items listed above.

Another question often asked, “Is this a full-time job?” No. Of the hundreds and hundreds of agencies that I have relationships with, none of them, large or small, have full-time people in this role. Here’s why.

To hire someone of this caliber, you’d have to pay $200,000 to $300,000 a year in most cases. That’s difficult to get a return on. If they are not of that high caliber, they won’t come with or build the systems you need to put in place. If you try to find someone to do this job for $95,000, producers will mock them, “If they could sell, they wouldn’t have taken this job.”

If you’re looking for a magic bullet, an instant turnaround that takes no effort and no investment … good luck.

“The difference between where your agency is today and where it will be five years from now is in direct proportion to your ability to develop your sales team.”

Developing your sales leadership ability will drive more growth, more profit, INSURANCEJOURNAL.COM

more agency value much faster than you could ever accomplish by writing another account or growing your personal book of business. For a copy of “Agency Growth Machine,” visit: www.thewedge.net/ insurance-journal-free-book-offer.

“

Share this article with a colleague.

IJMAG.COM/1219HG Schwantz is founder of The Wedge Group. Phone: 214-446-3209. Website: www.thewedge.net. Email: randy@thewedge.net

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Idea Exchange

Corporate Giving

The Corporate Citizenship Mandate

By David E. Coons

I

n the midst of today’s growing war for talent and increasingly competitive labor market, corporate citizenship programs should no longer be viewed simply as a “feel good” activity. Rather, this “winwin-win” opportunity — providing benefits for the charity, employer and employees — is quickly becoming a key differentiator in attracting and retaining talent.

In fact, a position of strong corporate citizenship has been shown to grow workforce comradery, increase engagement and promote a positive corporate image — all important factors in recruiting and retaining top talent.

Today’s professionals seek meaning in their work. They want to feel they are making a difference and contributing to the greater good. They want to take

pride in their companies and give back to their communities. According to a recent Deloitte survey, 61 percent of young professionals factor corporate citizenship into their job decisions. Further, 70 percent strongly favor working for a company that has a solid reputation for community involvement.

Corporate citizenship should no longer be an overlooked piece of your organization’s corporate brand. The question is not whether you should offer a corporate citizenship program, but rather, how your organization can maximize and enhance its current efforts.

Why Develop a Corporate Citizenship Program?

Your organization doesn’t have a corporate citizenship program? Now is the time to get started. Fortunately, there is no “one-size-fits-all” formula for implementing an effective and impactful corporate citizenship program. Organizations have the flexibility to develop a plan that best fits within their corporate focus, strategy and budget.

A corporate citizenship program does not have to be implemented on a grand scale to be meaningful. A successful charity program can be as simple as organizing drives — including food drives, coat drives and toy drives — for employees to participate in.

Reach out to your employees to deter-

mine the charity work that they may already be conducting. Supporting employees in the work they are already doing can go a long way in showing your organization’s support. Some companies have even gone so far as to provide paid time off for employees to volunteer with a charity of their choice. More than 20 percent of companies are offering paid time off for charitable purposes.

Matching gift programs also offer a simple way for organizations to promote corporate citizenship. With matching gift programs, employees make a donation to a nonprofit that will be matched — usually dollar for dollar — by your company.

Already, 94 percent of leading organizations are providing their employees with a matching gift program. Beyond boosting contributions and encouraging employee philanthropy, these types of corporate citizenship programs have shown to increase employee morale and engagement.

Promoting Your Company’s Charity Program

Despite its history of making a difference in the lives of individuals and communities, the insurance industry’s corporate citizenship mindset is not well-known.

An organization’s charitable actions often get buried and overlooked. With corporate citizenship providing organizations with obvious recruitment and engagement incentives, ensuring that your company

increases awareness of its efforts is vital.

When promoted properly, a strong charitable profile raises a company’s visibility and speaks well to its public reputation.

Your organization’s message of corporate citizenship should be front and center.

Corporate citizenship should no longer be an overlooked piece of your organization’s corporate brand.

Utilize your company’s website as a platform to share your organization’s charitable activities. Your “About Us” page is often the first visited section of your website.

Ad for Insurance Journal Print.pdf Take advantage of this high visibility to make your organization’s corporate citizenship more prominent.

Social media provides another great platform to share your charitable activities.

Highlight company-sponsored events,

1

share charity success stories and encourage your employees to provide their own experiences.

Photos and personal stories go a long way in engaging individuals in your corporate citizenship activities.

There is no denying that corporate cit10/28/16programs 2:04 PM are a vital addition to izenship your organization’s business strategy.

A successful and well-promoted corporate citizenship program will provide your organization with a unique solution that positively impacts both talent retention

and recruitment.

Share this article with a colleague.

IJMAG.COM/1219LK Coons is senior vice president of The Jacobson Group, a provider of talent to the insurance industry.

Phone: 800-466-1578. Email: dcoons@jacobsononline.com.

