Insurance Journal West 2017-08-07

WEST REGION California Commish Counters AGs Mercury’s Most Affordable EVs California Quake Policy Sales up

Deliver the expertise.

We can.

Expertise that allows us to understand the complexities of our business. Talented people who are inspired to deliver a remarkable experience. nationwide.com/wecan

E&S/Specialty A.M. Best rating of A+ (Superior), FSC XV Fortune 100 company

Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Š 2017 Nationwide

APPLIED PROTECTS THE TITANS OF INDUSTRY. ®

IT PAYS TO GET A QUOTE FROM APPLIED® ©2017 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.

Accepting large workers’ compensation risks. Most classes. All states, all areas, including New York City, Boston, and Chicago. Few capacity and concentration restrictions.

Simplified financial structure covers all exposures.

EXPECT THE WINNING DEAL ON LARGE WORKERS’ COMPENSATION. Call (877) 234-4450 or visit auw.com to get a quote.

Contents August 7, 2017 • Vol. 95 No. 15 • West

West W1 Tesla Workers in California Seek Safety Plan, Clarity on Pay

W6 JUDGE REFUSES TO BLOCK CALIFORNIA

GAS FACILITY FROM REOPENING

14 Report: Surplus Lines Shows Nationwide Jump in Premium

W2 Court Rules for NBC in Defamation Suit by Oregon Sporting Goods Company

W6 Judge Refuses to Block California Gas Facility From Reopening

10 Insurtech Funding Jumps to $1B: Willis Towers Watson/CB Insights Report 12 U.S. Building Owners Reviewing Structural Materials After London Tower Blaze

W2 Chevron Spending $20M to Protect Workers in Wake of California Fire

W4 California Commissioner Counters AGs, Other Commissioners over Climate Initiative

National

14 AAMGA, NAPLSO Merge to Form Wholesale Specialty Insurance Association

12

U.S. BUILDING OWNERS REVIEWING STRUCTURAL MATERIALS AFTER LONDON GRENFELL TOWER BLAZE

20 Autonomous Vehicles: Timeline for the Future 24 Top 25: P/C Direct Premium Written Up 4.8% in Q1 26 Special Report: Top 100 Independent P/C Agencies

W12 Mercury Names Most Affordable Electric Vehicles to Insure in California

29 Special Report: Top 20 Agency Partnerships

W14 California Earthquake Authority Policy Sales up 5.4% in 2Q from Year Ago

30 Special Report: Top 20 Banks in Insurance 31 Industry Veteran Tony Markel Shares Views on the 5 Ps 36 Spotlight: How Insurers Can Tap into New Revenue Streams by Using ‘Data Exhaust’

Idea Exchange W10 MGA Advice: Running Your MGA Like an Insurance Carrier Is a Mistake

20 FROM HERE TO AUTONOMY

40 How to Catch Commercial Auto Use Fraud 44 The Competitive Advantage: On the Other Side of the Desk 46 Closing Quote: Insurers Respond to Rising Claims Abuse

38 Closer Look: When Recreation Turns to Adventure

Departments W8 People 11 Declarations 11 Figures 16 Business Moves 34 MyNewMarkets

6 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

INSURANCEJOURNAL.COM

OPENING NOTE

Write the Editor: awells@insurancejournal.com

Congratulations Top Agencies

T

his year marks the 13th annual publication of Insurance Journal’s Top 100 Agencies special report.

This year’s Top 100 welcomes eight newcomers and returning agencies: Poms & Associates; Ascension Insurance Inc.; Shepherd Insurance; Baldwin Risk Partners; JGS Insurance; HomeServices Insurance; L/P Insurance Services Inc.; and SouthGroup.

This year’s Top 20 Agency Partnerships held strong with the same agency partnership groups with nine organizations moving up or down the ranking.

And what about the Future Top 100? While the following agencies didn’t make the cut in 2017, their total P/C revenue came very close. Special mention goes out to the following agencies:

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 Chris Burand

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

Insurance Markets Manager Melinda Deslatte, Dan Fash, Kristine Honey (619) 584-1100 X132 Logan McFaddin, Douglas Powell, khoney@insurancejournal.com William Stander, Alex Young Social Media Manager IJ ACADEMY OF INSURANCE Ly Short (619) 890-7735 Director Lshort@insurancejournal.com Patrick Wraight pwraight@ijacademy.com Classifieds, Jobs, Agencies Wanted/For Sale Associate Director Sr. Sales & Marketing Coordinator Barbara Whiffen Kelly De La Mora (800) 897-9965 X125 bwhiffen@ijacademy.com kdelamora@insurancejournal.com

ADMINISTRATION

Chief Financial Officer Mark Wooster mwooster@wellsmedia.com

MARKETING

DESIGN/WEB

Chief Technology Officer/ Chief Innovation Officer Joshua Carlson jcarlson@insurancejournal.com

Marketing Director Derence Walk dwalk@insurancejournal.com

V.P. of Design Guy Boccia gboccia@insurancejournal.com

Marketing Administrator Gayle Wells gwells@insurancejournal.com

Senior Web Developer Chris Thompson cthompson@insurancejournal.com

NEW MEDIA

Web Developer Jeff Cardrant jcardrant@insurancejournal.com

New Media Producer Bobbie Dodge bdodge@insurancejournal.com Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com

Web Developer Terrance Woest twoest@wellsmedia.com

CIRCULATION

Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com

Crest Insurance Group Atlas Insurance Brokers LLC Eustis Insurance and Benefits Harden Lamb Financial Group Kapnick Insurance Group York International Agency The Nitsche Group World Insurance Associates LLC Shoff Darby Insurance Agency Inc. Watkins Insurance Group Dean & Draper Insurance Agency LP Frank H. Furman Inc. Ross & Yerger Der Manouel Insurance Group K & S Insurance Agency Ames & Gough PSA Insurance & Financial Services Kaplansky Insurance Wallace Welch & Willingham FOR QUESTIONS Insurance Journal’s Top 100 and Top 20 Agency Partnerships reports would not be possible without the willing participation of all of the agencies, brokerages and agency groups that have shared their information over the years. We thank the many agencies that have contributed and invite others that have never submitted information for the report to consider it next year.

Andrea Wells Editor-in-Chief

8 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

REGARDING SUBSCRIPTIONS: Call: 855-814-9547 Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at:

insurancejournal.com/subscribe Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media 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 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2016 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission.

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

INSURANCEJOURNAL.COM

Join us at AonPrograms.com

National

Insurtech Funding Jumps to $1B: Willis Towers Watson/CB Insights Report

I

nsurtech funding volume hovered close to $1 billion in the 2017 second quarter, a result nearly 150 percent larger than the same period a year ago, according to a quarterly report on the sector from Willis Towers Watson and CB Insights.

That was a 248 percent jump from the 2017 first quarter and reflected a record 64 transactions, compared to $283 million and 38 transactions for insurtech funding deals in the previous quarter.

Insurtech funding in Q2 is also 148 percent higher than the $398 million in funding for 34 transactions in the 2016 second quarter, an 88 percent increase yearover-year, according to the report titled “Quarterly InsurTech Briefing Q2 2017.”

Why such a big jump? It turns out that funding volume soared due to the sheer increase in number of transactions, reflecting an escalating move toward insurtech capabilities.

A huge number of large capital intensive

investments globally also drove the results higher, the report noted.

One of the bigger trends the numbers indicate is insurtech financing continues to go global. The U.S. accounted for 65 percent of the transactions since 2012, but domestic transactions were just 45 percent of the total during the 2017 second quarter.

Insurtech funding is also going early stage. For Q2, early stage/seed/Series A financing hit a record $289 million in Q2, representing 63 percent of the total deals during that period.

Also, worth noting is that well-established insurers and reinsurers are increasingly investing in the InsurTech upstarts increasingly dotting the corporate landscape.

Lemonade, for example, has investments from Allianz Ventures and XL Innovate. Net Insurance attracted investment money from Markel Ventures, Munich Re/HSB Ventures and nationwide

10 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

Ventures. Trov has Suncorp Group, Sompo Japan, and Munich Re on its investor roster.

A Greater Focus on Claims Tech

Other insurtech financing trends from the report: • 34 property/casualty insurtech transactions during Q2 reflected a 48 percent hike from the 23 P/C deals in the 2017s first quarter. The number is also 89 percent higher than the 18 P/C deals in the 2016 Second quarter.

• There were 31 private technology investments by insurers and reinsurers during Q2, their highest to date. The results are 19 percent higher than the 26 investments in Q1 2017, and 1 percent larger than the 27 investments tallied in Q2 2016.

• Claims technology is becoming a new area of insurtech financing focus for insurers and reinsurers.

INSURANCEJOURNAL.COM

West

Tesla Workers in California Seek Safety Plan, Clarity on Pay

A

group of Tesla Inc. workers in California have asked the electric car maker’s board to provide a plan to address employee safety and information on pay and promotion.

The worker group, which hopes to become part of the United Automobile Workers union, said Tesla had a safety record worse than that of “sawmills and INSURANCEJOURNAL.COM

slaughter houses.”

“We’re tired of suffering preventable injury after preventable injury,” Michael Catura, a Tesla production associate, said in a statement.

The group also asked for clarity around Tesla’s compensation practices.

Starting pay at Tesla’s Fremont, Calif., auto factory was $18 per hour, far below

the national average for auto workers, the worker group said.

Chief Executive Elon Musk said in late July that the company is going to go through at least six months of “manufacturing hell” as it ramps up its efforts to produce 500,000 cars per year, close to six times its 2016 output.

Copyright 2017 Reuters.

AUGUST 7, 2017 INSURANCE JOURNAL | WEST | W1

WEST | News & Markets

Chevron Spending $20M to Protect Workers in Wake of California Fire

C

hevron Corp. and state regulators have reached a settlement related to a 2012 fire at its Richmond, Calif. refinery that will require the company to spend about $20 million on safety improvements, officials announced this week.

The agreement requires Chevron to replace all carbon steel piping that transports corrosive liquids with chrome-alloy piping, which is better at resisting corrosion. Chevron will also have to implement procedures to monitor equipment that alerts operators when replacements are needed, Cal/OSHA, the state’s workplace safety agency, said in a statement.

“This means safer operations at the

refinery, which will help protect refinery workers and those who work and live nearby,” Cal/OSHA Chief Juliann Sum said.

In 2013, the state fined Chevron nearly $1 million after a fire at the company’s Richmond refinery sent a cloud of gas and black smoke over residential areas.

Investigators found “willful violations” in Chevron Corp.’s response before, during and after the Aug. 6, 2012, fire caused by an old, leaky pipe in one of the facility’s crude units that the company had neglected to replace, even after inspecting areas near

the segment that failed less than a year earlier. Cal/ Osha also said at the time the company didn’t follow recommendations its own inspectors and scientists made in 2002 to replace the corroded pipe that ultimately ruptured and caused the fire.

Smoke and gas from the blaze prompted thousands of people to seek medical treatment, with many complaining of eye irritation and breathing problems. No workers were seriously injured in the incident.

Copyright 2017 Associated Press.

Court Rules for NBC in Defamation Suit by Oregon Sporting Goods Company

By Jonathan Stemple

A

federal appeals court has ruled that NBC News did not defame an Oregon sporting goods company by characterizing its exploding rifle targets as “bombs” in a report on the “Today” show.

The 2nd U.S. Circuit Court of Appeals in New York late last month said Tannerite Sports LLC did not show that NBCUniversal, part of Comcast Corp., made false statements about its targets, which contain chemicals that detonate when mixed together and shot with high-velocity bullets.

Writing for a three-judge panel of the appeals court, Judge Rosemary Pooler also said that when reporter Jeff Rossen told viewers in the March 2015 report he was “basically holding a bomb in my hand,” his description was “at the least, substantially true.”

W2 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

A lawyer for Tannerite, based in Pleasant Hill, Oregon, did not immediately respond to requests for comment.

The decision let stand an October 2015 dismissal of Tannerite’s lawsuit by U.S. District Judge Shira Scheindlin, who has since left the bench.

Tannerite sued over the “Today” report and an accompanying online article, “Bombs for sale: Targets containing dangerous explosive being sold legally,” saying that its rifle targets were not bombs and were “inert” when sold in stores.

Pooler, however, said the company appeared not to recognize the distinction between products that happen to explode and those designed or intended to explode.

The Tannerite target’s “singularity of explosive purpose – the fact that it is designed to be dispersed in a violent or rapid manner upon detonation – marks it

as a kind of bomb,” she wrote.

Pooler said no reasonable viewer could conclude that Tannerite targets could explode in stores, noting that Rossen said it was “not dangerous being in the studio right now” and that “you need a catalyst” before a target could explode.

According to the decision, the targets enhance long-range recreational shooting, and a 2014 Tannerite product guide said: ” trike your target and the gratification is instant.”

David Cargille, a lawyer who represented Tannerite earlier in the appeals process, said the court denied the company its day in court by deciding on its own “the truth or falsity of NBCUniversals statements.”

An NBCUniversal spokeswoman said in a statement: “NBC News is very pleased that the court determined our reporting was accurate, and that there was no basis for a libel suit.”

The case is Tannerite Sports LLC v NBCUniversal News Group, 2nd U.S. Circuit Court of Appeals, No. 15-3485.

Reporting by Stempel in New York; Editing by Leslie Adler Copyright 2017 Reuters.

INSURANCEJOURNAL.COM

STRUGGLING TO GET YOUR INSURED ON THE ROAD? Young drivers, new CDLs, unfavorable loss history, colorful MVRs, Drive away exposures we can do it all!

Call the commercial auto experts... We’ve got you covered.

PACIFIC GATEWAY INSURANCE AGENCY 27200 Tourney Rd Suite 360 Valencia, CA 91355

Phone: (800) 354-4844 - Fax (661) 257-5988 www.pgiainsurance.com - License #: 0C04869

We offer a wide variety of commercial auto, garage, property, and general liability products.

All backed by an A++ financial rating by AM Best.

WEST | News & Markets

California Commissioner Counters AGs, Other Commissioners over Climate Initiative

C

alifornia Insurance Commissioner Dave Jones fired off a letter to the 12 oil state attorneys general and one governor from states like Texas and Oklahoma over threats to sue him if he did not stop his Climate Risk Carbon Initiative, which asks insurers to voluntarily divest from thermal coal investments and requiring that insurers publicly disclose their investments in coal, oil, gas and utilities.

“I am not deterred by your threats,” Jones’ letter last month to the governor and attorneys general states. “We will not stop asking insurance companies to consider climate related risks and in particular we will not stop our Climate Risk Carbon Initiative. Our Climate Risk Carbon Initiative

is a sound regulatory endeavor that is grounded in financial risk analysis, consistent with the state-based system of insurance regulation. Sound regulation of the insurance industry includes consideration of climate related risks.”

Jones said one of his primary responsibilities includes making sure insurers are financially sound.

That responsibility, coupled with the volatility of carbon-based investments, is what Jones said led him to request insurers to publicly disclose investments that are at risk of becoming “stranded assets” as governments may increasingly restrict the use of fossil fuels, and consumers and businesses potentially move away from relying on fossil fuels.

Jones noted that the G-20 Financial Stability Board, the Prudential Regulatory Authority of the Bank of England, insurance regulators across the globe, and others have called for disclosure by insurers of climate-related risks.

Jones also came under attack from other state insurance commissioners over his

initiative. Several insurance commissioners have called the initiative an “affront to sound insurance regulation.”

His wrote a letter to those commissioners, which states: “While politically popular in your states, denying or ignoring climate change, its impacts and related risks, is contrary to the evidence based approach that lies at the core of our system of state based insurance regulation. The National Association of Insurance Commissioners in 2009 adopted a Climate Risk Disclosure Survey to be administered to insurers for this very reason — that it is important to recognize that there are risks associated with climate change and its impacts which insurers and insurance regulators should consider and address.”

