Insurance Journal West 2020-08-10

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August 10, 2020 • Vol. 98 No. 15

Contents

News & Markets

Special Report

Idea Exchange

Coastal Flooding Could Threaten 20% of the World’s Economic Output by 2100: Study

Special Report: Top 100 Independent P/C Agencies

Is It Covered?: Renters Insurance and Swimming Pools

14 Workers’ Compensation

Special Report: Top 20 Banks in Insurance

The Wedge: Creating Your Best Client

16

Spotlight: Why Condominium Associations Should Consider Risk Management and Financing with Caution

30

10

33

34

Rates Won’t Be Adjusted for Coronavirus Experience This Year Insurance Journal Offers Free Agency for Sale Listings. What’s the Catch?

36

22 Half of Insurance Agencies

Spotlight: COVID Business Interruption Suits Top 700 with More to Come

Lack a Digital Strategy, Applied Systems Survey Finds

39 Spotlight:

22

Recreation Market Coming Back with Old and New Risks to Consider

Insurtech Fundraising Rises in Q2 with $1.6 Billion Invested

38

40 42

44 46 Hurricane Planning

Is Crisis the New Normal?

During COVID-19

48

Minding Your Business: Motivating Employees During the COVID Pandemic

50

Closing Quote: Autonomous Vehicle Design Should Take Nothing for Granted

Tesla Invites Insurance Actuaries to Help It Create a ‘Revolutionary’ Insurance Company

Departments 8 Opening Note 6 | INSURANCE JOURNAL | AUGUST 10, 2020

20 Declarations

20 Figures

24 People

26 Business Moves

28 My New Markets

INSURANCEJOURNAL.COM

IT’S NOT ENOUGH TO KNOW AN INDUSTRY INSIDE AND OUT. YOUR CARRIER HAS TO BE ABLE TO SERVICE IT AS WELL AS THEY KNOW IT.

You need a carrier that specializes in an industry to find an exceptional level of service to match. We make it our business to know all there is to know about real estate. And with that deep specialization, comes expertise in underwriting, risk engineering and claims – all working together. All to help you develop customized product solutions that mitigate risk and maximize productivity for your mid- to large-size clients across a number of industries. Add to that an enhanced use of data & analytics, an extensive suite of unmatched capabilities, and a commitment to creating exceptional experiences, and it’s easy to see the difference true specialization can make. The Buck’s Got Your Back.® TheHartford.com/specialization The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT. 20-ML-310142 © July 2020 The Hartford

Opening Note Write the Editor: awells@insurancejournal.com

Publisher Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Congratulations Top 100 Agencies

T

his year marks the 16th annual publication of Insurance Journal’s Top 100 Independent Agencies special report.

This year’s Top 100 welcomes eight newcomers to the list: Paramount Exclusive Insurance Services Inc.; The Liberty Company Insurance Brokers Inc.; High Street Insurance Partners; Moody Insurance Agency Inc.; Lamb Insurance Services; SouthGroup Insurance and Financial Services LLC; Kapnick Insurance Group; and Kaplansky Insurance.

And what about the Future Top 100? While the following agencies didn’t make the cut in 2020, their total property/casualty revenue came very close.

Special mention goes out to the following agencies: • Harden • K&S Insurance • Eagan Insurance Agency LLC • The Advantage Group LLC • Ross & Yerger Insurance • Robinson Insurance Inc. • Frank H. Furman Inc. • Watkins Insurance Group • LassiterWare • Dean & Draper Insurance Agency LP

Insurance Journal’s Top 100 report 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.

Insurance Journal’s Top 100 report 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 gathered from voluntary online submissions and best estimates based on other public information sources.

We thank the many agencies that have contributed and invite others that have never submitted information for the report to consider it next year. Be proud of what you have accomplished.

For questions, comments or criticisms, write to us at Insurance Journal. And congratulations to this year’s top agencies!

Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

Chief Content Officer Andrew Simpson | asimpson@insurancejournal.com Editor-in-Chief Andrea Wells | awells@insurancejournal.com East Editor Elizabeth Blosfield | eblosfield@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 & Contributors Contributors: Kelly Geary, Monique McQueen, Susanne Sclafane, Jim Sams, Robert Tull Columnists: Catherine Oak, Bill Schoeffler, Randy Schwantz, Bill Wilson

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez | rvaldez@insurancejournal.com South Central Sales Mindy Trammell | mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA, CT) Howard Simkin | hsimkin@insurancejournal.com Midwest Sales Lisa Whalen | (800) 897-9965 x180 East Sales (NY, PA and CT only) Dave Molchan | (800) 897-9965 x145 Sales & Marketing Coordinator Ashley Berg | aberg@insurancejournal.com Advertising Coordinator Erin Burns | eburns@insurancejournal.com Insurance Markets Manager Kristine Honey | khoney@insurancejournal.com Senior Strategist Pam Simpson | psimpson@insurancejournal.com Social Media Manager Ly Short | Lshort@insurancejournal.com Marketing Administrator Gayle Wells | gwells@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

V.P. of Design Guy Boccia | gboccia@insurancejournal.com Web Team Lead Nathan Huebner | nhuebner@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Ryan Kleshinski | rkleshinski@wellsmedia.com Web Developer James Wagoner | jwagoner@wellsmedia.com New Media Producer Bobbie Dodge | bdodge@insurancejournal.com

ACADEMY OF INSURANCE

Director Patrick Wraight | pwraight@ijacademy.com Online Training Coordinator George Jack | gjack@ijacademy.com

SUBSCRIPTIONS:

Call (855) 814-9547

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Outside the US, call (847) 400-5951

Andrea Wells Editor-in-Chief 8 | INSURANCE JOURNAL | AUGUST 10, 2020

Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media Group, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747.

Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries.

DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2020 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission.

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News & Markets Coastal Flooding Could Threaten 20% of the World’s Economic Output by 2100: Study

F

ailure to rein in climate change and bolster sea defenses could jeopardize up to a fifth of the world’s economic output by the end of the century, as flooding threatens coastal countries worldwide, according to a new study.

From Bangladesh and India to Australia and even Britain, rising sea levels already are leading to more frequent and extreme flood events.

With climate change causing polar ice to melt and ocean waters to expand, economists have sought for years to put a figure on the future potential damage.

The latest effort, published last month in the journal Scientific Reports, paints one of the grimmest scenarios yet in estimating the economic fallout from sea rise if the world continues emitting greenhouse gases at the current rate.

Flood events that have typically occurred once in 100 years “could occur as frequently as once in 10 years” for much of the world, said the authors of the report, 10 | INSURANCE JOURNAL | AUGUST 10, 2020

including researchers at the universities of Amsterdam, Melbourne and the Global Climate Forum.

This worst-case scenario would cost the world up to 20% of its annual gross domestic product, given the impact on buildings and other infrastructure, they said.

Populations and Assets

Their estimates were based on factors including the populations and assets at risk, and models of tides, surges and sea levels around the world’s coasts.

Based on estimated 2019 GDP, that currently comes to around $17.6 trillion.

However, the study’s focus on the worstcase scenario — with high emissions and no flood preparations — may be unrealistic, said climate economist Thomas Schinko, deputy director of the Risk and Resilience research program at the International Institute for Applied Systems Analysis in Vienna.

Already, “societies are reacting to

changing coastal flooding risks all over the world,” said Schinko, who was not involved in the new research.

Though, he added, “not all countries are equally well equipped to adapt.”

The study used computer simulations that accounted for global tides, storm surges and wave data in gauging flood risks.

The bulk of the damage — 68% —would be caused by tide and storm events, rather than sea level rise itself.

Areas that are now home to some 171 million would be affected, with extensive flooding expected in northwest Europe, including the UK and northern France, as well as in southeastern China, Australia’s Northern Territories, Bangladesh and the U.S. states of North Carolina and Virginia.

Schinko said the work should be seen as “a strong signal to the international policy scene to urgently strengthen the ambitions for climate change mitigation.”

Copyright 2020 Reuters.

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News & Markets

Workers’ Compensation Rates Won’t Be Adjusted for Coronavirus Experience This Year

By Jim Sams

T

he workers’ compensation line is unlikely to generate a profit this year and may not recover in 2021, an insurance industry economist said during a recent webcast.

Steven N. Weisbart, senior vice president and chief economist for the Insurance Information Institute, said carriers did not factor in the cost of COVID-19 claims when they filed this year’s rates because the disease did not exist. The National Council on Compensation Insurance said the first full quarter’s data on COVID claims costs won’t be available until the end of September, and workers’ compensation rates in many states will be set before then.

“We are talking about a really difficult year,” Weisbart said. “We are working with rates that were essentially generated a year ago or the year before. The rates may not be sufficient.”

Weisbart gave his grim prognosis during a panel discussion on the impact of COVID-19 on workers’ compensation along with NCCI Senior Actuary Sean Cooper and Senior Division Executive Jeff Eddinger. Insurance Information Institute communications director Mark Friedlander moderated.

14 | INSURANCE JOURNAL | AUGUST 10, 2020

One Insurer’s Early COVID-19 Workers’ Comp Experience

In taking what it said is a cautious approach to recognizing the impact of COVID-19, The Travelers Cos. reported in July a manageable $114 million in overall coronavirus-related losses. The losses were primarily in workers’ compensation along with some management liability claims.

There were offsetting factors, resulting in a net charge overall of $50 million due to COVID-19 related activity.

“Some industry observers have speculated about the aggregate level of insured and investment losses arising out of the pandemic,” CEO Alan Schnitzer told analysts. “We don’t doubt the losses will be significant, but they won’t be borne evenly across insurers.”

In workers’ compensation, Travelers said most of its COVID-related claims have been from healthcare workers and first responders, which are not a significant part of its book of business. Also, Travelers noted that the frequency of those claims stabilized during the quarter.

Beyond the healthcare sector, data from some state workers’ comp systems suggest that the COVID-related claim rate is low relative to the infection rate, which could reflect that many of the older workers most seriously affected by

COVID-19 are not in the workforce.

‘We are talking about a really difficult year. … We are working with rates that were essentially generated a year ago or the year before. The rates may not be sufficient.'

‘We don’t doubt the losses will be significant, but they won’t be borne evenly across insurers.’

As it is watching the COVID-19 claims stabilize, Travelers has seen a lower volume of non-COVID-19 claims as workers have stayed home. The insurer expects this trend could change as employees return to the workplace and it is taking into account that severity could be adversely affected by injured workers delaying treatment due to the stay-at-home work environment.

Finally, the insurer noted a low level of workers’ comp claim activity tends to exist during economic recessions as workers can be more motivated to stay at their jobs and the workforce tends to be more seasoned.

continued on page 16 INSURANCEJOURNAL.COM

News & Markets continued from page 14 Going Forward

As for workers’ compensation pricing going forward, Schnitzer said that while the line has been profitable for several years and prices have been going down, prices may be “at or near the bottom” now.

Cooper said at this point, NCCI has data on COVID-19 claim costs only for the month of March. That claims data is being excluded when employers’ experience modifications are calculated, so insurers won’t be able to recover any increased costs.

NCCI said it started in July filing next year’s loss cost rates and experience ratings. Those rates will take effect beginning late this year and into mid-2021.

NCCI said in a July 16 memorandum that next year’s rates will not be adjusted to include the impact of COVID-19 claims.

What’s more, the organization said it has no plans to submit updated “law-only” rate filings if state legislatures change

workers’ compensation laws to make more virus claims compensable.

“As the COVID-19 pandemic is still in its early stages, projections of key assumptions for current and future time periods (e.g., infection/report/fatal rates) are wide ranging or not available,” the memo says.

During the webinar, Eddinger noted that several states have issued executive orders or passed legislation that creates a presumption that COVID-19 claims are compensable for employees who worked away from home. California, Illinois and Michigan have expanded coverage for the disease. Vermont became the latest to create a COVID-19 presumption when Gov. Phil Scott signed a bill into law on July 13.

Weisbart said the rush by lawmakers to ensure benefits are paid for workers who contract COVID-19 reminds him of their approach to business interruption claims.

Attorneys are pressuring policymakers to expand coverage for a risk that was not contemplated when the insurance

Insurance Journal Offers Free Agency for Sale Listings.

