Insurance Journal West 2018-08-06

WEST REGION California Workers’ Comp Formulary Patent Suit Over Ridesharing Model California’s Privacy Law Takeaways

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Contents August 6, 2018 • Vol. 96 No. 15 • West

West

National

W1 Metromile Secures $90M in Financing Led by Tokio Marine, Others

10 Cybersecurity Tops D&O Liability Risks: Willis Towers Watson

W2 Study Examines California Workers’ Comp Prescription Drug Outcomes Under New Formulary

14 Closer Look: Managing Risk for the World Champion Houston Astros

W2 Honolulu Mayor Tells City to Prepare for Climate Change W4 Lyft to Beef Up Background Checks Following Driver Arrest

24 Spotlight: Solving the Condo Coverage Puzzle

W1 METROMILE SECURES $90M IN FINANCING

LED BY TOKIO MARINE, OTHERS

26 Special Report: Top 100 Independent P/C Agencies 29 Special Report: Top 20 Agency Partnerships

W4 $10M Award to Man Hit

by Garbage Truck Reinstated

by Oregon Court

30 Special Report: Top 20 Banks in Insurance 32 Flood Model Changes Help Hiscox Re & ILS Enter U.S. Flood Market

W6 Lyft Faces Patent Suit by Professor Over Ridesharing Model

34 Weather Ranks Top in Causes of Home Damage: Travelers

Idea Exchange W8 How Surety Bonds Are Covering California’s Cannabis Industry

14

A WHOLE NEW BALLGAME: MANAGING RISK FOR WORLD CHAMPION HOUSTON ASTROS

W12 Five Takeaways from California’s Watershed Privacy Law W16 Study Warns of Cyber Hacking Risk to Firms Using SAP, Oracle Management Software

Departments

36 Ask the Insurance Recruiter: Proactive Agency Recruiting

W10 People

38 The Competitive Advantage: The Declining Value of Insurance

11 Declarations

11 Figures

42 Closing Quote: Reflections on the 2017 Hurricane Season

16 Business Moves

37 MyNewMarkets

24 THE CONDO COVERAGE PUZZLE

6 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

INSURANCEJOURNAL.COM

OPENING NOTE

Write the Editor: awells@insurancejournal.com

Congratulations Top Agencies

T

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, Mary Newgard

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

Rob Galbraith, Meghan Hoyer, Juan A. Lozano

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

IJ ACADEMY OF INSURANCE Director Patrick Wraight pwraight@ijacademy.com

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

Chief Financial Officer Mark Wooster mwooster@wellsmedia.com

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

MARKETING

DESIGN/WEB

ADMINISTRATION

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

NEW MEDIA

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

New Media Producer Bobbie Dodge bdodge@insurancejournal.com

Senior Web Developer Chris Thompson cthompson@insurancejournal.com

Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com

Web Developer Jeff Cardrant jcardrant@insurancejournal.com

CIRCULATION

Web Developer Terrance Woest twoest@wellsmedia.com

Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com

his year marks the 14th annual publication of Insurance Journal’s Top 100 Agencies special report.

This year’s Top 100 welcomes 12 newcomers and returning agencies: EPIC Insurance Brokers & Consultants; UniVista Insurance; Towne Insurance; Alera Group; TRICOR Inc.; Atlas Insurance Agency; Atlas Insurance Brokers LLC; Crest Insurance Group LLC; Murray Insurance Associates Inc.; Wallace Welch & Willingham; Gulfshore Insurance; and World Insurance Associates LLC. This year’s Top 20 Agency Partnerships held strong with the same agency partnership groups with 10 organizations moving up or down the ranking.

And what about the Future Top 100? While the following agencies didn’t make the cut in 2018, their total P/C revenue came very close.

Special mention goes out to the following agencies:

Future Top 100

Associated Insurance Management LLC Lamb Insurance Services Harden Eagan Insurance Agency Otterstedt Insurance Agency Eustis Insurance Inc. Watkins Insurance Group Maroevich, O’Shea & Coghlan Insurance Inc. (MOC Insurance Services) Kaplansky Insurance Ross & Yerger Insurance

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. All information in this report is FOR QUESTIONS gathered from voluntary online submissions REGARDING SUBSCRIPTIONS: Call: 855-814-9547 and best estimates based on other public Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: information sources. insurancejournal.com/subscribe We thank the many agencies that have Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media contributed and invite others that have never 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 submitted information for the report to conper special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pubsider it next year. Be proud of what you have lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended accomplished. For questions, comments or 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 criticisms, write to us at Insurance Journal.

Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission.

Congratulations to this year’s top agencies!

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

Andrea Wells Editor-in-Chief

8 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

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.

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

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D30.amtrustinsurance.com AmTrust is AmTrust Financial Services, Inc., located at 59 Maiden Lane, New York, NY 10038. Coverages are provided by its property and casualty insurance company affiliates. In TX, coverage is provided by AmTrust Insurance Company of Kansas, Inc.; AmTrust International Underwriters Designated Activity Company; Associated Industries Insurance Company, Inc.; First Nonprofit Insurance Company; Milford Casualty Insurance Company; Republic Underwriters Insurance Company; Republic-Vanguard Insurance Company; Security National Insurance Company; Southern County Mutual Insurance Company; Southern Insurance Company; Technology Insurance Company, Inc.; or Wesco Insurance Company. In WA, coverage is provided

by AmTrust Insurance Company of Kansas, Inc.; AmTrust International Underwriters Designated Activity Company; Associated Industries Insurance Company, Inc.; Developers Surety and Indemnity Company; Milford Casualty Insurance Company; Security National Insurance Company; or Wesco Insurance Company. Consult the applicable policy for specific terms, conditions, limits and exclusions to coverage.

National

Cybersecurity Tops D&O Liability Risks: Willis Towers Watson

C

ybersecurity is the top directors and officers (D&O) liability concern for organizations today, while claims brought by employees, including claims for harassment or discrimination, and regulatory enforcement risks are also critical D&O exposures.

According to Willis Towers Watson’s 2018 Management Liability (Directors and Officers) U.S. Survey, the top D&O risks in the coming year include cyber incident/cyber claims (80 percent), claims by employees (55 percent), and regulatory and enforcement risks (48 percent).

Meanwhile, concern over investor claims ranked seventh among the top concerns, a finding the report said was “surprising” given the rise in shareholder activism and trends in securities class action filings.

Respondents also said D&O premium rates

and any insurance program cost changes over the past year were primarily driven by company financial performance (39 percent) and industry risk profile (37 percent).

Meanwhile, less than 30 percent of company respondents felt that cost changes were due to insurance market competition, “suggesting that market competition in pricing is less of a factor than it has been the last few years.”

In evaluating D&O insurance program priorities, a majority of companies (58 percent) ranked obtaining more favorable policy language as the most important change to their program this year. Looking ahead, coverage for investigations (including investigations of the organization itself) ranked as the most important primary coverage issue over the next three years.

“Surprisingly, 77 percent of respondents

10 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

consider entity investigation coverage important. Although, current purchasing habits do not appear to be aligned with that concern,” the report noted.

In reviewing claims experience over the past year, more than half of the respondents (55 percent) said their organization had “experienced” a lawsuit or demand by a current or former employee, but only 34 percent of those submitted claims for those experiences. Overall, the report found a significant portion of unreported claims across a range of experiences, including lawsuits by customers and cyber breaches, noting the “extent of unreported incidents is concerning.”

The survey was conducted January through April 2018 and includes responses from 77 executives from various publicly traded and privately held companies.

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West

Metromile Secures $90M in Financing Led by Tokio Marine, Others

S

an Francisco, Calif.-based startup Metromile Inc. announced $90 million in Series E funding co-led by leading insurance companies Tokio Marine Holdings and Intact Financial.

The financing included participation from existing and new investors NEA, Index, Future Fund and Section 32, the venture capital firm founded by former

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Google Ventures CEO, Bill Maris. The firm plans to use the funds to expand pay-per-mile insurance and simplify the insurance experience through the use of artificial intelligence in claims processing.

The firm also announced the appointment of Stacy J. Smith as independent director to Metromile’s board of direc-

tors. Smith was previously working Intel Corp. as executive vice president of manufacturing, operations and sales and was also the longtime chief financial officer.

Metromile operates via a pay-per-mile insurance model, and is now available in eight states, including Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington.

AUGUST 6, 2018 INSURANCE JOURNAL | WEST | W1

WEST | News & Markets

Study Examines California Workers’ Comp Prescription Drug Outcomes Under New Formulary

A

new analysis offers a preliminary look at Utilization Review and Independent Medical Review outcomes involving pharmaceutical requests for California injured workers since the state implemented a workers’ compensation formulary in January.

The analysis from the California Workers’ Compensation Institute issued in late July shows that the proportion of UR decisions involving prescription drug requests fell from 44.5 percent in the pre-formulary period to 40.7 percent in the first five months of 2018.

At the same time, the percentage of UR decisions in which a prescription drug request was denied was unchanged at 14.6 percent, while 85.4 percent were either approved as submitted or approved with a modification, according to the CWCI study.

UR decisions involving opioid requests showed little change, edging down from 30.6 percent in the pre-formulary period to 30.0 percent after the formulary took effect, though the UR approval rate for opioids showed a sharper decline, falling from 72.3 percent to 68.8 percent.

Meanwhile, the percentage of IMR decisions involving UR modifications or deni-

als of opioids increased from 29.2 percent prior to the formulary’s implementation to 33.6 percent under the formulary, while the IMR uphold rate for opioid modifications or denials showed a modest increase, rising from 90.1 percent to 91.4 percent, the study shows.

Gov. Jerry Brown in 2016 signed Assembly Bill 1124, which mandated the adoption of an evidence-based formulary for medications prescribed to California injured workers and calling on the state Division of Workers’ Compensation to incorporate the formulary into its Medical

Treatment Utilization Schedule.

The intent of the legislation was to ensure that medications provided to injured workers meet evidence-based standards, and to reduce delays and frictional costs associated with pharmaceutical UR and IMR. The CWCI analysis uses data from 141,643 pharmaceutical requests and UR decisions from the first five months of 2017 and 2018, and 58,604 IMR decisions from the first four months of those same two years to measure and compare pre- and post-formulary UR and IMR prescription drug outcomes.

The study represents a preliminary look at pharmaceutical UR and IMR data from the first few months that system stakeholders were transitioning into the formulary. More time is needed to identify changes in prescribing patterns and other aspects of the formulary regulations that could impact UR and IMR disputes, according to CWCI. The analysis, “Initial UR and IMR Prescription Drug Outcomes Under the California Workers’ Comp Formulary,” is available on the CWCI website. It’s free to institute members and subscribers, while others can purchase a copy for $16.

Honolulu Mayor Tells City to Prepare for Climate Change

H

onolulu Mayor Kirk Caldwell has directed city departments and agencies to prepare for the effects of climate change and sea level rise.

The mayor issued the mandate last month, requiring the departments and agencies under his jurisdiction to view climate change as an urgent matter and to take action to protect and prepare the city W2 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

for the physical and economic effects of it.

Under the directive, city managers must

propose revisions to shoreline development rules and construction standards.

It also calls for elevating or moving infrastructure and key facilities.

The directive is in response to a city Climate Change Commission brief prepared from a state report, which projected coastal flooding, erosion and property damage affecting hundreds of businesses and public buildings.

Copyright 2018 Associated Press. All rights reserved.

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WEST | News & Markets

Lyft to Beef Up Background Checks Following Driver Arrest

By Paul Elias

R

idesharing company Lyft is beefing up its background checks after a driver arrested for rape was found to be in the United States illegally.

The company’s “enhanced detection processes” will apply to new applicants and existing drivers, Lyft spokeswoman Kate Margolis said. She declined to discuss the changes in detail.

San Francisco Police arrested Lyft driver Orlando Vilchez Lazo, 36, in July and charged him with raping four women who he lured to his car pretending to be their rideshare driver. The company fired Vilchez Lazo, Margolis said.

Margolis and police investigators said there’s no evidence Vilchez Lazo was on duty when

the attacks occurred.

The U.S. Immigration and Customs Enforcement agency said Vilchez Lazo was living in the country illegally and that it planned to deport him to his native Peru if he was ever released from jail in the United States. He is being held without bail and faces a maximum sentence of life in prison if convicted.

Vilchez Lazo “fraudulently represented himself” when he applied for a job and and passed the company’s background check, Margolis said.

Uber and Lyft hire private background companies that run a driver’s name, license and Social Security number through local court records, national criminal databases and a federal sex offender registry. Searches can take as little as 24 hours and none

would flag a worker in the country illegally using bogus documents.

In California, after heated debate, the state Public Utilities Commission ordered the companies to run criminal background checks annually on all of its drivers.

Previously, the companies ran only a single check before hiring a driver.

The commission, however, resisted calls to require the fingerprinting of drivers. The commissioners said hiring accredited security companies to search criminal databases and run credit checks of prospective drivers was sufficient.

Copyright 2018 Associated Press. All rights reserved.

$10M Award to Man Hit by Garbage Truck Reinstated by Oregon Court

Hawaii Jury Sides with Couple in Disability Discrimination Suit

he Oregon Court of Appeals has ruled that a trial judge shouldn’t have reduced a jury’s award to a man whose leg was severed by a garbage truck in downtown Portland.