‘Office Of Cannabis’ OK’d by San Francisco Supervisors

Colorado Town Will Use Odor Ordinance to Regulate Fracking

an Francisco officials have approved a new Office of Cannabis in advance of recreational marijuana sales starting in California next year.

The San Francisco Chronicle reported that the Board of Supervisors also directed the new office to analyze disparities that keep certain minority groups out of the cannabis business.

Its other task is to make recommendations on how to keep medical marijuana affordable

Colorado town has updated its public health and safety code so it can locally regulate the oil and gas industry.

The Daily Camera reported Erie trustees approved an ordinance allowing the town to consider complaints against fracking-related odors.

The measure is the region’s first step toward local regulation of the fracking industry.

The decision comes two weeks after trustees failed to pass an emergency approval for the same ordinance.

S

Board President London Breed suggested San Francisco follow in the steps of Oakland, California, where lawmakers established a cannabis equity program this year.

The program sets aside half of business licenses to city residents who have been arrested on a cannabis crime or who live in neighborhoods with historically high numbers of marijuana arrests.

Copyright 2017 Associated Press.

W4 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

A

Erie ordinances typically take effect 30 days after approval.

Complaints from Erie residents against oil and gas operations-related odors will be handled by local police. Violation charges could then be sought in municipal court.

Copyright 2017 Associated Press.

INSURANCEJOURNAL.COM

WEST | News & Markets

Porter Ranch, California - January 26, 2017: Aerial view of the Southern California Gas Company Aliso Canyon storage facility. The facility was the site of the largest methane leak in US history.

Judge Refuses to Block California Gas Facility From Reopening

A

judge has refused to block a Los Angeles, Calif. natural gas storage facility from reopening a yearand-a-half after a major blowout spewed methane that drove thousands of families from their homes.

Los Angeles Superior Court Judge John Wiley ruled last month that state laws prevented him from stopping Southern California Gas Co. from restarting operations at Aliso Canyon.

The state had given approval to allow the company to pump gas into underground storage wells after an overhaul and rigorous testing.

The facility above the San Fernando Valley has been largely out of commission since an old well failed in October 2015, unleashing methane for nearly four months and leading 8,000 families to evacuate.

The blowout released the largest-known amount of climate-changing methane in U.S.

history and led to widespread complaints of nosebleeds, nausea, headaches and symptoms that persisted even after the leak was capped last year.

Wiley said he understood opponents’ arguments that an extensive safety review had not taken into account the risk of an earthquake from a fault that runs through the field. He acknowledged that the reopening was important to residents of Porter Ranch and surrounding suburbs but that lawmakers had taken authority away from Superior Court judges to overturn orders by the California Public Utilities Commission.

“So what’s my power?”

Wiley said. “Zero. I have zero power. Because in the 1950s the Legislature said, ‘Hands off. The PUC owns this problem.’”

Skip Miller, a lawyer for Los Angeles County, disagreed with the judge and filed an appeal to block the facility from reopening.

W6 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

“I think your honor is just dead-bang wrong,” Miller said.

“This is super important to the county of LA and the 30,000 people who live out there.”

The county asked the 2nd District Court of Appeal to block the restart because it was notified the company had planned to resume operations.

Chris Gilbride, a SoCalGas spokesman, said the utility has a few steps to complete before it can resume storing gas and wasn’t sure when it would restart.

The state allowed SoCalGas to resume limited operations under stricter rules put into effect after the blowout. Fewer than half the 114 wells in the field have passed tests that would allow them to be used.

The county, however, said the state’s review didn’t adequately address the threat of a strong quake rumbling across the Santa Susana Mountains where the field is located.

“That’s a recipe for disaster,” Miller said. “We think they’re jumping the gun.”

The county’s legal filing included emails and a declaration from a former SoCalGas manager who raised concerns several years ago about the danger. Jim Mansdorfer, who managed the company’s gas storage wells for years, said the Santa Susana fault could rupture all wells and release gas at 100 to 1,000 times the rate of the 2015 blowout.

In response, the state said the facility has likely undergone more scrutiny from a regulatory agency than any facility in the U.S. and the county didn’t have a valid claim but could appeal to regulators.

The county’s claims are based on “the vague possibility of a future, hypothetical catastrophic earthquake,” the state said.

“Fearmongering and heated rhetoric aside, the county fails to allege a legal or factual basis upon which relief, let alone emergency relief, may be granted,” Deputy Attorney General Jennifer Rosenfeld said.

SoCalGas echoed the state’s arguments in a legal filing. In a letter to politicians and policymakers it said the county’s claims were “baseless and wrong.”

The company said it didn’t agree with Mansdorfer’s opinion, but it had forwarded his concerns to regulators.

While the company and the state have deemed the facility necessary for home heating and to fuel gas-fired power plants, Southern California has avoided predictions of blackouts over the past year while the facility was closed.

Copyright 2017 Associated Press.

INSURANCEJOURNAL.COM

You’ll Get the Royal Treatment

MonarchExcess.com

At Your Service

Derek Borisoff, President / Chief Executive Officer monarchxs@monarchexcess.com // 818-249-0100 x1237

Commercial Lines // Personal Lines // Special Risk // Professional Liability // Brokerage

La Crescenta 818-249-0100 / Simi Valley 805-577-6800 / San Diego 619-521-2170 / Rancho Mirage 760-779-5555 San Marcos 760-891-2811 / Fresno 559-226-0200 / Arizona 877-406-8026 / Hawaii 818-425-9847 / Lic. #0697233

WEST | PEOPLE

Ken Cook

Bothell, Wash.-based EagleView Technologies has named Kenneth Cook senior vice president.

Cook will lead field services while collaborating with engineering and product teams to develop solutions for claims and underwriting professionals in the property insurance space.

He was previously vice president of client relations at EagleView. He has worked in the insurance industry for 26 years, holding positions with insurance carriers including State Farm Insurance and Farm Bureau Financial Services.

EagleView is a provider of aerial imagery, data analytics, property data and GIS solutions for government, infrastructure and commercial sectors.

Salt Lake City, Utah-based GBS Benefits Inc. has named Scott Schneider president.

Schneider has a background in finance, underwriting and sales.

Schneider most recently was vice president of sales and marketing for SelectHealth.

Rick Fielding, who has been the president of GBS since the company’s inception in 1989, will continue to lead GBS Benefits as CEO. GBS Benefits is an insurance and employee benefits firm and a member of Leavitt Group.

Alliant Insurance Services Inc. has named Jason VanderYacht a vice president within its energy and marine group.

VanderYacht will be based in Los Angeles, Calif.

He has experience covering an array of marine risks

and a specialty in cargo insurance and surety solutions. VanderYacht was an account executive with specialty insurance brokerage Roanoke Trade prior to joining Alliant. Before that he was a multiline claims adjuster with Capital Insurance Group.

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

Brown & Brown Insurance has named Todd Davis a sales consultant in California.

He will advise clients on their group and individual insurance plans.

Davis came to B&B from Heffernan Insurance, where he was an assistant vice president of employee benefits. He was a risk adviser with Ascension Insurance Inc. before that.

Brown & Brown through its subsidiaries offers a range of insurance products and services.

TLB Insurance Services has named Scott Scherer an employee benefits agent in the agency’s Walnut Creek, Calif., office.

Scherer was previously president and owner of Hall of Fame Benefits.

He was vice president of sports and entertainment at Cole Capital, and a vice president at Genworth financial before that. He started his insurance career in 1999 with The Hartford.

TLB is a subsidiary of Leavitt United Insurance Services, part of Leavitt Group.

WEST | News & Markets

Progressive Unveils Online Homeowners Insurance Comparison Shopper

P

rogressive announced a new tool called HomeQuote Explorer, an online platform designed to enable homeowners to compare home insurance quotes from multiple carriers.

The insurer says it takes 15 minutes or less to get most quotes.

“This might sound familiar because it’s the formula we used to put the power of comparison shopping in the hands of auto insurance customers in 1996,” Progressive W8 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

CEO Tricia Griffith said in a statement. “We think HomeQuote Explorer will compel a lot of homeowners to take a few minutes to make sure they’re getting the right coverage at the right rate.”

The platform pulls in publicly available information on a property automatically, and has a series of prompts to help the user enter other required information, according to Dan Witalec, the insurer’s customer acquisition leader.

Progressive writes homeowners through its subsidiary ASI that it acquired in 2015.

INSURANCEJOURNAL.COM

STABLE STEADY STRONG Nobody else in the industry has a track record like State Fund’s. For more than 100 years, we’ve been the stable force that others look to for guidance, and we’ve never pulled out of the market when times get tough. As the market fluctuates, consider putting your client’s business where you know it’ll be secure. Contact us today for a quote.

statefundca.com

Together, we’ll help keep California working.

Inquires accepted from California only.

State Compensation Insurance Fund is not a branch of the State of California.

Copyright © 2015 State Compensation Insurance Fund of California.

In loving memory of

Bob Borisoff On the Anniversary of his passing.

1928-2003

“He was my mentor in insurance and my teacher in life.

I watched him turn clients into friends, friends into family and family into guarded treasures. A true gentleman of the industry. Always making people feel good about themselves.

He was my hero and my Dad.�

Derek Borisoff CEO

WEST | News & Markets

Mercury Names Most Affordable Electric Vehicles to Insure in California

M

ercury Insurance put together a list of the 10 most affordable electric vehicles to insure, and Fiat, Kia and Nissan models top the list.

Mercury researchers examined the 2017 electric vehicles available at car dealerships today or in the near future to compile a list of the most affordable vehicles to insure.

The list was created based on the Mercury price for full coverage — liability, comprehensive and collision — in California.

“Consumer interest and intent to buy electric vehicles has increased substantially,” Chong Gao, a senior product manager for Mercury Insurance, said in a statement.

“We put together this list to help inform your decision, because many people don’t consider what it will cost to insure a vehicle before they buy it.”

The top 10 list for 2017 all-electric vehi-

cles begins with the most affordable make and model to insure: • Fiat 500e • Kia Soul EV • Nissan Leaf • Volkswagen e-Golf • Smart ForTwo Electric Drive • Mitsubishi i-MiEV • Ford Focus Electric • Hyundai IONIQ Electric • BMW i3 • Tesla Model 3 Mercury developed the list using a 30-year-old male with a clean driving record, who lives in Newport Beach, Calif., and travels 13,000 miles per year. The full coverage with a $500 deductible includes

liability limits of $100,000 in injuries per person, $300,000 per accident and $50,000 in property damage.

Mercury is a multiline carrier predominantly offering personal automobile, homeowners and commercial insurance through a network of independent agents.

Personal Lines l Commercial Lines l Agri-business

Older Homes

High Value Homes

Homes with Main Street Water Losses Homes Odd Homes

Insure Homes With Abram.

Flexible Underwriting | Online Quoting | Standard & Non-Standard

ABRAM16764.indd 1

W12 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

7/24/17 3:49 PM

INSURANCEJOURNAL.COM

GROW YOUR AGENCY &

REMAIN INDEPENDENT

34 YEARS IN BUSINESS

80+ AGENCIES THROUGHOUT CALIFORNIA AND ARIZONA

$750M COLLECTIVE WRITTEN PREMIUM

65 INSURANCE COMPANIES REPRESENTED

An insurance agency network with all kinds of possibilities.

800-401-8847 · www.unitedvalleyins.com · CA lic #0655225

WEST | News & Markets

California Earthquake Authority Policy Sales up 5.4% in 2Q from Year Ago

By Don Jergler

C

alifornians may be getting the idea that they live in earthquake country.

That’s the underlying message that can be found in the latest figures out from the California Earthquake Authority.

The CEA, a not-for-profit, publicly managed organization, announced at the end of July that it ended its second quarter of 2017 with policies in force up nearly 5.4 percent from the same quarter a year ago.

The CEA now has more than 950,000 policies in force, continuing a trend of increased earthquake insurance sales that began in 2016. The authority in 2016 reported a net gain of more than 52,000 policies, more than seven times the CEA’s average gain annually over the past 10 years.

Interest in earthquake insurance remains

W14 | INSURANCE JOURNAL | WEST AUGUST 7, 2017

strong in 2017, with 18,804 more policies in force after the first six months, bringing the authority’s total policies in force to 950,393 at the end of June 2017, according to the CEA. Glenn Pomeroy, CEO of the CEA, offered several reasons behind the increased policy sales. And those reasons are in lieu of the usual driving force behind earthquake policy sales, which would be recent temblors. There haven’t been many of note in and around California for a while.

“We’re attributing to it to a sum total, realizing what’s happening collectively out there,” Pomeroy said. “You do have the scientific community speaking with a clearer and stronger voice than they have in the past.”

Pomeroy views one scientist’s warning in particular as turning point for spurring the interest of Golden State residents in

financially protecting themselves from earthquakes.

That warning came last year in May from Thomas Jordan, director of the Southern California Earthquake Center, during a national earthquake conference.

He told the audience that the southern section of the San Andreas Fault is “locked, loaded and ready to roll.” The catchy quote was picked up by news outlets around the country.

“That seems to be a turning point in more and more people paying attention to what scientists are saying,” Pomeroy said.

The overall earthquake policy take up in California has been rising slowly over the last few years, according to figures from the California Department of Insurance.

In 2016, the latest figures available, 10.79 percent of California homes that had homeowners insurance also had earthquake insurance. That figure was 10.23 percent in 2015.

New messaging mandated by the state also gets some credit from Pomeroy.

Beginning last year, a new law took effect changing the way that people get notified about the availability of earthquake insurance.

“The mandatory offer law” mandates that carriers that sell homeowners insurance must offer earthquake insurance and mail out notices that if a home is not covered that earthquake insurance is available to be purchased. Last year the Legislature successfully put through a bill to make the wording on the offers being mailed to homes more reader friendly.

The CEA itself may have had a hand in the policy sales uptick. The CEA last year rolled out new policy options, an online earthquake insurance calculator and a new deductible structure with options for 5 percent, 10 percent, 15 percent, 20 percent or 25 percent.

“All these efforts combined have put us in the position where we’re able to speak more effectively to Californians,” Pomeroy said.

INSURANCEJOURNAL.COM

By remodeling our rates and strengthening our coverage offering, Nautilus Insurance Group equips you with the right tools to profitably grow your business.

Building the perfect coverage for

CONTRACTORS

O.N.E. more reason to do business with Nautilus.

A.M. Best A+XV Rated Carrier Products and services described above are provided through various surplus lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed surplus lines brokers.

Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. Nautilus Excess Insurance Agency, LLC conducts business in California as a licensed surplus lines broker (License #0I56061). Š2017 Nautilus Insurance Group

800.842.8972 | nautilusinsgroup.com | nautilusagents.com

Figures

Declarations

9

Egregious Fallony

“The Fallons’ alleged theft from injured workers is particularly egregious. By stealing from injured workers who depend on the funds for future care, the Fallons may have left many victims without the resources they need for medical treatment.”

The number of cases of Legionnaires’ disease attributed to an outbreak at The Guest House at Graceland in Memphis, Tenn. Health officials said on July 19 the number of cases had increased from five to nine, with the hotel’s pool and hot tub being considered the source of the bacteria.

— Insurance Commissioner Dave Jones had harsh words for

Tom Fallon, 63, and his daughter, Christina Fallon, 28, who allegedly embezzled $273,954 from injured workers who trusted him to invest settlement funds from workplace accidents.

Not Blaming Tesla

“I did not intend to put the blame on Tesla or the auto pilot system as I am aware that I need to be in control of the vehicle regardless if the auto pilot system is engaged or not.”

$150 MILLION $317 MILLION

— David Clark, 58, in an email to Minnesota’s

Kandiyohi County Sheriff’s Department. Clark was driving a 2016 Tesla when it was involved in a crash in Minnesota on July 16. According to the sheriff’s department, Clark previously said that when he engaged the Autopilot system, it caused the vehicle to suddenly accelerate and then roll over. In the email recently released by Tesla, Clark said instead he believed he had disengaged the Autopilot system at the time of the crash.