What’s the Catch?

I

nsurance Journal announced that insurance agency owners looking to sell their agencies may post agency-for-sale listings on the highest trafficked property/casualty insurance news site in the world. For free.

What’s the catch? If the insurance agency sale occurs due to a contact made through the Insurance Journal website, the owner is asked to submit a $1,000 finder’s fee to Insurance Journal. This fee is paid solely on the honor system.

Within the listing, owners are asked to disclose the location, gross annual revenue, information about the facilities, and a comprehensive description. Listings are blind, meaning that Identifying information such as agency name or website is not included publicly. A 3-month, 6-month, or 1-year listing option is offered — all at no cost.

“We realize an honor system finder’s fee is not typical,” says Wells Media Group CEO Josh Carlson. “But our insurance agency readers trust Insurance Journal and we trust them.”

To place a free listing, or to view agencies that are available for purchase, visit: https://www.insurancejournal.com/agencies-for-sale/. Agency buyers can email agencies@insurancejournal.com to join the interested buyers list.

16 | INSURANCE JOURNAL | AUGUST 10, 2020

contracts were signed.

On the other hand, there are offsetting factors. Telecommuting has become the “new normal,” Weisbart said. Eddinger said employees who telecommute are less injury prone than workers in offices.

Weibart said the pandemic is also hastening automation, which will reduce worker injuries.

Still, Weisbart said uncertainty about claims costs combined with dismal investment returns because of the economic contraction caused by the pandemic will challenge workers’ compensation carriers for the time being.

“It looks like it will be challenging for this line to break even for this year or even in future years, especially in light of the fact that for the past six years this has been a profitable line of insurance,” he said.

Eddinger said until the novel coronavirus arrived, workers’ compensation insurers would never expect to suffer a catastrophic loss from a pandemic. But since 2003, the world has seen the emergence of the SARS, H1N1, Ebola, and Zika viruses.

Eddinger said the time may have come for NCCI to develop a pandemic catastrophe risk factor that can be added to rates, similar to how a terrorism risk factor was added after the Sept. 11, 2001 terrorist attacks. He said NCCI has hired a catastrophe risk modeling firm to develop the risk factor.

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Figures

$250,000 A New Hampshire man is facing a fine of at least $250,000 and up to five years in prison after being charged in a fraud scheme that involved using Bitcoin to buy stolen personal data belonging to people across the country, officials said. Jonathan Nguyen, 23, of Windham, was charged in federal court with conspiring to engage in wire fraud, access-device fraud and identity theft, according to U.S. Attorney Andrew Lelling’s office.

$95 MILLION

The amount in car insurance premium refunds insurers have given to Michigan motorists due to a drop in driving and crash claims during the coronavirus pandemic, the state Department of Insurance and Financial Services said. The refund amount varies by insurer, but it typically was 15% to 20% for April, May and June. The state also announced a savings of $118,000 on workers’ compensation policies and at least $1.6 million on other types of property/casualty insurance amid the COVID-19 outbreak.

Declarations Flood Risk

“No matter where we live, it’s important that we all understand our flood risk, and what it could cost us.”

— Maine Insurance Superintendent Eric Cioppa said in a Maine Bureau of Insurance press release encouraging all Mainers to consider purchasing flood insurance, even those who live outside of federally designated flood zones, as the 2020 Atlantic hurricane season is underway. The Atlantic hurricane season officially runs between June 1 and November 30 each year.

20 | INSURANCE JOURNAL | AUGUST 10, 2020

Downing Campaign

“The Downing campaign at no point in time purposely or knowingly fell out of compliance and continues to actively work with the COPP to follow all election laws and regulations.”

— Sam Loveridge, campaign manager for the winning Montana auditor candidate Troy Downing, responded to charges from the state’s political practice commissioner that Downing had seven campaign violations. The state auditor is also Montana’s commissioner of securities and insurance.

Fast Money

“We expect this money to go fast so you need to be ready to apply.”

— Louisiana Treasurer John Schroder, who oversees the state’s Main Street Recovery Program, which will provide grants for small businesses that have been hurt by the coronavirus outbreak, says applications should be filed as soon as possible. Small businesses that haven’t received federal aid can apply for grants up to $15,000. More than 450,000 firms are estimated to be eligible, but fewer than 20,000 would be able to collect payments if they each receive the maximum grant.

INSURANCEJOURNAL.COM

7.8 The magnitude of the earthquake that struck the Alaska Peninsula in late July. According to the U.S. Geological Survey, the quake struck on July 21 at 10:12 p.m. local time. It was centered in waters 65 miles southeast of Perryville, Alaska, at a depth of 17 miles.

45% The percentage of COVID-19 virus deaths in Florida attributed to long-term care residents and staff as of mid-July. Official state infection numbers show that deaths inside nursing homes have been on the rise, averaging about 40 per day by the middle of July after those numbers had dropped in midJune to lower than 20 deaths per day.

University Sex Discrimination

“UNL’s response to each of the Plaintiffs constituted sex discrimination in a variety of ways.”

— A lawsuit filed by a former University of NebraskaLincoln volleyball player and eight other women alleges the school did not properly investigate their complaints of sexual assault and harassment, in violation of Title IX, the federal civil rights law ensuring equal opportunities for women in education.

The complaint filed in U.S. District Court in Nebraska alleges a pattern of unresponsiveness, sloppiness and indifference by university employees in charge of investigating allegations of sexual misconduct.

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It Must Stop

“Although we recognize that our police officers are often asked to make split-second decisions, we expect them to do so with respect for the dignity and worth of black lives. This has to stop.”

— The 4th U.S. Circuit Court of Appeals, in an opinion reversing a lower court’s summary judgment of qualified immunity in an excessive force lawsuit against police officers of the Martinsburg Police Department of West Virginia. Officers from the department shot a homeless black man 22 times after he fought with officers when stopped while walking on a Martinsburg street. The police department has since settled the suit for $3.5 million.

Endangered Food Workers

“As Covid-19 continues to infect thousands of meatpacking workers, it is stunning that USDA is further endangering these workers by allowing poultry companies to increase line speeds to dangerous new levels that increase the risk of injury and make social distancing next to impossible.”

— United Food and Commercial Workers International Union International President Marc Perrone, in an emailed statement, comments on a federal lawsuit filed by food worker unions to block Trump administration waivers that allow poultry plants to operate production lines at a faster pace, arguing the higher speeds endanger employees.

AUGUST 10, 2020 INSURANCE JOURNAL | 21

News & Markets Half of Insurance Agencies Lack a Digital Strategy, Applied Systems Survey Finds

A

little more than half (51%) of independent insurance agencies and brokerages say they have some sort of digital strategy in place, with larger firms more likely than smaller to have one.

That’s according to insurance technology company Applied Systems that conducted an online survey of 700 agencies and brokerages in the U.S. and Canada to measure the degree of technology adoption and calculate a digital technology score for each.

While 51% said they have some sort of digital strategy, the average digital technology adoption score is 44%– nearly the same as in 2019.

The surevey reveals that there remain areas where agencies have yet to deploy digital technology, according to the 2020 Applied Digital Agency and Brokerage survey.

The survey questions examined what

Applied Systems sees as five core competencies of a digital agency and brokerage: management system capabilities, mobility, insurer connectivity, analytics and cloud software.

Agencies scoring 80% or higher across all core competencies were considered to be digital agencies or brokerages, having adopted most of the key drivers of digital transformation.

Agencies have moved into digital more in personal than commercial and they have continued to increase their use of mobile apps, according to the survey results.

Other survey findings include:

Foundational management system:

Ninety-five percent of agencies and brokerages have a management system.

Mobile: Thirty-three percent of agencies and brokerages use client self-service portals, a 50% increase year over year.

Adoption of client mobile apps also increased 50% year over year to 27% versus 18% in 2019. For all regions combined, 52% of agencies and brokerages have extended mobile technology to their employees.

Insurer connectivity: Personal lines remains the most widely adopted at 84%.

Claims download experienced the greatest growth at 60% versus 57% in 2019.

Analytics: Adoption of analytics software is growing but remains lower compared to other tools. Only 29% of agencies and brokerages reported using data analytics applications, a 26% increase year over year.

Cloud: Up 9% year over year, 71% of agencies and brokerages choose to host their software in the cloud, and it continues to be the top choice among agencies and brokerages for software hosting.

Insurtech Fundraising Rises in Q2 with $1.6 Billion Invested

F

ollowing the COVID-19-induced slowdown in global insurtech investment during the first months of 2020, insurtechs raised $1.56 billion during the second quarter.

The total, up 71% over Q1, was driven in part by later-stage investments, including four “mega-rounds” in excess of US$100 million, according to the new “Quarterly InsurTech Briefing” from broker Willis Towers Watson.

At 74, deal count was down 23% from Q1, but many individual rounds were larger as investors continued to turn away from “seed” and “angel” deals in favor of support for more mature ventures, said WTW. Property/casualty insurance sector investments predominated, accounting for 68% of funding, but the share of life/ health sector investments was up 17 points to 32%, as the pandemic crisis continues to compound the value of technology,

22 | INSURANCE JOURNAL | AUGUST 10, 2020

particularly telehealth, in the segment.

Also notable during the quarter was the initial public offering of Lemonade and the acquisition of two incumbent insurance companies by insurtechs, Hippo and Buckle.

Deals were struck in a record-breaking 25 countries. Seed and Series A financing hit a record low, at just 42% of deals.

Series A deals were flat, but Series C deals accounted for 11% of deals, up from 6% the previous quarter.

Distribution-focused start-ups saw an 11-point rise in deal share, while B2B companies reduced their share by nine points.

New re/insurer partnerships reached a record high of 34 deals, up four from Q1 2020.

“While insurtech investment clearly rebounded in Q2, and the trend towards greater commitments to later-stage fundraisings continues, we should be cautious and not read too much into the

general state of the global insurtech market based on this quarter alone,” said Andrew Johnston, global head of Insurtech at Willis Re. In the short term, investment confidence will test the status quo, especially for highly leveraged insurtechs, and in the medium term, changing risk classes may be better understood alongside rising consumer optimism, but the true economic impact of COVID-19 probably won’t unfold until 2021 and 2022, he added.

“Survival may be a challenge for some insurtechs, especially if their use-case has been lost forever due to underlying societal change following the lockdown,” he continued.

In its first quarter report, WTW found that while finding fell 54%, insurtech companies still raised US$912 million.

Most of the funding was completed at the beginning of the quarter.

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People National

Aon announced that Brent Rieth is the new U.S. practice

leader of the Cyber Solutions Errors and Omissions/Cyber Broking team. Rieth first joined Aon in 2009 as team leader of the E&O/Cyber broking effort for multi-national clients. In December 2018, he became Central and West managing director and region leader for U.S. Cyber Broking. In his new role, he oversees the E&O/ Cyber resources across the U.S., working with Commercial Risk and U.S. Broking to support Aon’s clients. He is based in Chicago.

East

Melville, New York-based managing general underwriter CorRisk Solutions has hired Christine DeFelice to lead its architects and engineers (A&E) professional liability team.

DeFelice is based in CorRisk’s New York City office and will report to Maria V. Amelio, chief underwriting officer of Specialty Casualty, in this new role.

She comes to CorRisk with more than 20 years of experience in the insurance industry, primarily on the insurance carrier side, while specializing in underwriting architects and engineers professional liability. Her previous positions were with PL Risks Advisors, Ironshore Insurance Services, Tudor Professional and Royal Sun Alliance.

DeFelice began her professional liability career underwriting public officials, educational errors and omissions, cyber, miscellaneous errors and omissions, employment practices liability insurance and some non-profit directors and officers. Through

the years, her career became focused on the A&E segment as an underwriting specialist.

Great American Insurance Group has hired Gordon M. Lewis as a divisional vice president within its Ocean Marine division. Lewis has more than 28 years of experience in numerous lines of business within the marine insurance industry.

He joins Great American from the North American branch of a large specialty insurance company, where he led the Ocean Marine team for the last eight years as vice president of Ocean Marine.

In his new role at Great American Insurance Group, Lewis will lead the division’s Northeast underwriting team in New York, N.Y., Windsor, Conn., and Boston, Mass.