In reinstating the award, the Appeals Court said the judge’s application of a $500,000 state cap for pain and suffering violated the Oregon Constitution’s demand for substantial remedy.

The Oregonian/OregonLive

jury in Hawaii has sided with a Maui couple in a $1.9 million disability discrimination lawsuit against their condo association which fined them thousands of dollars for uncarpeted floors and attempted to sell their unit in foreclosure.

Lawyer Eric Ferrer, who represented Greg and Michele White, said that the Villas at Kenolio Association of Apartment Owners fined the couple $200 a day for a period

T

reported Scott Busch was crossing a street in 2015 when he was hit by a garbage truck that made an illegal turn. The impact severed his left leg above the knee.

A jury awarded Busch $3 million for medical and other expenses, plus $10.5 million for pain and suffering.

Multnomah County Judge Mitch Greenlick cut the $10.5 million in noneconomic damages to $500,000.

Copyright 2018 Associated Press. All rights reserved.

W4 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

A

of two years for the floors.

The condo board says the wooden floors in the couple’s unit violated the community’s rules.

The couple says the floors help Greg White navigate through the home. He is blind in his left eye and visually impaired in his right eye.

The couple explained that to the board, but the board denied their request for an exception.

The board declined to comment.

Copyright 2018 Associated Press. All rights reserved.

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WEST | News & Markets

Lyft Faces Patent Suit by Professor Over Ridesharing Model

By Jonathan Stempel

A

retired Georgia Institute of Technology engineering professor described as a

“pioneer” in developing the idea of ridesharing sued Lyft Inc., claiming it infringed his patent for technology underlying the core of its business model.

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According to the complaint, Lyft has failed to pay Stephen Dickerson for using his system integrating cellphones, global positioning system technology and automated billing, despite earning as much as $1 billion of annual revenue. Through his company RideApp Inc., Dickerson is seek-

ing reasonable royalties and an injunction against San Francisco-based Lyft.

Lyft was valued last month at $15.1 billion after completing a $600 million financing round. A Lyft spokeswoman declined to comment.

The complaint called Dickerson a “pioneer in developing the radical idea” of ridesharing by conceiving his system in 1999, before cellphones from major manufacturers incorporated GPS technology and allowed for automated billing. Dickerson said he reacquired the patent this year, 17 years after assigning his rights to Georgia Tech, which made no effort over the years to stop infringements.

Jeffrey Toney, a partner at Kasowitz Benson Torres representing Dickerson, said his client thought Lyft might be infringing the patent when he began efforts to reclaim it.

“His vision is to integrate all forms of subscription transportation into a single cellphone application, so you can get where you’re going in the most efficient way,” Toney said. The case is RideApp Inc. v Lyft Inc., U.S. District Court, Southern District of New York.

(Reporting by Stempel in New York; editing by Jonathan Oatis and Dan Grebler) Copyright 2018 Reuters. All rights reserved.

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Idea Exchange

Cannabis Bonds

How Surety Bonds Are Covering California’s Cannabis Industry

By Michael Herranen

A

s the cannabis industry fights for legitimacy across the United States, California is working to maintain its leadership in the niche.

In February, the state issued the first-ever surety bond program specifically for the cannabis industry in the nation.

Let’s take a look at why surety bonds and the cannabis industry work well together, and how cannabis bonds work.

The Problem in Focus

The cannabis industry — especially as it relates to medical marijuana — has become less taboo in American urban centers.

However, federal drug policy and cultural attitudes still stigmatize the industry.

Northward in Canada, progressive policies have offered our neighbors a considerable competitive advantage, and American cannabis growers want to even the playing field.

The California Department of Insurance approved a new surety bond for the state’s cannabis industry in February, which could help growers do just that. Cannabis is not an easy crop to grow, and surety bonds give growers and others a way to ensure that they are complying with the relevant laws in place to govern the industry.

For example, if a crop becomes contaminated with mold, laws prohibit a grower to simply throw the product out. A cannabis surety bond would allow that cannabis business to cover their costs for proper disposal.

California Insurance Commissioner Dave Jones appears to be approaching this issue as he and his department would any other: they are working to ensure that cannabis businesses have the insurance coverage they need — just as any other businesses in the state of California would. The industry is legal, so it should also be insured.

How California Cannabis Regulations Work

The state of issues six different cannabis licenses and each requires a $5,000

W8 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

surety bond: • California Cannabis Cultivation License (allows the holder to cure, dry, grade, grow, harvest, plant, and trim cannabis) • California Cannabis Distributor License (allows the holder to transport cannabis goods only between licensed cultivators, manufacturers, and distributors) • California Cannabis Manufacturer License (allows holders to compound, prepare, produce, and propagate cannabis or cannabis products via extraction methods, chemical synthesis, or a combination both) • California Cannabis Microbusiness License (allows holders to cultivate, distribute, manufacture, and retail; cultivation must stay within less than 10,000 square feet and Level 1 manufacturing, Type 6 only) • California Cannabis Retailer License (allows holders to sell cannabis goods to customers via delivery or at their premises) • California Cannabis Testing Laboratory License (allows the holder to offer or perform tests of cannabis or cannabis products) Except for testing laboratories, each of the six licenses has two subcategories: “A” (adult-use 21 years of age and older) or “M” (medical).

California also permits counties and municipalities to pass their own ordinances governing cannabis businesses, so long as they comply with the California regulations. Some municipalities have created cannabis business surety bond ordinances.

For example: • City of Coalinga Commercial Marijuana Operations Surety Bond ($25,000) • City of Los Angeles Commercial Cannabis Surety Bond ($5,000) • City of Palm Springs Cannabis and Marijuana Tax Bond (cost varies)

• City of Shasta Lake Commercial Cannabis Business Surety Bond ($5,000) • Yolo County Cannabis Surety Bond ($10,000)

How California Cannabis Bonds Work

The Medicinal and Adult-Use Cannabis Regulation and Safety Act in California requires that entities seeking licensure under it attain cannabis surety bonds, also called California Cannabis Bonds. For most licensing categories, California requires a $5,000 surety bond. As stated, some localities require more costly bonds.

California cannabis surety bonds are underwritten individually. This means that the cost varies from person-to-person and depends primarily on the applicant’s credit score. Business owners with strong credit scores may receive cannabis surety bond rates as low as 5 percent of the total bond amount. For example, business owners with great credit scores might pay only $250 per year for their $5,000 surety bond.

The state is the Obligee for California cannabis surety bonds, so the bond is protecting the state and ensuring that business owners will comply with regulations. Until they are canceled, California cannabis surety bonds remain in force from their effective date onward. For this reason, the bond renews annually. The owner can usually cancel the surety bond with 30 days written notice to the Obligee.

Herranen is president of Viking Bond Service Inc. Phone (888) 278-7389. Email: MikeH@vbsbond.com.

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WEST | PEOPLE

Robert Etzler

Lisa Bracero

Rochelle Lesser

Paragon Insurance Holdings LLC is expanding in San Diego, Calif., with the opening of a new office in downtown and the hiring of Robert Etzler.

He will serve as senior vice president and director of workers’ compensation.

Prior to joining Paragon, Etzler held leadership roles at Cypress Point – Arrowhead General Insurance Agency (now Arrowhead General Insurance Agency), Atlas General Insurance Services, and most recently, Midwestern Insurance Alliance.

Paragon is a national multi-line specialty managing general agency.

Sacramento, Calif.-based Warren G. Bender Co. has named Lisa Bracero an account executive the commercial lines department.

She has 15 years of experience in commercial insurance.

She was previously a field sales manager at Nationwide.

Warren G. Bender is an independent family-owned insurance brokerage.

Stone Creek Insurance Agency has named Rochelle Lesser as junior account manager in the downtown Spokane, Wash., office.

Lesser will help grow the Spokane office.

She comes to Stone Creek with prior experience at both Travelers and State Farm.

Lafayette, Calif.- based Stone Creek is an insurance brokerage that specializes in property/casualty coverage in Western U.S. and Florida.

Napa, Calif.-based The Doctors Co. has named Kerin Torpey Bashaw senior vice president of patient safety and risk management.

Bashaw reports to Bill Fleming, chief operating officer.

Bashaw has more than 20 years of experience.

She has held a variety of positions in healthcare organizations, most recently as corporate vice president of quality for Verity Health Systems.

She has also served as system vice president of quality for Alameda Health System, and has held other positions as patient safety officer, and director of clinical services and operations.

The Doctors Co. is a physician-owned medical malpractice insurer with 79,000 members and more than $4.8 billion in reported assets.

WSS, part of XPT, a new specialty insurance

W10 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

distribution company, has named Lynn Bertram senior broker/underwriter in the commercial lines department, while Stefanie McLeod will serve as vice president and senior production underwriter in the personal lines department.

Bertram previously spent 15 years at Monarch as a broker/underwriter, and most recently as manager of their commercial lines department.

McLeod, who was also with Monarch, ran their personal umbrella department for the past 16 years. With WSS she will be tasked with expanding the personal lines department writing personal umbrellas, homeowners and other ancillary personal lines products.

WSS, which provides retail brokers a commercial and personal lines products, with access to both admitted and non-admitted markets, is headquartered in Plano, Texas.

XPT is a new specialty insurance distribution company.

PEMCO Insurance has named Diane Geurts a communication manager for the company’s marketing department.

Geurts has spent 20 years working in marketing and communications roles.

Geurts will support PEMCO’s employee communication efforts, and will also contribute to ongoing strategic communication initiatives.

Prior to joining PEMCO, Geurts held marketing and communications roles at companies including Wendy’s, Tully’s Coffee and online legal service company Avvo.

PEMCO Insurance provides auto, home and boat insurance.

Swiss Re Corporate Solutions has named Allen Kwan head sales for the West region.

Kwan will be responsible for the growth of the Western region, particularly within Los Angeles.

Currently based in San Francisco, he will relocate to Los Angeles in 2019. He succeeds Jennifer Knox, who was appointed head of U.S. West earlier in the year.

Kwan has 15 years of insurance experience.

Since joining Corporate Solutions in 2012, he has held various positions within underwriting and sales. Most recently, he was the business development manager for the West region.

Swiss Re Corporate Solutions serves the commercial insurance sector by providing financial protection from a wide range of risks to midsized and large corporations.

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Idea Exchange

Privacy Matters

Five Takeaways from California’s Watershed Privacy Law

By Kaylee A. Cox

and Joel E. Roberson

C

alifornia recently enacted a sweeping new privacy law, the California Consumer Privacy Act of 2018, which is likely to have broad implications for organizations providing services to, or collecting data from, California consumers.

The CCPA shares similar themes with the European Union General Data Protection Regulation (GDPR), in particular with its focus on consumers’ rights and control over their personal information as well as transparency requirements related to companies’ data practices.

Those who breathed a sigh of relief after the May 25 GDPR implementation deadline may need to redirect privacy compliance efforts and make further changes to meet the requirements of this new privacy W12 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

regime.

CCPA, enacted on June 28, shares similar themes with GDPR. However, certain of the act’s requirements and implications differ from, or could exceed, those under GDPR. As a result, merely having a GDPR program will not be enough to address the requirements of the CCPA. Moreover, adding to the complexities created by the substance and the timing of the act, many of its provisions are broad and ambiguous in their current form, creating the potential for implementation challenges, impacts to business operations and increased legal and regulatory exposure.

The version of the act signed into law was a more moderate version enacted to avoid an even further restrictive privacy regime from making it onto the California ballot in November.

California lawmakers struck a deal with those pushing the original initiative. In exchange for passing the CCPA, the initiative will be taken off the November ballot.

Notably, the act is industry-agnostic as signed into law.

It applies to all organizations that collect personal information on California

consumers for a business purpose, subject to certain thresholds. While the act does include certain exemptions, it is not clear how exemptions may apply or be interpreted in various contexts.

Here are five key questions regarding the CCPA:

1. When does the California privacy law become effective?

By Jan. 1, 2020, all covered businesses must comply with the new CCPA requirements. The CCPA directs California’s attorney general to adopt regulations before that date to implement the act.

2. Does the new California privacy law apply to my organization?

The act applies to organizations that are operated for profit or financial benefit in California, collect consumers’ personal information (as broadly defined under the act) and meet one or more of the following: 1) has annual gross revenues over $25 million; 2) annually buys, sells, receives for its commercial purpose or shares for commercial purposes the personal information of 50,000 or more consumers, households or devices; or 3) derives 50 percent or more of

continued on page W14 INSURANCEJOURNAL.COM

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 | Idea Exchange continued from page W12

its annual revenues from selling consumers’ personal information.

The act also applies to any organization that controls, or is controlled by, a business that meets the foregoing criteria and shares common branding with the business, which could have broad implications for franchised businesses and subsidiaries.

In addition, even companies that are not directly subject to the act may still be impacted if they do business with, or provide services to, covered organizations.