Massachusetts Marijuana The amount of a recently finalized settlement for contractors and vendors who are owed millions of dollars after the owner and president of a Vermont ski resort were accused of massive fraud. The Caledonian Record said the federal receiver overseeing Jay Peak ski resort expects to receive the first payment in the settlement from Raymond James Financial Inc.

$3.1 MILLION That’s how much a former altar boy at a Portland, Ore., church is suing the church for contending he was repeatedly sexually abused by a choir director in the early 1960s.

The Portland man, now in his late 60s, contends in the lawsuit the abuse took place at St. Michael and All Angels Episcopal Church.

INSURANCEJOURNAL.COM

“We feel confident this will bring in enough revenue to properly implement and regulate this new marketplace, and allow us to invest in key areas such as substance abuse.”

— Rep. Mark Cusack, after Massachusetts House and Senate

negotiators reached an agreement on a revamped version of Massachusetts’ voter-approved marijuana law that would allow retail pot sales to be taxed at a maximum 20 percent rate.

Cusack led the House in the talks, which carried on well past the June 30 deadline.

The amount Louisiana Gov. John Bel Edwards’ administration has earmarked for hazard mitigation protection projects around Louisiana. The dollars are allocated by the Federal Emergency Management Agency, and each project must receive FEMA approval. Projects include drainage pipe replacements, water pump station upgrades and levee improvements.

Dust Storm Pileup

“Everybody hit everybody.”

— Upton County (Texas) Sheriff Dan Brown said a zero-visibility dust storm caused a 10-vehicle pileup in West Texas that left eight people hurt, including one in critical condition. Brown said dirt from recently plowed fields blew across the highway and that nobody could see. The accident happened Sunday afternoon on Highway 349, near Rankin, about 275 miles northwest of San Antonio.

InsuranceJournal.com

$200,000 The amount of premium Ohio’s Franklin County, which includes Columbus, is paying for a $10 million cyber insurance policy. The Franklin County Data Center currently spends about $3 million a year on cyber security. The insurance would pay for security improvements in the event of a hack and other mitigation.

Poll

In which one of these areas would you MOST like to see the P/C insurance industry develop new products?

22.22 Small Business 17.78 Homeowners 9.63 Management/Professional Liability 42.22 Cyber 8.15 Commercial Property Total Votes: 270

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 11

NATIONAL | News & Markets

U.S. Building Owners Reviewing Structural Materials After London Grenfell Tower Blaze

By Jeff Martin

U

.S. building owners should review what materials their structures are built with following a deadly fire in London that showed how flames can quickly cover a high-rise, devouring it from the outside, fire experts said.

An Associated Press review found that the manufacturer of the panels used in the London tower said the same panels were used in some U.S. buildings. However, many building owners were unaware of that.

British authorities are investigating whether those Reynobond PE panels and other materials helped spread flames across the doomed Grenfell Tower.

“I think the public has this awareness of this stuff they never had before, and the building owners have

more awareness,” said Robert Solomon, a fire protection engineer with the National Fire Protection Association.

That awareness is prompting a renewed look at exterior materials — often called cladding — at several U.S. buildings.

Local fire marshals are among the best resources for anyone concerned about a building’s safety, said Jon Narva, a spokesman with the National Association of State Fire Marshals.

“The fire marshals are going to be aware of the circumstances surrounding the Grenfell fire, and they should be able to help any concerned building owners with finding out information,” Narva said.

Officials are awaiting test results to determine if the Baltimore Marriott Waterfront hotel, which rises more than 30 stories over the city’s harbor, used Reynobond PE panels.

12 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

New York-based Arconic Inc. has stopped selling those panels for use in high-rise buildings.

In general, U.S. buildings made of concrete, steel or glass will merit few concerns, Solomon said.

“If you have something that’s not in those three categories, people are starting to take a look at that,” Solomon said.

Building owners with concerns can remove a two-story section about 10 feet wide and test it for fire spread — a roughly $30,000 full-scale test to see how the entire section as it is constructed on the building reacts to fire, Solomon said.

“One of the things we periodically hear is that it’s too expensive to test all these combinations of materials,” Solomon said.

“As a fire engineer, I just scratch my head. You think $30,000 is too much to spend

on a $50 million building project?”

Though Marriott officials say they are awaiting test results on the building, the company has not specified what type of testing is being done.

If dangerous materials are found in any building, options include removing the materials entirely, changing how much of the material is used or changing where it’s used on a building, Solomon said.

Innovative solutions — such as an exterior sprinkler system that can send water raining onto a building’s outer walls — have also been discussed in the United Arab Emirates, where some high-rise buildings have burned in recent years, Solomon said.

Copyright 2017 Associated Press.

All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

INSURANCEJOURNAL.COM

We’re ready to be your top choice multi-line carrier.

Look to us for your personal & small business auto, RV, motorcycle, homeowners & other insurance needs.

www.NatGenAgency.com

Š 2017 National General Insurance. All Rights Reserved.

Eligibility, coverages and discounts may vary by state. Underwritten by member companies of National General Insurance.

NATIONAL | News & Markets

Surplus Lines Insurance Premium Up Nationwide

A

mid-year compilation of excess and surplus (E&S) insurance premium amounts by the Surplus Lines Stamping Office of Texas (SLTX) shows a 6.6 percent increase in premium nationally compared with the same period last year.

SLTX used information from the 15 managing service offices across the U.S. region in its analysis. Across the U.S., service offices reported total premium of $14.3 billion, with E&S policy items and filings up almost 11 percent.

Arizona, Utah, North Carolina and Minnesota saw the greatest premium spikes of 29 percent, 27 percent, 19 percent, and 16 percent, respectively. The positive news

reported from each of these state’s executive directors were that the increases were attributed from market changes in property and construction, new/improved business technology platforms, and policy increases in premium.

California, Florida, Texas and New York all saw increases in premium volume ranging from 5 to 8 percent. These four offices represent much of the U.S. premium volume, totaling $10.9 billion of the total $14.3 billion mid-year value.

As with most states, Florida’s surplus lines premium contin-

ues in an upward trend.

“The primary factors of our 6 percent growth for the first 6 months of 2017 are an improving economy, particularly in housing, and the fact that more policies written are being renewed rather than re-entering the admitted market at the end of the period,” Gary D. Pullen, executive director of the Florida Surplus Lines Service Office, said in the SLTX.

Other western states with reported E&S premium increases are Idaho (7.4 percent), Oregon (5.2 percent) and Washington (5 percent).

Overall, the 2017 mid-year review provides a good snapshot. The industry is experiencing growth in almost all regions across the U.S. Albeit soft market conditions, stability is a factor that is as valuable for 2017 and beyond, SLTX said.

New Wholesale & Specialty Association Is Born

M

embers of the American Association of Managing General Agents (AAMGA) and the National Association of Professional Surplus Lines Offices (NAPSLO) have approved a merger of the two associations, creating the new Wholesale & Specialty Insurance Association (WSIA).

According to the joint announcement, 89 percent of the AAMGA’s votes and 93 percent of NAPSLO’s votes were in support of the merger and affirmed the creation of the WSIA, effective August 1, 2017.

Hank Haldeman, Merger Committee chair, said members voted for more than a sim-

ple merger of the two existing organizations. Instead they have “endorsed the creation of a new world-class member services association that will serve the entire wholesale, specialty and surplus lines industry.”

WSIA will be governed by a board of directors that includes both legacy organizations’ members.

Corinne Jones, AmWINS Access, will serve as president.

14 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

“It is an honor to serve as the first president of WSIA, and I’m looking forward to the work that’s ahead,” said Jones.

“This is an exciting time for our association,” said NAPSLO President Dave Leonard.

WSIA became fully operational on August 1 with services and programs.

One of the first opportunities to participate at WSIA will be at the WSIA Annual Marketplace,

formerly the NAPSLO Annual Convention, which is Sept.

10-13 in San Diego.

“Members will see the WSIA brand incorporated into all programs and services in coming months, as we offer a combined slate of education programs that includes all the same opportunities that each organization has traditionally offered,” said Brady Kelley, WSIA executive director.

Kelley said WSIA will also continue its forum for its under-40 members by combining the programming and events of the AAMGA’s Under Forty Organization and NAPSLO’s Next Generation into WSIA’s U40.

INSURANCEJOURNAL.COM

ELEVATE YOUR EMPLOYEE BENEFITS TEAM FOR SUCCESS

Give your Employee Benefits team the support they need — so they can give your clients the service they deserve. With ReSource Pro Employee Benefits Solutions, your teams will be able to deliver world-class service that ensures growth and retention — even during peak season.

Let’s talk about how we can help elevate your operations and eliminate the stress of annual renewals. Call us at 1.877.812.0411, email eb@resourcepro.com or visit resourcepro.com/eb.

NATIONAL | Business Moves now have access to all of the product offerings formerly administered by NAPLIA.

Hub International Limited, Unilite Insurance Agency

Markel, State National

Markel Corp. will acquire Texas-based State National Companies Inc. for $919 million, a deal that the Virginiabased insurer and reinsurer said will help diversify its underwriting and revenue streams.

Both companies’ board of directors voted unanimously to approve the deal, which calls for Markel to pay $21 per share to acquire all outstanding shares of State National common stock. Plans call for closing the acquisition in the 2017 fourth quarter, assuming State National shareholders and state regulators approve the deal.

State National is a specialty property/casualty insurance services provider focused on collateral protection insurance that insures personal automobiles and other vehicles held as collateral for loans made by credit unions. Its program services segment provides access to the U.S. property/casualty insurance market in exchange for ceding fees.

According to its website, State National is the largest and

longest-standing pure-play U.S. insurance fronting business with approximately $1.4 billion in gross written premium (2016) and more than 60 programs. It employs about 400 people.

Markel, based in Virginia, is a holding company for insurance, reinsurance and global investment operations.

The McGowan Companies, NAPLIA

The McGowan Companies, a Fairview Park, Ohio-based company offering specialized insurance programs, has purchased the assets of Framingham, Mass.-based North American Professional Liability Insurance Agency LLC. NAPLIA will be re-branded under the McGowan Program Administrators brand and will function as a division of McGowan & Company Inc. following the transaction.

Established in 1999, NAPLIA is a program administrator for professional liability insurance for accountants, bookkeepers and investment advisors.

All McGowan brokers will

16 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

Hub International Limited, a global insurance brokerage, has acquired the assets of Unilite Insurance Agency Inc. Terms of the acquisition were not disclosed.

Based in Lake Success, N.Y., Unilite was formed in 1991 and specializes in providing insurance products and services to the commercial real estate, construction and manufacturing industries. Robert Eisman and Eli Blisko, co-owners of Unilite, will join Hub’s Northeast region, reporting to Doug Schenendorf, president of its Long Island operations.

Alliant Insurance Services, Boynton & Boynton Insurance Professionals

Alliant Insurance Services Inc. has acquired Fair Haven, N.J.-based Boynton & Boynton Insurance Professionals in an effort to continue expanding its footprint throughout the northeast region of the U.S. Terms of the agreement were not disclosed.

Boynton & Boynton is a private insurance agency and is expected to add personal and commercial insurance solutions to the company’s growing Alliant Americas division.

Following the transaction, Boynton & Boynton will operate as part of Alliant Americas.

Boynton & Boynton President Jay Lynch, along with the entire Boynton & Boynton management team and staff, will join Alliant and continue to service clients from

its offices in New Jersey and Pennsylvania.

Founded in 1929, Boynton & Boynton provides a range of commercial and personal insurance solutions to clients in New York, New Jersey and Pennsylvania.

Alliant Americas provides midsized businesses with targeted insurance, risk management and consulting services.

As a middle-market platform with offices throughout the U.S., Alliant Americas delivers a range of products and services that are regionally focused.

Conifer Holdings, RHP General Agency Inc.

Conifer Holdings, headquartered in Michigan, has agreed to sell the book of HomeValue business produced through Sycamore Insurance Agency to Texas-based RHP General Agency Inc. As part of this renewal rights transaction, the entire team at Sycamore Waco will become employees of RHP General Agency.

Conifer specializes in restaurants, bars and taverns throughout the United States inclusive of liquor liability.

RHP General Agency through its subsidiary insurance company, Southern Vanguard, is a specialty provider of low value dwellings in Texas.

JenCap Holdings, Special Risks Facilities

JenCap Holdings LLC has agreed to acquire privately held Special Risks Facilities Inc., an MGA/contract binding authority and wholesale insurance brokerage firm based in Sterling Heights, Michigan.

continued on page 18

INSURANCEJOURNAL.COM

OUT-THINK. OUT-WORK. OUT-EXECUTE. REPEAT.

If your client has a complex risk situation, you don’t have to go it alone. Our specialty risk professionals have deep experience with the toughest risk placements. We not only design creative solutions for all size accounts but repeatedly out-execute the competition. Contact your RT specialist at www.rtspecialty.com.

r tspecialty.com R-T Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC, provides wholesale brokerage and other services to agents and brokers. RT is a Delaware limited liability company based in Illinois. As a wholesale broker, RT does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: R-T Specialty Insurance Services, LLC License #0G97516. Š 2017 Ryan Specialty Group, LLC

NATIONAL | Business Moves continued from page 16 Special Risks was formed in 1971 and has been led by Jack Klebba and Randy Kaszeta. The company has an additional office in Peoria, Arizona.

JenCap Holdings (JCH) was formed in March 2016 by The Carlyle Group and JCH management to consolidate specialty insurance distribution businesses, including managing general agents, program managers and transactional wholesale brokers.

The acquisition of Special Risks (SRF) is the fifth such transaction by JCH, which is headquartered in New York.

binding operations in Texas, and IMS’ Stephen Vallender has been appointed executive vice president at U.S. Risk Brokers Inc. Headquartered in Houston, Texas, with additional offices in Dallas and San Antonio, IMS London American has been committed to providing superior underwriting and brokerage services since its founding in 2005.

U.S. Risk Insurance Group operates internationally and is headquartered in Dallas.

Crest Insurance Group, Troon

Crest Insurance Group LLC has acquired Tucson, Ariz.-based Troon Insurance Property/casualty wholesaler, U.S. Risk Services.

Insurance Group LLC, has acquired Texas Terms of the deal were not disclosed. based IMS London American Brokerage Troon was founded by Clebern Best and and Underwriting Services. has been serving the greater Phoenix area IMS President Larry Mennes has been 12:36 for 20 years.

A&M helps BIG.pdf 1 1/5/16 PM named president of U.S. Risk’s contract Crest has Arizona offices in Tucson,

U.S. Risk Insurance Group, IMS London American

Close More, Larger Accounts with A&M Helping Small Brokers Get Big Small and mid-size brokers can feel locked out of the competition for the larger more complex accounts. You can compete and succeed on large accounts with the combination of your drive and marketing know-how, and A&M's ability to deliver the right coverage at the right price.

C

M

Y

CM

MY

CY

Contact us today to talk about larger accounts.

CMY

K

One Submission. Multiple Markets.™

(800) 234-6977

or Fax: (323) 255-0957 California License #0323106 www.andersonmurison.com

ANDERS16783.indd 1

18 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

7/20/17 2:58 PM

Phoenix, Scottsdale, Sierra Vista and Flagstaff, as well as in San Diego, Calif.

Ryan Specialty Group, N-Surance Outlets Ryan Specialty Group LLC, has reached a definitive agreement to acquire N-Surance Outlets (NSO), a wholesale insurance brokerage and binding authority operation headquartered in Roswell, Ga. NSO will become part of R-T Specialty LLC (RT Specialty), the wholesale brokerage unit of Ryan Specialty Group (RSG), and will enhance RT Specialty’s Atlanta office while remaining at the current Roswell location.

N-Surance Outlets specializes in commercial P/C, transportation, and garage risks and was founded in 1985 by Gregory K. Murrey.

Jason Murrey, President of NSO, and his team will continue to service and expand their client base.