Southeast Reliance Partners has added Thom Albrecht as

Thom Albrecht chief financial officer and chief revenue officer. Albrecht is a 32-year veteran of the transportation space and served most recently as chief commercial officer and chief financial officer with Celadon Group.

Prior to Celadon, Albrecht’s experience included transportation consulting, equity research and M&A. He previously served as president of Sword & Sea Transport as well as managing director at BB&T Capital Markets.

During the course of his career, Albrecht has worked closely with motor carriers, freight brokers, freight forwarders, shippers

24 | INSURANCE JOURNAL | AUGUST 10, 2020

and equipment companies.

Reliance President Chad Eichelberger said the addition of Albrecht will allow the company to continue to grow its presence in the commercial transportation insurance space.

Reliance Partners is a commercial insurance agency with locations in Chattanooga, Tenn., Birmingham, Ala., Chicago, Austin, Texas, Milwaukee, Wisc., Sacramento, Calif., and Tampa, Fla.

Lockton Re, the global rein-

surance business of insurance broker Lockton, has hired Keith Thurman to its Lockton Re Atlanta office to lead the buildout of its Workers’ Compensation practice in the U.S., working closely with colleagues both there and in the UK. Thurman started his career at E.W Blanch Co. and was most recently at Aon. Over time, he has focused on the workers’ compensation line of business, working with a variety of carriers. His experience ranges from state funds and residual markets mechanisms to main street and specialty niche writers, including mining, forest products, and other high hazard classes such as construction and trucking. He also served as a member of Aon Re’s Workers’ Compensation Practice Group.

Thurman’s responsibilities will include developing product and content for clients and prospects ranging from state funds and regional carriers to global insurers, while bringing thought leadership and expertise in the workers’ compensation arena to Lockton’s U.S. Reinsurance offering and broker teams. Additionally, Thurman will work with

Lockton Re’s Analytics and Rating Agency Advisory teams to further develop workers’ compensation capabilities and tailored products in conjunction with Lockton’s proprietary SAGE platform.

South Central

Dallas-based Boyd,

Shackelford, Barnett and Dixon LLC added Wes Edison as senior

vice president.

Previously, Edison served Wes Edison as senior vice president at Marsh Wortham, a division of Marsh USA Inc. Before 2018, when the company merged with Marsh USA Inc., Edison had served as director at Wortham Insurance and Risk Management, where he worked for more than ten years. At BSBD, Edison plans to strengthen relationships with carriers while also developing a framework for serving businesses of all sizes.

The Water Quality Insurance Syndicate (WQIS), a

specialist insurer that provides comprehensive coverage in the vessel pollution insurance market, appointed John P. Phillips as senior underwriter based in Houston.

Phillips was most recently head of Marine Programs at Aspen Insurance US based in Houston and was charged with the development and management of all Specialty Marine Programs throughout the Americas. Prior to his time at Aspen, he was responsible for the start-up and management of the Houston marine branch for Liberty International Underwriters, where he later served as Hull Product Line INSURANCEJOURNAL.COM

leader for North and South America.

CAC Specialty has added Robert Regueiro as senior

vice president and marketing account executive in its Financial Lines Practice in Houston.

Prior to joining CAC Specialty, Regueiro most recently led McGriff’s Executive Risk Advisors team in Houston. He specializes in public company directors and officers liability, cyber risks, employment practices liability, fiduciary liability and commercial crime lines of cover. He has experience designing and developing executive risk solutions for clients in the oil and gas industry, complex international programs, and in-depth involvement in identifying and utilizing litigation trends to help negotiate manuscript executive risk policies.

Denver-based CAC Specialty is an employee-owned risk solutions company of seasoned and proactive industry leaders.

Midwest

Horace Mann Educators Corp., headquartered in

Springfield, Ill., has appointed Vice President Paul Haley as chief risk officer. Haley has led risk assessments for the company’s business development efforts since 2018.

Haley will report to CFO Bret Conklin, who oversees Horace Mann’s ERM processes. Haley has 35 years of experience in the life insurance sector, holding senior actuarial positions at Genworth Financial, Colonial Life and Prudential Financial before joining Horace Mann in 2018.

Valley Insurance Agency INSURANCEJOURNAL.COM

Alliance (VIAA), a network of

independent insurance agencies in Missouri and Illinois, has named Amy Russell as small commercial marketer.

Amy Russell Russell has more than 20 years of experience in the insurance and marketing industries.

She previously worked as a commercial lines account manager for VIAA’s sister company, POWERS Insurance & Risk Management.

In her new position, Russell will handle new and remarketed small commercial insurance accounts on behalf of the alliance’s members.

Russell will also provide marketing advice and support to the organization’s producers, clients and underwriters.

Specialty insurance provider, Risk Placement Services (RPS), headquartered in Rolling Meadows, Ill., has appointed

Mark Gallagher

Mark Gallagher

to lead its National Transportation Practice. Gallagher is based in Des Moines, Iowa. He succeeds industry veteran Jimmy Proffitt, who has retired.

Gallagher joined RPS in early 2019. Shortly after, he was chosen to establish and lead a dedicated team of transportation producers, underwriters and support personnel for the North Central region. Prior to joining RPS, Gallagher served as vice president of underwriting for Truckers Insurance Associates Inc., where he started his transportation insurance career in 1996.

West

San Francisco, Calif.-based Coalition has named Marcin Weryk as head of business development.

Weryk will support growth by driving the Marcin Weryk company’s distribution strategy.

Weryk has more than 15 years of insurance industry experience. Weryk was most recently vice president and head of cyber risk for the Western and Southern U.S. at XL Catlin. He has also held cyber and technology underwriting positions at XL Catlin and CNA. Coalition is a provider of cyber insurance and security.

Coalition provides companies with cyber and technology insurance coverage in all 50 states and the District of Columbia, as well as coverage across all 10 provinces in Canada.

Crest Insurance Group in San

Diego, Calif. has named P.J.

Jacquelin II

he was a deck officer for commercial carriers and the US Navy. He served in the U.S. Coast Guard’s prevention department as a marine inspector, planner and public affairs officer. He later became a senior loss control specialist with Travelers and then joined The Hartford as the head of ocean marine risk engineering.

He has also been a broker with Barney and Barney/Marsh & McLennan Agency.

Vaccaro previously worked as a financial consultant with Whiteboard Risk & Insurance Solutions. He was a senior analyst with JTaylor before that. McGee has a background in risk management. He has worked as a Hotshot & Helitack Firefighter and also served in the U.S. He has worked in retail management as a financial analyst and most recently as a risk management analyst/consultant for Ashton Tiffany LLC. Crest writes insurance business throughout the Southwest and continental U.S.

Berkley Crime, a division of Berkley FinSecure, a Berkley

PJ Jacquelin

to oversee its ocean marine practice.

Crest has also added Hunter Hunter Vaccaro Vaccaro to the California branch. Crest Insurance Group of Tucson, Ariz., has named Mike McGee as vice president/ producer in the commercial lines division.

Jacquelin has more than 20 years of experience in insurance and risk management.

After graduating from the California Maritime Academy,

Co., has named Brian Platt as assistant vice president and underwriter.

Platt will Brian Platt be focused on developing stand-alone fidelity/crime business across a spectrum of businesses within the West region. He will be based in Colorado. Platt has a 16-year background as both an underwriter and broker.

Berkley FinSecure provides insurance solutions to financial institutions, including bond, management liability coverages and all standard property and casualty lines.

AUGUST 10, 2020 INSURANCE JOURNAL | 25

Business Moves

East

NFP, Team Scotti

Insurance broker NFP has acquired LFG Inc., which does business as Team Scotti.

The transaction closed effective Dec. 1.

Team Scotti, based in Pittsburgh, Penn., and founded in 1987, is a national insurance broker offering insurance and employee benefit programs to Major League Baseball and Minor League Baseball (MiLB) and their affiliates.

The firm plays a risk management role for MLB, including, but not limited to securing high-limit disability insurance for key players, written on behalf of teams, as well as servicing their group health benefit needs.

Team Scotti Founder John A. Scotti will join NFP as a managing director, reporting to Henry Lombardi, executive vice president and head of NFP Property & Casualty.

NFP and its subsidiaries aim to meet the holistic risk management needs of many North American professional sports leagues including the NBA, NFL, NHL, WNBA and the ATP Tour, as well as other professional and amateur sports leagues, teams, organizations, athletes and events.

The Team Scotti acquisition adds retail brokerage expertise with respect to MLB and MiLB.

Midwest

USI Insurance Services, Associated Benefits & Risk Consulting

USI Insurance Services, headquartered in Valhalla, N.Y., has completed its 26 | INSURANCE JOURNAL | AUGUST 10, 2020

acquisition of Associated Benefits & Risk Consulting from Associated Banc-Corp., based in Green Bay, Wisc.

ABRC is a multi-line insurance agency and Midwest-based consulting firm with 400 employees, providing employee benefits, retirement plans, compliance, business insurance, risk management and individual insurance solutions.

USI is a global insurance brokerage and consulting firms in the world, delivering property/casualty, employee benefits, personal risk, program and retirement solutions to large risk management clients, middle market companies, smaller firms and individuals.

World Insurance Associates, Pinnacle Insurance Group of Indiana

World Insurance Associates LLC has acquired Pinnacle Insurance Group of Indiana.

Since 1942, Pinnacle Insurance Group of Indiana has been a trusted insurance and risk management advisor to commercial and personal insurance clients throughout the country.

World Insurance Associates LLC is headquartered in Tinton Falls, N.J., and is a nationally ranked, full-service insurance brokerage.

South Central

Hilltop Holdings, National Lloyds, Align Financial Holdings

Dallas-based Hilltop Holdings Inc. completed of the sale of Hilltop’s wholly owned Texas-based subsidiary, National

Lloyds Corp., to Align Financial Holdings LLC on June 30.

The transaction, which was first announced in January, closed following the receipt of required regulatory approvals and the satisfaction of other customary closing conditions.

Gross proceeds (before transaction expenses) at closing to Hilltop from the transaction were approximately $154.1 million, subject to post-closing adjustments.

Dallas-based National Lloyds is a specialty property insurer primarily serving owners of lower value homes and mobile homes. The company writes premiums through two subsidiaries, National Lloyds Insurance Co. and American Summit Insurance Co. (Carriers), and also has wholly owned agency and services businesses, including Nalico General Agency (Agencies).

As part of its purchase of National Lloyds, Align concurrently sold the Carriers to ReAlign Insurance Holdings LLC (ReAlign) in an all-cash transaction.

ReAlign is an insurance holding company formed by ReAlign Capital Strategies LLC and other private investors.

Headquartered in San Diego, Calif., Align Financial Holdings was founded in 2003.

HUB International Limited, Gus Bates Insurance & Investments

Chicago-based global insurance brokerage, HUB International Limited, has acquired the assets of GBC Benefits Ltd., d/b/a Gus Bates Insurance & Investments, located in Fort Worth, Texas.

Gus Bates I&I provides a comprehensive range of services, including retirement plan services, employee benefits, property/ casualty and personal lines insurance.

Gus Bates I&I CEO Gus Bates and President Matt Morris will join Hub.

Southeast

Relation Insurance, Summers Thompson Lowry

Relation Insurance Services, a privately owned insurance brokerage that offers property and casualty, risk management, employee benefits, and TPA-consulting

continued on page 27 INSURANCEJOURNAL.COM

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News & Markets Northern California Woman Pleads Guilty to Workers’ Comp Fraud and ID Theft

M

arlene Cavalcanti, 40, has pleaded guilty to two felony counts of insurance fraud and identity theft after falsifying documents to receive an additional $10,590 on her workers’ compensation claim.

Cavalcanti, employed as an executive assistant, reportedly fell at work and sustained injuries. As a result of her subsequent workers’ comp claim, Cavalcanti received more than $42,000 in total temporary disability payments in

addition to her medical treatment.

An investigation by the California Department of Insurance revealed that after being placed on disability, Cavalcanti ceased medical treatment and began working for another company. During this time, she reportedly submitted multiple fictitious doctors' reports in an attempt to continue to receive disability payments from the workers’ comp insurance company. When confront-

ed by detectives, Cavalcanti ultimately admitted to the fraudulent documents and forged doctors’ signatures.