3. How does the new California privacy law define personal information?

The definition of “personal information” is exceedingly broad and expressly incorporates data types beyond those traditionally identified under existing U.S. law. For example, personal information includes but is not limited to elements such as: • Commercial information (records of products or services purchased, obtained or considered, and other consuming histories or tendencies); • Internet activity (browsing and search history and interactions with advertisements); • Inferences drawn from personal information to create profiles reflecting consumer preferences and attitudes.

right to know, control and delete personal information collected by businesses. Some of the significant provisions include: • Right to request consumer profiles. The act grants California consumers the right to request a detailed listing of certain information, such as the categories of 1) personal information collected and sources of that information, 2) personal information sold and disclosed, and 3) third parties with whom personal information is disclosed or sold. The act distinguishes between personal information that is disclosed versus sold (as defined under the act), and businesses must identify such distinctions in disclosures and responses to consumer requests.

• Transparency and disclosures. The CCPA requires entities to make certain disclosures on their website and in public statements, including its privacy policy, regarding the collection and sharing of personal information.

• Consumer rights and anti-discrimination prohibition. The act provides consumers the right to opt-out of the sale of their personal information. In addition, consumers have a right to request the deletion of their personal information that the business has collected from the consumer. The CCPA also prohibits entities from discriminating against consumers based on the exercise of their rights under the act, including charging consumers different prices based on their decision whether to opt out unless the price difference is reasonably related to value provided by the consumer’s data.

• Liability and private right of action.

The act expressly provides for a private right of action for certain data breaches. Before a private right of action can commence, a consumer must provide a business with 30 business days’ notice and an opportunity to cure. If the alleged

‘Those who breathed a sigh of relief after the May 25 GDPR implementation deadline may need to redirect privacy compliance efforts and make further changes to meet the requirements of another new privacy regime — this time one emanating from the U.S.’

Although most privacy statutes exclude “publicly available” information collected by federal, state and local governments, under the CCPA “publicly available” information would constitute personal information if it is “used for a purpose that is not compatible with the purpose for which the data is maintained and made available in the government records or for which it is publicly maintained.”

4. What are the most impactful provisions in the new California privacy law?

The act is heavily focused on consumers’ W14 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

violation can be cured, a company must provide the consumer with a written statement that the violations have been cured and that no further violations will occur. A consumer private right of action can proceed where a cure is not possible or a consumer alleges a company has violated its written statement to cure a past violation. The attorney general also has enforcement authority under the act, and businesses in violation of the act may be liable for civil penalties.

5. What is likely to happen between now and January 2020?

It is anticipated that the California Legislature will consider legislation in 2019 prior to the implementation date to address technical and substantive issues identified in the act. It is possible that amendments to the CCPA could strengthen privacy protections in the act or make compliance more difficult.

Conclusion

The enactment of a broad Californiaspecific privacy regime is likely to have far-reaching impacts across state jurisdictions and abroad.

The CCPA may create a de facto baseline standard for data privacy controls and processes in the U.S., and could cause other states to follow suit or could lead to the Congress taking up the issue and enacting a federal privacy standard.

Much like GDPR, many of the requirements of the CCPA may be difficult to implement or integrate into business operations.

Companies that may be subject to the CCPA should closely monitor developments and undertake an assessment of compliance obligations well in advance of the January 2020 deadline because compliance may require significant structural, operational and legal changes in an organization’s practices.

Cox is an attorney in Holland & Knight’s Washington, D.C., office and co-chair of the firm’s cybersecurity, data breach and privacy team. Roberson is a Washington, D.C., attorney and a member of the firm’s public policy and regulation practice group.

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WEST | News & Markets

Study Warns of Cyber Hacking Risk to Firms Using SAP, Oracle Management Software

By Eric Auchard

A

t least a dozen companies and government agencies have been targeted and thousands more are exposed to data breaches by hackers exploiting old security flaws in management software, two cyber security firms said in a recent study.

The Department of Homeland Security issued an alert citing the study by security firms Digital Shadows and Onapsis that highlights the risks posed to thousands of unpatched business systems from software makers Oracle and SAP. These can enable hackers to steal corporate secrets, the researchers said.

Systems at two government agencies and at firms in the media, energy and finance sectors were hit after failing to install patches or take other security measures advised by Oracle or SAP, security firms

Onapsis and Digital Shadows said in the report.

The alarm was raised because firms store highly sensitive data in the vulnerable products, known as enterprise resource planning software and in related applications for managing customers, employees and suppliers.

In an alert entitled “Malicious cyber activity targeting ERP applications,” the Homeland Security’s National Cybersecurity and Communications Integration Center highlighted signs of increasing hacker focus on ERP applications, citing the study.

“An attacker can exploit these vulnerabilities to obtain access to sensitive information,” said NCCIC, an arm of the U.S. Computer Emergency Readiness Team.

Many of these issues date back a decade or more, but the new report shows rapidly rising interest by hacker activists,

W16 | INSURANCE JOURNAL | WEST AUGUST 6, 2018

cyber criminals and government spy agencies in capitalizing on these issues, Onapsis Chief Executive Mariano Nunez said.

“These attackers are ready to exploit years-old risks that give them full access to SAP and Oracle systems without being detected,” he said. “The urgency level among chief security officers and CEOs should be far higher.”

An SAP spokesman said that, in general, the company takes security issues seriously across its organization.

Oracle was not immediately available to comment.

Both companies release regular patches to known security bugs in their software.

However, customers are often reluctant to make fixes out of fear doing so might disrupt their manufacturing, sales or finance activities.

Risks also arise from installation mistakes or growing moves to link traditionally back-office business systems to the cloud in order to reach mobile or online users.

The new alert follows a 2016 Homeland Security department warning to some SAP customers after Onapsis uncovered plans by Chinese hackers to exploit out-of-date software used by dozens of companies, Nunez said.

In their latest research, Onapsis and online monitoring firm Digital Shadows identified some 17,000 SAP and Oracle software installations exposed to the internet at more than 3,000 top companies, government agencies and universities.

They did not name the affected organizations, but data seen by Reuters shows many of the world’s best-

known firms at risk.

At least 10,000 servers are running incorrectly configured software that could subject them to direct attack using known SAP or Oracle exploits, the report’s authors warned.

More than 4,000 known bugs in SAP and 5,000 in Oracle software pose security threats, especially in older systems that operators may consider uneconomical to fix, they said in the report.

One of the highest profile attacks occurred in 2013 and 2014 when hackers used an SAP vulnerability to break into the U.S. Investigations Service, the largest commercial provider of background checks and security clearances for federal employees.

This year, hackers began exploiting a vulnerability in WebLogic servers which Oracle fixed last October. Their targets included attacking Oracle PeopleSoft ERP systems so as to make money from mining crypto currencies, the report said.

Digital Shadows combed through Google searches, social media chatter and the dark web where they found discussions in Chinese and Russian hacker forums regarding how to use specific SAP and Oracle vulnerabilities.

They also discovered some hackers were eavesdropping on discussion boards where third-party technology contractors share work tips, including default passwords that hackers can use to access some systems.

(Reporting by Auchard; editing by Jim Finkle, Jason Neely and Kirsten Donovan) Copyright 2018 Reuters. All rights reserved.

INSURANCEJOURNAL.COM

Figures

Declarations

$3.67 MILLION The Consumer Services Division (CSD) at the Arkansas Insurance Department recovered $3,673,940 for Arkansas insurance customers in the first half of 2018, the agency reported. Recoveries are dollar amounts recovered for Arkansas consumers by CSD in excess of the amounts initially offered by insurance companies. For all of 2017, $2,813,513 was recovered by CSD.

$13.5 MILLION The amount, and more, that a Chicago-based vice president of an insurance underwriting group is accused of stealing in a fraud scheme involving premium payments for fraudulently issued “matching deductible” policies.

Federal prosecutors allege that from 2005 to 2016, David Ballard, 54, fraudulently issued unauthorized “matching deductible” insurance renewal policies to a client company and kept the premium payments for his own use, according to the U.S. Attorney’s Office for the Northern District of Illinois.

$919,000 The amount an Alabama farmer has admitted to stealing from the federal crop insurance program.

Dexter Day Gilbert pleaded guilty in July to falsifying documents that allowed him to receive nearly $1 million in crop insurance money.

Gilbert admitted to submitting false applications to the Noninsured Crop Disaster Assistance Program and will be sentenced in September.

INSURANCEJOURNAL.COM

$1 MILLION

Campus Guns

“College campuses as gun-free zones present an environment where murderers, rapists and other criminals may commit crimes without fear of being harmed by their victims.”

— An NRA lobbyist who supported a new Tennessee law to allow state college faculty members to carry guns on campus, with certain restrictions.

California Wildfires

“It’s mirroring last year. Grass and brush are just tinder, they are like a fuse for these wildfires.”

— Scott McLean, deputy chief of the California Department

of Forestry and Fire Protection, said the state should brace for another year of bad wildfires as it sees worsening drought.

Pushed to the Brink

“The combination of an uncompetitive tax structure, unfair and unnecessary regulatory burdens, and rising health care costs have pushed many state businesses to the brink. That is why these reforms, and the savings that come with them, are so significant.”

— Heather C. Briccetti, president and CEO of The Business

A Florida man has been charged with assuming the identity of a New Jersey doctor to submit more than this amount in fraudulent medical claims for services allegedly rendered at a Morris County medical center that in reality did not exist. Yoandi Marrero, of Hialeah, Fla., and PA Clinical Center Inc., the registered company he is said to have used to front the phantom medical practice, were charged with insurance fraud and attempted second degree theft by deception, third degree theft by deception, and fourth degree identity theft in an indictment handed up by a state Grand Jury in Trenton, N.J.

$229,700

Council of New York State Inc., said regarding the newly approved 11.7 percent reduction in loss cost rates in New York, which are the basis for setting workers’ compensation premiums for 2019. This reduction, coupled with the 4.5 percent rate cut achieved in the first year of the 2017 reforms, means overall system costs will be reduced by upwards of $1 billion dollars, the council says.

Airbnb Allegations

“The allegations in the complaint suggest that Airbnb does far more than just post listings. A website may not be immune where it contributes materially to the alleged illegality of the conduct.”

— Florida Circuit Court Judge William Thomas said in denying Airbnb’s request to throw out a Miami landlord’s suit against the home-sharing site, according to Bloomberg. Airbnb sought protection from the suit by Apartment Investment & Management Co. under the Communications Decency Act, a federal statute that shields online service providers from lawsuits over content posted by their users.

Duck Boat Tragedy

“If you have the information that you could have rough waters or a storm coming, why ever put a boat on that water?”

— Steve Paul, owner of the Test Drive Technologies inspection

That’s the amount for which an Edmonds, Wash.-based asbestos removal contractor has been cited by the Washington Department of Labor & Industries for improper handling of asbestos.

service in St. Louis, comments on the sinking of a tourist duck boat on Missouri’s Table Rock lake, in which 17 people were drowned during a thunderstorm. Paul said he wrote a report in August 2017 to the boat’s operator describing flaws in the vessel’s design that put it at greater risk of sinking in rough weather.

Being Prepared

“We need to be ready.’’

— Edmond, Oklahoma, Traffic Engineer Tom Minnick said

that the city is spending millions of dollars in preparation for self-driving cars and to alleviate traffic problems.

AUGUST 6, 2018 INSURANCE JOURNAL | NATIONAL | 11

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NATIONAL | Closer Look | Recreation & Leisure

A Whole New Ballgame: Managing Risk for World Champion Houston Astros

ning has added to her roster of things to worry about.

Until the Astros’ World Series victory last year, Rusch, senior director of risk management for the baseball team, did not have to worry about World Series rings being stolen, fans lined up at 6 a.m. for a 7 p.m. game, or the extreme emotions

certain newly-minted celebrity players incite.

Last year also brought a real test of risk management disaster planning, although she can’t pin this one on the team.

Before beating the New York

By Andrew Simpson

M

onica Rusch’s work was easier when the Houston Astros were

losers.

She was accustomed to worrying about fans being hit by balls, drunks getting too rowdy, players suffering injuries, thieves breaking into parked cars, slips and falls in the stands, even the dreaded prospect of an active shooter at the Astros baseball stadium in

downtown Houston.

But now that the team is the World Series Champion, her job is more complicated. Mind you, she’s not complaining.

Quite the contrary, Rusch, who has been with the team for 29 years, is thrilled over the team’s success. She refers to her employer as “the 2017 World Series Champions” every chance she gets. “I can’t say that enough. I’m sorry,” she claims.

But it’s just a fact that win-

14 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

Yankees to win the American League Championship and then the Los Angeles Dodgers in the World Series in October and November, Rusch and her Astros had to beat Hurricane Harvey in August.

“You can observe a lot by watching,” is one of Rusch’s favorite Yogi Berra sayings. She has seen a lot in the venue that not only houses the Astros but also hosts concerts and corporate, charity and other events.

But she has not seen anything like 2017.

At this year’s RIMS

Conference, Rusch shared her insights into sports and entertainment risks.

Big League Training

From first aid to facility maintenance, crowd control to player behavior, medical privacy to a terrorist attack, Rusch is involved in every facet of safety and security at the home of the Astros, Minute Maid Park.

The stadium has a command center, security cameras, police officers, scanners for people and equipment entering the facility, cleaning crews, and first aid representatives.