Terms of the transaction were not disclosed.

R-T Specialty, LLC, a subsidiary of Ryan Specialty Group LLC, provides wholesale brokerage and other services to agents and brokers.

Alera Group, Group Benefits

Alera Group – an independent insurance agency and employee benefits firm - has acquired Group Benefits LLC of Memphis, Tenn.

Group Benefits LLC is a benefits broker and consulting firm providing employee benefits products since its inception in 2009.

This acquisition is the latest announcement from Alera Group.

GBS Benefits, Volk & Associates

Longmont, Colo.-based Volk & Associates has been purchased by GBS Benefits, a member of Leavitt Group.

Volk & Associates has operated as an insurance and human resources consulting firm in northern Colorado.

GBS Benefits Inc. is an employee benefits firm and a member of Leavitt Group.

Leavitt Group is a privately-held insurance brokerage that provides property/ casualty insurance, risk management and employee benefits solutions.

INSURANCEJOURNAL.COM

NATIONAL | News & Markets

From Here to Autonomy

Morality and Retirement Timeline for Auto Insurance Pros

By Andrew Simpson

W

hile the media, ethicists and perhaps the public like to ponder whether a self-driving car in a crisis should be programmed to hit a group of nuns crossing the street or hit a bus full of schoolkids, the drive toward autonomous driving is unlikely to be slowed by such moral dilemmas, insurance executives were told recently.

That’s because while scenarios involving split second decisions and catastrophic consequences are worth considering, the odds of some of them happening are very low whereas the odds of automated driving saving many lives are very high, Joe Schneider, managing director, KPMG Corporate Finance, suggested before attendees at the Super Regional P/C Insurer Conference in Lake Geneva, Wis. “My personal viewpoint is that in many ways it’s kind of a thing that the media latches onto because it’s a very interesting hypothetical question,” said Schneider, when asked about programming ethical choices. “I don’t know if in reality, there’s going to be many nuns crossing the street and school bus situations. With that said, it

is something to certainly consider.”

The point stressed by Schneider and other panelists at the Super Regional conference is that automated driving will be fueled more by safety than by anything else. Many people will appreciate that driverless cars free-up time, some firms will benefit economically by cutting the costs of employing drivers, and others who have not been able to drive will welcome their new freedom to travel. But the paramount promise of driverless cars is that they will save lives. They will do so by eliminating human error, which is responsible for most traffic fatalities in the U.S. every year.

“The important point with the almost 40,000 fatalities is that over 90 percent of those are attributable in some way to human or driver error, whether it’s distracted driving or whatever,” said panelist Peter Rafferty, who is manager of the Transportation Systems Management and Operations (TSM&O) unit at the University of Wisconsin and involved in the university’s U.S. government-approved testing site for driverless vehicles.

“The automated vehicles … they don’t fall asleep, they don’t get drunk, they see all around them. They react much faster,”

20 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

said Rafferty. “So that’s where big safety gains are going to be happening.”

KPMG’s Schneider brought a copy of his firm’s most recent research into what all this means for the auto insurance industry.

In a 2015 report, KPMG said the market would shrink by as much as 60 percent by 2040. However, according to KPMG’s updated study, The Chaotic Middle: The Autonomous Vehicle and Disruption in Automobile Insurance, the auto insurance sector will dwindle by more than 70 percent or $137 billion by 2050 due not only to autonomous vehicle technology but also a rise in on-demand transportation and a shifting of liability to manufacturers.

According to many researchers, the transition from mostly human-controlled to human-free motoring will happen over the next 25 years. The road will likely be marked by regulatory bumps and a “chaotic middle” as KPMG calls it, or a “messy middle” as Rafferty characterizes it, where vehicles with varying levels of autonomy and human involvement are on the roads.

Automation Levels

The Society of Automotive Engineers

continued on page 22

INSURANCEJOURNAL.COM

We believe every customer deserves person-to-person support.

That’s why, when you call PHLY, you’ll speak with a real person.

A professional with answers to your questions about coverage, paying a bill, making a claim, binding a proposal, even how to use the chat feature on our website. Along with quality coverage and claims service, how we interact with you is one of the many things that set us apart.

Now, real quick, let’s get you the answers you need.

Call 800.873.4552 or visit ThinkPHLY.com

A.M.Best A++ Rating Ward’s Top 50 2001-2016 94.5% Claims Satisfaction 100+ Niche Industries

REAL PEOPLE. REAL ANSWERS. REAL QUICK.

Philadelphia Insurance Companies is the marketing name for the property and casualty insurance operations of Philadelphia Consolidated Holding Corp., a member of Tokio Marine Group. All admitted coverages are written by Philadelphia Indemnity Insurance Company. Coverages are subject to actual policy language.

NATIONAL | News & Markets continued from page 20 you can’t ride your horse around in a lot of places. You probably won’t be able to drive a vehicle around that can kill people.”

KPMG has offered its own timeline.

Over the next two or three years, consumers will begin experiencing the safety advantages of new technologies and attitudes will shift towards acceptance of autonomous driving.

Right to Left: Joseph Petrelli, KPMG's Joe Schneider, Merlino's Also the first autonomous cars will be Ryan Purdy, UWisconsin's Peter Rafferty on the roads. On-demand transport 0. No Automation — human and the cars will shift into a safe mode of and car-sharing will continue to expand. drivers perform all aspects of driving even operation if a dangerous situation arises.

By 2024, the majority of travel within cities when there are warning or intervention and surrounding suburbs will be on-desystems.

Timeline mand rather than with a personal vehicle, 1. Driver Assistance — driving assistance

Experts have offered different adoption and by 2035 on-demand will be the norm systems of either steering or acceleration/ timelines; Rafferty’s calls for the transition in transportation, according to KPMG’s deceleration. Example: automatic braking being largely completed by 2040. projections. systems.

“It’s gonna’ be years or even decades yet 2. Partial Automation — one or more before we really get the full automation Insurance Pros driving assistance systems of both steering and acceleration/deceleration. Example: that can operate everywhere. The vehicle Today’s insurance executives should be Tesla Autopilot can get out of your garage, go through a educating themselves on the technology 3. Conditional Automation — automatneighborhood across town, pick up a kid, and possible timelines because the traned driving system performs all aspects of what not. That’s still a long way away. sition will be happening on their watch, driving with expectation that human will Automated vehicles are here, yes. But according to panelists. respond appropriately if requested to inter- we’re just at the beginning of a rather long “This is not George Jetson stuff,” KPMG’s vene. transition period in my opinion,” he said.

Schneider said. “This stuff is real. It’s mov 4. High Automation — automated driv“This is just my impression of things.” ing more quickly.” ing system performs all aspects of driving He urged the Super Regional executives even if human does not respond approprito prepare. ately to request to intervene requested to Although autonomous vehicles are intervene. expected to become very popular, it’s also 5. Full Automation — automated drivexpected that some people will still drive. ing system performs all aspects of driving Schneider recalled a recent global corpounder all roadway and environmental conrate finance meeting in New York where he ditions. gave a presentation on the topic to insur Rafferty expects that by 2020, there will ance professionals. There was a gentleman “At level zero, one and two, the driver be plenty of level three cars on the roads. in the back of the room from Milan who is supposed to always be paying attention By 2025, “shared mobility” fleets using begged to differ that driving will become and ready to take over control of the vehifirms like Uber and Lyft will have caught extinct. In his Italian accent, he insisted, cle if something goes wrong, like the Tesla on. By 2030, highly automated level four “People will always be driving Ferraris.

You’re not gonna’ make that car autonoauto-pilot. Levels three, four and five that’s vehicles will start appearing and by 2030, human drivers will be banned on certain mous because people are always driving not the case. If something goes wrong, the roads and in urban areas.

By 2040, the Ferraris.”

Share this article with a colvehicle is able to go into some sort of safe transition is going to be largely complete, league. condition. That’s the important distinction Rafferty believes. here,” Rafferty said.

“From there to 2100 it’s going to be like IJMAG.COM/807AU The “messy middle” will occur between the shift that we just had 100 years ago the level two and three automation period from the horse to the gas-powered autoThe Super Regional P/C Insurance Conference of partially automated vehicles, where the mobile.

It’ll be that dramatic.

This is really was sponsored by actuarial consulting firm driver should be paying attention but may going to be a change.

Not that these things Demotech Inc. and Wells Media’s Insurance be distracted. In later levels, eventually the will be outlawed.

It’s just that, like today, Journal and Carrier Management. driver will not be required to pay attention (SAE) has developed widely-accepted classification system for the various levels of automation in driving, which Rafferty highlighted. There are six levels starting with zero. In levels 0 to 2, the human driver monitors the driving environment. In levels 3 to 5, the assisted driving system monitors the driving environment:

‘The automated vehicles … they don’t fall asleep, they don’t get drunk, they see all around them.’

22 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

NATIONAL | News & Markets

P/C Direct Premium Written Up 4.8 Percent

By Douglas A. Powell

D

irect premium written (DPW) for property/ casualty insurance companies continues to increase, albeit gradually. At year-end

2016, approximately $606 billion of DPW was reported, a record high for the industry. For 2016, total DPW for all P/C insurers aggregately increased 4 percent over 2015, an increase of $23.4 billion.

Through the first quarter of 2017, the insurance industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased 4.8 percent over 2016.

For the three months ending March 31, 2017, P/C companies comprising the Top 25 insurers in terms of DPW growth increased their DPW nearly 14 percent over the first three

months of 2016. This continues the Top 25 insurers’ impressive display of premium growth and financial stability.

The Top 25 accounted for 55 percent of the growth in the P/C insurance industry’s DPW. In contrast, the remainder of the industry reported an increase in DPW of 2.6 percent, or $3.1 billion year-over-year.

It is important to note that while increasing DPW, P/C companies have aggregately maintained a sufficient level of policyholders’ surplus (PHS).

One measure that indicates P/C companies are conservatively leveraged is the DPW to

PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without consideration of the effect of reinsurance. Since 2010, this ratio for P/C companies has remained stable at approximately 70 percent.

There is always a fair amount of uncertainty in making projections based on first quarter data, but if the industry holds to its 10-year historical pattern, growth in 2017 would again result in the highest level of year-end direct premium written ever reported by the P/C insurance industry.

Powell is a senior financial analyst with Demotech Inc. Email: dpowell@ demotech.com.

Top 25 Property/Casualty Companies Based upon dollar amount of direct premium written (DPW) growth Year-to-date results March 31, 2017, versus March. 31, 2016

Company Name

State Farm Mutual Automobile Insurance Co. Liberty Insurance Underwriters Inc. GEICO General Insurance Co. Rural Community Insurance Co. American Family Insurance Co. GEICO Casualty Co. GEICO County Mutual Insurance Co. Liberty County Mutual Insurance Co. GEICO Indemnity Co. USAA General Indemnity Co. American Bankers Insurance Co. of Florida Allstate Fire and Casualty Insurance Co. NAU Country Insurance Co. GEICO Advantage Insurance Co. USAA Casualty Insurance Co. ACE American Insurance Co. Farmers Insurance Exchange Government Employees Insurance Co. LM General Insurance Co. Auto-Owners Insurance Co. Ohio Security Insurance Co. United Services Automobile Association Evanston Insurance Co. Allstate Vehicle and Property Insurance Co. Integon National Insurance Co.

DPW 3/31/2017

$10,015,471,290 $821,592,917 $2,383,686,594 $149,071,048 $288,963,021 $1,089,790,642 $414,389,242 $281,858,292 $1,465,436,218 $932,632,487 $955,803,461 $2,005,607,474 $1,036,351,837 $323,038,713 $1,467,686,135 $1,056,023,847 $1,045,422,926 $1,470,404,769 $821,399,239 $762,024,157 $465,151,976 $1,820,468,754 $287,946,420 $443,350,682 $303,022,440

Top 25 P/C Companies by DPW Growth $32,106,594,581 All Other P/C Companies $123,639,340,662 Total $155,745,935,243

DPW 3/31/2016

$9,197,798,644 $576,726,968 $2,169,592,962 -$25,469,982 $135,773,410 $936,845,834 $262,491,723 $130,469,485 $1,321,599,127 $798,398,522 $824,515,622 $1,876,664,565 $909,853,513 $202,168,169 $1,350,066,849 $941,414,095 $933,985,184 $1,362,513,156 $714,640,368 $662,026,940 $365,691,227 $1,729,844,856 $202,341,375 $361,917,970 $223,759,869

$28,165,630,451 $120,469,270,758 $148,634,901,209

$ Growth

$817,672,646 $244,865,949 $214,093,632 $174,541,030 $153,189,611 $152,944,808 $151,897,519 $151,388,807 $143,837,091 $134,233,965 $131,287,839 $128,942,909 $126,498,324 $120,870,544 $117,619,286 $114,609,752 $111,437,742 $107,891,613 $106,758,871 $99,997,217 $99,460,749 $90,623,898 $85,605,045 $81,432,712 $79,262,571

$3,940,964,130 $3,170,069,904 $7,111,034,034

% Growth

8.89% 42.46% 9.87% -685.28% 112.83% 16.33% 57.87% 116.03% 10.88% 16.81% 15.92% 6.87% 13.90% 59.79% 8.71% 12.17% 11.93% 7.92% 14.94% 15.10% 27.20% 5.24% 42.31% 22.50% 35.42%

13.99% 2.63% 4.78%

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

24 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

Sometimes

CLOSE isn’t good enough

In premium financing, competitive rates are just part of the game. We’ve got superior technology and exceptional customer service − all backed by a national charter.

If you’re a client, you already love us. If you're not, let us show you what you've been missing.

Call us or visit afsibex.com Western Region Newport Beach, Calif.

800.347.4986 service@afsibex.com

Insurance Premium Finance Professionals Competitive Rates | Customized Financing | Exceptional Service

Central and Eastern Regions Dallas, Texas 800.299.5626 service@afsibex.com

About This Report: Welcome to the

13th annual Insurance Journal Top 100 Independent P/C Agencies report.

The Top 100 list is ranked by total property/casualty agency revenue for 2016 and comprises only those agencies whose business is primarily retail, not wholesale.

This report also features the nation’s Top 20 Agency Partnerships, which can be found on page 29. This list includes agency groups such as aggregators, clusters, networks and franchise organizations, all of which play an important role in the independent agency system today.

Also included is a list of the nation’s Top 20 Bank Holding Companies and Top 20 Banks in Insurance courtesy of the Michael White’s Bank Insurance Fee

Income Report - 2017 Edition. See Sponsored by page 30.

Insurance Journal wishes to thank all of the agencies and brokerages that were willing to share their information and cooperated in the process for the Top 100 and Top Agency Partnerships reports. The We encourage all qualifying agencies to result is a glimpse at some of the nation’s submit data for future reports. The more most successful independent insurance submissions Insurance Journal receives agencies and brokerages. the more accurate and comprehensive this All information in this report has been listing can be. Also, submitted data was not garnered from voluntary online submisindependently verified. sions from agencies and brokerages and A special thank you to the 2017 Top 100 best estimates based on other public inforP/C Agencies report sponsor AFS IBEX. mation sources. There may be agencies For more information about this report, eligible for listing but for which no inforcontact Andrea Wells at: awells@insurmation was received or located. ancejournal.com.

26 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

Insurance Journal’s 2017 Top 100 Property/Casualty Agencies Ranked by 2016 Total P/C Revenue

Hub International Lockton Cos. Alliant Insurance Services Inc. USI Insurance Services

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

6 5 7 8 12 9 14 13 10 11 16 18 17 24 20 19

AssuredPartners Confie Acrisure LLC BroadStreet Partners Inc. NFP Integro Group Holdings LP Risk Strategies Co. Insurance Office of America Inc. Leavitt Group Crystal & Co. The IMA Financial Group Inc. Cross Financial Corp., dba Cross Insurance Wortham Higginbotham Heffernan Insurance Brokers Hays Companies

21

25

Woodruff-Sawyer & Co.