Are you making more happen in your community?

The Safeco Make More Happen Award recognizes Safeco independent agents for extraordinary volunteerism with nonprofit organizations in their communities.

Sa v D et at h e! e

Apply for a Safeco Make More Happen Award in 2017 for a chance to earn money and recognition for your favorite nonprofit!

Applications are available Feb. 1, 2017 at www.safecoagentnews.com/agp

Look for more information in Safeco Agent News in January 2017 SAFECO14545.indd 1

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DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 31

Idea Exchange

Perpetuation

A True Game Changer Why a Unique Perpetuation Model Still Stands Strong

By Heath Ritenour

I

n the insurance agency system, it’s no secret that right now many agencies are merging or being acquired, increasingly by private equity firms. For some, this is a blessing because they have not been able to keep up with technology, their intended legacy plan has not worked out, or the impending talent gap poses such a threat that what is valuable today may become unsustainable in the near future.

About eight years ago, Insurance Journal published an article on our company that looked into the distinctive qualities of the Insurance Office of America (IOA) model — qualities that set us apart and differ broadly from the traditional way of running an insurance agency. From the very beginning, the firm was built on a producer-focused model instead of a profit-focused model. Despite the buyouts, talent shortages, and weak or nonexistent perpetuation plans that plague many agencies, we have always been positioned to do well.

However, it took being blindsided by a cancer diagnosis to open my eyes to the fact that every model can be taken to new levels. After a six-month dose of reality — and chemotherapy — both my body and IOA have a renewed emphasis on the future. That future is a very positive place to be, for me and for those I care about in my personal and business worlds, and it’s

a place your agency can head toward even without the trauma of a health crisis.

Successful perpetuation is the cornerstone of agency longevity, but perpetuation is more than just saying, “Bill would make a great CEO someday” or “Beth knows a ton; she could step up in a heartbeat.”

Bill and Beth might very well be excellent candidates in a perpetuation plan but not if they leave five years before it’s their time to shine. Agencies have got to implement a producer-focused model that develops and retains their core personnel, and that often comes down to making sure people have skin in the game.

Yet even the best models in the industry can face unexpected challenges. An illness helped push us to build a more comprehensive perpetuation plan that would protect our three main constituents: the agency; our people; and our clients.

Learning from the Unexpected

that came from it that I don’t think a type A guy like myself could have learned any other way. It’s opened my eyes to appreciate the things I took for granted — my family, health, and work. It also helped me lead our agency to new and better levels that will benefit others, and that is gratifying.

Truth is, I’m not a control freak, but I was living in a world where I felt like I had things under control. Anyone who believes they have things lined up and in control is believing a lie.

My cancer diagnosis was a reality check: I might have been doing a great job at the things I had control over, but there are things we don’t run that can affect (or ruin) our lives and businesses. My diagnosis caused our firm to look at our perpetuation plan and take greater control over the things we could to promote our agency’s long-term viability and strength.

Some ask me if we were prepared. We

For me, staying in shape is important, so I play basketball with a group of guys half my age once a week. At nearly 40, I don’t have to win, but I certainly hate to lose, which means I come home pretty sore at times. After a tough Saturday morning game, I was stretching and working out some tight muscles when I discovered a lump. I was diagnosed with testicular cancer just three weeks after getting the all-clear in my annual physical, and I was completely blindsided.

Less than a year later, having been through surgery and chemotherapy, I’ve had my six-month scan, and I’m clean.

Looking back on it, it’s something that I would not trade because there was growth and so many learning experiences

32 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

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were not as prepared as we are today.

There were conversations about possibilities but not the formal plans we have now.

In many ways, that experience has caused us to be better prepared for the next time we have something come up that we weren’t expecting. We have our flowchart for who we believe have the potential to be our next board members. It is planned out that, if something happens to me, our president, or our chairman, we know who moves into the roles. These are steps all agencies can take right now.

What Sets You Apart for the Future

Perpetuation was built in as a cornerstone of our model because more than just a personnel chart is needed to create an effective leadership-handoff plan. You’ve also got to keep your future leaders. That requires a compelling compensation program, appropriate technology investment to facilitate sales and client retention, and ownership opportunities for those who want to be more integrally involved in the success and future of the agency.

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For example, when you look through the lens of what you would want as a customer service partner or a large producing agent — key players in perpetuation — you’d likely want to be compensated fairly. You wouldn’t want your commission cut in half year two, and you’d want to be paid the same for renewal business because retention is important. As we all know, it’s more profitable to retain a piece of business than it is to write a new one.

Successful perpetuation is the cornerstone of agency longevity.

In addition to the same commission level every year, you’d likely want equity in your book of business and an opportunity to actually have something of value when you retire over and above what you put away. But that is not the typical model.

Other unexpected factors also play a role in preparing for the future. Outside of healthcare, there’s probably no industry riper for disruption than ours. Part of that is due to technology, where there is a lot of money getting expended right now, but an even a bigger part of that potential disruption is culture.