During the investigation, department detectives reportedly discovered Cavalcanti attempted to file a new workers’ comp claim at a different insurance company with her new employer. The new workers’ comp claim dates and injuries were similar and overlapped with her initial claim. The investigation by detectives prevented payment on this subsequent fraudulent claim and the insurance company incurred no loss.

Cavalcanti is expected back in court Sept. 9 2020 for sentencing. The Marin County District Attorney’s Office prosecuted the case.

Clint Eastwood Files Suit in California Against CBD Sellers Over Use of His Name

By Andrew Dalton

C

lint Eastwood sued several companies that sell CBD supplements in late July, alleging that they are falsely using his name and image to push products he would never agree to endorse.

Two lawsuits filed in federal court in Los Angeles include allegations that companies have spread phony articles reporting that the 90-year-old actor-director is quitting the movie business to focus on a CBD business.

The lawsuits say Eastwood has no part in the manufacture, sale or promotion of CBD, a chemical derived from marijuana often sold as a dietary supplement or included in creams and ointments.

In the suits that seek millions in damages, Eastwood names as defendants nearly 20 small companies, based in states including Arizona, California, Delaware and Florida, that sell CBD, along with up to 60 anonymous entities that may be named later.

One of the companies, Sera Labs, said in a statement that it “worked for a limited time with a publisher and gave them W2 | INSURANCE JOURNAL | AUGUST 10, 2020

specific advertisements they could use which follow our very strict guidelines and shut down the ads immediately after learning that they used Eastwood’s name and likeness.”

The company said its guidelines prohibit using such false claims in its ads and has severed all relationships with the advertiser, and it urged others in the industry to do the same.

Other companies named in the suit, including Patriot Supreme and Norok Innovation Inc., did not immediately respond to messages seeking comment.

The suit says phony news articles on Eastwood and his supposed championing and selling of CBD have been spread via email and social media.

The headline on one such story reads: “Big Pharma In Outrage Over Clint Eastwood’s CBD … He Fires Back With This!”

Another headline says, “Breaking News: Clint Eastwood Exposes Shocking Secret Today. “The story includes links to purchase what it claims are Eastwood’s CBD products and quotes from a fabricated interview where Eastwood says he has

Clint Eastwood moved on from the film business. That article also includes fake testimonials about the products from several celebrities, the suit says.

One of the suits also alleges that companies are using hidden tags and other tactics that link Eastwood’s name to their products in online searches.

Copyright 2020 Associated Press.

INSURANCEJOURNAL.COM

News & Markets

Family of Teen Who Died at Washington University Fraternity Files Lawsuit

I

n his first semester at Washington State University, Sam Martinez witnessed or took part in several activities that his family says were a pattern of hazing at Alpha Tau Omega (ATO), the fraternity he hoped to join.

Pledges were quizzed on the history of the fraternity and forced to eat raw onions if they answered incorrectly, and taken on camping trips where they were tackled and beat up. A week before Martinez died, each pledge was handcuffed to a female pledging a sorority and then locked in a room; the key was at the bottom of a vodka bottle the pair had to consume.

On the November 2019 night before Martinez died, he and another student consumed the bulk of a half-gallon of rum, cheered on by members of the fraternity. He became unconscious within two hours, but no one called for medics until 8:30 the next morning.

The details of the Bellevue 19-yearold’s death Nov. 12 and the events leading up to it are outlined in a lawsuit filed last month by Martinez’s family that alleges WSU, the fraternity, its Pullman chapter and some specific members bear responsibility for his death, The Seattle Times reported.

Martinez, a graduate of Newport High School who loved to play sports and W4 | INSURANCE JOURNAL | AUGUST 10, 2020

hoped to study business and entrepreneurship at WSU, died of acute alcohol intoxication. His death was classified as an accident by the Whitman County coroner.

Martinez’s parents have tried to get as much information as possible about the circumstances of that night – and advocated for sweeping changes to a system that they say is responsible for their son’s death. The wound is “as fresh and deep as the day police knocked on our door,” his mother, Jolayne Houtz, wrote in a Seattle Times op-ed. She sleeps next to his ashes each night.

“We are speaking up now, at the beginning of the school year, as parents and students are heading back to campus and thinking about the school year ahead,” said the former Seattle Times reporter.

“We lost our son and I really can’t bear to think of any other sons or any other children being lost to the same thing.”

Houtz said the lawsuit, filed in King County Superior Court, is a call for reform in fraternities and colleges that allow fraternities to operate with little oversight. Greek organizations can have benefits, his father, Hector Martinez, said, noting that his son and other students had volunteered by giving out gifts to children just weeks before his death.

“It doesn’t outweigh the terrible

risks,” Houtz added. “When you pledge a fraternity, you shouldn’t be pledging your life. We feel like Sam was just pushed to the brink by this ritual and then left to die alone.”

A trial date is scheduled for August 2021, according to Seattle attorney Rebecca Roe, who is representing the family. They are seeking unspecified compensation for economic and noneconomic damages including wrongful death, “pre-death pain and suffering,” fear of impending death and lost earning capacity. In Pullman, ATO lost its recognition for six years and as part of a suspension agreement admitted to violating WSU’s standards of conduct including hazing, reckless endangerment and providing alcohol to minors.

WSU did not respond to a request for comment Friday. Alpha Tau Omega CEO Wynn Smiley declined to comment, writing in an email that the national organization had not been made aware of the lawsuit.

In January, the WSU Intrafraternity Council developed a nine-point initiative “in an effort to prevent any further tragedy” that included a ban on alcohol at “big-little” events, a requirement that each chapter host an alcohol education course and the creation of a committee dedicated to lobby the Washington Legislature on laws related to hazing and other items that affect the WSU Greek community.

The lawsuit filed by Martinez’s family joins a steady stream of legal allegations against fraternities across the U.S. by pledges or members.

In January, the family of a Cornell University freshman who died after a “Christmas in October” event at the Phi Kappa Psi fraternity sued the university and the fraternity, according to the Ithaca Times.

A former University of Arizona student filed a lawsuit in April against the university, Theta Chi fraternity, and chapter leaders after suffering what he claims was a chemical burn in his eye and a blood infection during hazing, according to The Arizona Republic.

Copyright 2020 Associated Press.

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News & Markets Wyoming Department of Insurance Fines Farmers Insurance Exchange $150K

T

he Wyoming Department of Insurance announced the resolution of a matter against Farmers Insurance Exchange that resulted in monetary penalties against the carrier.

The department entered an order approving a settlement with Farmers Insurance Exchange which included a civil penalty of $150,000.

In 2016, Farmers Insurance Exchange filed its Farmers Smart Plan Home policy with the department for review and approval.

At the request of the department, Farmers changed the language of the policy to reflect specific Wyoming regulatory requirements. However,

Farmers reportedly did not update its producer handbook to reflect new sales procedures as a result of the change in this policy language. Some policies were sold to Wyoming consumers that would not have provided certain benefits, according to the department.

In November and December of 2018, two complaints were filed with the department regarding the FSPH policy.

After an investigation into the complaints, the error was identified, and Farmers took corrective action including refunding premiums to the affected policyholders, together with interest, and payment of a civil penalty. Roughly 3,300 Wyoming policyholders may have been affected by this error, according to the department.

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but it could make a big difference.

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W6 | INSURANCE JOURNAL | AUGUST 10, 2020

Lawsuit Accuses Utah State University of Discrimination in Student Expulsion

A

lawsuit filed in federal court accuses Utah State University of unlawfully discriminating against and expelling a student with Down syndrome during her first term.

Emily Arthur was in the Aggies Elevated program which offers students a mix of career exploration and independent living leading to a certificate, the Deseret News reported. The program is funded by a federal grant.

The lawsuit filed in Utah’s U.S. District Court seeks unspecified damages and injunctive relief.

The lawsuit says as a result of the university’s “intentional discrimination,” Arthur was “degraded, dehumanized and humiliated.”

University spokesperson Amanda DeRito said Utah State University typically doesn’t comment on current litigation, but the lawsuit is troubling in its misrepresentation of facts and how it portrays the Aggies Elevated program.

According to the lawsuit, Arthur was provisionally accepted into the program in 2018 and began participating in activities leading up to moving into student housing on the Logan campus.

At no point, did anyone with the program inform Arthur or her parents that she was not ready or unqualified to participate, the lawsuit says.

Copyright 2020 Associated Press.

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News & Markets Report Holds Optimistic Virus Recovery View for Cannabis Industry

By Don Jergler

A

new report out examining how the COVID-19 pandemic impacted the U.S. cannabis industry shows consumer purchasing spiked, dropped, then started to stabilize in the time between when things began to unravel for the nation in March until recently.

In other words, it appears that the experience for cannabis, as a product, wasn’t much different from other mainstream products, such as toilet paper, certain foods, and other essentials.

The report, “The State Of The Cannabis Industry 2020: Cannabis, COVID-19, and Beyond,” was put together by LeafLink, Flowhub and Vangst. Spoiler alert: It holds an optimistic view of post-pandemic recovery for the industry.

The report shows a small decline in sales throughout February compared with the same period in 2019. A two-week sales spike was seen in mid-March around the time the U.S. started to react to COVID-19 with stay-at-home orders and toilet paper shortages, the report shows.

Following that “panic spike,” a decline in sales occurred as most states began sheltering in place. Then many states started deeming dispensaries as essential businesses. It’s therefore possible that consumers weren’t worried about product accessibility and didn’t feel the need to stock up like they did in the prior weeks, the report theorizes.

What followed all of that was a recovery period with more spikes leading up to the international cannabis celebratory 4/20 date. Since April 20, sales have stabilized, but at volumes averaging 40% higher than 2019, the report shows.

Those who work to insure cannabis businesses have seen their retailer clientele grow and prosper, however the impacts of the pandemic on cannabis and insurance appear to be more complex than a simple comparison of greater or fewer sales.

Steven B. Sherman, vice president of the Cannabis Risk Group for PSA Insurance & Financial Services in Hunt Valley, MD, has been hearing from a number of his carrier W8 | INSURANCE JOURNAL | AUGUST 10, 2020

partners with pandemic-related inquiries about his clientele.

“Insurers have started asking about precautions that the cannabis industry is taking regarding Covid-19, and we expect some to strengthen exclusionary language regarding virus or pandemic related claims,” Sherman said.

There are already several concerning exclusions in policies for cannabis businesses. Sherman has been advising his rapidly growing clients to budget for increases in their premiums, particularly their general and product liability costs, which are closely tied to their revenues.

The report also indicates that, as with other industries, fortune favors the prepared.

Between March and April 24, dispensaries with order-ahead capabilities sold 22% more on average than dispensaries without order-ahead capabilities, and they saw 8% more transactions and a 13% increase in average order amounts.

The drop in sales on March 25 had a smaller impact on dispensary locations with order-ahead capabilities. Between March 20 and March 25, Colorado dispensaries with order ahead saw a 45% drop in sales compared with the 56% drop in sales locations without order ahead, an 11% difference, the report shows.

Even as markets stabilized, dispensaries with order ahead capabilities apparently continued to outperform. On April 2, for example, average daily recreational

sales were 27% higher for dispensaries with order-ahead in Colorado and 18% higher for dispensaries with order-ahead in California, according to the report.

Many retailers also shifted their strategies during the pandemic.

Nearly eight-in-10 (79%) introduced curbside pickup and delivery models in response to COVID-19, 64% pivoted to a delivery strategy, and 43% increased their focus on digital marketing and e-commerce strategies, the report shows.

The report also shows that cannabis consumers didn’t change their product preferences, but what did change was consumer buying habits.

People stocked up more during every dispensary visit, and bought more at each transaction. The average overall basket size on March 17 for recreational dispensaries rose to $69.37, with Colorado at $73.13.

The average recreational basket size, for comparison, on April 20, 2019 on was $62.11 and the average Saturday (normally the busiest consumer purchasing day of the week) was between $58-$62.

On March 25, average daily recreational sales went back down to an average 2020 pre-COVID Wednesday. The decrease was not because people were buying less, but because they were going to the store less often.