22

22

AIS Insurance *

23

23

Answer Financial *

24

26

PayneWest Insurance Inc.

$2,812,925,000 $16,907,118,000 $6,557,061,938 $8,213,632,936

11,554 6,500 2,806 4,353

Main Office

$1,107,702,000 $1,000,411,000 $656,293,229 $574,963,909

$380,364,000 $425,840,000 $245,476,528 $455,160,360

$8,191,839,000 $7,428,780,000 $5,252,492,321 $4,984,602,611

Chicago, Ill. Kansas City, Mo. Newport Beach, Calif.

Valhalla, N.Y.

$546,904,035 $515,060,000 $478,614,530 $338,700,000 $214,013,378 $188,637,000 $153,300,000 $147,588,675 $145,976,185 $143,928,000 $116,711,856 $107,100,000 $105,498,000 $96,439,097 $91,947,700 $91,700,000

$294,208,901 N/A $121,418,378 $51,600,000 $755,586,224 $88,824,000 $46,745,000 $18,764,016 $62,568,997 $20,822,000 $29,596,533 $23,000,000 $21,896,000 $58,612,966 $28,009,100 $101,700,000

$89,000,000 $87,953,450

l

1 2 3 4

2016 Other than Full-Time P/C Premium Employees

$7,825,556,098 $1,654,500,000 $5,064,469,075 $2,750,000,000 $1,250,000,000 $1,850,000,000 $1,459,000,000 $1,538,414,369 $1,327,056,225 $1,236,000,000 $1,310,076,472 $851,300,000 $927,509,000 $671,871,000 $673,150,000 $1,030,000,000

$4,413,758,036 N/A $2,526,218,203 $950,000,000 $12,750,000,000 $1,600,000,000 $741,000,000 $270,441,304 $1,132,870,471 $319,000,000 $619,262,283 $656,300,000 $319,569,000 $1,466,561,000 $360,700,500 $1,000,000,000

$30,100,000

$810,300,000

$579,300,000

429

San Francisco, Calif.

N/A

$544,913,100

N/A

505

Cerritos, Calif.

$80,000,000

$2,000,000

$645,000,000

N/A

531

Encino, Calif.

$78,255,327

$21,466,741

$607,983,240

$309,676,926

675

Missoula, Mont.

Jo

1 2 3 4

2016 Total P/C Premiums Written

ur na

2016 Total 2016 Total Other P/C Revenue than P/C Revenue

ce

2017 2016 Rank Rank Agency Name

4,239 Lake Mary, Fla. 4,500 Huntington Beach,Calif.

2,798 Caledonia, Mich.

2,400 Columbus, Ohio 3,600 New York, N.Y. 1,064 New York, N.Y. 905 Boston, Mass.

1,064 Longwood, Fla. 1,692 Cedar City, Utah 469 New York, N.Y. 654 Denver, Colo.

760 Bangor, Maine 526 Houston, Texas 871 Fort Worth, Texas 409 Walnut Creek, Calif.

750 Minneapolis, Minn.

29

Hylant Group Inc.

$69,408,218

$39,005,337

$674,000,000

$1,645,000,000

635

Toledo, Ohio

41

Westwood Insurance Agency *

$64,430,785

N/A

$385,238,744

N/A

121

West Hills, Calif.

27

30

INSURICA Inc.

$63,144,913

$15,821,796

$526,713,096

$213,439,807

529

Oklahoma City, Okla.

28

32

TWFG Insurance

$62,747,669

$2,223,400

$418,317,795

$14,822,664

100

The Woodlands, Texas

$62,465,000

$15,265,000

$551,069,543

$386,900,388

475

Alpharetta, Ga.

$60,478,719

$24,511,684

$491,029,596

$245,116,845

503

Richmond, Va.

$59,654,000

$32,364,000

$515,079,504

$391,757,948

454

Schaumburg, Ill.

$54,365,000

$16,832,000

$470,000,000

$200,000,000

331

Tacoma, Wash.

$51,737,448

$15,084,504

$667,118,173

$270,872,075

427

Poughkeepsie, N.Y. Woodbury, N.Y.

29

28

Prime Risk Partners

30

42

The Hilb Group LLC

ur an

25 26

31

31

Assurance

32

35

Propel Insurance

33

33

Marshall & Sterling Enterprises Inc.

34

37

SterlingRisk

$51,456,000

$11,109,000

$361,329,000

$106,368,000

225

35

34

Eastern Insurance Group LLC **

$51,028,000

$24,365,000

$348,000,000

$411,899,000

370

Natick, Mass.

36

36

Frenkel & Co.

$46,977,000

$25,041,000

$561,490,000

$910,579,000

160

New York, N.Y.

38

The Graham Co.

new

Poms & Associates

Ins

37 38

$46,054,985

$5,185,842

$274,751,240

$49,436,638

174

Philadelphia, Pa.

$43,900,000

$5,600,000

$269,700,000

$85,000,000

200

Los Angeles, Calif.

Bowling Green, Ky.

39

Houchens Insurance Group Inc.

$43,471,785

$15,665,334

$324,149,952

$395,717,900

279

40

Professional Insurance Associates Inc.

$42,000,000

N/A

$320,000,000

N/A

52

San Carlos, Calif.

41

44

$40,184,002

$3,779,478

$298,239,884

$125,621,085

230

East Providence, R.I.

42

48

Starkweather & Shepley Insurance Brokerage Inc. Gowrie Group

$39,604,500

$1,800,500

$280,537,000

$30,001,033

177

Westbrook, Conn.

43

45

Lawley Insurance

44

new

Ascension Insurance Inc.

®

39 40

45

43

46 47

$38,511,685

$17,746,852

$313,701,750

$333,698,641

344

Buffalo, N.Y.

$38,088,000

$48,722,000

$331,200,000

$328,500,000

467

Walnut Creek, Calif.

$37,106,129

$9,216,075

$292,575,418

$103,298,316

218

Houston, Texas

46

Bowen, Miclette & Britt Insurance Agency LLC Fisher Brown Bottrell Insurance Agency **

$36,767,223

$8,330,663

$325,074,935

$80,850,412

175

Jackson, Miss.

50

The Horton Group Inc.

$36,691,877

$25,032,669

$344,927,000

$441,615,000

356

Orland Park, Ill.

48

51

TrueNorth

$36,028,310

$15,319,541

$338,901,422

$388,098,578

301

Cedar Rapids, Iowa

49

47

Parker Smith & Feek Inc.

$35,670,000

$9,793,000

$291,825,000

$177,750,000

203

Bellevue, Wash.

50

49

Andreini & Co.

$34,156,950

$8,567,819

$205,746,528

$117,310,323

213

San Mateo, Calif.

51

54

LMC Insurance & Risk Management Inc.

$33,502,744

$12,429,324

$296,117,712

$161,201,794

280

West Des Moines, Iowa

52

52

The Mahoney Group

$32,470,981

$5,411,820

$224,142,017

$62,452,448

174

Mesa, Ariz.

Editor’s Note: * = Carrier Owned Agency; ** = Bank Owned Agency

INSURANCEJOURNAL.COM

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 27

Insurance Journal’s 2017 Top 100 Property/Casualty Agencies Ranked by 2016 Total P/C Revenue

2016 Total 2016 Total Other P/C Revenue than P/C Revenue

53

57

Robertson Ryan & Associates Inc

54

55

Charles L. Crane Agency

$30,649,000

$4,439,000

55

59

Moreton & Co.

$30,061,000

$13,757,000

56

60

James G Parker Insurance Associates

$29,467,000

$5,075,000

57

56

Rich & Cartmill Inc.

$29,204,340

$1,028,069

58

61

Haylor, Freyer & Coon Inc.

$27,777,489

$3,522,967

$3,515,000

2016 Other than Full-Time P/C Premium Employees

$270,000,000

Main Office

$78,000,000

225

$217,000,000

$39,000,000

270

Saint Louis, Mo.

$372,000,000

$271,000,000

194

Salt Lake City, Utah

$297,333,000

$105,000,000

205

Fresno, Calif.

$244,194,770

$10,821,778

165

Tulsa, Okla.

$219,000,000

$81,000,000

171

Syracuse, N.Y.

ur na

$31,812,000

2016 Total P/C Premiums Written

Milwaukee, Wisc.

l

2017 2016 Rank Rank Agency Name

59

65

Insureon

$27,224,687

N/A

$254,921,972

$0

237

Chicago, Ill.

60

62

Bouchard Insurance

$26,770,711

$11,381,203

$254,973,501

$261,857,262

232

Clearwater, Fla.

130

New Berlin, Wisc.

61

66

HNI Risk Services

$25,885,758

$2,493,960

$325,000,000

$35,000,000

62

72

Scirocco Financial Group Inc.

$25,085,709

$2,843,589

$193,279,052

$41,327,310

108 Hasbrouck Heights, N.J.

63

Tolman & Wiker Insurance Services LLC

$24,516,170

$6,475,158

$218,816,406

$115,789,473

155

69

Wood Gutmann & Bogart Insurance Brokers

$23,801,554

$2,035,104

$227,483,675

$30,826,072

124

Tustin, Calif.

65

64

Bolton & Co.

$23,763,732

$19,200,823

$232,333,511

$384,016,860

175

Pasadena, Calif.

66

68

SullivanCurtisMonroe Insurance Services LLC

$23,625,000

$9,425,000

$258,715,000

$269,285,000

196

Irvine, Calif.

67

new

Shepherd Insurance

$23,428,616

$5,232,887

$179,346,830

$213,000,000

240

Carmel, Ind.

$6,215,000

$205,000,000

$270,000,000

225 Port Washington, Wisc.

$6,772,500

$188,000,000

$0

59

N/A

$151,380,000

$0

21

Denver, Colo.

$26,060,137

$168,000,000

$317,000,000

225

San Mateo, Calif.

Salt Lake City, Utah

Jo

63 64

Ventura, Calif.

79

Ansay & Associates LLC

$22,474,000

76

Turner Surety and Insurance Brokerage

$22,375,800

70

91

Premier Group Insurance Inc.

$22,038,100

71

71

ABD Insurance and Financial Services

$21,832,166

72

81

The Buckner Co. Inc.

$21,637,793

$2,478,739

$170,515,779

$42,657,973

160

73

98

Sunstar Insurance Group LLC

$21,417,423

$1,713,385

$204,999,202

$48,301,580

148

Memphis, Tenn.

74

75

TIS Insurance Services Inc.

$21,265,298

$8,222,345

$151,878,653

$78,986,056

137

Knoxville, Tenn.

Arcadia, Calif.

73

Arroyo Insurance Services Inc.

new

Baldwin Risk Partners

77

74

R&R Insurance Services Inc.

Paramus, N.J.

$21,258,620

$2,551,034

$174,790,260

$27,966,441

130

$21,200,000

$13,500,000

$243,000,000

$374,000,000

237

Tampa, Fla.

$21,122,000

$4,468,000

$19,305,000

$13,865,000

174

Waukesha, Wisc.

Phoenix, Ariz.

ur an

75 76

ce

68 69

78

82

Lovitt & Touché

$20,982,963

$12,086,341

$196,085,633

$204,055,902

179

79

95

Eagan Insurance Agency LLC

$20,661,507

$1,124,823

$109,083,067

$12,498,037

88

Metairie, La.

80

92

Swingle Collins & Associates

$20,000,000

N/A

$138,000,000

$0

81

Dallas, Texas

81

70

Sihle Insurance Group Inc.

$19,392,383

$1,588,227

$170,804,452

$15,478,116

82

80

Associated Benefits and Risk Consulting

$19,151,800

$53,639,000

$157,900,000

$1,068,400,000

368

Minnetonka, Minn.

83

84

The Daniel and Henry Co.

$19,032,000

$5,279,000

$148,510,000

$56,351,000

178

St. Louis, Mo.

84

85

Tompkins Insurance Agencies Inc.

$18,873,000

$7,802,000

$273,167,000

$123,091,000

179

Batavia, N.Y.

85

83

Rogers & Gray Insurance

$18,691,700

$2,359,000

$129,800,000

$18,211,501

146

South Dennis, Mass.

86

77

John M Glover Agency

87

78

88

89

89

new

90

96

91

90

92

new

93

86

CHS Insurance Services LLC

94

87

Otterstedt Insurance Agency Inc.

95

97

The Advantage Group LLC

96

93

Cobbs Allen

114 Altamonte Springs, Fla.

N/A

$137,345,000

$10,000,000

175

Norwalk, Conn.

$18,495,000

$2,356,000

$148,037,000

$24,901,000

103

Houston, Texas

Armfield, Harrison & Thomas dba AHT Insurance JGS Insurance

$18,467,441

$14,472,069

$148,482,589

$0

187

Leesburg, Va.

$18,450,084

$406,254

$82,785,147

$2,391,856

74

Holmdel, N.J.

Foa & Son Corp.

$18,073,400

$1,833,100

$152,699,400

$35,626,300

115

New York, N.Y.

Associated Insurance Management Inc.

$18,008,879

N/A

$128,451,013

$0

75

Silver Spring, Md.

HomeServices Insurance

$18,000,000

N/A

$131,000,000

$0

150

Minneapolis, Minn.

$17,131,867

$1,792,115

$128,355,306

$29,086,734

94

$16,345,390

$704,721

$124,040,839

$24,012,000

88

Inver Grove Heights, Minn.

Englewood Cliffs, N.J.

$16,157,425

$1,292,494

$102,011,170

$16,156,175

103

Edmonds, Wash.

$15,920,728

$7,183,147

$143,167,572

$82,653,592

133

Birmingham, Ala. Memphis, Tenn.

®

Ins

$18,601,967

Insgroup Inc.

97

99

Lipscomb & Pitts Insurance LLC

$15,340,365

$5,957,047

$138,167,000

$218,063,000

129

98

new

L/P Insurance Services Inc.

$15,180,440

$4,532,593

$115,927,390

$61,901,604

141

Reno, Nev.

99

new

SouthGroup

$15,050,100

$1,160,600

$120,150,000

$12,300,000

142

Ridgeland, Miss.

MJ Insurance Inc.

$14,988,543

$12,559,598

$124,333,548

$681,219,102

124

Indianapolis, Ind.

100 100

Editor’s Note: * = Carrier Owned Agency; ** = Bank Owned Agency

28 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

l ur na

Insurance Journal’s Top 20 Agency Partnerships

(Ranked by 2016 Total P/C Revenue) Employee count for these groups does not necessarily include all affiliates responsible for total revenue.

1

2016 Total P/C Revenue

Agency

2016 Total Other 2016 Total P/C than P/C Revenue Premiums Written

2016 Other than P/C Premium

Full-Time Employees

Main Office

$6,610,000,000

N/A

14,314

Hampton, N.H.

$43,845,000

$401,476,000

$582,000,000

2,190

San Francisco, Calif.

N/A

$3,267,870,849

$971,497,250

3,314

Northumberland, Pa.

$31,432,330

$1,933,006,726

$324,126,976

10

Tucker, Ga.

N/A

$1,032,815

N/A

64

Allegany, N.Y.

Jo

2017 2016 Rank Rank

N/A

SIAA Inc.

$843,938,886

2

3

ISU Insurance Agency Network

$401,475,000

3

2

Keystone Insurers Group

$392,144,502

4

4

SecureRisk

$250,785,588

5

5

The Iroquois Group

$150,688,483

6

6

Combined Agents of America LLC

$97,748,334

$11,052,314

$744,083,729

$110,000,000

925

Austin, Texas

7

7

Renaissance Alliance Insurance Services LLC

$96,402,877

$1,373,444

$574,971,920

$1,496,335

96

Wellesley, Mass.

ce

1

$89,250,000

$73,047,000

$595,998,000

N/A

10

El Dorado Hills, Calif.

$88,000,000

$8,000,000

$451,000,000

$120,000,000

385

College Station, Texas

$84,498,750

$6,060,600

$675,990,000

$101,010,000

27

Fresno, Calif.