It’s one thing to be wildly attractive as a business, but it’s another thing to have an organizational culture where people feel like they’re part of something bigger than themselves, where they feel like they’re part of a family and they never want to leave. Creating this environment is particularly important today as baby boomers retire and the number of millennials in the work force grows. As a group, millennials tend to want to derive a sense of meaning and purpose from their company.

As our industry continues to see the big getting bigger and the small folks going away, more private equity companies and more public companies are running our agency channel. That can leave us without a lot of culture and heart in the business. I believe a firm’s culture is a huge differentiator, and at IOA, we work hard to grow all aspects of our identity. We can bring improved technology and value to our

clients but also stay focused on cultivating a culture that people never want to leave; something that is completely different in an industry of sameness. Ownership in the future of the agency is crucial, whether it’s through compensation, equity holdings, or simply the chance to have your talents and intellect affect business decisions.

When your model focuses on the people building your business instead of merely putting money in the pockets of top brass or stockholders you don’t know, you send a signal to partners and employees that they are valued and they matter. That, my friends, is a huge part of talent retention, transformative innovation, and perpetuation. In this industry, that makes you a true game-changer and typically makes you more appealing to clients and top-quality hires.

Most agencies are focused on the next deal or the next acquisition. But if you are intensely focused on adding value to people and the client experience, you can expect a long and healthy future. Share

this article with a colleague.

IJMAG.COM/1219DE Ritenour is CEO of Insurance Office of America (IOA).

Phone: 800-243-6899. Website: www.ioausa.com.

Advertisers Index

Read, browse, contact, or do product searches on any of our full page advertisers at: www.insurancejournal.com/adshowcase/

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DECEMBER 19, 2016 INSURANCE JOURNAL | NATIONAL | 33

Closing Quote 3 Common Strategies Found in the Fastest-Growing Independent Agencies

By Chuck Blondino

O

ver the past several years, despite some dire predictions, the independent agency channel overall has held its own against other distribution channels. In a recent internal research study, for example, Safeco Insurance found that the distribution of auto insurance by channel was virtually unchanged from 2010 to 2015.

But that’s only the headline.

While most agencies aren’t growing at all, some are growing like gangbusters. Safeco recently completed a study of the 2,000 largest agencies in our nationwide channel, and one of the findings was stunning: policies in force for the 240 fastest-growing agencies increased by a whopping 26.7 percent in 2015, growing nearly twice as fast as they did in 2013.

How is this possible? What is their secret? We decided to find out, so we surveyed the 240 and received 193 responses.

It turns out there’s no hidden

formula, nothing they’re doing that other agencies can’t adopt in some way.

There are three things that came up repeatedly among these fast-growing agencies — things every independent agent can do to drive growth in the coming years.

Every single one of the 193 has done at least one of the following: They hired part-time marketers. Fifty-two percent of the respondents to our survey hired a marketer, most starting at only four-to-eight hours per week. These marketers organize community activities, manage referral program details, and write content for blogs, social media, and newsletters (print and email). They also track the effectiveness of these varied tactics, ensuring maximum return on your marketing investment.

They added new producers.

Thirty-eight percent brought on extra people to go out and find the new business.

This strategy maximizes producers getting out of the office, making connections, and driving repeatable referral resources.

Agency principals became the marketers. Some 10 percent of agency principals decided to do the marketing themselves. The decision to

34 | INSURANCE JOURNAL | NATIONAL DECEMBER 19, 2016

work less in your business and work more on your business is first and foremost a culture shift. It may require you to give up being the number one sales person in the office, so you can focus your attention on overall growth instead of individual sales. But doing so will enable the agency to grow faster.

Remember: your most salable product is you.

While our findings indicate that any one of these three strategies will drive growth for your agency, hiring a marketer takes the least amount of change and has the greatest chance for success because you’re paying someone to do the tasks you don’t have time for today. On the flipside, becoming your own chief marketing officer is a great way to start easing out of the day-today and looking at the bigger picture.

Of course, marketing is a profession and ramping up can be daunting. In Safeco’s Customers for Life program — which helps independent

agents build stronger client relationships, raise retention, and generate more referrals — we have found that it’s much more effective to invest in relationship marketing rather than brand marketing.

The ROI on brand marketing is difficult to track, while referral programs, newsletters, e-newsletters, and testimonial requests are proven to drive an average of three-to-five times more referrals and increase retention by an average of 1.5 points.

The agencies who are flourishing in this climate are combining the above tactics with digital or online marketing.

The path that leads to your doorstep is increasingly made of bits and bytes — search engines, review sites like Yelp, and social networks like Facebook and Instagram.

The key to success in digital marketing — as in all marketing — is to be as human and authentic as possible in your storytelling. Remember: your most salable product is you.

Blondino is the director of Agency Capabilities and Programs at Safeco Insurance.

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