Rusch acknowledges the technology tools but talks more about the people and process of risk management — not only the security and safety staff but also the audiences they serve. Much of her job is making sure her people are trained and where they need to be to ensure a safe environment for everyone.

“We plan for every type of risk there is, or we think we know of, but there’s always the unknown. Every time you turn on the radio, the TV … My husband is the worst. ‘Did you hear what the Astros did last night?’” he asks her before she has even had her morning coffee.

Baseball players have spring training; for Rusch, training is all important. As part of it, every employee takes an online course that documents that they have read and understand the policies and procedures.

The security team gets pregame or event briefings at which they learn what promotions are happening, if there has been a heightened security threat, what the attendance

continued on page 20

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NATIONAL | Business Moves

BNC Insurance Agency, Murray, Schoen & Homer

BNC Insurance Agency Inc., an independently owned retail brokerage firm with headquarters in Rye Brook, N.Y., has acquired Murray, Schoen & Homer Inc., also located in Rye Brook, N.Y. Terms of the transaction were not disclosed.

MSH has been in business since 1906. The six employees of MSH, which include the agency principals Robert Homer and Leslie Homer, have all joined BNC in the transaction.

Founded in 1997, the transaction brings BNC to roughly 85 employees.

Risk Strategies, Oxford Risk Management Group

Risk Strategies, a Boston, Mass.-headquartered, privately held national insurance brokerage and risk management firm, has acquired Oxford Risk Management Group, a Sparks, Md.-based provider of alternative risk and captive insurance and consulting. Terms of the deal were not disclosed.

Established in 2010, Oxford

Risk Management Group specializes in conducting captive feasibility analysis, coordination and management of turnkey captive insurance company arrangements, both domestically and internationally. The company is led by its founding principals, Michael DiMayo and Kevin Myers.

Following the acquisition, the Oxford brand and team will continue operating as usual with the company’s expertise continuing to be available to its referral channels as it becomes a resource for Risk Strategies’ clients as well.

Cook Maran & Associates, Joseph P. Price Agency

Cook Maran & Associates, a New York and New Jersey insurance broker and the New York metropolitan area platform for Prime Risk Partners, has acquired Joseph P. Price Agency.

Price is a Long Island, N.Y.based insurance agency that has provided customized commercial, personal and employee benefit products for more than 25 years.

16 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

As a result of the merger with Cook Maran, Price broadens the offering of PRP. Price employees will eventually move from the agency’s Holtsville, N.Y., location to Cook Maran’s Melville, N.Y., office.

Price has also built a specialty practice in risk management for public and special libraries.

Beyond property and casualty, Price provides expertise in specialty coverage for valuable and large collections, mobile libraries, cyber security and protection for directors, officers and employees.

Core Assurance Partners, E.L. Creech & Co.

Core Assurance Partners, a financial services company headquartered in Hampton Roads, Va., has acquired E. L. Creech & Co. Inc., a fourth-generation, family-owned property and casualty firm based in Virginia Beach, Va., where it will maintain its offices. Terms of the transaction between the two privately held companies were not disclosed.

The combined organization will continue to serve clients in Hampton Roads, Va., and the Mid-Atlantic region with expertise in insurance and risk management for real estate, hospitality, construction, automotive and maritime industry sectors, complemented by a Private Client Services practice.

Core Assurance Partners offers insurance and risk management products to businesses in the Mid-Atlantic region.

Launched in 2017 by a team of insurance entrepreneurs, the privately held firm is expanding its core competencies across industries.

TrueNorth, Gateway Insurance Services

TrueNorth Companies has acquired Iowa-based Gateway Insurance Services, which will adopt the TrueNorth name and brand.

With locations in Ames and Iowa Falls, Gateway Insurance Services has been committed to providing quality insurance products to both communities for nearly 35 years. Like TrueNorth, John Langeland and the Gateway team have established a strong reputation built on faithful service, strategic insight and personalized solutions.

Throughout the transition, Langeland will work closely with TrueNorth Risk Management Specialist Lane Danielsen, to expand the TrueNorth name and firm presence in the Central Iowa area.

Headquartered in Cedar Rapids, Iowa, TrueNorth has offices spanning six states.

Holmes Murphy, Cobb Strecker Dunphy & Zimmermann

Holmes Murphy has joined forces with privately owned Cobb Strecker Dunphy & Zimmermann Inc., based in Minneapolis, Minn.

Holmes Murphy said the merger is its largest to date and strengthens the firm’s depth in the property/casualty and, more specifically, construction and surety industries.

CSDZ was initially founded in 1919 as a construction contract surety organization and has since grown into a nationally recognized specialty risk management organization.

CSDZ will continue to oper-

continued on page 18

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NATIONAL | Business Moves continued from page 16 ate on a stand-alone basis and will remain in its three locations of Minneapolis, Minnesota; Salt Lake City, Utah; and Madison, Wisconsin. CSDZ’s Jerry Ouimet will maintain his current role as president overseeing the same day-to-day operations he has been leading for years. CSDZ Chairman and CEO R. Scott Egginton is taking on the role of chairman emeritus of CSDZ and will continue to be involved with both client and partner relations.

The merger adds more than 100 employees to the Holmes Murphy team.

run agency. It has focused for more than 50 years on helping construction companies with their surety bonding, as well as personal and business insurance needs. All of Klein’s employees and leadership will join MMA and continue operating out of Klein’s existing office.

Marsh & McLennan Agency LLC is a subsidiary of Marsh established in 2008 to serve as a platform for the middle market.

Chatham Insurance Services, DOXA Insurance Holdings

Chatham Insurance Services Inc. Marsh & McLennan, Klein Agency (Chatham), a provider of errors and omis Marsh & McLennan Agency LLC, the sions insurance to the managed care indusmiddle market agency subsidiary of Marsh, try, has been acquired by DOXA Insurance has acquired Klein Agency Inc., a St. Paul, Holdings LLC (DOXA).

Chatham will continue its operations Minnesota-based surety and property/ casualty agency specializing in the conunder the leadership of Jeff Stetson and struction industry. his staff, retain the Chatham name, and Klein Agency is a BIG.pdf third-generation family headquartered in Schaumburg, Ill. A&M helps 1 1/5/16 12:36 remain PM

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Chatham began operations in 2002 by Jeff Stetson and Jim Cannella, experts in underwriting in the managed care industry since 1987.

The firm is an independent underwriter solely focused on management liability insurance and managed care coverage across the U.S. Chatham targets all sizes of publicly and privately held companies as well as nonprofit organizations in need of managed care insurance services.

DOXA Insurance Holdings is a Midwestdomiciled private equity fund that acquires small to medium managing general agents.

INSURICA, Employer Solutions Group

Insurance broker INSURICA, headquartered in Oklahoma City, has acquired employee benefits provider Employer Solutions Group, based in Austin, Texas.

ESG operates throughout Texas under the leadership of Michael Bakonyi and Thomas Seuthe. The entire ESG team will be joining Austin Branch Manager Devin Stewart at INSURICA’s Austin office complex.

The effective date for the deal was June 1, 2018.

With annual revenues topping $100 million, INSURICA employs over 530 employees in 30 offices located throughout Oklahoma, Texas, Arkansas, Colorado, Arizona and California.

AssuredPartners, Hutson Insurance Group

AssuredPartners Inc. has acquired the Hutson Insurance Group located in Plano, Texas.

The Hutson Insurance Group is a full-service insurance broker that has served the Plano and the North Texas marketplace for over 20 years under the leadership of Brian and Kim Hutson.

Headquartered in Lake Mary, Florida, and led by Jim Henderson and Tom Riley, AssuredPartners Inc. acquires and invests in insurance brokerage businesses (property and casualty, employee benefits, surety and MGU’s) across the United States and in London.

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NATIONAL | Closer Look | Recreation & Leisure continued from page 14 may be, and where there is maintenance going on in the stadium.

There are also post-event briefings. “We want to know what went well, best practices, and lessons learned. No one’s perfect, so we want to improve on things,” she said.

The staff training includes a review of Major League Baseball’s code of conduct — including why and when a fan may be ejected.

There is training on golf carts — how to drive them and where to return the keys.

The Astros also have mandatory HIPAA (Health Insurance Portability and Accountability Act) training on the protection of medical privacy of athletes and employees.

“We have first aid staff that will respond to a situation.

We have baseball operations that work with players. The last thing we need is a player’s information to be released if it’s not approved to be released. We want all of our staff to have an understanding of what HIPAA is,” she said.

She acts like a team scout.

She anticipates the attendance. “We have a large crowd, our risk factors may go up.”

She monitors response times. “I have first aid strategically placed throughout the ballpark,” Rusch said. She insists that response time be one minute or less. If there is a heavy crowd and it gets congested, she may have to move staff around.

She anticipates the opponent, especially if it’s the in-state rival Texas Rangers.

“They say it’s bigger in Texas.

Yes, those games are bigger,” she said.

Risks of Champions

To demonstrate how her risk lineup has changed, Rusch said she was asked if she had brought her World Series ring to RIMS in San Antonio. Every employee gets one.

“I’m not bringing that from Houston to here,” she exclaimed, suggesting there is added risk from employees showing them off everywhere they go.

The Astros staff learned an important lesson this year when it promoted a replica World Series ring giveaway at a game. The game started at 7:00 p.m. The first fans were in line at 6:00 a.m. Rusch and her staff had not prepared for the early arrivals. Knowing firsthand about Houston heat and humidity and the risks to people waiting outside in line all day, they sprang into action.

The first thing was to get plenty of water outside by the

20 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

gate for those in line. Next, security was put in place. Then first aid staff was called in.

‘We plan for every type of risk there is, or we think we know of, but there’s always the unknown.’

“Everything went smoothly. Now we’re getting ready for another replica giveaway day,” she said.

She’s worried not only about the flashy rings, but also about the players who earned them.

“Some of our players, people didn’t know who they were before. Now you’ve got these success stories of these guys.

They’re just terrific people, and everybody wants to get close to them,” she said.

The newfound celebrity status required a re-evaluation of travel and other safety conditions around players.

The major leaguers have a better understanding of the risks of travel than minor leaguers or those new to the big leagues. “We have multiple minor league teams in different cities. Those cities are different. Usually, they’re in small towns,” she said. “Your major league guys have gone through the minor leagues. They’re much more experienced with the travel.”

‘Walk in the Park’

One of Rusch’s strategies is what she calls her “walk in the park.”

“Anytime I say, ‘Let’s take a

walk in the park’ … that means bring your notepad, bring your iPad, bring something because I will find something in the ballpark,” she said.

She tells her employees to think of the park as their home: “If you’re assigned to section 252, that’s your home, so you should be responsible for these fans that are coming every time they should be here. They should be comfortable.”

The point of the walk around Minute Maid is to identify anything risky and fix it. They check the concrete, the signage, the striking on the steps.

“We check the seats. There might be a bolt missing. We want to know before that person sits in it and has an injury,” she added.

Hurricane Harvey

August 2017 was no walk in the park — in fact, the park was closed for a period due to Hurricane Harvey. The park was unsafe and unapproachable. But that was the least of the region’s problems. The fans were too busy saving their families, homes and belongings to worry about America’s pastime.

Rusch was among those in danger.

“I am a risk person. I have my backpack packed. I had one bottle of wine, a can opener, a can of tuna, a pack of crackers.

I was ready to go. A change of clothes,” she recalled.

Her husband maintained they were not going to have to leave their house.

Then, at 7:00 a.m., there was a knock on their door. They were told, “We’re opening up the reservoir. There could be 100 feet of water here.”

continued on page 22

INSURANCEJOURNAL.COM

NATIONAL | Closer Look | Recreation & Leisure continued from page 20 Within 30 minutes, Rusch and her husband were taken out by boat. “That’s how fast it came up,” she said.

She wasn’t able to take her backpack but she did manage to save the company’s laptop.

“I don’t know why,” said the veteran risk manager.

She remembers one of the first times they tested their hurricane plan.

“First time there was a warning. They went into action.

They knew how long it took to get the equipment off the field, how long it took to close up the facility, get all the supplies that they needed. When the hurricane didn’t happen, they were like, ‘We did this for nothing.’

No, we didn’t, because we have our timeline. We’re prepared to go the next time.”

The Astros returned to Minute Maid Park just a week after Harvey hit for their next series against the New York Mets, even though the city and fans were very much still in

recovery mode.

Rusch said she can’t even remember the exact date in August when everything happened. [It was Aug. 28 when the reservoir was opened.]

“We weren’t allowed to go back until Sept. 15. Geez, that wasn’t on my plan,” she said.

Her experience with Harvey reinforced a lesson she has repeated over and over again throughout her career: “It doesn’t matter how much you prepare, there’s still going to be unexpected things.”

Just Say No

Over the years, she has learned that it takes a thick skin to be a risk manager because she is often the one pointing out why something can’t be done. “A lot of our employees are like, ‘Here she is again.

22 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

She’s going to say no,’” is how she describes her reputation.

She’s working on altering her image. When some interns wanted to have an event where participants would repel off the roof, Rusch’s boss, the head of operations, told the group not to expect approval. “This isn’t going to float. I know her too well. I’m not going to be the bad guy. She’s going to tell y’all no, so be prepared,” he told them.