$67,151,000

$1,997,000

$568,000,000

$2,500,000

45

High Point, N.C.

$56,586,702

$4,548,954

$415,473,758

$97,245,916

486

Statesboro, Ga.

N/A

$426,000,000

N/A

428

Stuart, Fla.

$48,634,225

$1,030,603

$401,964,591

$7,748,193

235

Jacksonville, Fla.

9

Pacific Interstate Insurance Brokers

10

Insurors Group LLC

10

8

United Valley Insurance Services Inc.

11

11

Smart Choice

12

12

Georgia Agency Partners Inc.

13

14

GreatFlorida Insurance

$53,266,000

14

13

Brightway Insurance

ur an

8 9

15

15

United Agencies Inc.

$43,491,342

$10,108,342

$349,328,053

$206,714,564

292

Pasadena, Calif.

16

17

Networked Insurance Agents

$42,012,751

N/A

$233,110,416

N/A

113

Grass Valley, Calif.

$36,249,646

$8,335,435

$274,757,737

$90,083,357

274

Owasso, Okla.

$33,091,849

$588,666

$330,918,401

$2,063,301

23

Las Vegas, Nev.

$30,713,759

N/A

$242,492,735

N/A

251

Camp Hill, Pa.

$30,015,444

N/A

$300,154,442

$64,450,000

349

Fresno, Calif.

17

16

Bainswest Inc.

18

18

Fiesta Auto Insurance Center

19

19

The Insurance Alliance of Central Pennsylvania Inc.

20

20

PacWest Alliance Insurance Services Inc.

®

Ins

Editor’s Note: List includes aggregators, clusters, and franchise groups.

INSURANCEJOURNAL.COM

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 29

Top 20 Banks in Insurance Brokerage Fee Income (2016/Nationally)

Website

Winston Salem, N.C.

https://www.bbt.com

$636,000,000

Citibank N.A.

Sioux Falls, S.D.

https://www.citibank.com

3

$114,848,000

BancorpSouth Bank

Tupelo, Miss.

https://www.bancorpsouthonline.com

4

$80,795,000

Associated Bank N.A.

Green Bay, Wisc.

https://www.associatedbank.com

5

$73,997,000

Eastern Bank

Boston, Mass.

https://www.easternbank.com

6

$60,654,000

Discover Bank

Greenwood, Del.

https://www.discovercard.com

7

$56,528,000

Towne Bank

Portsmouth, Va.

https://www.townebank.com

8

$47,326,000

Frost Bank

San Antonio, Texas

https://www.frostbank.com

9

$42,402,000

Manufacturers and Traders Trust Co.

Buffalo, N.Y.

https://www.mtb.com

10

$36,764,000

Trustmark National Bank

Jackson, Miss.

https://www.trustmark.com

11

$32,905,000

People's United Bank

Bridgeport, Conn.

https://www.peoples.com

12

$28,490,000

KeyBank N.A.

Cleveland, Ohio

https://www.key.com

13

$19,106,000

Valley National Bank

Passaic, N.J.

https://www.valleynationalbank.com

14

$16,958,000

Fifth Third Bank

Cincinnati, Ohio

https://www.53.com

15

$15,586,000

Univest Bank and Trust Co.

Souderton, Pa.

https://www.univest.net

16

$15,571,000

PNC Bank N.A.

Wilmington, Del.

https://www.pnc.com

17

$14,360,000

Arvest Bank

Fayetteville, Ark.

https://www.arvest.com

18

$14,040,000

Benchmark Bank

Plano, Texas

https://www.benchmarkbank.com

19

$13,960,000

The Adirondack Trust Co.

Saratgoa Springs, N.Y.

https://adirondacktrust.com

20

$13,846,000

Peoples Bank

Marietta, Ohio

https://www.peoplesbancorp.com

ur na

2

ce

$1,708,128,000

l

City, State

Branch Banking and Trust Co.

1

Jo

Rank

2016 Insurance Brokerage Fee Income Bank Holding Company Name

Note about this report: These rankings include commercial banks, savings banks and savings associations (a.k.a. thrifts) which are required to report line item fee income like insurance brokerage. Source: Michael White’s Bank Insurance Fee Income Report - 2016 Edition

Top 20 Bank Holding Companies in Insurance Brokerage Fee Income

Ins ur an

(2016/Nationally)

City, State

Website

1

$1,709,519,000 BB&T Corp.

Winston-Salem, N.C.

https://www.bbt.com

2

$898,000,000 Wells Fargo & Co.

San Francisco, Calif.

https://www.wellsfargo.com

3

$392,000,000 Citigroup Inc.

New York, N.Y.

https://www.citigroup.com

4

$256,000,000 Bank of America Corp.

Charlotte, N.C.

https://www.bankofamerica.com

5

$153,000,000 American Express Co.

New York, N.Y.

https://www.americanexpress.com

6

$141,842,000 Regions Financial Corp.

Birmingham, Ala.

https://www.regions.com

7

$116,282,000 BancorpSouth Inc.

Tupelo, Miss.

https://www.bancorpsouthonline.com

8

$80,795,000 Associated Banc-Corp

Green Bay, Wisc.

https://www.associatedbank.com

9

$77,728,000 First Command Financial Services Inc.

Fort Worth, Texas

https://www.firstcommandbank.com

10

$73,997,000 Eastern Bank Corp.

Boston, Mass.

https://www.easternbank.com

11

$71,000,000 Morgan Stanley

New York, N.Y.

https://www.morganstanley.com

12

$68,523,000 Stifel Financial Corp.

St. Louis, Mo.

https://www.stifelbank.com

13

$63,578,000 Huntington Bancshares Inc.

Columbus, Ohio

https://www.huntington.com

14

$60,654,000 Discover Financial Services

Riverwoods, Ill.

https://www.discovercard.com

15

$47,326,000 Cullen/Frost Bankers Inc.

San Antonio, Texas

https://www.frostbank.com

16

$42,402,000 M&T Bank Corp.

Buffalo, N.Y.

https://www.mtb.com

17

$42,000,000 Popular Inc.

San Juan, Puerto Rico

https://www.popular.com

18

$36,764,000 Trustmark Corp.

Jackson, Miss.

https://www.trustmark.com

19

$32,905,000 People's United Financial Inc.

Bridgeport, Conn.

https://www.peoples.com/portal/site/ peoples

20

$30,420,000 Lauritzen Corp.

Omaha, Neb.

https://www.firstnational.com

®

Rank

2016 Insurance Brokerage Fee Income Bank Name

About this report: With few exceptions, the Federal Reserve Board requires only what it defines as “large” bank holding companies (i.e., BHCs with consolidated assets in excess of $1 billion) to file line item fee income like insurance brokerage. Ranking excludes several traditional life insurers that do not engage in significant banking activities. Source: Michael White’s Bank Insurance Fee Income Report - 2016 Edition 30 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

News & Markets | NATIONAL unless you know what drives your company,” Markel said.

“Companies in a growth mode have to determine what makes them tick; it’s critical. People drive the entire process of any organization and it’s critical to stick to your culture.”

‘People are the most important thing in any business.

Everything boils down to people.’

‘Specialize and Diversify,’ Industry Veteran Markel Tells Super Regional Insurers

By Andrea Wells

I

nsurance is a very simple business.

“You take in some money, you spend some money and you lose some money, and God willing, you have some left at the end of the day,” according to Anthony (Tony) Markel, vice chairman of the board at Markel Corp., and a keynote speaker at the inaugural Super Regional Property/Casualty Insurer Conference 2017, sponsored by Demotech Inc. and Insurance Journal, in Lake Geneva, Wis., July 16-18.

Markel told the story of the Markel Corp., a company he helped grow from a small long-haul trucking wholesale specialty agency with a net worth of about $6 million into a global holding company for insurance, reinsurance and investment operations with total revenue of more than $14 billion today.

INSURANCEJOURNAL.COM

His main advice for super regional carriers: specialize but diversify, much like Markel has done over the years. He also urged them to take full advantage of new technology and analytics but not to forget people and relationships.

When Markel and his cousins took over the wholesale insurance agency in the mid-1970s from his father and grandfather, the business was entirely dependent on long-haul trucking, which remains a difficult class of business.

“Although we had a nice platform, we decided we needed to make changes,” he said.

That change meant taking the firm into a risk-bearing role. In 1980, Markel started the firm’s first entry into the insurance company side by founding the Essex Insurance Co. In 1986, the company went public, opening the door to expansion and global opportunities in the London

market. In 2016, Markel was listed on the Fortune 500. The road to $14 billion in revenue wasn’t easy, Markel said, but the firm grew by staying true to certain principles. Markel told Super Regional P/C Insurer Conference attendees the firm’s success can be told through an old marketing concept known as the 5 Ps – product, price, place, promotion and, most important, people.

Smart People

Markel’s success has everything to do with its people, according to Markel.

“Clearly people are the most important thing in any business," he said. "Everything boils down to people. Hire smart people, much smarter than you are."

Also, critical to companies in a growth mode is hiring people that align with the company’s culture.

“You can’t hire good people

Competitive salaries and good employee benefits are important, but one of the most overlooked compensation benefits, according to Markel, is incentives.

“You want eye-catching incentives that focus on what performance you really want," he said. "…Give employees a piece of the action, and most importantly, base a majority of their incentive comp on their individual performance.”

From a public company standpoint, the shareholder mentally goes along well with incentive compensation, he added. Results are quantifiable.

“I hate incentive programs that are judgement (based) and subjective," he said. "That doesn’t focus on what to deliver. Tell them upfront: here’s what I expect and here’s what you are going to get.”

People want to feel like they are part of the team; they want to feel important, Markel said.

Product

Insurance products are not “rocket science” but success comes with specialization. For Markel, success has come with one specialized product after

continued on page 32

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 31

NATIONAL | News & Markets continued from page 31

another, he said.

“We started off with a few fundamental products — one deal and product at a time — but they were all reasonably specialized," he said. "The last thing you want to do is get into a generalist mode. Specialize, but do diversify. If you are wed exclusively to one product and that product comes under attack, you are in trouble.

Specialize, but diversify.”

Products have a life span in insurance like every business.

“What’s hot today will be less necessary tomorrow, so continually add to your product mix,” Markel advised the audience.

Pay attention to what producers say, too. “Anyone who doesn’t pay attention and listen to their producers when developing new products is dooming themselves to mediocrity,” Markel said.

Don’t overlook how to enhance products either.

“Things change rapidly today.

Competition comes in at the drop of a hat,” he said.

What is an outstanding product today might be outdated in six months. Always be aware of what’s going on in the marketplace and respond accordingly to producers, he said.

“You better know what’s going on in the marketplace and make conscious decisions on what you can do and what you can’t do," he explained.

Place (Distribution)

While Markel Corp. began its roots as a wholesale insurance organization and continues to focus mainly on the wholesale market, Markel said in today’s world, diversifying is a must.

“We started and continue to be very wholesale driven, but we also have retail chan-

nels and direct business,” he said. Sticking to one channel of distribution is no longer an efficient way to deliver every product, he added.

‘Anyone who doesn’t pay attention and listen to their producers when developing new products is dooming themselves to mediocrity.’

“Retailers themselves will admit they are not the proper way to distribute some products, and wholesalers are not the end all either,” Markel said.

“You can’t be naively committed to one distribution system because clearly all products cannot be distributed by one distribution system.”

The proper way: take a look at each product and be open about how it should be distributed, he said. When Markel broke the news that it would diversify its distribution channels, it had to be delivered to its traditional wholesale channel “very gently,” he said.

“But realistically, wholesalers understand their role," he said. "They might not see it the

32 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

way we do and where they add value and where we add value, but frankly, these products didn’t fit into their mold.” He added it’s important to have a realistic conversation. “Sit down and talk.”

Price

A property/casualty insurer cannot be successful without producing an underwriting profit, Markel said.

“It’s job number one, and everyone in the organization from the president to the switchboard operator has to know that underwriting profit is number one," he said. "You can’t invest funds with any degree of confidence if you are always facing the specter of underwriting losses.”

Insurers have to be committed to making an underwriting profit, and it takes everyone in the organization to do it, Markel said. He advised tying underwriting profits to incentive programs when possible.

Just as important to profitability for insurers is conservative reserving, he said.

“If you don’t reserve adequately, you are doomed to bring on potential failure," he said. "For an underwriter, to bring on good risk when you have under-reserved puts you

in trouble.”

For Markel, “if you see us taking any underwriting profit from long tail business I can assure you it will be from years three, four or five. … We will not take underwriting profit from current years because of the potential of losses.”

Insurers must invest in technology tools as well, Markel said. “Make sure your underwriters have the tools necessary to do the job instead of being naïve,” he said.

Markel’s success didn’t come from holding back on expenses. “We have never been a low expense writer," he said. "We have always spent more time pricing on loss ratio than expense ratio. We look to reduce expense as every organization should but it’s a heck of a lot easier to reduce an expense ratio than to reduce a loss ratio. We concentrate much more on loss ratio than expense.”

Promotion

According to Markel, communication and promotion are key and service “goes without saying.” It’s a competitive market, and there’s always someone “ready to eat your lunch,” Markel said. But at the end of the day, it boils down to people, relationships and understanding what people want.

“You cannot over communicate – you can’t," he said. "You can’t provide your people, your clients and your distribution channel partners with too much information on what you are doing and what you want to accomplish." Share this arti-

cle with a colleague.

IJMAG.COM/807SR

INSURANCEJOURNAL.COM

• 6,350 member agents signed since 1983 • $6.8 Billion in Premium • Full & highest commissions • Big is Better – size, clout, stability

• No minimum volume requirement for profit sharing and excess compensation • Your clients and companies are always yours

To learn how we can help you increase your agency income and value, contact us today. info@siaa.net | www.siaa.net

NATIONAL | MyNewMarkets out of service ratios within the national average; less than 100,000 annual miles per unit; insured in business for three more more years, with stable to moderate operational growth.

Available limits: As needed Carrier: Unable to disclose States: All states Contact: Preston Herrington at 804-643-7800 or e-mail: preston@contund.com

Lessors Risk

Market Detail: Executive

Workers Comp Payroll Service, Florida to California Market Detail: Low Rate

Workers’ Comp (www.

LowRateWorkComp.com) serves Florida and throughout the USA. Eligible classes have one or more employees with $400/week minimum payroll.

Pay as you go workers’ comp, payroll service, and employee leasing available.

Available limits: As needed Carrier: Unable to disclose, admitted States: All states except Ohio Contact: Customer service at 850-625-5190

Coastal Homes

Market Detail Reliable

Insurance Managers Inc. (www. reliableins.net) can appoint agents to write home insurance right away. Online quote and bind online, with coverage available in all zip codes, no credit checks, homeowners, dwelling, mobile homes and flood. High commissions and no start up or monthly fees.

Minimum Limit: 20,000 Available limits: Maximum $5 million Carrier: Unable to disclose,

admitted and nonadmitted available States: Texas only Contact: Ryan Nickels at 713227-7283 or e-mail: r.nickels@ reliableins.net

Local & Regional Trucking

Market Detail: IBI – Insurance

Brokers of Indiana (www.goibi. com) has access to write local and intermediate trucking that is domiciled in Indiana.

No unit count restrictions and new ventures are acceptable.

Auto liability, auto physical damage, general liability and trailer interchange can be packaged together with direct bill options. Commodity types can vary. Local delivery operations are acceptable.

Available limits: As needed Carrier: Unable to disclose, admitted States: Indiana only Contact: Brian Collins at 317888-2593 or e-mail: bcollins@ goibi.com

Aircraft Hull and Liability

Market Detail: Plimsoll

Specialty Markets LLC (www. plimsollspecialty.com) offers hull and liability for airplanes

34 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

and helicopters of every type from large fleets of helicopters to regional airlines down to the light aircraft operated by the CEO of the key account.