The overall daily number of transactions decreased 19% compared to an average 2020 pre-COVID Wednesday, according to the report.

INSURANCEJOURNAL.COM

continued from page 26 services through its family of brands across the United States, has acquired Summers Thompson Lowry Inc., a privately owned insurance brokerage based in Raleigh, N.C. Summers Thompson Lowry will retain the Summers name and operate as Summers Insurance Group, a Relation company. Larry Summers will remain with the company as the head of the Raleigh office.

Founded in 2000 by Larry Summers, Summers offers property and casualty products for commercial and personal clients and has established itself within the Raleigh, Durham and Chapel Hill regions.

The acquisition expands Relation’s commercial risk management resources to the greater Raleigh area and further enhances Summers’ nationwide capabilities.

According to Joe Tatum, CEO of Relation, the acquisition will strengthen its P&C offerings in North Carolina.

Relation was formed in 2007 and is a nationwide independent insurance agency.

Relation is a privately held corporation owned by Aquiline Capital Partners, a private equity firm based in New York and London investing in businesses globally across financial services and technology.

Insurity, Epic-Premier of Florida

Insurity, Inc., a provider of cloud-based core systems and data analytics for insurers, brokers, and MGAs, has completed the acquisition of Florida-based Epic-Premier Insurance Solutions, Inc. Epic-Premier offers software products for a client base of MGAs, program managers, and wholesale brokers.

EPIC-Premier’s technology, designed for MGAs, will be combined with Insurity’s digital platform and cloud services to assist business operations across policy lifecycles, increase the automation of both standard and specialty insurance lines, and improve the speed and agility of client requirements.

The product can also be leveraged by carriers and brokers who currently manage MGA networks or who wish to create MGA networks to broaden their market reach.

The acquisition was completed on June 22, 2020.

INSURANCEJOURNAL.COM

Renaissance Alliance Insurance Services

Renaissance Alliance Insurance Services, a membership alliance for independent insurance agencies, has added six independent insurance agencies to its Florida network.

The new members include: AFG Insurance (American Fidelity Group) of Spring Hill, Fla. an independent agency offering a full suite of personal and commercial solutions in two offices on the Gulf coast.

Atlantic Insurance Partners of Stuart, Fla., established in 1993, a full-service, independent insurance agency offering both personal and commercial insurance.

Bluehill Insurance of Fort Lauderdale, Fla., an independent insurance agency that provides commercial, business, and private client coverages to various industries.

Dunham Insurance Services of Fort Lauderdale, Fla., founded in 1997, an independent insurance agency serving personal and commercial clients in Florida and throughout the US. Kretschmer Insurance Agency Inc. of Fort Pierce, Fla., offering personal and commercial insurance in Port St. Lucie, Indian River County, Martin County and Okeechobee County, Fla. Optisure Risk Partners, Pembroke Pines, Fla., specializing in a total workers’ compensation solution, hospitality insurance, risk management, and coverage for private clients and high net worth individuals.

Renaissance Alliance is a membership alliance for independent agencies specialized in property and casualty insurance.

Propel Insurance, HealthCare Services Insurance Partners

Propel Insurance, a retail insurance agency and a portfolio company of Flexpoint Ford, has acquired HealthCare Services (HCS), a risk management and insurance consulting firm based in Knoxville, Tenn., that specializes in serving senior care organizations.

The combined agency will generate in excess of $120 million of annual revenue in 2020 and will have seven offices across the U.S. Propel’s acquisition of HCS will expand

Propel’s existing senior living practice.

Propel and HCS will consolidate their expertise to clients manage risk across the country.

Kirkland & Ellis LLP acted as legal counsel to Propel and Flexpoint Ford in connection with the transaction. Reagan Consulting acted as financial advisor to HCS and Morris Manning & Martin, LLP acted as legal counsel in connection with the transaction.

Propel Insurance is a nationwide privately-owned insurance agency.

Flexpoint Ford is a private equity investment firm.

Sunstar Insurance Group, BBH Capital Partners

Sunstar Insurance Group LLC has completed a majority recapitalization with BBH Capital Partners, the private equity strategy of Brown Brothers Harriman & Co. As part of the transaction, Sunstar management and key employees will remain significant shareholders alongside BBHCP. Sunstar has grown to become one of the largest independent insurance brokers in the U.S. through organic growth and an active M&A strategy, having completed over 25 acquisitions within its core geography. The transaction with BBHCP provides Sunstar with additional capital to maintain its current momentum and accelerate long-term growth.

According to Casey Bowlin, Sunstar’s chief executive officer, the investment by BBHCP will allow the company to create opportunities for its employees, customers and carrier partners and will further accelerate its organic and M&A growth strategies.

LNC Partners, the private equity firm that previously invested debt and equity capital in Sunstar in 2015, will remain a lender to Sunstar.

Sunstar is a regional insurance brokerage firm headquartered in Memphis, Tenn., focused on servicing the insurance needs of businesses and individuals in the Southeast and lower Midwest. Sunstar operates through 10 hub offices, with 18 branch offices in Arkansas, Kansas, Missouri and Tennessee.

AUGUST 10, 2020 INSURANCE JOURNAL | 27

My New Markets Agribusiness

Market Detail: Sierra Specialty (www.sier-

raspecialty.com) offers an exclusive agriculture service program that includes: General liability & professional liability; occurrence or claims made; pollution cleanup for site and transit; fast quote turn-around & flexible rating; coverage extensions & higher limits available. Sierra Specialty’s exclusive agriculture business service programs has the authority to underwrite, bind and issue competitive and comprehensive programs specifically designed for many of the services by and for the farm & agriculture industry, including: arborist tree trimming & pruning services; ag crop spraying; ag advisors (including chemical applicator advisor); farm managers; farm labor contractors; farm machinery operators and harvesters; hay baling services; landscape and gardeners; pest and weed sprayers and advisors; tree trimming and pruning services. Sierra Specialty’s other programs include: farm & ranch programs for hard to place farmers; equine program (admitted and non-admitted); livestock mortality program (admitted); and preferred farm program (admitted).

Available limits: As needed Carrier: Unable to disclose, admitted States: All states except Alaska, Dela., Maine, Mass., Minn., Mont., N.H., N.Y., N.D., R.I., Vt., and W. Va. Contact: Mark Schroeder at 559-256-6900 or e-mail: mark@sierraspecialty.com

Business Owners Policy

Market Detail: Hiscox’s (www.hiscox.com) business owners policy provides general liability coverage and also protects business equipment. Anyone owns their office building should consider this coverage, as it may be covered as well, or if there have tools or equipment relied on to do work.

Policies can be customized upgrades to get the right coverage and only pay for what is really needed. Highlights include: Online quotes in minutes online or by phone; broad appetite with same-day coverage for more than 180 professions; instant binding - policy documents are emailed immediately; direct billing and servicing handled by Hiscox; automatic renewal with the potential to earn commission for the 28 | INSURANCE JOURNAL | AUGUST 10, 2020

lifetime of the policy, as long as you are the producer of record.

Available limits: Minimum $500,000 Carrier: Hiscox Insurance States: Ariz., Calif., Colo., Conn., D.C., Ga., Ill., Ind., Md., Mass., Mich., Minn., Mo., N.J., N.Y., N.C., Ohio, Pa., Texas, and Wisc.

Contact: Partner Contact at 866-739-0727 or e-mail: 866-739-0727

Artisan Contractors

Market Detail: Striker Insurance Services,

a Risk Theory company (www.risktheory. com), offers commercial auto & general liability to more than 80 classes of residential & commercial artisan contractors. Policies can be customized to meet the needs of contractors who are required to stay on the job and protect their daily operations.

Eligible risks include: Residential and commercial artisan contractors; new residential construction; GCs and subcontractors requiring coverage flexibility. Commercial auto policies provide: $1 million CSL AL coverage; stated value APD; blanked additional insured; blanket waiver of subrogation; primary and non-contributory language; hired and non-owned AL and APD; broadened pollution; trailer interchange; and rental reimbursement. General liability policies provide: $1 million each occurrence; $2 million products- completed ops aggregate; $2 million general aggregate; practice policies; occurrence form; defense outside the limits; blanket additional insureds; blanket waiver of subrogation; primary and non-contributory language.

Submission requirements: narrative, large losses and target premium; completed ACORD app; completed striker supplemental app; employee list; equipment and vehicle schedules; 5 years of currently valued loss runs (within 90 days).

Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All states except Alaska, Fla., Hawaii, La., N.Y., Okla., and Texas Contact: Brian Atkinson at 469-310-9142 or e-mail: batkinson@riskpoint.com

FedEx Contractors

Market Detail: SAGE Program Underwriters (www.sageuw.com) offer coverage for:

FedEx Group ISP or CSP contractors; P&D; line haul; Amazon; line haul only; local, intermediate or long haul. Coverage features include: access to exclusive top rated and stable insurance company partners; competitive rates and commissions; extensive industry knowledge; exclusive insurance provider for the National Ground Delivery Association (NGDA); flexible payment plans; approved safety and training programs paid for by SAGE; and free membership in NGDA. Available limits: As needed Carrier: Unable to disclose, admitted States: All states except Alaska, Hawaii, North Dakota, Ohio, Washington, and Wyo. Contact: Chuck Holdren at 833-724-3111 ext.

700 or e-mail: info@sageuw.com

Captive Workers’ Compensation Market Detail: Gray Specialty (www.

grayspecialty.com) provides buffer layers of excess workers compensation coverage to captives, qualified self-insureds, self-insured groups, joint powers authorities and associations. Self-insured retentions as low as $100,000 are available; limits of up to $1 million are available. Coverage is offered on an admitted basis. Coverage may also be offered on a facultative reinsurance basis if necessary for alternative risk clients. The admitted coverage fits below the excess carrier’s attachment and allows the insured to lower their retention to levels not found in the excess workers' compensation marketplace.

Available limits: Minimum $100,000, maximum $1 million Carrier: The Gray Insurance Co. States: All states Contact: Robert Swayze at 504-754-6701 or e-mail: rswayze@grayspecialty.com

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About This Report:

W

elcome to the 16th annual Insurance Journal Top 100 Independent P/C Agencies

®

Ins

report.

The Top 100 list is ranked by total property/casualty agency revenue for 2019 and comprises only those agencies whose business is primarily retail, not wholesale.

Also included is a list of the nation’s Top 20 Bank Holding Companies and Top 20 Banks in Insurance courtesy of the Michael White’s Bank Insurance Fee Income Report - 2020 Edition. See page 33.

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 report.

The result is a glimpse at some of the 30 | INSURANCE JOURNAL | AUGUST 10, 2020

Sponsored by

nation’s most successful independent insurance agencies and brokerages.

All information in this report has been garnered from voluntary online submissions from agencies and brokerages and best estimates based on other public information sources.

There may be agencies eligible for listing but for which no information was received or located.

We encourage all qualifying agencies to submit data for future reports. The more submissions Insurance Journal receives the more accurate and comprehensive this listing can be. Also, submitted data was not independently verified.

A special thank you to the 2020 Top 100 Independent Agencies report sponsor

SmartChoice, a independent agency network of over 8,000 agencies and more than 100 carriers.

For more information about this report, contact Andrea Wells at: awells@ insurancejournal.com.

Is your agency on this list?

Tell everyone! For reprints, badges, plaques and more, call (800) 897-9965 x125 or email us at: reprints@insurancejournal.com.

INSURANCEJOURNAL.COM

Insurance Journal’s 2020 Top 100 Property/Casualty Agencies Ranked by 2019 Total P/C Revenue

2020 Rank

Agency Name

2019 Total P/C Revenue

2019 Total 2019 Total Other than P/C P/C Premiums Revenue Written $828,856,009 $12,000,000,000

1

HUB International

$1,572,638,745

2

Acrisure LLC

$1,510,981,673

$371,825,262

$12,649,624,619

2019 Other than No. of P/C Premium Employees

Main Office

$12,000,000,000

12,633

Chicago, Ill.

$6,160,443,826

7,958

Caledonia, Mich.

3

Lockton Companies

$1,247,087,000

$620,493,000

$15,092,727,000

$23,014,171,170

8,000

Kansas City, Mo.