She surprised them all by approving the repelling event —

but not before turning it into a lesson about risk transfer. She told them to find a way to reduce the risk to the stadium. So they found a vendor that specializes in these events and had them sign agreements to indemnify the Astros organization for everything. “They were so excited about this event, and I couldn’t believe the number of people.”

Even at the risk of a reputation for saying no, Rusch stands by her insistence on policies that are clearly written and consistently communicated. “Written policies are put in place for a reason. It’s about communication and understanding,” she said. “You have to educate your employees.

You have to educate your players. You have to educate everyone so that they can’t come back and say, ‘Well, I didn’t know.’”

Getting everyone on the same page is one way to “reduce or mitigate potential claims,” she said.

A final piece of advice: “The one thing I have learned over the years is to listen. You have to listen to your crowd, you have to listen to your audience, you have to listen to your employees and your frontline people.”

Rusch even listens to fans who have had a bad experience at the ballpark. She personally calls everyone who has been hit by a ball or a bat. “I think it protects our branding, and I want to be able to reach out to that fan. Every single fan, employee, and player is important to us,” she said.

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NATIONAL | Spotlight | Condos

regardless of owner- ship, if your Condominium Association Agreement requires you to insure it: (a) Fixtures, improvements and alterations that are a part of the building or structure; and (b) Appliances, such as those used for refrigerating, ventilating, cooking, dishwashing, laundering, security or housekeeping.

HO 00 06 Homeowners 6 – Unit-Owners Form

The Condo Coverage Puzzle

By Patrick Wraight

H

ave you ever watched someone try to finish a jigsaw puzzle with pieces missing? There are still a few hundred pieces to place, but there is one open space in the middle of a grove of trees that beckons to be filled. The puzzler spends hours combing through pieces that look like that hole. Eventually, he realizes that the one piece he’s been searching for is missing.

That’s what it is like to try to understand coverage on a condominium. It’s a huge jigsaw puzzle full of mismatched and missing pieces. The jigsaw puzzle gets even more complicated when we add lines of business to the mix. Condos need property, liability, D&O, and WC coverages (maybe others). For

now, let’s consider the property exposures.

Condo insurance can be easy if the association’s policy and the unit owners’ policies are all written by the same carrier or if they are all written on the ISO policy. This is simply because they are designed to work together. In fairness, many carriers write policies that are very similar to one another in the basics, only making changes to details here and there.

Here are excerpts from the ISO Condominium Association Policy and Unit-Owners Policy.

CP 00 17 Condominium Association Coverage Form

a. Coverage 1. Covered Property a. Building (6) Any of the following types of property contained within a unit,

24 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

a. Coverage A – Dwelling 1. We cover: a. The alterations, appliances, fixtures and improvements which are part of the building contained within the “residence premises”. b. Items of real property which pertain exclusively to the “residence premises” c. Property which is your insurance responsibility under a corporation or association of property owners agreement…

Did you notice how neatly they fit together? The association’s form provides coverage for certain items that could be called personal property of the unit owner. In fact, that property is covered on the residential (homeowners’) unit owners’ form. On the CP 00 17, certain items are required to be covered on the association policy if the association agreement requires it. It doesn’t say that specifically in the HO 00 06. In fact, that form extends coverage to anything that the association agreement requires the unit owner to insure.

Later in the association policy, there is a paragraph that

tells us if property is covered on the unit-owner’s policy, the association policy is primary, and the unit owner’s policy is excess. There is similar language on the unit-owners’ policy that states the unit owner’s policy is excess and will not contribute until the loss exceeds the limits of the association’s policy.

It appears that the insurance policy is not the only document that you need to decide if a unit-owner or association is properly insured. You may also need to read the association documents, specifically the insurance requirements. The association documents will spell out what the individual unit owners’ and the association’s responsibilities are.

One more thing to consider is the state condominium law.

Some states are very specific about the responsibility of the association and unit-owner.

Florida, for example, requires that the association’s policy must exclude, “all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures…within the boundaries of the unit and serve only such unit.”

Condominium insurance is a complicated subject, and one not easily (or quickly) solved.

In the end, if you’re working with a unit-owner, or association, it is certainly worth looking at the state law, the association documents, and several of the attendant policies. Who knows, you might find gaps that you know how to fill?

Wraight is the director of Insurance Journal’s Academy of Insurance.

Phone: 800.897.9965 ext. 130. Email: pwraight@ijacademy.com INSURANCEJOURNAL.COM

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About This Report: Welcome to the

14th annual Insurance Journal Top 100 Independent P/C Agencies report.

The Top 100 list is ranked by total property/casualty agency revenue for 2017 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

Sponsored by Income Report - 2018 Edition. See 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 We encourage all qualifying agencies to Agency Partnerships reports. The result submit data for future reports. The more is a glimpse at some of the nation’s most submissions Insurance Journal receives, successful independent insurance agencies the more accurate and comprehensive this and brokerages. listing can be. Also, submitted data was not All information in this report has been independently verified. garnered from voluntary online submissions from agencies and brokerages and A special thank you to the 2018 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: mation was received or located. awells@insurancejournal.com.

26 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

INSURANCEJOURNAL.COM

Insurance Journal’s 2018 Top 100 Property/Casualty Agencies Ranked by 2017 Total P/C Revenue

2018 Last Rank Year Agency Name 1 2 3 4

1 2 3 7

HUB International Lockton Companies Alliant Insurance Services Inc. Acrisure LLC

5 6 7

5 4 6

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

8 new 9 11 10 12 13 15 16 18 21 24 19

2017 Total 2017 Total Other P/C Revenue than P/C Revenue

2017 Total P/C Premiums Written

2017 Other than No. of P/C Premium Employees

Main Office

$500,869,000 $490,360,000 $309,565,154 $290,192,296

$10,036,095,000 $8,050,353,000 $5,484,433,677 $7,030,450,753

$3,704,101,000 $21,435,000,000 $7,517,254,353 $5,276,223,564

10,190 7,000 3,032 4,388

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

Caledonia, Mich.

AssuredPartners Inc. USI Insurance Services Confie

$610,969,843 $600,917,117 $515,600,000

$416,220,690 $489,305,709 N/A

$4,290,986,340 $4,970,675,196 $1,654,500,000

$7,996,853,699 $8,831,432,687 N/A

5,100 7,155 4,500

BroadStreet Partners Inc. EPIC Insurance Brokers & Consultants NFP Risk Strategies Company Integro Insurance Brokers Insurance Office of America Inc. Leavitt Group IMA Financial Group Inc. Cross Financial Corp., dba Cross Insurance Higginbotham Woodruff Sawyer PayneWest Insurance Heffernan Insurance Brokers

$471,154,000 $284,767,295 $258,000,000 $209,710,000 $183,357,000 $171,579,999 $168,661,000 $125,222,732 $117,100,000 $110,184,000 $96,100,000 $95,249,555 $94,343,653

$74,891,000 $115,150,264 $1,071,000,000 $49,500,000 $91,784,000 $22,047,028 $87,147,000 $32,766,498 $23,000,000 $62,661,000 $32,100,000 $23,105,235 $27,025,484

Lake Mary, Fla. Valhalla, N.Y. Huntington Beach, Calif.

Columbus, Ohio San Francisco, Calif.

New York, N.Y. Boston, Mass.

New York, N.Y. Longwood, Fla. Cedar City, Utah Denver, Colo.

Bangor, Maine Fort Worth, Texas San Francisco, Calif.

Missoula, Mont.

Walnut Creek, Calif.

22

AIS Insurance*

20

Hays Companies

ur na $3,688,691,000 $1,190,217,500 $2,000,000,000 $1,680,000,000 $1,500,000,000 $14,500,000,000 $2,650,000,000 $985,000,000 $3,959,000,000 $2,110,000,000 $1,662,783,938 $329,093,361 $1,331,379,000 $1,384,135,000 $1,401,472,659 $680,864,158 $900,000,000 $760,000,000 $767,629,000 $1,782,004,000 $940,900,000 $711,800,000 $788,864,179 $322,996,728 $722,395,860 $319,271,144

Jo

21 22

l

$1,357,083,000 $1,073,929,000 $782,577,900 $747,628,431

2,770 1,308 4,300 1,075 1,118 1,077 1,645 672 820 925 442 727 420

$91,150,000

$515,000

$570,000,000

N/A

515

Cerritos, Calif.

$90,300,000

$107,300,000

$788,000,000

$1,157,000,000

709

Minneapolis, Minn.

27

INSURICA Inc.

$83,186,632

$14,699,321

$597,198,733

$220,716,080

572

Oklahoma City, Okla.

25

Hylant Group Inc.

$81,750,932

$48,099,345

$693,000,000

$1,767,731,000

678

Toledo, Ohio

25

29

Prime Risk Partners Inc.

$79,201,558

$17,595,820

$534,349,084

$574,951,775

583

Atlanta, Ga.

26

30

Hilb Group

$74,366,496

$37,977,679

$540,126,996

$303,821,436

667

Richmond, Va.

27

28

TWFG Insurance Services

28

31

Assurance

29

26

Westwood Insurance Agency*

30

32

Propel Insurance

31

35

32

ce

23 24

$3,518,565

$497,676,037

$17,584,600

105

The Woodlands, Texas

$34,558,966

$540,093,407

$361,397,331

490

Schaumburg, Ill.

$70,290,596

N/A

$390,910,377

N/A

130

West Hills, Calif.

$65,000,000

$12,600,000

$483,000,000

$144,000,000

343

Tacoma, Wash.

Eastern Insurance Group LLC**

$64,297,757

$19,265,538

$389,642,483

$410,148,751

400

Natick, Mass.

33

Marshall & Sterling Enterprises Inc.

$59,026,579

$18,432,632

$353,790,246

$266,622,925

431

Poughkeepsie, N.Y.

ur an

$73,651,389

$70,888,785

33

new

UniVista Insurance

$56,205,719

$7,478,115

$360,527,748

N/A

232

Miami, Fla.

34

41

$50,177,012

$5,020,948

$327,014,154

$142,168,264

233

East Providence, R.I.

35

40

Starkweather & Shepley Insurance Brokerage Inc. Professional Insurance Associates Inc.

$50,000,000

N/A

$350,000,000

N/A

55

San Carlos, Calif.

36

37

The Graham Company

$48,667,737

$8,266,088

$289,475,530

$68,893,643

187

Philadelphia, Pa.

37

44

Relation Insurance Services (formerly Ascension Insurance Inc.) Lawley Insurance

$48,145,000

$49,305,000

$418,652,000

$428,739,000

469

Walnut Creek, Calif.

43 39

40

new

Towne Insurance**

41

49

Parker Smith & Feek Inc.

42

47

The Horton Group Inc.

Ins

38 39

Houchens Insurance Group Inc.

$45,858,150

$25,530,775

$331,293,675

$369,253,042

399

Buffalo, N.Y.

$45,766,832

$19,875,438

$331,962,000

$571,695,000

282

Bowling Green, Ky. Virginia Beach, Va.

$45,711,697

$14,488,881

$327,025,676

$350,819,170

312

$44,337,000

$11,735,000

$324,058,000

$194,364,000

224

Bellevue, Wash.

$43,751,056

$28,669,846

$338,722,833

$436,176,697

376

Orland Park, Ill.

43

76

Baldwin Risk Partners

$41,172,732

$16,601,017

$345,000,000

$334,000,000

300

Tampa, Fla.

44

42

Gowrie Group Inc.

$40,325,851

$1,800,500

$306,222,188

$31,711,906

177

Westbrook, Conn.

51

LMC Insurance & Risk Management Inc.

$40,117,566

$15,651,402

$294,681,603

$207,478,447

285

West Des Moines, Iowa

46

Fisher Brown Bottrell Insurance Inc.**

$38,167,543

$8,215,729

$337,756,351

$94,759,762

140

Jackson, Miss.

47

56

James G Parker Insurance Associates

$37,905,000

$4,575,000

$320,000,000

$64,008,000

210

Fresno, Calif.

48

45

$37,778,095

$10,075,675

$264,090,415

$102,492,094

218

Houston, Texas

49

new

Bowen, Miclette & Britt Insurance Agency LLC Alera Group

$37,500,000

$202,000,000

N/A

N/A

1,100

Deerfield, Ill.

50

48

TrueNorth

$36,545,570

$20,114,949

$813,000,000

$467,024,248

310

Cedar Rapids, Iowa

51

67

Shepherd Insurance

$36,105,520

$8,211,330

$302,852,700

$344,750,000

310

Carmel, Ind.

52

50

Andreini & Company

$35,861,648

$9,045,360

$231,602,314

$119,543,419

210

San Mateo, Calif.

®

45 46

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

INSURANCEJOURNAL.COM

AUGUST 6, 2018 INSURANCE JOURNAL | NATIONAL | 27

Insurance Journal’s 2018 Top 100 Property/Casualty Agencies Ranked by 2017 Total P/C Revenue

2017 Total 2017 Total Other P/C Revenue than P/C Revenue

2018 Last Rank Year Agency Name

2017 Total P/C Premiums Written

2017 Other than No. of P/C Premium Employees

Main Office

53

52

The Mahoney Group

$34,956,410

$5,581,700

$291,171,439

$61,992,556

175

Mesa, Ariz.