Available Limits: As Needed Carrier: Unable to Disclose States: All states Contact: Customer service at 770-933-6925

Transportation Insurance Program

Market Detail: Continental

Underwriters Inc. (www.contund.com) has rolled out of a new motor carrier program.

The following commodities are acceptable for coverage: dry van; less than truckload (LTL); truckload carriers; refrigerated; intermodal; liquid and dry tanker operations; local cartage; and hardwood log haulers. Ineligible trucking operations that cannot be written in this program: hazardous materials; sand and gravel/in transit ready mix; wrecker/junk auto haulers; garbage haulers; cattle and livestock; house/ mobile homes. Target markets/ favorable characteristics local, regional and intermediate for hire motor carriers with: above average loss experience; satisfactory DOT/CSA ratings with

Insurance Professionals, also known as EIP, (www.execins. com) is a company providing primarily property and casualty insurance solutions to business owners and retail agents throughout Texas, Oklahoma, and other states. EIP’s main business is focused on commercial insurance products such as general liability, professional liability, inland marine, and many more lines of business.

Available limits: As needed Carrier: Unable to disclose, non-admitted States: Calif., Okla., and Texas Contact: Customer service at 800-779-4095.

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

Need a Market?

Find it.

FAST

INSURANCEJOURNAL.COM

NATIONAL | Spotlight | Homeowners & Condos

How Insurers Can Tap into New Revenue Streams by Using ‘Data Exhaust’

By L.S. Howard

T

he chief executive officer of Quandl is on a mission to let insurance companies know that their data is valuable and professional investors will pay them for it. But a lot of insurers are oblivious to that fact.

“We’d like to unlock the value of that data by creating a new source of revenues for insurers,” said Tammer Kamel, CEO of Quandl, a Toronto-based data platform that gathers financial, economic and alternative data for investment professionals.

“The revenue insurers can receive for data falls right to their bottom line. There is no cost to the insurance company. It’s just extra money for doing very little,” he said.

For more than five years, Quandl has taken “data exhaust” from a variety of industries and sold it to investors who are looking for market signals on which to trade. The company focuses on alternative data sourced from “the wilderness” — in other words, data that Wall Street doesn’t normally see.

“We find undiscovered data, package it

in a way that investors can use, and sell it to them to generate revenue for us and our data partners.” Insurance companies’ data definitely falls within “my definition of data from the wilderness,” Kamel affirmed.

Auto Data From the Wilderness

Just over a year ago, Quandl first opened its doors to insurance industry data, beginning with a partnership with a U.S. auto insurer.

“The insurance company came to us and said, ‘We’re interested in learning how we can monetize our data through a partnership with you.’”

The two companies sat down together to discuss some ideas and came up with a plan. Now, a year later, this company provides daily reports to Quandl about how many auto policies it has written. The reports are repackaged and sent to investors who can use it for trading.

“This insurer is making money in an innovative way by taking their data exhaust and sending it through us and ultimately on to professional investors,” he explained.

The insurer doesn’t provide information

36 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

about who is buying the cars. “They just report the number of policies written for various car manufacturers. That’s it — one number per day,” said Kamel, emphasizing that no customer information is revealed so the insurer’s business is not compromised in any way.

“It turns out that this is very interesting information for Wall Street because it correlates with new car sales in general,” he said. “When people buy a new car, the next thing they do is buy an insurance policy.” This creates a window into how many new policies are being sold each day.

This is powerful information for Wall Street, which typically gets such data on a monthly basis, Kamel explained.

“That’s an example of an insurance company taking its data exhaust and turning it into more revenue for the firm. They don’t have to do anything other than give us access to the data, and we send them a check,” he said.

Economic Indicators

“Any unique data that professional investors can access has the potential of giving them an advantage vis-à-vis their peers and vis-à-vis the market as a whole,” Kamel added. “If you know something about a company, a part of the economy or a commodity that others don’t know, you can profit from that by trading on that information.”

INSURANCEJOURNAL.COM

The number of new cars being sold in America is an important economic indicator as well as an indicator of the performance of auto or parts manufacturers, he said.

Homeowners Insurance

The housing market is another key economic indicator. “Insurers have a very good understanding of activity in the housing market because every house that is bought is ultimately insured, usually around the time that it changes ownership," he said.

tion about its insurance partners is ever revealed by Quandl. “The identity is protected so the information only can be used for its intended purpose and not to get an inside track on how any particular insurance company is doing," he stated.

“

I’m not ready to retire.”

You have built significant value in your agency through years of hard work. InsurBanc can help you to unlock the value to grow your agency to the next level, independently. InsurBanc can provide funding for acquisitions, perpetuations and producer development.

Control your own legacy.

Acquisition & Perpetuation Loans | Working Capital | Equipment Leasing Cash Management | Online Banking

866.467.2262 | Visit InsurBanc.com INSBAA16736.indd 1 INSBAA16729.indd

INSURANCEJOURNAL.COM

league.

IJMAG.COM/807TA

Do I need to sell my agency because everyone else is?”

‘Insurers have a very good understanding of activity in the housing market.’

As a result, Quandl is currently looking in the “wilderness” to find an insurer with homeowners insurance data to sell. But it doesn’t have to stop at homeowners, Kamel said.

Anything that insurers cover provides interesting data for investors, he said, pointing to the example of coverage for luxury goods or commercial shipping.

“There are probably things that could be done with their data that they haven’t even thought about," he said.

And just because Quandl has one data partnership with an auto insurer doesn’t mean a second or third insurer couldn’t be introduced as partners. “More insurers provide more coverage, which increases the accuracy on anything you’re already tracking,” he said. “There is lots of room for growth.”

The potential for profit is huge as each investor will pay up to $1 million to Quandl for a powerful data set, which Quandl shares with the data partner. The portion varies with every partner, Kamel said.

While that may seem like a lot of money, Kamel explained that these investors manage billions of dollars, which means they need to make hundreds of millions of dollars in profits. “Spending $1 million to make $10 million can be a very sensible decision," he said.

Kamel emphasized that no informa-

In line with this confidentiality, Quandl also doesn’t reveal how many insurers it works with, only that it’s “currently a small number.”

Share this article with a col-

IB_Ad_Control_BW_4.5x7.5_11.1.15.indd 1

6/29/17 1:49 PM PM 8/1/16 1:21

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 37

11/1/15 12:39 PM

NATIONAL | Closer Look | Recreation & Leisure

Risks Multiply When Recreation Turns to Adventure Ziplining and rock climbing replace sight-seeing and beachcombing

By Andrea Wells

V

acationers and tourists are no longer content to sit and relax; they want adventure.

The global adventure tourism market is forecast to grow by as much as 46 percent by 2020, according to the Global Adventure Tourism Market 2016-2020 report published October 2016 by SandlerResearch.org. In 2015, the adventure tourism industry generated revenue of $7.88 trillion.

“Increased preference for adventure over other tourism activities will be a key driver for market growth,” the report said.

Instead of staying at beach cottages or going sight-seeing, vacationers are increasingly opting to go skydiving or rock climbing, caving or deep-sea

diving and similar high risk activities.

Insurers are having to keep up with the trend.

“Campgrounds, RV parks, dude ranches, resort lodges — those are some areas where we’ve seen a shift going on,” says Doug Killeen, vice president of underwriting at Philadelphia Insurance Companies. “Those places are feeling the pressure to add many different services and a lot of those services are in the adventure realm.”

Campgrounds used to be where vacationers would spend the night, perhaps swim in the camp’s pool or play a round of putt-putt golf.

But times have changed.

It’s no longer enough for a campground to offer traditional activities such as hiking or swimming, according to Krystal Allen, underwriting manager at Philadelphia Insurance Companies.

38 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

Many campgrounds are adding things like inflatables on a lake, jumping pillows and climbing walls, she said. Even upscale resort lodges are finding customers want white water rafting, mountain biking, ropes courses and ziplining.

Entertainment

“Now campgrounds are more geared to having entertainment for the children; they are more than just a place to stay and see the local sites,” she said.

Parks are adapting to consumer demands as well. “It’s not just a swing set anymore.

Parks are adding these large climbing apparatuses geared toward entertaining the children on premise,” she said.

Leisure and recreation companies are finding that if they don’t want to go into riskier activities they must at least add more for their guests to do than in days gone by.

“The common thing we see a lot is having to have a dozen activities to offer,” Killeen said.

“It’s not all just high-thrill but places feel the need to offer a lot – ice skating, snow shoeing, dog sledding or snow mobiles.”

Specialized Adventures

One insurance specialist is betting his company’s future on the adventure trend.

Isaac Allen, president and CEO of The Northman Co., a managing general underwriter and managing general agency, is focusing his firm on “insurance for the wild.” Allen founded his firm a little over three years ago looking to write a variety of risks including construction and energy.

“We were touching everything at that point,” he said of his agency’s beginning.

But it did not take long for him to refine the mission and take his own business on an adventure.

‘Campgrounds, RV parks, dude ranches, resort lodges — those are some areas where we’ve seen a shift going on.’

For Allen, targeting adventure comes naturally. He competed in college football and rugby and calls himself a lifelong outdoorsman. Those he hired were also into sports.

“Our entire team is from the sports and entertainment world,” he said.

He came to realize that many

INSURANCEJOURNAL.COM

of his Northman’s clients were from sports and entertainment as well.

“As we started to examine our client base we noticed that the biggest impact was going to be made in the sports and entertainment industries,” he said.

He was also motivated by personal relationships.

“I have a lot of buddies that travel for sport and compete for prizes. At the same time they were having a real difficult time finding life (insurance) programs that would actually cover them for their events or for a lot of the back country things they do. That’s how it started,” he said.

The sport and adventure industry has changed and for the past year Northman has been trying to educate insurance markets on that change, according to Allen. Both the London and Bermuda markets compete in this space.

“They are recognizing that the industry has matured and it’s a global. This was an industry where guys were living in the back of their trucks five years ago. Now they are getting sponsored for hundreds of thousands of dollars if not millions a year.”

Large companies are moving into this space as well – from energy bars, to health food companies and equipment gear. “We’ve had to educate these markets and bring them up-to-speed on the maturity and risk management and risk mitigation sophistication of the industry today,” he said.

Part of that

INSURANCEJOURNAL.COM

education has come from collecting and analyzing industry data.

“Our data show not only are loss ratios better today than five to eight years ago, but also that the adventure sport industry is growing in size,” he added. And these adventure seekers are looking for the best coverage too.

‘This market has a client demographic that is begging for accurate coverage.’

“This market has a client demographic that is begging for accurate coverage. They want it and they don’t even have discrepancies with paying a higher premium if it’s the best coverage, if they know that if something goes wrong they are covered. That’s their biggest issue.”

In the sports sector, in particular, Allen said there has been “massive gaps” in data. “There wasn’t a lot of statistics of actual loss runs and especially a lack of attention on risk management and mitigation. We recognize that as differentiators and that’s what we’ve built our team around.”

Northman is ready to embark on a whole new adventure in expansion. Allen said the firm is in its last round of securing $100 million funding to acquire similar businesses. “I can’t name funders at this point but we are about three weeks away from having that completely done and able to announce,” he said.

In preparation, Allen has

brought on board some heavy-hitters in the adventure sports and events world: • Chris Davenport, a twotime World Champion skier widely regarded as one of the premier big mountain skiers in the world today, joined Northman to lead the adventure sport division. Davenport is also a team member of the Kastle Ski Co. • Tim Cadiente, a former marketing guru with Oakley, is leading the Northman entertainment division and serving as chief creative officer.

• Tad Pilati, joined Northman as chief marketing officer, from Beats by Dre. Allen thinks the adventure world will continue to grow for a few philosophical reasons.

“I look at the way we function as society now; it is so safe. We sit in an office, then we go home to a really nice place where we have food and hot water, we make pretty good money and have health care. Life is very safe.”

But he maintains humans are meant to have a dose of adrenaline.

“When you get into sport and you get into those adventure experiences where it makes you completely focused with a clear mind, for me it’s my purest form of meditation. I go into sport and I think about nothing except my mind and body connection, whether it’s trail running or rugby; there’s nothing going on in my head except for survival and execution of my body and muscle memory. It forces you back into primitive survival mode.”

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 39

Idea Exchange

Claims

How to Catch Commercial Auto Use Fraud

By Alex Young

P

ulling the wool over the insurance company’s eyes seems like a victimless crime. After all, if a few dollars are saved by saying a car is a personal vehicle instead of the commercial work truck it really is, who really gets hurt? The answers is — everyone. Because the truth is, smallstakes scams like this can collectively cost a company — and other policyholders — a lot of money.

Insurance fraud is on the rise — a study from the Coalition Against Insurance Fraud (CAIF) found that more than 60 percent of insurers say fraud rose from 2013 to 2016. Carriers are fighting back: 76 percent of insurers use technology to detect false claims — a steep increase from CAIF’s 2014 and 2012 studies.

But when it comes to auto insurance, in particular, the strategy of waiting until claims departments catch fraud has two gaping flaws: Not all fraud is caught when processing a claim and even if it is caught at the time of a claim, auto insurance carriers may still lose big.

Nowhere is this strategy more of a mistake than when a carrier insures what it believes to be a personal vehicle that is being used for commercial purposes.

their books, which leads them to discount premiums on the front end and rely on claims to catch fraud on the back end.

The 2016 CAIF study found 90 percent of the insurers using anti-fraud technology are employing it during claims. Methods include automated red flags/business rules tied to existing claims systems, which “help insurers tag honest claims for payments and isolate suspect ones for routing to anti-fraud departments” — but hoping fraud will be caught at the time of a claim is the wrong approach, for several reasons.

The potential for commercial use fraud begins at underwriting, when a driver may not directly misrepresent his intentions to use a vehicle commercially, but certainly will not volunteer the information, and may never be asked either way.

Additionally, through what’s called “adverse selection,” a savvy insurance agent looking to bring in more business may insure a high-risk driver — or someone the agent knows will use a vehicle for commercial use without buying a policy for such — under a carrier with a hole in its risk profiling. If a carrier does not inspect the driver closely during underwriting in order to take in more revenue in the short term, this creates a higher risk in the long term.

When it comes to commercial use, if carriers take a risk at underwriting and then wait for claims to find fraud, they’ve already lost money. The carrier would have been charging a lower premium, because personal vehicle insurance is always less expensive than commercial

insurance — sometimes up to 100 percent less expensive — so the carrier has been losing out on potential revenue for the life of the policy. Verisk estimates that personal lines automobile insurers incur $29 billion in annual losses due to premium leakage.

The carrier also may believe it can simply void a policy at the time of a claim if there is commercial use fraud, but that isn’t true across the board. A policy cannot always be voided. Even if the claims team does catch it, the cost to fight fraud at claims may far exceed the cost to prevent that fraud in the first place.

Further, even if the fraud is discovered at claims and the carrier can in fact void the insured’s policy, the carrier may still be on the hook for third-party claims, if the vehicle it was insuring caused bodily injury to passengers or other drivers.

These costs can be devastating: Picture a landscaping crew driving to a jobsite in a truck with an extended cab, seating five people. The driver, who is insured under a personal auto policy and not a commercial one, gets into an accident, and all parties are seriously injured. Although the carrier may be able to void the driver’s policy for

Waiting Until Claims to Catch Fraud

Most auto insurance carriers correctly assume they have some level of fraud on 40 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

INSURANCEJOURNAL.COM

use misrepresentation, the carrier may still be responsible for the medical expenses of the four passengers.

Commercial Use Detection

Some carriers try to head off commercial use fraud during underwriting by looking for red flags, which might include type of vehicle (Ford Econoline, Ford Sprinter, F150, etc.), whether the vehicle has ever had a commercial plate attached to its vehicle identification number (VIN), or whether the listed driver has ever held or currently holds a professional tradesman license (plumber, contractor, etc.).

To find these red flags, most carriers must go to a third-party service that would run license plates or identification information through a filter. These data analytics tools do work in some cases, but certainly not all: Some contractors or professional tradesmen are not licensed, which means they would never be flagged by any system.