4

Alliant Insurance Services Inc.

$1,144,426,508

$442,432,293

$7,721,508,925

$9,803,804,046

4,085

Newport Beach, Calif.

5

USI Insurance Services

$1,124,011,947

$749,709,426

$8,656,112,373

$8,239,928,839

7,512

Valhalla, N.Y.

6

AssuredPartners Inc.

$1,058,043,992

$372,476,406

$10,796,367,265

$6,207,940,100

6,787

Lake Mary, Fla.

BroadStreet Partners Inc.

$618,313,000

$128,487,000

$4,494,000,000

$1,850,000,000

3,755

Columbus, Ohio

EPIC Insurance Brokers & Consultants

$581,953,162

$179,290,414

$3,663,387,879

$4,041,286,150

2,600

San Francisco, Calif.

Confie

$508,171,000

$0

NFP

$456,547,620

$1,006,303,706

11

Risk Strategies

$426,273,250

$129,316,750

12

Leavitt Group

$223,978,435

$86,240,512

13

Insurance Office of America Inc.

$194,051,217

$30,476,851

14

IMA Financial Group

$155,482,214

$27,923,222

15

Alera Group

$150,000,000

$306,000,000

16

Higginbotham

$144,592,000

$95,876,000

17

Cross Insurance

$142,000,000

$46,000,000

18

The Hilb Group LLC

$131,703,121

$61,977,939

$126,800,000 $112,134,433

21

PayneWest Insurance Inc.

$108,108,955

22

AIS Insurance*

$104,545,000

23

Hylant

$102,052,311

24

INSURICA Inc.

$98,956,691

Baldwin Risk Partners Univista Insurance

27

TWFG Insurance Services

28

Westwood Insurance Agency*

29

Propel Insurance

3,835

Huntington Beach, Calif.

5,577

New York, N.Y.

$3,387,116,450

$2,322,226,500

1,987

Boston, Mass.

$1,516,263,598

$1,229,597,020

1,890

Cedar City, Utah

$1,918,651,138

$432,755,813

1,191

Longwood, Fla.

$2,632,072,676

$ 743,282,696

793

Denver, Colo.

$1,147,000,000

$0

1,800

Deerfield, Ill.

$1,145,000,000

$1,755,000,000

1,051

Fort Worth, Texas

$1,150,000,000

$1,000,000,000

988

Bangor, Maine

$1,022,307,002

$1,443,256,944

951

Richmond, Va.

$31,800,000

$1,407,000,000

$666,800,000

515

San Francisco, Calif.

$31,001,152

$797,082,782

$342,599,504

417

Walnut Creek, Calif.

$25,362,817

$757,176,446

$530,233,664

750

Missoula, Mont.

$0

$662,031,160

$0

501

Cerritos, Calif.

$53,146,221

$779,575,840

$1,745,345,420

720

Toledo, Ohio

$17,425,539

$702,045,290

$272,004,120

600

Oklahoma City, Okla.

Tampa, Fla.

$90,580,308

$47,260,385

$1,326,000,000

$464,000,000

860

$87,294,211

$10,913,060

$500,166,418

$55,199,910

1,114

Miami, Fla.

$83,300,000

$1,700,000

$601,000,000

$10,000,000

115

The Woodlands, Texas

$81,251,268

$0

$448,040,713

$0

139

West Hills, Calif.

$78,400,000

$14,800,000

$580,000,000

$280,000,000

351

Tacoma, Wash.

ur an

25 26

$0

$2,424,394,595 $20,460,000,000

Jo

Woodruff Sawyer Heffernan Insurance Brokers

$1,704,000,000

ce

19 20

ur na

9 10

l

7 8

30

Eastern Insurance Group LLC

$72,218,344

$18,614,378

$407,000,000

$459,000,000

424

Natick, Mass.

31

TrueNorth Companies

$69,507,000

$17,992,000

$623,663,000

$299,867,000

385

Cedar Rapids, Iowa

32

Marshall & Sterling Enterprises Inc.

$68,387,459

$19,714,944

$386,729,873

$303,899,175

440

Poughkeepsie, N.Y.

33

PCF Insurance Services

$66,000,000

$14,500,000

$770,000,000

$278,500,000

610

Salt Lake City, Utah

34 35

Towne Insurance**

$60,211,621

$17,990,277

$446,560,640

$394,605,635

419

Virginia Beach, Va.

Relation Insurance Services

$58,576,260

$58,158,660

$469,628,180

$608,930,740

517

Walnut Creek, Calif.

36

Lawley Insurance

$55,302,327

$32,064,162

$373,499,160

$508,044,191

422

Buffalo, N.Y.

$55,140,175

$4,955,818

$363,233,577

$137,636,774

248

East Providence, R.I.

38

Starkweather & Shepley Insurance Brokerage Inc. Professional Insurance Associates

$54,000,000

$0

$385,000,000

$0

57

San Carlos, Calif.

39

Graham Company

$53,498,528

$7,007,254

$383,472,170

$112,570,229

193

Philadelphia, Pa.

40

Parker, Smith & Feek Inc.

$53,158,000

$15,261,000

$376,487,000

$218,496,000

261

Bellevue, Wash.

41

World Insurance Associates LLC

$52,343,835

$6,114,880

$588,607,475

$135,886,222

405

Tinton Falls, N.J.

Ins

37

Shepherd Insurance LLC

$52,241,029

$9,305,007

$359,147,812

$411,663,500

365

Carmel, Ind.

43

Houchens Insurance Group Inc.

$50,664,412

$20,294,165

$367,563,885

$684,126,000

323

Bowling Green, Ky.

44

Sunstar Insurance Group

$48,500,000

$500,000

$490,000,000

$1,000,000

310

Memphis, Tenn.

45

$48,239,942

$9,342,113

$312,964,135

$88,944,848

218

Houston, Texas

46

Bowen, Miclette & Britt Insurance Agency LLC ABD Insurance and Financial Services

$45,900,000

$49,523,869

$315,000,000

$510,000,000

350

San Francisco, Calif.

47

The Horton Group Inc.

$44,909,031

$32,790,555

$375,905,354

$876,195,266

350

Orland Park, Ill.

48

Premier Group Insurance Inc.

$43,800,000

$0

$361,500,000

$0

35

Denver, Colo.

49

Rose & Kiernan Inc.

$43,638,120

$11,957,190

$470,938,173

$1,136,359,347

200

East Greenbush, N.Y.

50

Scott Insurance (James A. Scott & Son Inc.)

$42,926,000

$23,321,000

$375,419,565

$644,839,431

340

Lynchburg, Va.

®

42

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

INSURANCEJOURNAL.COM

AUGUST 10, 2020 INSURANCE JOURNAL | 31

Insurance Journal’s 2020 Top 100 Property/Casualty Agencies Ranked by 2019 Total P/C Revenue

2019 Total P/C Revenue

51

Huntington Insurance**

$42,332,000

2019 Total Other than P/C Revenue $20,036,000

$390,814,687

330

Columbus, Ohio

52

Robertson Ryan & Associates

$42,107,000

$4,178,000

$380,610,000

$70,500,000

364

Milwaukee, Wisc.

53

The Mahoney Group

$40,135,452

$5,625,255

$340,741,031

$70,760,351

158

Mesa, Ariz.

54

Fisher Brown Bottrell Insurance Inc.**

$36,436,312

$8,625,873

$233,098,185

$122,444,453

152

Jackson, Miss.

55

Ansay & Associates

$36,089,661

$6,623,506

$239,876,607

$662,492

241

Port Washington, Wisc.

56

Charles L. Crane Agency Company

$35,904,000

$4,808,000

$250,497,000

$71,217,132

270

Saint Louis, Mo.

57

Sterling Seacrest Partners Inc.

$34,819,025

$10,963,437

$284,972,116

$128,456,177

192

Atlanta, Ga.

58

Cobbs Allen

$34,146,964

$10,151,309

$243,131,366

$80,041,642

214

Birmingham, Ala.

Minneapolis, Minn.

2019 Total P/C Premiums Written $251,417,753

2019 Other than No. of P/C Premium Employees

Main Office

l

Agency Name

ur na

2020 Rank

59

HomeServices Insurance

$34,000,000

$0

$234,000,000

$0

275

60

M&T Insurance Agency Inc.**

$33,816,000

$7,190,000

$269,185,000

$128,162,000

155

Buffalo, N.Y.

61

Haylor, Freyer & Coon Inc.

$33,095,000

$3,400,000

$242,387,000

$111,400,000

183

Syracuse, N.Y.

San Antonio, Texas

62

Frost Insurance**

$32,625,858

$23,784,570

$219,543,860

$429,413,469

277

63

Rich & Cartmill Inc.

$31,840,000

$1,520,000

$246,000,000

$11,250,000

113

Tulsa, Okla.

64

Bolton & Company

$31,782,620

$23,635,183

$260,116,823

$454,454,240

195

Pasadena, Calif.

Insgroup Inc.

$31,606,359

$6,329,462

$290,000,000

$80,432,000

175

Houston, Texas

Moreton & Company

$31,259,000

$19,483,000

$385,000,000

$320,000,000

225

Salt Lake City, Utah

67 Wood Gutmann & Bogart Insurance Brokers

$29,640,799

$4,318,272

$248,554,486

$78,366,694

157

Tustin, Calif.

68

Turner Surety & Insurance Brokerage

$29,537,000

$0

$207,492,000

$0

69

Paramus, N.J.

69 People's United Insurance Agency Inc.**

$29,359,000

$2,807,000

$218,765,000

$48,719,000

154

Hartford, Conn.

70

James G Parker Insurance Associates

$29,114,000

$6,257,000

$244,807,000

$73,059,000

204

Fresno, Calif.

71

The Buckner Company Inc.

$28,403,984

$3,158,901

$190,831,037

$59,843,272

175

Salt Lake City, Utah

Jo

65 66

AHT Insurance

$27,895,338

$20,820,531

$188,552,418

$221,061,117

200

Leesburg, Va.

73

R&R Insurance Services Inc.

$26,895,642

$7,063,195

$204,156,115

$147,013,223

176

Waukesha, Wisc.

74

Atlas Insurance Brokers LLC

$26,877,713

$193,893

$191,481,915

$3,021,544

165

Rochester, Minn.

75

JGS Insurance

$26,660,000

$1,250,000

$110,000,000

$31,250,000

111

Holmdel, N.J.

76

TRICOR Inc.

$25,921,385

$4,723,311

$176,677,022

$263,000,000

225

Lancaster, Wisc.

77

Atlas Insurance Agency Inc.

$25,217,693

$4,009,771

$174,606,585

$74,479,062

110

Honolulu, Hawaii

78

$25,169,000

$10,820,000

$219,410,000

$195,824,000

188

Irvine, Calif.

79

SullivanCurtisMonroe Insurance Services LLC Swingle, Collins & Associates

$24,792,278

$762,653

$210,330,402

$12,581,393

98

Dallas, Texas

80

Foa & Son Corp.

$24,750,000

$2,250,000

$231,750,000

$55,250,000

120

New York, N.Y.

ur an

ce

72

81

Christensen Group Inc.

$24,709,568

$12,319,589

$220,000,000

$200,000,000

151

Eden Prairie, Minn.

82

Sihle Insurance Group

$24,296,063

$96,673

$193,360,366

$1,765,360

111

Altamonte Springs, Fla.

83

Crest Insurance Group LLC

$24,232,764

$5,112,343

$177,835,871

$55,995,795

160

Tucson, Ariz.

84

RogersGray

$23,780,000

$8,220,000

$175,000,000

$86,000,000

195

Kingston, Mass.

85

Tompkins Insurance Agencies Inc.**

$23,439,878

$8,064,059

$161,629,948

$122,789,490

180

Batavia, N.Y.

86

Paramount Exclusive Insurance Services Inc. John M. Glover Agency

$22,639,200

$175,000

$195,000,000

$2,500,000

60

Encino, Calif.

$22,627,979

87

$160,000,000

$11,000,000

175

Norwalk , Conn.

$22,442,116

$2,379,530

$171,405,731

$40,466,284

144

Woodland Hills, Calif.