54

53

Robertson Ryan & Associates Inc.

$33,624,418

$3,455,870

$305,000,000

$70,000,000

245

Milwaukee, Wisc.

54

Charles L. Crane Agency

$33,000,000

$5,000,000

$33,000,000

$5,000,000

270

St. Louis, Mo.

73

Sunstar Insurance Group

$32,452,746

$2,385,066

$291,365,770

$23,850,660

224

Memphis, Tenn.

$15,697,393

$375,000,000

$275,000,000

204

Salt Lake City, Utah

55

Moreton & Company

$32,360,865

59

Insureon

$31,487,860

59

71

ABD Insurance and Financial Services

ur na

57 58

l

55 56

N/A

$297,999,041

N/A

254

Chicago, Ill.

$30,500,000

$33,900,000

$228,100,000

$569,800,000

275

San Mateo, Calif.

60

new

TRICOR Inc.

$29,446,000

$4,389,000

$163,780,000

$81,100,000

212

Lancaster, Wisc.

61

60

Bouchard Insurance

$28,933,163

$13,797,753

$226,021,119

$236,305,970

238

Clearwater, Fla.

62

70

Premier Group Insurance Inc.

$28,749,100

$813

$205,350,714

N/A

25

Denver, Colo.

63

68

Ansay & Associates

$28,541,727

$7,252,238

$184,292,778

$66,067,210

64

65

Bolton & Company

$27,977,533

$18,643,889

$246,283,640

$310,731,483

186

65

58

Haylor, Freyer & Coon Inc.

$27,975,368

$2,975,000

$225,200,000

$86,058,000

171

Syracuse, N.Y.

66

61

HNI Risk Services

$27,334,828

$3,128,352

$300,000,000

$40,000,000

145

New Berlin, Wisc.

Waukesha, Wisc.

260 Port Washington, Wisc.

Pasadena, Calif.

77

R&R Insurance Services Inc.

$27,045,000

$6,699,228

$203,775,529

$107,784,032

194

69

Turner Surety & Insurance Brokerage

$26,000,000

$2,000

$166,000,000

N/A

63

Paramus, N.J.

69

63

Tolman & Wiker Insurance Services LLC

$25,525,833

$7,024,635

$198,636,475

$123,010,286

155

Ventura, Calif.

Jo

67 68

64

Wood Gutmann & Bogart Insurance Brokers

$25,275,909

$23,905,895

$207,260,601

$38,756,855

143

Tustin, Calif.

71

78

Lovitt & Touche

$25,240,434

$15,095,199

$214,163,994

$252,185,720

178

Phoenix, Ariz.

72

66

Sullivan Curtis Monroe Insurance Services LLC

$24,999,000

$10,445,000

$237,920,000

$350,000,000

194

Irvine, Calif.

73

72

The Buckner Company Inc.

$24,478,343

$2,637,406

$167,878,043

$48,535,837

156

Salt Lake City, Utah

74

74

TIS Insurance Services Inc.

75

75

Arroyo Insurance Services Inc.

76

81

Sihle Insurance Group

ce

70

$23,891,239

$9,020,200

$160,525,074

$85,969,136

139

Knoxville, Tenn.

$23,289,000

$2,634,000

$209,785,000

$33,566,000

140

Arcadia, Calif.

$23,259,360

$1,247,188

$186,377,174

$14,638,197

125 Altamonte Springs, Fla.

92

HomeServices Insurance

$23,000,000

N/A

$23,000,000

N/A

175

Minneapolis, Minn.

82

Associated Benefits and Risk Consulting**

$22,914,700

$60,068,300

$161,151,000

$1,020,230,000

375

Minnetonka, Minn.

Birmingham, Ala.

ur an

77 78 79

96

Cobbs Allen

$22,648,669

$7,836,084

$178,844,204

$63,672,672

150

80

86

John M. Glover Agency

$22,468,503

$487,000

$143,567,000

$7,702,000

175

Norwalk, Conn.

81

85

Rogers & Gray Insurance

$22,175,000

$3,100,000

$150,300,000

$65,300,000

150

Kingston, Mass.

82

88

AHT Insurance

$21,781,873

$16,568,048

$164,041,785

$468,631,220

206

Leesburg, Va.

83

90

Foa & Son Corp.

$21,469,300

$1,901,800

$195,941,000

$47,545,000

115

New York, N.Y.

84

84

Tompkins Insurance Agencies Inc.**

$21,401,000

$7,148,000

$151,319,000

$115,996,000

171

Batavia, N.Y.

85

87

Insgroup Inc.

$21,138,000

$3,142,000

$156,780,000

$38,010,000

117

Houston, Texas

new

Atlas Insurance Agency

$21,040,887

$3,137,786

$163,847,252

$68,354,944

97

Honolulu, Hawaii

87

new

Atlas Insurance Brokers LLC

$21,025,894

$210,258

$135,688,607

$2,713,772

150

Rochester, Minn.

88

89

JGS Insurance

$21,000,000

$650,000

$87,000,000

$7,000,000

76

Holmdel, N.J.

80

Swingle, Collins & Associates

$20,715,000

$49,512

$143,775,000

$49,000

87

Dallas, Texas

new

Crest Insurance Group LLC

$19,460,040

$4,338,713

$146,415,862

$41,425,214

129

Tucson, Ariz.

new

Murray Insurance Associates Inc.

$19,083,000

$11,022,000

$187,597,000

$69,610,000

183

Lancaster, Pa.

83

The Daniel and Henry Company

$19,008,000

$5,976,000

$149,024,000

$61,823,000

184

St. Louis, Mo.

98

L/P Insurance Services Inc.

$18,061,644

$5,513,796

$134,229,296

$63,790,474

151

Reno, Nev.

new

Wallace Welch & Willingham

$17,927,068

$6,988,186

$189,079,560

$115,369,580

105

St. Petersburg, Fla. Ridgeland, Miss.

89 90 91 92 93 94

Ins

86

99

SouthGroup Insurance Services

$17,919,486

$1,136,000

$122,791,594

$10,824,120

136

new

Gulfshore Insurance

$17,900,000

$1,700,000

$137,700,000

$23,100,000

119

Naples, Fla.

97

new

World Insurance Associates LLC

$17,699,640

$859,807

$126,253,158

$10,244,347

157

Tinton Falls, N.J.

®

95

96

98

97

Lipscomb & Pitts Insurance

$17,289,056

$7,426,966

$131,432,000

$218,440,000

116

Memphis, Tenn.

99

95

The Advantage Group LLC

$17,002,807

$1,700,289

$113,352,047

$11,335,200

106

Edmonds, Wash.

MJ Insurance Inc.

$16,993,368

$13,807,848

$122,917,207

$741,371,940

141

Indianapolis, Ind.

100 100

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

28 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

INSURANCEJOURNAL.COM

l rn a

Insurance Journal’s Top 20 Agency Partnerships

(Ranked by 2017 Total P/C Revenue) Employee count for these groups does not necessarily include all affiliates responsible for total revenue.

Agency Partnership

2017 Total P/C Revenue $1,087,318,445

1

1

SIAA Inc.

2

2

ISU Insurance Agency Network

$468,151,000

3

3

Keystone Insurers Group

$406,441,318

4

4

SecureRisk

$279,857,933

5

5

Iroquois Group Inc.

$174,104,631

6

6

Combined Agents of America LLC

7

7

Renaissance Alliance Insurance Services LLC United Valley Insurance Services Smart Choice

10

9

Insurors Group LLC

11

12

Georgia Agency Partners Inc.

12

8

Pacific Interstate Insurance Brokers

13

13

GreatFlorida Insurance Holding Corp.

14

14

Brightway Insurance

No. of Employees

Main Office

N/A

17,302

Hampton, N.H.

$7,400,460,019

$57,898,000

$3,829,000,000

$769,000,000

2,587

San Francisco, Calif.

$73,847,223

$3,387,010,987

$1,107,368,834

3,518

Northumberland, Pa.

$23,051,643

$2,119,169,260

$288,145,533

10

Tucker, Ga.

N/A

$1,159,294,874

N/A

65

Allegany, N.Y.

$12,738,713

$807,077,320

N/A

8

Austin, Texas

$102,566,569

$625,114

$614,327,991

$3,256,881

101

Wellesley, Mass.

$98,156,339

$9,309,972

$785,250,711

$232,749,289

28

Fresno, Calif.

$91,327,000

$552,000

$745,000,000

N/A

51

High Point, N.C. College Station, Texas

eJ

10 11

2017 Other than P/C Premium

N/A

$87,249,000

$4,339,950

$478,913,706

$66,392,000

395

$64,870,000

$7,000,000

$405,557,000

$58,000,000

1

Statesboro, Ga.

$62,500,000

N/A

$700,000,000

N/A

10

El Dorado Hills, Calif.

$59,080,860

$10,213,776

$472,860,000

$683,255

513

Stuart, Fla.

$55,128,722

$1,233,896

$455,275,865

$9,050,658

227

Jacksonville, Fla. Pasadena, Calif.

ur an c

8 9

$116,344,805

2017 Total Other 2017 Total P/C than P/C Revenue Premiums Written

ou

2018 Last Rank Year

15

15

United Agencies Inc.

$47,231,597

$8,632,487

$369,609,407

$146,313,338

385

16

18

Fiesta Auto Insurance Center

$43,788,251

$5,400,000

$411,761,755

$2,558,493

27

Las Vegas, Nev.

17

16

Networked Insurance Agents

$42,495,943

N/A

$248,696,656

N/A

108

Grass Valley, Calif.

18

17

Bainswest Inc.

$40,210,000

$8,445,520

$287,721,430

$123,440,000

270

Owasso, Okla.

19

20

PacWest Alliance Insurance Services Inc.

$34,452,159

$2,676,963

$308,925,926

$38,242,329

289

Fresno, Calif.

20

19

The Insurance Alliance of Central Pennsylvania Inc.

$34,402,655

N/A

$259,402,670

N/A

252

Camp Hill, Pa.

®

Ins

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

INSURANCEJOURNAL.COM

AUGUST 6, 2018 INSURANCE JOURNAL | NATIONAL | 29

Top 20 Banks in Insurance Brokerage Fee Income (2017/Nationally)

1

$1,748,000,000

2

$595,000,000

3

$118,737,000

Branch Banking and Trust Company

City, State

Website

Winston Salem, N.C.

www.bbt.com

l

2017 Insurance Brokerage Fee Income Bank Holding Company Name Citibank, N.A.

Sioux Falls, S.D.

www.citibank.com

BancorpSouth Bank

Tupelo, Miss.

www.bancorpsouthonline.com

4

$82,773,000

Eastern Bank

5

$81,474,000

Associated Bank, N.A.

6

$68,364,000

KeyBank N.A.

7

$62,262,000

Towne Bank

8

$55,547,000

Discover Bank

9

$46,337,000

Frost Bank

10

$43,264,000

Manufacturers and Traders Trust Company

11

$38,168,000

Trustmark National Bank

12

$33,084,000

People's United Bank

$22,000,000

Bank of America N.A.

$18,156,000

Valley National Bank

Boston, Mass.

www.easternbank.com

Green Bay, Wisc.

www.associatedbank.com

Cleveland, Ohio

www.key.com

Portsmouth, Va.

www.townebank.com

Greenwood, Del.

www.discovercard.com

San Antonio, Texas

www.frostbank.com

Buffalo, N.Y.

www.mtb.com

Jackson, Miss.

www.trustmark.com

Bridgeport, Conn.

www.peoples.com

Charlotte, N.C.

Jo

13 14

ur na

Rank

Passaic, N.J.

15

$17,486,000

USAA Federal Savings Bank

16

$17,133,000

Fifth Third Bank

$15,676,000

Benchmark Bank

$15,555,000

Univest Bank and Trust Co.

19

$14,347,000

Arvest Bank

20

$14,204,000

Peoples Bank

San Antonio, Texas

www.usaa.com

Cincinnati, Ohio

www.53.com

Plano, Texas

www.benchmarkbank.com

Souderton, Pa.

www.univest.net

Fayetteville, Ark.

www.arvest.com

Marietta, Ohio

www.peoplesbancorp.com

ce

17 18

www.bankofamerica.com

www.valleynationalbank.com

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 - 2018 Edition

ur an

Top 20 Bank Holding Companies in Insurance Brokerage Fee Income (2017/Nationally)

Rank

2017 Insurance Brokerage Fee Income Bank Name

1 2 3 4 5 6

City, State

Website

Winston-Salem, N.C.

www.bbt.com

$727,000,000 Wells Fargo & Company

San Francisco, Calif.

www.wellsfargo.com

$544,000,000 Citigroup Inc.

New York, N.Y.

www.citigroup.com

$416,000,000 Bank Of America Corp.

Charlotte, N.C.

www.bankofamerica.com

$157,000,000 American Express Company

New York, N.Y.

www.americanexpress.com

$140,195,000 Regions Financial Corp.

Birmingham, Ala.

www.regions.com

$82,773,000 Eastern Bank Corp.

Boston, Mass.

www.easternbank.com www.associatedbank.com

Ins

7

$1,751,000,000 BB&T Corp.

Green Bay, Wisc.