Additionally, not every vehicle being used for business will have a commercial plate tied to it. A vehicle like a Ford F150 can certainly function as both a heavy-duty work truck and a way to tool around town. No insurance carrier ever sends an inspector to assess a vehicle before writing a policy anymore — but without a commercial plate or tradesman license tied to a vehicle or driver, how would a personal lines auto insurer ever know if it was being used commercially?

Value of a Photo

There is one method that walks the line between analytics and analog: determining commercial use by parsing actual photographs of the vehicle being insured, while it’s on the road or driving around town.

A picture of a vehicle is the best evidence of commercial use a carrier can have when it comes to certain definitive attributes — e.g., commercial-grade ladder racks and tool boxes, lifts, heavy-duty trailer hooks, business signage, etc.

While not all commercial use can be determined with a photo, a photo showing those characteristics of commercial use is near definitive proof — much more so

than a driver with a commercial license or commercial plates. A photo of the driver’s vehicle with “Bob’s Roofing” painted on the side and a commercial-grade ladder rack on top makes it clear.

With the photographic evidence that

continued on page 42

5 Reasons

• Easy online quoting—less than one minute

EZ Flood

• No elevation certificate or photographs required

why we call it

®

private flood insurance

• Streamlined process with as few as 12 underwriting questions

• Accepted by more than 1,000 mortgage lenders • Coverage can be effective immediately

When your clients need options, offer the suite of NFS Edge private flood insurance solutions. It’s easy to get started: nfsedgeinsurance.com/EZ

EZ Flood Standard

EZ Flood Preferred

NFS Edge Insurance Agency, Inc. is a licensed producer in all states. (TX Lic# 1339727) (CA Lic# 0E67797); Insurmark is a division of Financial & Professional Risk Solutions, Inc. E-12624-517IJ

AONAF015.indd 1

INSURANCEJOURNAL.COM

some new tools and services can provide, a carrier’s agents are better armed with definitive evidence of commercial use, and can either adjust the policy to reflect a commercial rate or get the policy off the

7/18/17 1:19 PM

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 41

Idea Exchange

Claims

continued from page 41 books. With all states allowing carriers a 30-day window to update a policy or withdraw a quote, carriers can insure now and check photos of vehicle sightings later for any policy flagged during analysis.

Nothing Soft About This Fraud

Carriers may consider commercial use misrepresentation “soft” fraud — but there’s nothing soft about it. In its 2016 report, Verisk estimated 8 percent of all

Our People

Keep You

One Step Ahead Ian H. Graham Insurance has a unique focus: community associations.

Our staff of specialists: • Provide an extra layer of expertise for you • Care about making a difference for your clients • Help your clients serve and strengthen their communities

Learn how to offer our custom community association products 800.621.2324 | www.ihginsurance.com Endorsed by:

Underwritten by:

Administered by:

policies have some level of ownership misrepresentation, and a loss ratio of more than double other policies studied — making it critical that carriers have a way to contain fraud well before claims.

Verisk recommends a couple of ways to lower the risk of fraud and/or misrepresentation, including “prevent and contain premium leakage across the policy life cycle with quality data assets,” and “verify previously unknowable underwriting information with the help of dependable partners.”

With a data asset like a photograph, carriers have a clean way of assessing commercial use at or immediately after underwriting, using information that may previously have been unknowable, such as whether the vehicle has a commercial-grade ladder rack — as opposed to data analytics tools, which tend to be more of an indicator; they provide a lead, but not real proof.

‘The potential for commercial use fraud begins at underwriting.’

Automated systems and data analytics can be a complicated way of tracking down misrepresentation, whereas photos of vehicle sightings are decidedly straightforward.

Of course, a driver could argue that a commercial-grade toolbox doesn’t necessarily mean commercial use, or that signage for Bob’s Roofing on the side of a truck might just mean Bob was the previous vehicle owner and not the current one — but with access to vehicle photos, a carrier or agent can make that decision themselves and greatly increase the odds of detecting commercial use well before a claim ever arises.

Share this article

with a colleague.

CNA is a registered trademark of CNA Financial Corporation. The information contained in this document is for general information only and is not legal advice.

It is intended to provide a general overview of the services and products offered. Only the 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.

Ian H. Graham Insurance is the brand 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., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency.

E-12670-517

AONAF014.indd 1

42 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

7/18/17 1:18 PM

IJMAG.COM/807HO Alex Young is vice president and general manager, insurance, for DRN. Young can be reached at ayoung@ drndata.com.

INSURANCEJOURNAL.COM

Idea Exchange

The Competitive Advantage

On the Other Side of the Desk only wanted the financials if audited and yet most of their prospects won’t have audited financials. One has to wonder if they really want the business or not.

Alternatively, do they know what they’re doing?

Other questions were so terribly designed, a truly proper answer could not be proffered.

App Designs

By Chris Burand

I

t is always interesting to be on the other side of a desk. I’m always consulting and writing on “all things” insurance but I’m not always buying insurance. This year I purchased a couple of new policies causing me to complete new applications.

It was an experience that once again further convinces me the industry must purposely want a poor reputation. At the very least, it creates opportunities for new competitors.

For example, some questions on the applications were just ludicrous. For example, one question was, “Is the risk subject to a catastrophe?” If catastrophe is not an exposure, most people really do not need insurance! Of course, my account is subject to catastrophe. Every risk has a catastrophe exposure. Maybe it would have helped to define catastrophe, but the application did not do so (Understand, the question had nothing to do with living on a coast.)

What an absolutely, nonsensical, stupid question.

Other questions were so poorly written that I had no idea what was being asked. I have made a living in this industry for 30 years, and if the questions made no sense to me, I cannot imagine what normal people would think.

One question requested audited financials. The vast majority of businesses do not have audited financials. The company

I know the people who design applications try hard, and they are probably smart, but if I, someone with decades of experience working at fairly high levels within the industry, cannot understand the application’s questions, why should anyone expect regular consumers to understand or even answer the questions correctly?

Anyone with such expectations is thinking unreasonably. I think what happens is the carrier or the firm designing the application is just too close to the situation. I will offer to be that outside purveyor to fix this because it needs fixing.

For example, one question asked if I wanted a specific coverage. The application did not offer a place to answer the question though. There was not a box or a place to circle “yes” or “no.” The application must have had 40 other “yes/no” options, but nothing for this optional coverage. Moreover, I would not have been applying for that coverage if not for that specific option.

The policy was otherwise of minimal value.

On the other hand, some of the “yes/no” questions could not be answered honestly and/or cor-

44 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

rectly with a “yes/no” response. The situation was like a deposition or trial when an attorney asks for a “yes/no” response and neither “yes” nor “no” is a correct answer.

In those situations, the attorney is usually attempting to create a trap. So when I, and other people, see such a question, it seems like a trap or incompetence because maybe the carrier does not really understand what they are asking, or they are asking the question in such a way they know the answer will be wrong and then can deny the claim.

Either way, distrust is created. The industry’s reputation is tarnished. A liability exposure is created too. The problem with poorly worded questions, poorly designed questions, and poorly designed applications is these situations give companies more potential outs for paying claims. They can

advise a question was answered improperly and therefore, deny coverage. I am sure (not really) this never happens, but to insureds, they see it as a trap.

Not Rocket Science

I am not writing about rocket science.

The consumer understands a well-designed application is not rocket science, so they see a stupid question or a trap and think the worst. Especially when the consumer asks their CPCU agent about the question and even the agent cannot answer. These situations create multiple problems for agents. It causes them to take more time writing new accounts because they have to explain more. It creates significant E&O exposures because people hurry or give poor advice to get through the questions and hope the underwriter does not follow up. It helps rush the industry to a commodity because agents oversimplify to get through the process without the client’s eyes glazing over.

For example, asking questions like: “Are you in compliance with [name the regulation or law]?” That is a legal question. I may think I am in compliance, but I have not read the 500 pages of applicable regulations specific to whatever category. I have not gone to law school to know how to interpret those 500 pages. I am not an attorney, and I do not have a law license required to offer a legal opinion, but that is what the question requires - a legal opinion offered by people without law degrees. It makes no sense.

A common and specific example of this is the often-asked question, “Are you in compliance holding PII data securely?” Not only are those regulations complex, but multiple definitions of PII information exist. Sometimes, the policy (which is almost never provided with the application) gives a definition.

The application never gives a definition.

That definition may not be the same in the rules. Sometimes different government entities use different definitions. When the application asks if the applicant is compliINSURANCEJOURNAL.COM

ant with PII security, to which definition of PII data are they referring?

Then, I came to the part that required signatures in multiple places that were not materially significant sections. The application was designed with signature boxes almost randomly. I am sure you’ve seen these situations, and one has to wonder, “Why does a person need to sign here?”

If you are wondering, the insured is wondering, and if they are wondering, trust is wavering. This leads to the point where electronic signatures are not allowed. I am completing an application electronically, so I expect to sign it electronically. Why kill trees to print an electronic application so I can manually sign, scan and email it? I understand the fear of an electronic signature not being upheld, though the impression I get is many agencies and carriers have not thought it through or examined the legal strength of electronic signatures in specific situations. They want to be “safe.”

Poorly designed applications create frictional costs for carriers. Every call an agent makes to an underwriter asking for more information or an explanation is a cost. A good application saves everyone money and frustration. Poor reputations cost companies, because it costs more to convince people to purchase insurance.

Poor reputations and questionable applications increase exposures and lawsuits.

Most of this can be avoided if an organization takes time upfront to think about what the questions mean from the consumer’s perspective. Maybe the best way to do this is to get outside help from someone not so close to the forest they cannot see the trees.

Share this article with a

colleague.

IJMAG.COM/807BU Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868.

E-mail: chris@burand-associates.com

Advertisers Index

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

Abram Interstate www.abraminterstate.com W12 Access Home Insurance www.accesshomeinsurance.com S5, SC6 American Agents Alliance www.agentsalliance.com 43 Anderson & Murison www.andersonmurison.com 18 Aon Affinity www.aon.com 9, 41, 42 Applied Underwriters www.auw.com 4, 5, 48 California Earthquake Authority mvp.earthquakeauthority.com 7 CNA Insurance www.cna.com 19 Cypress P&C www.cypressig.com S7 EZLynx www.ezlynx.com 23 Foremost Insurance Group www.foremoststar.com 35 FSLSO www.fslso.com S5 GeoVera Insurance Company www.geovera.com S3, SC3 IB Green & Associates www.ibgreen.com S5 InsurBanc www.insurbanc.com 37 Leavitt Group Enterprises, Inc www.leavitt.com 2 Lighthouse Holdings, LLC www.lighthousepropertyins.com SC5, S5, S6 London Underwriters www.londonuw.com S6

Louisiana Commerce & Trade Assoc. www.lctacomp.com SC5 M.J. Hall & Company www.mjhallandcompany.com W14 MetaPay www.afsibex.com 25 Monarch E&S Insurance Services www.monarchexcess.com W7, W11 National General Insurance www.nationalgeneral.com 13 Nationwide E&S www.wearenownationwide.com 7, 3 Nautilus Insurance Company www.nautilusinsgroup.com 3, W15 Pacific Gateway Insurance Services www.pgiainsurance.com W3 Pacific Specialty Insurance Company www.pacificspecialty.com W5 PersonalUmbrella.Com www.personalumbrella.com 47 Philadelphia Insurance Companies www.phly.com 21 ReSource Pro www.resourcepro.com 15 RT Specialty www.rtspecialty.com 17 SIAA www.siaa.net 33 St. Johns Insurance Company www.stjohnsinsurance.com S5 , S6 State Compensation Insurance Fund www.statefundca.com W9 Texas Mutual www.texasmutual.com SC4 United Fire Group www.ufgsolutions.com E5 United Valley Insurance Services www.unitedvalleyins.com W13

AUGUST 7, 2017 INSURANCE JOURNAL | NATIONAL | 45

Closing Quote Insurers Respond to Rising Claims Abuse

By Logan McFaddin &

William Stander

W

henever severe weather strikes and there is property damage, insurers are among the first responders to help throughout the recovery process. However, in too many cases, some shady contractors, public adjusters and lawyers seeking to prey on the misfortune of others and profit from the insurance payouts are not far behind.

This is a growing problem across the country, and homeowners need to be aware of those looking to take advantage of them following a weather event. Even though state and local officials have little tolerance for scams and attempt to crack down on the criminals, it can be difficult to stop those who are determined to abuse

and misuse the insurance and legal system with excessive claims and litigation.

States like Colorado, Texas and Florida – with extreme exposure to catastrophic weather events – are well aware of the need to take steps to mitigate losses, but making progress is challenging because these states are also plagued by contractors and lawyers who abuse the legal system.

The abuses drive up not only the rate of disputed claims and court action, but costs.

One of the abuses growing at an alarming rate involves the assignment of benefits (AOB).

Lawyers and local contractors often work together to encourage homeowners to sign away their insurance rights and sign over control of their insurance policy. Many of the contractors involved in this abuse inflate claims costs and when an insurance company doesn’t immediately pay the claim, lawyers are quick to file a lawsuit. This leaves homeowners suffering through unnecessary litigation when they simply wanted to get the repairs made and move on with their lives.

This major influx of AOB claims and lawsuits is hurting homeowners and potentially driving up insurance costs for everyone. Assignment of benefits reforms are needed to protect policyholders from dishonest companies and individuals looking to take advantage of people in a desperate situation.

Florida is ground zero for this type of abuse. The Wall

46 | INSURANCE JOURNAL | NATIONAL AUGUST 7, 2017

‘It’s not just homeowners who are the victims.’

Street Journal editorial board even recently weighed in on AOB abuse in Florida, calling it a “man-made fiscal hurricane.”

In a detailed analysis of this get-rich-quick scheme where lawyers file inflated claims to try to secure settlement paydays, Citizens Property Insurance concluded that AOB abuse could soon impact property insurance rates for homeowners across the state by as much as 10 percent per year.

It’s not just homeowners who are the victims. In both Florida and Arizona, auto glass repair schemes are becoming another example of AOB abuse.

Some auto glass repair shops try to convince unsuspecting consumers to sign over their insurance benefits. These shops aren’t affiliated with the insurance companies. They may inflate the glass claim and then turn around and sue the insurance company, often without the policyholder’s knowledge. According to the Florida Department of Financial Services, in 2006, approximately 400 auto glass AOB lawsuits were filed against

auto insurers. In 2016, nearly 20,000 lawsuits were filed.

Consumers must be aware of the type of fraudsters out there, which is why some companies have developed preferred contractor managed repair networks to provide their customers with the option to use contractors that have been pre-vetted for quality work and customer service.

These types of programs help curb the abuse, but unfortunately, they cannot eliminate it from occurring.

It’s crucial we continue to educate homeowners about the importance of talking with their insurance company or agent before signing any documents related to damage repairs.

We also need to help policymakers focus on the importance of maintaining a healthy business climate and competitive insurance market.

McFaddin is the regional manager for the Property Casualty Insurers Association of America (PCIAA). Stander is executive director of the Florida Property & Casualty Association (FPCA).

INSURANCEJOURNAL.COM

Life’s not neat.

GET A standalone PERSONAL UMBRELLA for stuff that can be a little messy.

FROM a LANDLORD to a LEAD FOOT, ANSWER 4 quick QUESTIONS ONLINE AND GET a $5 MM POLICY IN MINUTES FROM AN ADMITTED CARRIER RATED A+ XV BY A.M. BEST. plus, no volume requirement. umbrellas are for everyone.

Family-owned and operated. Proudly dog-friendly. available nationally. Underwriting criteria varies by state. Visit us online for guideLines.

California Insurance License 0D08438. A.M. Best rating effective JULY 2017. For the latest rating, visit ambest.com.

Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide.

For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com. Š2017 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best.

Insurance plans protected U.S. Patent No. 7,908,157.