$22,200,000

$7,530,000

$182,310,000

$188,250,000

300

Traverse City, Mich.

Murray Insurance Associates Inc.

$21,686,000

$10,436,000

$221,100,320

$68,486,990

191

Lancaster, Pa.

The Daniel and Henry Company

$21,659,000

$5,758,000

$156,618,000

$100,249,000

180

St. Louis, Mo.

L/P Insurance Services LLC

$20,963,450

$8,552,855

$158,094,043

$93,538,478

155

Reno, Nev.

MJ Insurance Inc.

$20,280,644

$17,266,611

$145,781,887

$1,178,073,341

157

Carmel, Ind.

94

Moody Insurance Agency Inc.

$20,024,970

$7,338,405

$171,600,580

$161,418,275

124

Denver, Colo.

95

Lipscomb & Pitts Insurance LLC

$19,540,059

$3,057,086

$146,412,000

$211,464,000

129

Memphis, Tenn.

96

Associated Insurance Management LLC

$19,530,699

$0

$140,341,600

$0

83

Silver Spring, Md.

97

Lamb Insurance Services

$18,900,000

$3,000,000

$140,000,000

$60,000,000

100

New York, N.Y.

98

$18,202,105

$892,502

$136,500,000

$25,075,000

159

Ridgeland, Miss.

99

SouthGroup Insurance and Financial Services LLC Kapnick Insurance Group

$17,319,173

$17,140,623

$122,315,928

$428,172,756

176

Adrian, Mich.

100

Kaplansky Insurance

$16,273,769

$284,348

$93,168,246

$510,670

74

Needham, Mass.

89 90 91 92

®

93

Ins

$2,364,552

The Liberty Company Insurance Brokers Inc. High Street Insurance Partners

88

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

32 | INSURANCE JOURNAL | AUGUST 10, 2020

INSURANCEJOURNAL.COM

Top 20 Banks in Insurance Brokerage Fee Income (2019/Nationally)

2020 Rank

2019 Insurance Brokerage Fee Income Bank Holding Company Name

1

$2,024,000,000

2

$490,000,000

City, State

Website

Truist Bank

Charlotte, N.C.

www.truist.com

Citibank, N.A.

Sioux Falls, S.D.

www.citibank.com

3

$123,539,000

BancorpSouth Bank

Tupelo, Miss.

www.bancorpsouthonline.com

4

$90,209,000

Eastern Bank

Boston, Mass.

www.easternbank.com

$89,104,000

Associated Bank, N.A.

Green Bay, Wisc.

www.associatedbank.com

$78,656,000

Towne Bank

Portsmouth, Va.

www.townebank.com

7

$52,850,000

Frost Bank

San Antonio, Texas

www.frostbank.com

8

$49,253,000

Discover Bank

Greenwood, Del.

www.discovercard.com

ur na

l

5 6

9

$47,191,000

Manufacturers and Traders Trust Company

Buffalo, N.Y.

www.mtb.com

10

$42,396,000

Trustmark National Bank

Jackson, Miss.

www.trustmark.com

$34,349,000

People's United Bank

Bridgeport, Conn.

www.peoples.com

$33,778,000

Fifth Third Bank

Cincinnati, Ohio

www.53.com

13

$16,393,000

Univest Bank and Trust Co.

Souderton, Pa.

www.univest.net

14

$16,549,000

PNC Bank, N.A.

Wilmington, Del.

www.pnc.com

15

$15,705,000

Bristol County Savings Bank

Taunton, Mass.

www.bristolcountysavings.com

16

$15,000,000

Bank of America, N.A.

Charlotte, N.C.

www.bankofamerica.com

17

$14,963,000

Arvest Bank

Fayetteville, Ark.

www.arvest.com

18

$14,915,000

BBVA USA

19

$14,802,000

Peoples Bank

20

$14,800,000

The Adirondack Trust Company

Jo

11 12

Birmingham, Ala.

www.bbvausa.com

Marietta, Ohio

www.peoplesbancorp.com

Saratoga Springs, N.Y.

www.adirondacktrust.com

ce

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 - 2020 Edition

Top 20 Bank Holding Companies in Insurance Brokerage Fee Income 2020 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Ins ur an

(2019/Nationally)

2019 Insurance Brokerage Fee Income Bank Name $2,209,000,000

Truist Financial Corp.

City, State

Website

Charlotte, N.C.

www.truist.com

$537,000,000

Citigroup Inc.

New York, N.Y.

www.citigroup.com

$154,000,000

American Express Company

New York, N.Y.

www.americanexpress.com

$90,209,000

Eastern Bank Corp.

Boston, Mass.

www.easternbank.com

$89,104,000

Associated Banc-Corp

Green Bay, Wisc.

www.associatedbank.com

$79,000,000

Morgan Stanley

New York, N.Y.

www.morganstanley.com

$76,792,000

Stifel Financial Corp.

St. Louis, Mo.

www.stifelbank.com

$73,000,000

Wells Fargo & Company

San Francisco, Calif.

www.wellsfargo.com

$67,897,000

Huntington Bancshares Inc.

Columbus, Ohio

www.huntington.com

$60,502,000

UBS Americas Holding LLC

New York, N.Y.

www.ubs.com

$52,850,000

Cullen/Frost Bankers Inc.

San Antonio, Texas

www.frostbank.com

$49,253,000

Discover Financial Services

Riverwoods, Ill.

www.discovercard.com

$47,191,000

M&T Bank Corp.

Buffalo, N.Y.

www.mtb.com

$42,396,000

Trustmark Corp.

Jackson, Miss.

www.trustmark.com www.popular.com

Popular Inc.

San Juan, P.R.

$35,500,000

Fifth Third Bancorp

Cincinnati, Ohio

www.53.com

17

$34,349,000

People's United Financial Inc.

Bridgeport, Conn.

www.peoples.com

®

$41,000,000

16 18

$32,637,000

Community Bank System Inc.

Dewitt, N.Y.

www.communitybankna.com

19

$31,091,000

Tompkins Financial Corp.

Ithaca, N.Y.

www.tompkinstrust.com

20

$22,000,000

JPMorgan Chase & Co.

New York, N.Y.

www.jpmorganchase.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 - 2020 Edition

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AUGUST 10, 2020 INSURANCE JOURNAL | 33

Spotlight: Condos Why Condominium Associations Should Consider Risk Management and Financing with Caution

I

nsurance for a condominium associBy Patrick Wraight ation is designed to finance the insurable exposures for the association. These exposures include the property and several liability exposures, including what would be covered by a commercial general liability policy, directors and officers liability policy, and potentially other liability policies.

The concept is as simple as any in insurance. When there is a covered loss, the appropriate insurance policy should respond to pay the loss.

That policy should indemnify the claimant, whether it is the association on the property

policy, or a third-party on any liability policy.

What happens if there is a loss that isn’t covered by the association’s policy, the amount of the loss exceeds the available limit on the policy, or there is a deductible that applies to the loss? Where does that money come from?

Any unit owner would hope that the association has liquid assets (cash in the bank) to pay for such an event, but where does that cash come from after the association pays for it, or if there isn’t enough available money in the bank?

Guess who gets to pay that portion of the bill that isn’t covered by the insurance policy. If you guessed that it comes from the members of the association (the unit owners), you guessed correctly. So how does that get handled?

34 | INSURANCE JOURNAL | AUGUST 10, 2020

Here’s the scenario. There is a covered loss to association property — a fire at the building that houses the community recreation room, conference room, and offices. The association has appropriate coverage in place, but the association’s policy carries a $10,000 deductible. The association has an emergency fund with more than enough to cover their deductible so they write a check to the contractor, the contractor gets to work, the money comes in from the insurance policy to cover the rest of the loss and all is right in the world.

How does the association recoup that $10,000? They could choose to rebuild that emergency using the normal association fees that come in from the members. They could also choose to assess all

or a portion of that amount to the association members.

In choosing to assess the 100 members of the association (we all like easy numbers), the board sends a letter to all association members letting them know what happened, that they are being assessed for their portion of the deductible, the amount of the assessment ($100, because $100 is $10,000 divided by 100), and when it’s due.

Here’s what we find in the ISO Homeowners 6 – UnitOwners Form.

Loss Assessment We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the “residence premises”, by a corporation or association of property owners. The assessment INSURANCEJOURNAL.COM

‘What happens if there is a loss that isn’t covered by the association’s policy, the amount of the loss exceeds the available limit on the policy, or there is a deductible that applies to the loss?

Where does that money come from?’

must be made as a result of direct loss to property, owned by all members collectively, of the type that would be covered by this policy if owned by you, caused by a Peril Insured Against under Coverage A, other than: 1. Earthquake; or 2. Land shock waves or tremors before, during or after a volcanic eruption.

In our scenario, it looks like the unit-owner has some coverage for that $100 assessment, but what if the loss was a little different? What if the loss was a flood loss? We’re not talking about the non-weather-related water loss (can you tell I’m in Florida?) that the insured would call flooding. We’re talking about National Flood Insurance Program flooding.

We’re talking about grab the dog and run to the top floor INSURANCEJOURNAL.COM

flooding. What about that?

The problem comes up from these words, “…caused

by a Peril Insured Against under Coverage A…”

We’re pretty sure that fire would be a Peril Insured Against, but flood?

Let’s look at how this policy reads. For brevity’s sake, we’re only listing the names of the perils. Descriptions have been left out.

We insure for direct physical loss to the property described in Coverages A and C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.

1. Fire or Lightning 2. Windstorm or Hail 3. Explosion 4. Riot or Civil Commotion 5. Aircraft 6. Vehicles

7. Smoke 8. Vandalism or Malicious Mischief 9. Theft 10. Falling Objects 11. Weight of Ice, Snow or Sleet 12. Accidental Discharge or Overflow of Water or Steam 13. Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging 14. Freezing 15. Sudden and Accidental Damage from Artificially Generated Electrical Current 16. Volcanic Eruption This is a named peril policy, which means that only those perils that are listed are covered, unless they are excluded or limited anywhere in the policy. This tells us that if the association suffers a flood loss to the covered property, even

if the association has a policy that covers that flood loss, there is no coverage for it here.

The worse scenario is that the loss is not covered at all by the association’s policy and then the cost of the loss potentially gets assessed to the members of the association.

Instead of $100 per member to cover the fire loss deductible that is covered by the unit-owner’s policy, the flood loss turns into a much larger assessment, which is not covered by the unit-owner’s policy.

This is among the reasons that a condominium association needs to consider its risk management and financing program very carefully.

Wraight is the director of the Academy of Insurance. Phone: 800-897-9965 ext. 130. Email: pwraight@ijacademy. com

AUGUST 10, 2020 INSURANCE JOURNAL | 35

Spotlight: Business Interruption COVID Business Interruption Suits Top 700 with More to Come

By Susanne Sclafane

W

hen insurance coverage lawsuits brought by businesses seeking coverage for COVIDrelated interruptions surpassed the 700 mark last month, the natural question to ask was: Is that a lot?

That’s exactly the question that Chris Cheatham, CEO and co-founder of insurtech RiskGenius, asked during a webinar he hosted, addressing the question to Tom Baker, the William Maul Measey professor at the University of Pennsylvania, who presented the figure.

Baker, an expert in insurance law and policy, showed an analysis of the numbers of business interruption coverage suits following past catastrophe events between 2009 and 2020 — in particular, Hurricanes Ike, Irma and

Harvey and Superstorm Sandy and COVID-19.

“They exceed the norm by two or three times all the nat cats,” he said, comparing the current level of COVID-19 cases in federal courts to the business interruption coverage suits filed after those natural catastrophe, “It’s a big deal,” he added, displaying line graphs with case spikes that rose to less than 100 for Hurricane Ike a year after the third-quarter 2008 event, and to roughly 150 a year later. For Sandy, Irma and Harvey, case filings were less than 100 in similar time frames.

The University of Pennsylvania has been tracking insurance coverage litigation on a COVID Coverage Litigation Tracker (CCLT) powered by Lex Machina, machine learning-focused legal analytics software that harvest information from

36 | INSURANCE JOURNAL | AUGUST 10, 2020

PACER, the federal docket system.