11

$68,364,000 Keycorp

Cleveland, Ohio

www.key.com

12

$66,950,000 Stifel Financial Corp.

St. Louis, Mo.

www.stifelbank.com

13

$60,452,000 Huntington Bancshares Inc.

Columbus, Ohio

www.huntington.com

14

$55,547,000 Discover Financial Services

Riverwoods, Ill.

www.discovercard.com

15

$55,366,000 UBS Americas Holding LLC

New York, N.Y.

www.ubs.com/us/en.html

16

$46,337,000 Cullen/Frost Bankers Inc.

San Antonio, Texas

www.frostbank.com

17

$43,264,000 M&T Bank Corp.

Buffalo, N.Y.

www.mtb.com

$81,474,000 Associated Banc-Corp

$78,446,000 First Command Financial Services Inc.

Fort Worth, Texas

www.firstcommandbank.com

10

$74,000,000 Morgan Stanley

New York, N.Y.

www.morganstanley.com

®

8

9

18

$38,168,000 Trustmark Corp.

Jackson, Miss.

www.trustmark.com

19

$33,084,000 People's United Financial Inc.

Bridgeport, Conn.

www.peoples.com/portal/site/peoples

20

$32,160,000 Lauritzen Corp.

Omaha, Neb.

www.firstnational.com

About this report: With a 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 - 2018 Edition 30 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

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NATIONAL | Spotlight | Flood quota share as the insurer gets more comfortable, Sivyer explained.

While the quota share arrangement can provide up to a 100 percent cession to Hiscox Re, Sivyer said, client participation is preferred. The FloodXtra cover is provided as an endorsement to a homeowners policy, which is white-labeled and sold under the primary insurers’ brand and policies. By adding the cover as an endorsement, lower premiums of $100-$200 can be offered, she added.

“We always look for partners who are best in class, and we want as much alignment with those people as we can have, which is standard underwriting procedure for Hiscox,” said Bevis Tetlow, head of North American Underwriting.

Flood Model Changes Help Hiscox Re & ILS Enter U.S. Flood Market

By L.S. Howard

L

ess than 12 percent of U.S. homeowners have a flood insurance policy, despite the fact that flooding is the country’s most common natural disaster, said Katy Sivyer, underwriter for North America and the Caribbean at Hiscox Re & ILS. This is why Hiscox Re & ILS launched a new U.S. personal lines flood product late last year, called FloodXtra, which aims to help its insurer partners provide their policyholders more affordable flood insurance, thereby helping to fill the flood insurance gap.

In a nutshell, Sivyer explained, Hiscox is using technology to differentiate lowto-moderate-risk locations within “a given flood zone to be able to charge a more affordable rate, which we think will increase the take-up of flood insurance.”

With the FloodXtra product, Hiscox does a bit of hand-holding for insurers that are new to the market by providing quota share arrangements and all the latest analytic technology and flood modeling.

Flood could provide massive new busi-

ness opportunities, but it’s a risky business without the right tools and technological knowledge.

“At the moment, we do quota shares to help our clients get comfortable with the products. Longer term, we’d love to move it toward a catastrophe, excess-of-loss product,” she said, noting that Hiscox has spent the last four years getting comfortable with the analytics of flood models and developing a deep understanding of the flood peril.

“We’ve focused on building our understanding of floods because we consider it to be a growth area for us,” she confirmed.

But first, a deep understanding of the models is required. “You need to understand their downfalls and use them as a tool to better understand the risk — but not straight out of the box,” she said, noting that’s why clients and partners will need to spend some time to understand the peril, “which is why we offer a quota share arrangement.”

Hiscox has been asking for a 10 percent co-participation from its ceding companies in the first year. “Then over the next three years, that would move up to a 25 percent

32 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

Flood Model Development

It’s clear that the advent of flood models in the last four or five years has enabled Hiscox and other carriers to get into the market, but they’re not yet at the point “where you can treat them as a black box and take them straight off the shelf,” Sivyer emphasized.

Hiscox has licensed three flood models to date and partnered with a number of independent analytical experts such as remote sensing and satellite imagery companies to understand historical flood events, GIS experts to validate available flood models, and independent actuarial consultants to review its proprietary pricing algorithm to add confidence in its rating.

“We take the best bits of each model and generate our own internal understanding of flood risk,” Sivyer affirmed.

Even if one model is more accurate, her team would examine different bits of the different models “to improve our view,” she said. “It’s the same with hurricane modeling, where the models have been around for 20, 30 years and they’ve gathered a lot of data, which has helped them improve and refine the technology.”

Still, it’s very clear that one model isn’t enough because the science “and our understanding of the peril, particularly one that’s as highly granular as flood, is constantly evolving,” Sivyer said, noting that INSURANCEJOURNAL.COM

flood risk changes along with changes in the urban environment. Exacerbating the problem is the fact that flood is much harder to model than hurricanes, tornadoes and earthquakes because it’s such a localized peril. Further, she said, the computational power that’s needed to run these models, because of the size of the United States, has only become available in the last four or five years.

“Computationally, it’s so intensive that it’s been quite a challenge," she stated.

Private Market Interest Grows

Until about five years ago, policyholders were only able to obtain homeowners flood cover from the U.S. National Flood Insurance Program (NFIP). However, with the advent of new flood models and a move by the NFIP to open the program to private markets, interest in the risk is growing.

“Last year’s hurricanes — particularly the Texas floods associated with Hurricane Harvey — have highlighted the inadequacy of flood insurance provisions in the U.S.,” said Tetlow in prepared comments when FloodXtra was launched. “The market is deregulating, and the good news for consumers is this will give them a greater choice of flood cover.”

The NFIP offers one standard premium of nearly $400 to homeowners in high-risk areas as well as those in low-to-moderaterisk areas, which have a one-in-a-100-year risk, or a 1 percent chance of a flood. It’s those low-to-moderate risks that Hiscox believes can be written at a more affordable price than is offered by the NFIP. Currently, more than 20 percent of NFIP claims come from homes considered to be in low-to-moderate-risk flood areas, where insurance take-up is below 2 percent, said Hiscox in its October 2017 announcement of the launch of FloodXtra.

“There is a high variation of flood risk, and some locations should be paying more — such as $1,000 — and some locations should be paying a lot less because their risk and the location of that property doesn’t require a higher cover or higher premium,” Sivyer said.

FloodXtra provides a granular underINSURANCEJOURNAL.COM

standing of the risk, “so we can charge people the right amount in the right area,” she explained.

Tetlow said FloodXtra allows Hiscox’s carrier partners and ILS investors to leverage “in-house flood analytics and propri-

etary technology,” which will help boost U.S. homeowners’ resilience to flood.

This article first appeared in Insurance Journal’s sister publication, Carrier Management.

Your social service clients

make

a difference in people’s lives.

We’re here to protect them.

[ aspire. ] Let them

For insurance that can make a difference speak to an Affinity Nonprofits specialist | 800.432.7465

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Aon Affinity Nonprofits is the program name for the brokerage and program administration operations of Affinity Insurance Services, Inc. (TX 13695); (AR 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services, Inc.; in CA, Aon Affinity Insurance Services, Inc. (0G94493), Aon Direct Insurance Administrator and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency. E-12538-0718

AONAF029.indd 1

6/22/18 10:27 AM

AUGUST 6, 2018 INSURANCE JOURNAL | NATIONAL | 33

NATIONAL | Spotlight | Homeowners

Weather Ranks Top in Causes of Home Damage: Travelers

W

ind is the most common claim while fire is the most expensive claim for homeowners,

according to Travelers Companies’ recently released Top Ways Things Can Go Wrong interactive report. The report examines

the company’s national homeowners insurance claim data from 2009 to 2016. It highlights the types of claims that are most prevalent in four regions of the United States and some of the largest metropolitan areas.

Most Common Causes of Damage

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Ian H. Graham Insurance is the brand name for the brokerage and program administration operations of Affinity Insurance Services, Inc.; (TX 13695); (AR100106022); 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.

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AONAF028.indd 1

34 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

6/22/18 10:26 AM

Wind – 24% Non-Weather Water – 20% Hail – 16% Weather-Related Water – 11% Theft – 6%

Fire – 25% Hail – 20% Non-Weather Water – 17% Wind – 17%

Weather was a significant contributor to property losses throughout the year.

Damage from windstorms, hail and water accounted for half of all claims.

While water damage caused by weather is certainly a risk, more water-related claims were due to non-weather events like plumbing or appliance issues inside the house.

When it came to claims by season, spring produced the highest number of claims, mostly related to damage caused by hail. Wind was the leading source of claims during the summer, fall and winter.

Looking at the United States by region (Northeast, South, West and Midwest), the South recorded almost half of the total claims (46 percent), while the Midwest (12 percent) had the fewest. Wind was the largest contributor to claims in the Northeast and South, while non-weather-related water damage was the reason for most claims in the West. Hail was the most common cause of damage in the Midwest.

Wind damage ranked in the top five for both most common and costliest claims in the metropolitan areas analyzed in the report. Fire was one of the costliest causes of claims in these cities, while theft was among the most common.

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Idea Exchange

Q&A

Ask the Insurance Recruiter

Q: I’m the new vice president of talent acquisition for a large regional agency in California. Prior to my arrival, the organization had the ability to recruit, but it was largely by accident than intention. As I get a handle on our openings (which range from 40-90 at any given time), what are the big issues I need to focus on? – Jennifer in California

A:

Dear Jennifer, the recruiting history of your company describes 99.9 percent of all independent agencies. You have a tremendous opportunity to usher in organization and strategic planning unlike your firm has ever seen. Presuming they view you as “an agent of change,” then you have buy-in and a blank slate to successfully recruit all types and levels of positions. Your biggest obstacles are the bad habits hiring managers have adopted over the years. Institute a pain-free recruiting process and watch the company break the cycle of reactive recruiting.

‘A Pain Free Process’: Proactive Agency Recruiting

1

Make Decisions Driven by Data

To know where you’re going, you have to know where you’ve been. Historically, how long has the agency taken to hire, from start to finish, service (account managers, analysts and CSRs), sales and marketing, executives, technical (claims, loss control, risk management) and administrators?

What has been the process for advertising openings, processing applications, conducting interviews, determining compensation, responding to counter-offers, new hire retention, cost per hire, etc.? I don’t

expect agency executives to be experts in recruiting. It’s not their field, but with a lack of understanding comes assumptions about the difficulty (or lack thereof) in filling critical positions. If you don’t show them data and cost, you will hear them say: “Candidates are out there. They fall off trees.

Why aren’t we finding good people?”

2

Treat Your Position Like an Outside Consultant

Your seat belongs at the leadership table. Too often agency leaders lump internal recruiting into the rest of the

36 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

HR department. When that happens, you’re not seen as a strategist. To be viewed differently, you must articulate the impact of recruiting on all other aspects of the business.

Speak the executive’s language – growth, profitability, budget, cost containment, retention and culture.

3

With Real Power Comes Real Responsibility

Don’t shy away from being in control. It’s what they’ve hired you to do. Own that by requesting decision making authority over aspects of the process such as budgets, utilization of resources (vendors, outside recruiting budgets) and requisition status. If widespread control is hard to obtain, start small and request just one area of dominance. You determine the interview process. An individualistic process per position or hiring manager undermines your success and is detrimental to the whole organization.

Essentially, you create a RPO.

4

Organic Recruiting on Purpose

Question: What is the toughest position for an agency to proactively recruit? Answer: An opportunity hire, or a position without a formal vacancy.

Most companies reactively recruit because their process is designed to fill vacancies.

Strive for an equitable balance of time spent on speculative recruiting and filling immediate needs.

By Mary Newgard Capstone Search Group Newgard is partner and senior search consultant for Capstone Search Group, a national recruiting firm. Email: asktherecruiter@csgrecruiting.com.

What Is Recruitment Process Outsourcing?

RPOs give your agency the flexibility to relinquish part or all of its recruiting to an external search firm. RPOs are fully customizable.

Arrangements can be designed for specific positions or all agency hires throughout the year.

Successful RPOs reduce hiring expenses and dramatically improve staffing results.

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MyNewMarkets | NATIONAL

Aviation and Aircraft Liability and Hull Physical Damage

Market Detail: Unmanned Risk Management’s (www.

UnmannedRisk.com) chartassure product offers corporate non-owned aircraft liability insurance for companies or individuals that use aircraft that they do not own and that are operated by third parties such as chartered aircraft or permissive use. These exposures are primarily contingent liabilities where the user does not employ the crew and is not directly involved with the operation and maintenance of the aircraft. Non-owned hull and liability for corporate aircraft coverage includes: non-owned aircraft third party legal liability with limits of $100 million or higher; non-owned aircraft hull physical damage $1 million and up. Non-owned hull and liability for special uses coverage for film and product; power-line patrol; pipe-line patrol; aerial photo and survey; and air ambulance.

Available limits: Minimum $500,000, maximum $750 million Carrier: Various, admitted States: All states INSURANCEJOURNAL.COM

Contact: Customer service at 866-256-0227

Inland Marine - Motor Truck Cargo

Market Detail: CTC Transportation Insurance Services LLC (www.coast-ins. com) provides insurance on the freight or commodity hauled by a for-hire trucker. It covers liability for cargo that is lost or damaged due to fire, collision, or striking of a load.

Available limits: Minimum $25,000, maximum $250,000 Carrier: Certain Underwriters at Lloyd’s States: All states except Alaska, Hawaii, Ky. Mass., Mich., Miss., and N.Y. Contact: Sales & Marketing Rep at 760-487-7399 or e-mail: info@coast-ins.com

High Hazard/ High Risk Workers’ Compensation

Market Detail: The Pride Risk Solutions, Inc (www.priderisk. com) program covers high-risk insureds in a wide range of industries. Some of the most common governing codes covered under this program include: manufacturing HVAC, sheet metal, masonry, land-

scaping, electrical, plumbing, painting, food processing, bakeries, hospitality, warehouse operations, trucking/transportation, heavy construction (excluded in NY), cold storage, retail, wholesale staffing (excluded in NY), seasonal operations (advised upfront), property management, janitorial, and residential cleaning.

Organizations with the following characteristics are eligible: high risk business segments; experience modifiers over 1.00; cancelled/non-renewed coverage/gap in coverage; large losses/poor claims experience; few or no options aside from the state insurance fund.

Available limits: As needed Carrier: Lion Insurance, admitted States: Ala., Ariz., Calif., Colo., Fla., Ga., Ill., La., Md., Miss., N.C., Nev., N.J., N.M., N.Y., Okla., Pa., S.C., Tenn., Texas and Va. Contact: Marketing at 904217-6344 or e-mail: mwagner@ priderisk.com

Golf & Country Club Umbrella

Market Detail: The Preferred Club Program (from Venture Programs) (www.preferredclub.

com) offers a highly-competitive umbrella coverage for private, semi-private and daily-fee golf & country clubs that is able to sit atop other primary club insurance programs (assuming A- VI or better A.M. Best rating from primary insurers). Able to sit atop D&O and EPLI policies, as well as offering Coverage A (excess) and Coverage B (umbrella) protection.

Available limits: Minimum $25 million, maximum $50 million Carrier: Chubb States: All states except Ala., and Ark. Contact: Venture Programs at 800-282-6247 or e-mail: marketing@ventureprograms.com

Inland Marine Programs

Market Detail: Travelers Inland Marine Programs (www.

InlandMarineExperts.com) offers customized programs and works with various industry groups, professional associations, and hobbyist or buying groups. It can provide tailored inland programs for a wide range of industries. The Fine Art presence offers capacity and expertise for fine art dealers and collectors in a variety of cultural and historical areas.

Available limits: As needed Carrier: Travelers States: All states Contact: 800-238-6225 This section brought to you by Insurance Journal’s sister website: www.mynewmarkets.com

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AUGUST 6, 2018 INSURANCE JOURNAL | NATIONAL | 37

Idea Exchange

The Competitive Advantage

The Declining Value of Insurance

By Chris Burand

V

alue is a relative term often specific to a given asset. For example, if the price of gold declines from $1,800 per ounce to $1,250 per ounce, as it has, then gold is less valuable. The price of insurance is set to decline materially over the next 10 years. In fact, one reason insurance companies have been so profitable over the last decade is that premiums increased materially faster than claims.

If premiums were even softer, matching claims, insurance would already be less valuable. I know some readers are doubting these first few sentences, so here are facts based on A.M. Best’s databases and

simple calculations.

The 20-year average combined ratio is only 102.4 percent with a median of 101.3 percent. These are phenomenal results.

The unweighted long-term average is 104.2 percent, and prior to the past 10 years, it was 105.1 percent. The past 10 years was 100.7 percent. A 4.5 point long-term improvement is worth approximately $25 billion per year.

Keep in mind that over the past 20 years, we’ve incurred Hurricane Katrina, Superstorm Sandy, the credit crisis, numerous other catastrophes and yet, these are still the most profitable years.

Also keep in mind that the nation has grown by 40 million people per the U.S. Census Bureau, with millions more cars, millions more houses, millions more assets and yet, the number of claims submitted annually has remained roughly between 51 million and 53 million per year. All of those extra exposures are not resulting in a commensurate increase in claims filed.

Earned premiums increased so much faster than claims during the first 15 years of the last 20 years that it took the softest market in history and the large 2017 catastrophes for loss increases to finally match premium increases over the past 10 years.

38 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

When people have fewer claims, insurance becomes less important and therefore, less valuable. Severity still plays a clear role for everyone jumping to this point. However, selling insurance where frequency exists in the forebrain is quite different than selling insurance when frequency declines and severity is all that really matters because human beings do not process severity well. People can conceive they may be impacted by claims that often occur, but humans tend to always think the rare but severe claim will never happen to them. The way in which insurance is sold, just on this point alone, will have to change.

Less Insurance Going Forward

Going forward, relative to GDP, less insurance will be required to finance and protect people and the economy. A major reason is that everyday life, already safer than maybe ever, is about to become more safe and the more safe an environment, the less important insurance becomes. The reasons the world will be safer include: • Vehicles will become even safer. For those that always argue “but bumpers are more expensive” please consider that if fewer accidents occur, fewer bumpers will

continued on page 40

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Idea Exchange continued from page 38

need repair, and a lot of bumpers can be repaired for the price of one major injury.

These safety features include: braking mechanisms, smart mirrors, lane identifiers and smart technology to reduce fraud.

• Auto technology alone is expected to decrease auto premiums by 20 percent.

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The Competitive Advantage • Water leak detection and prevention technology will likely, over time, decrease non-cat property claims by 30 to 40 percent. Insurance simply will not be required, or be nearly as expensive, if the probability of water damage claims decrease by 80 percent.

• New technology coming to the blue collar workplace will absolutely decrease injuries and the fewer injuries, the less valuable insurance becomes.

Consolidation

Access Home Insurance www.accesshomeinsurance.com SC10, S5 American Agents Alliance www.agentsalliance.com 39 AmTrust www.amtrustgroup.com 9 Anderson & Murison www.andersonmurison.com 18 Aon Affinity www.affinityhcp.com 33, 34 Applied Underwriters www.auw.com 4, 5, 44 Brecht & Associates www.brechtassoc.com SC7 California Earthquake Authority mvp.earthquakeauthority.com W15 Cypress Texas Insurance Company www.cypressig.com SC4 EZLynx www.ezlynx.com 7 Foremost Insurance Group www.foremoststar.com 15 GeoVera Insurance Company www.geovera.com SC3,S3 K&K Insurance Group www.kandkinsurance.com 21 Leavitt Group Enterprises, Inc www.leavitt.com 2 Louisiana Commerce & Trade Assoc. www.lctacomp.com SC9, S5 M.J. Hall & Company www.mjhallandcompany.com W6, W9 MetaPay www.afsibex.com 25 Midlands Management Corporation www.midlandsmgmt.com SC8 Monarch E&S Insurance Services www.monarchexcess.com W3, W13 Omaha National Underwriters www.omahanational.com W1 Pacific Gateway Insurance Services www.pgiainsurance.com W7 PersonalUmbrella.Com www.personalumbrella.com 43 Philadelphia Insurance Companies www.phly.com 3 ProAssurance Companies www.proassurance.com 23 Providence Bank www.pbagencyfinance.com 17 PSIC - Pacific Specialty Insurance Co. www.wwfi.com W5 SIAA www.siaa.net 31 Smart Choice Agents Program www.smartchoiceagents.com 19 St. Johns Insurance Company www.stjohnsinsurance.com S5 State Compensation Insurance Fund www.statefundca.com W11 Texas Mutual - Safety Group www.texasmutual.com SC5 TWFG - The Woodlands Financial Group www.twfg.com 12, 13 United Fire Group www.ufgsolutions.com 35

These are just some of the major forces that will create a much safer world, but at the cost of decreasing the price and need for insurance. The result will be a consolidation of insurance companies.

Approximately 900 property/casualty carriers exist, but the top 90 carriers by market share write 88 percent of all premiums, and the top 11 carriers write 50 percent per A.M. Best and my calculations. The remaining carriers, excluding those with special niches, just really do not matter.

If hundreds of carriers are immaterial and the other carriers know the market is going to shrink, consolidation is about the only possible outcome.

An interesting wrinkle though has to do with all of the acquisitions of insurance agencies and brokers at record prices. At those prices, the acquisitions do not pay for themselves on a cash flow basis before the deflation takes hold, making the debt used for the acquisitions more dear. This is a timing issue, but one likely to catch some players without a chair in the game of musical chairs, especially with rising interest rates and less deductibility of interest expense under the new tax law.

Insurtech distributors are mostly funded by equity. While the public face of these companies is all about the customer experience, I suspect that some see a strategic play where they do not have debt loads.

However, major serial acquirer distributors do. Furthermore, if they can create a better customer experience while legacy players cannot adjust their balance sheets or afford

40 | INSURANCE JOURNAL | NATIONAL AUGUST 6, 2018

the transition to the customer experience versus selling less valuable insurance, then these distributors will achieve fast growth and profit even more quickly.

Growing Value

The less valuable insurance, the more the sales focus truly has to be on something other than insurance that does have growing value. At this point, as insurtech is making everyone aware, it is about the consumer experience. Exactly what “the consumer experience” means is up for debate, with many different strategies and ideas and some snake oil thrown in by some.

But I’ll put it succinctly: No one has ever wanted to buy insurance and therefore, the better consumer experience has to include some service, product or both that consumers actually want. This may be risk management, it may be web portals that practically cook dinner for you, it may be apps that provide extremely addictive games (a key element of good apps is that they contain a game), or it may be some other consumer experience, but it cannot be insurance.

No one ever wanted to buy insurance when it was far more valuable and just because it becomes, relatively, less expensive, people will not be motivated to buy more of it.

What will you be selling that people actually want to buy?

Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868.

E-mail: chris@burand-associates.com.

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Closing Quote One Year Ago: Reflections on the 2017 Hurricane Season

By Rob Galbraith

I

t’s hard to believe but August brings us to the one-year anniversary of the watery nightmare that was Hurricane Harvey and the beginning of the remarkable 2017 hurricane season that also featured Hurricane Irma (marking the first ever U.S. landfall of back-to-back Cat 4 hurricanes) and the devastating Hurricane Maria.

The 2018 hurricane season has been relatively benign so far, and the outlook is for less activity for the rest of the year compared with the historic 2017 season. We should be mindful, however, that “it only takes one” — one landfall to cause significant economic damage and fundamentally disrupt people’s lives.

The property/ casualty insurance industry often fades into the background after major disasters, avoiding the media spotlight that is focused on relief efforts while doing

the heavy lifting of helping individuals and families rebuild after losses such as those seen in 2017.

Thousands of claims adjusters blanketed the impacted areas, working long days to process the numerous claims that were reported and needed to be settled. A competent and caring claims adjuster is priceless to a homeowner who is still reeling emotionally, trying to process how their life has been turned upside down in a matter of minutes after Mother Nature put their property in the path of its wrath. New, innovative technologies such as drones and aerial imagery helped make the recovery process faster and more efficient, allowing more people to receive help quicker, putting people on the path to recovery sooner and a return to normalcy, if not completely back to normal.

The 2017 hurricane season also highlighted some of the additional benefits that a strong and vibrant property/casualty insurance industry can bring.

Strong, statewide building codes in Florida adopted following Hurricane Andrew were a big reason Hurricane Irma did not cause a repeat of the wide-

spread devastation of that historic storm, even though Irma itself was a widespread storm.

Strong building requirements from the Texas Department of Insurance (TDI) along the Texas coast also helped.

We must continue to work hard as an industry to find innovative ways to close the protection gap.

Improved resilient construction techniques are a result of the scientific research done by the Insurance Institute of Business and Home Safety (IBHS), which is funded by member companies within the industry. Stronger, more resilient construction leads to less damage and lower premiums, making homeowners insurance more affordable than it otherwise would be in hurricane-prone areas. The reinsurance marketplace provided a much-needed backstop, and the insurance-linked securities (ILS) market was severely tested for the first time and passed with flying colors.

The 2017 season also highlighted opportunities for our industry.

Hurricane Harvey showed that far too few people had flood insurance through the National Flood Insurance Program (NFIP). More needs to

be done to educate consumers about the need for flood insurance outside of the 1-in-100year Special Hazard Flood Zones, and the newly emerging private flood insurance market is definitely helping in this regard.

Hurricane Maria showed that there are many underserved populations who do not have adequate insurance coverage — often the most vulnerable people who are most in need of homeowners or renters insurance do not have a product. We must continue to work hard as an industry to find innovative ways to close the protection gap.

Insurance professionals often tell their stories of how they “fell” into a career in insurance, and I am no exception. I once met a man who told me he grew up wanting to work in insurance. I asked him why he was so motivated to join our ranks, and he spoke of the consequences he saw firsthand growing up in India when a natural disaster hit and there was no P/C insurance to help the community recover.

It is the delivery on our promise as an industry to be there for policyholders in their times of need that make me equally proud to be an insurance professional — for life.

Galbraith is a director of underwriting research at USAA where he leads a team of professionals that specialize in underwriting risks in catastrophe-prone areas. He is a recognized thought leader on P/C insurance with more than 20 years of experience in the financial services industry in a variety of positions.

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