A webinar slide based on recent CCLT output indicated a figure of 694 total COVID-19 business interruption insurance coverage lawsuits, but Baker said that he had seen a list of 69 new cases on the day of the webinar — July 21.

While that number likely had some duplicates (owing to an overly inclusive search he uses to tap the Lex Machina tool), Baker confidently projected that the BI cases had eclipsed 700 at that point — more than Ike, Sandy, Irma and Harvey together.

Although Baker could not compare COVID BI case numbers with those brought in the wake of Hurricane Katrina because Lex Machina only goes back to 2009, he speculated that while the Katrina-driven suits numbers would be bigger than those for the other storms,

“it wouldn’t be anything like COVID-19.”

“And it’s not slowing down,” Baker added, referring to the continual trend in COVID BI coverage suit filings.

Cheatham, who has been using the University of Pennsylvania tracker to put together analyses of his own, agreed with the assessment.

“It’s almost five-times,” he said, comparing the COVID case counts to those following each of the storms individually.

Providing one obvious reason for the disparity, Cheatham noted that while a hurricane hits just one area — a single state or multiple states — COVID-19 shut down almost everything for a period of time. “That was a countrywide shutdown essentially, except for some remote locations, where businesses just across the board were shut down,” Cheatham said, turning to INSURANCEJOURNAL.COM

Baker to supply other reasons that COVID is a much bigger BI event in terms of the claims being filed than the storms.

Baker offered that the nature of the coverage disputes is different. For hurricanes, coverage disputes centered around questions like what share of the loss the insurance company should pick up vs. the federal flood program. “And then also, what was the value of the damage?”

In contrast, “for COVID-19, the insurance industry has decided that it’s just not paying absent an affirmative coverage [grant] in the policy.” He added: I think things move to litigation faster and also, with a greater propensity because there’s not that belief that, ‘Hey, we can come to some agreement.’

When the answer is, ‘No, your claim is denied,’ the next step is litigation.”

Penn. Higher Than New York

Cheatham and Bryan Wilson, MIT Fellow, have been working on their own analysis of trends in COVID litigation for a series of articles Cheatham is authoring exclusively for Carrier Management, titled “COVIDigation Nation.” In the accompanying article, “COVIDigation: Why So Many Cases? Are More Coming?” — the first of the series — he uses Penn Law’s COVID Coverage Litigation Tracker to conclude that 69% of COVID insurance coverage lawsuits have been filed in just nine states. While big states known for high litigation rates generally, like California and Illinois are among them, Cheatham’s analysis shows another factor is the correlation between COVID infection rates and the number of insurance coverage lawsuits filed.

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Still, there are a few questions that Cheatham needed Baker’s help to answer — like why Pennsylvania, registering 10.5% of the coverage lawsuits as mid-July, and Florida, with 8.3%, were outpacing New York’s 7.0%?

Part of the reason is that New York isn’t viewed as a particularly policyholder-friendly jurisdiction, Baker said, explaining a slower pace of filings in the Empire state.

Beyond that, he said that plaintiffs firms actively seeking to consolidate cases in other states may explain some of the other outliers.

“There is an effort right now in the federal courts to have what is called an MDL, which is multidistrict litigation — a procedure in the federal courts that’s very widely used in products liability cases, but has,

D

to my knowledge, never been used before in insurance cases,” Baker said. He explained that what an MDL does is that it transfers all of the cases of a particular category to one federal court for proceedings leading up to, but not including trial. (The cases go back to the court where they originated for the trial.)

“There are three teams of lawyers who have filed three competing efforts to consolidate these cases in Pennsylvania, Florida, and Illinois,” Baker said, noting that the three cohorts have adopted different strategies.

“The Pennsylvania lawyers’ strategy has been, ‘Hey, we’re going to file the most cases and that this case should be consolidated in the Eastern District of Pennsylvania because that’s the center of gravity from

MDL vs. Class Action: What’s the Difference?

uring a July 21 RiskGenius webinar, Prof. Tom Baker from the University of Pennsylvania Carey Law School explained that a class action decides the case for all of the people who are in the class unless they choose to opt out so that decides the case. An MDL “just gets the case ready, and then it goes back to the court where it started and where [cases are] resolved on an individual basis.”

Practically, “MDLs tend to settle as a group and class actions, once class certification is granted, tend to settle too,” he said, noting the similarities between the two that are nonetheless different “from a legal procedure perspective.”

Speculating on what would happen in a COVID insurance litigation MDL, he said discovery would take place. Expert witnesses would address questions like, “What is COVID-19? What does it mean to have virus in the building? What’s the transmission?”

In addition, motions to dismiss could be ruled upon.

Summary judgment motions could be ruled on. And typically, in an MDL, “with a lot of prodding from the judges, the parties will tend to agree to put cases in different categories and then some categories will be resolved and settled; others won’t.”

Judges may also remand cases selectively for test case trials “because the idea of an MDL is that there’s too many cases… to handle them all really individually so let’s figure out the process that will allow the parties to resolve them.”

cases.’” While Florida lawyers are using a similar strategy, a high-powered coverage lawyer on the Illinois team of higher profile national lawyers is simply relying on their reputations rather than flooding the dockets. “The strategy that they’re taking is, ‘Listen, we’re just really amazing lawyers and you should do it in Chicago’ — and Chicago is in the middle of the country,” Baker said.

Years Not Months

In his COVIDigation analysis, Cheatham also tracks the timing of case filings, finding roughly one-month lag between spikes in COVID infections and new high watermarks for litigation filings. Viewing a jump in infections during the week of a June 23 based on the New York Times COVID-19 dataset, Cheatham suggested there could be a surge in insurance litigation near the end of July.

Baker, going back to his analysis of hurricane landfalls and BI coverage litigation, suggests an even longer loss development tail for insurers to worry about.

“The peak doesn’t come until one year” out, Baker said, pointing to a bar graph showing case counts at intervals of six months, 1-2 years, 2-3 years and over three years out for the storm events. While most showed case spikes in the 1-2 year bucket, for Ike, the spike came in 2-3 years, and there were still Sandy BI lawsuits being filed after 3 years. “To the extent that COVID-19 cases follow that pattern, which it’s too soon to tell because we’re not even six months out really, then that suggests that there’s a lot more lawsuits to come,” Baker concluded.

AUGUST 10, 2020 INSURANCE JOURNAL | 37

News & Markets Tesla Invites Insurance Actuaries to Help It Create a ‘Revolutionary’ Insurance Company

‘Where we want to get to with Tesla Insurance is to be able to use the data that’s captured in the car, in the driving profile of the person in the car, to be able to assess correlations and probabilities of crash and be able then to assess a premium on a monthly basis for that customer.’

38 | INSURANCE JOURNAL | AUGUST 10, 2020

By Andrew Simpson

T

esla, which has been testing an insurance product for its drivers in California, is preparing to build an insurer, one CEO Elon Musk says will be “revolutionary.” And he’s inviting actuaries to join his cause.

“I would love to have some high energy actuaries, especially. I have great respect for the actuarial profession. You guys are great at math. Please join Tesla, especially if you want to change things and you’re annoyed by how slow the industry is. This is the place to be. We want revolutionary actuaries,” Musk said on a call with analysts on July 22.

According to Zachary Kirkhorn, Tesla’s chief financial officer, the company wants to harness the data from its telematics on its cars and drivers to build the new insurance operation beyond California.

“Where we want to get to with Tesla Insurance is to be able to use the data that’s captured in the car, in the driving profile of the person in the car, to be able to assess correlations and probabilities of crash and be able then to assess a premium

on a monthly basis for that customer,” he said.

He said Tesla is nearly finished with testing its California telematics product and hopes to be filing that in several more states by the end of the year with the goal of going nationwide.

Musk said accuracy of information is “at the heart of being competitive” with insurance. The choice is between assessing drivers “looking in the rear-view mirror” or assessing them individually, “looking ahead with smart projections” and being able to point to what actions they can take to reduce their insurance. “It’s like… if you want to pay more for insurance, you can.

But if you want to pay less, then please don’t drive so crazy,” Musk said, adding, “Then people can make a choice.”

He said understanding the insurance expense, such as $15,000 to fix a fender, can actually be helpful to the carmaker, allowing it to adjust the design of its cars to how repairs are done and lessen the cost.

Musk has long maintained that car insurance rates should fall as driver-assist and self-driving technology become standard.

INSURANCEJOURNAL.COM

Spotlight: Recreation Recreation Market Coming Back with Old and New Risks to Consider

I

t’s been a challenging year for many businesses, especially those in the recreation, leisure and entertainment world. But while entertainment continues to struggle, things are picking up for the recreation market, according to Patrick Gavin, managing director of ALIVE RISK, a division of All Risks Ltd. Gavin took some time to answer a few questions about new, and old, risks affecting today’s recreation accounts.

IJ: Describe the general market conditions for entertainment and recreation.

Patrick Gavin: Some areas are

starting to come back in some way, shape or form. On the amusement side, water parks, family entertainment centers, amusement parks, are starting to open up. Really the most negatively affected area has been entertainment, large music and touring — that is not happening. One interesting area: We have insured our first couple of drive-in concerts. So, those are starting to come back.

But again, life as we knew it six months ago is not there.

IJ: Have you seen a lot of insurance market contraction given the circumstances?

Gavin: Yes, there definitely has

been a decline in business, but even with that decline, we’re still seeing the business happening out there. One area is with camps, clinics, and youth sports, and depending on where they’re operating, they may be required to have sexual abuse coverage. There are also schools that have canned contracts saying they are required INSURANCEJOURNAL.COM

to have sexual abuse and molestation coverage. So that’s one area that’s challenging but also needed.

We’ve seen some of the big players out there previously offer $10 million in limits (on sexual abuse coverage) but are now lowering that to just $1 million or $2 million so you’re seeing a lot of sublimits. We will sublimit that coverage, too. That way camps still get coverage, but it doesn’t overextend one market with a really long-tail liability coverage for something that can be tough to underwrite. Unfortunately, this is an issue that just won’t go away. Also, for smaller camps and clinics where there may be financial restraints, we are seeing more creative ways to offer sublimits for sexual abuse and molestation coverage, say for a five-day camp.

While the pandemic may have brought a decline in some business, have there been any areas that are generating new opportunities as well?

Gavin: Yes, one thing I think

the pandemic did for agents and insureds alike was to look at the coverages they had. So many people looked and said, “Wow, do I have coverage for something if something like this happens?” … Like active shooter: “Do I really need that coverage?” Well, no you don’t until something happens. With COVID, it’s been cancellation and contingency business insurance. It could be weather coverage. … People are going to take a deeper look at their policies and coverage because of what’s happened.

So, right now, there’s not a

lot of options to buy cancellation coverage, for COVID as an example. But I think as markets get ahold of this, as a vaccine comes out and things start to settle down, I think people are going to look at their coverages like active shooter, communicable disease, things that they know could be a disruption and say, “Does it make sense to reassess and make sure we’re covered as much as we can be?”...

But right now, people are in a tough spot. It’s the old adage that “you can’t buy fire insurance while the building’s burning down.”

IJ: What, if any, lessons have been learned from the pandemic thus far?

Gavin: I know this probably just

sounds like the most generic answer ever, but in insurance, you have to plan for the unexpected, and what could have been more unexpected than this?

With sports, sexual abuse coverages and prevention, as well as concussion coverages

Patrick Gavin and prevention, are two of the most talked about issues in the business, and for good reason.

There have been terrible losses and incidents in both of those areas that have tragically affected people’s lives. From an insurance perspective, we’re going to continue to talk about prevention of those two risks, which is a good thing on all fronts. But also, we can’t lose sight of the other things, the unexpected … because the unexpected is going to happen and we need to be prepared.

Idea Exchange: Is It Covered?

Logic & Language, Forms & Facts Renters Insurance and Swimming Pools

S

o far in this column, I’ve written several articles that are titled, or could have been titled, “Just Because It’s Not Covered Doesn’t Mean It’s Not Covered.” Sometimes

By Bill Wilson a policy almost certainly was never intended to cover a particular type of loss, but when a specific set of circumstances and facts coincide with a quirk in policy language, we may find coverage where none was arguably ever intended. That’s the subject of this article.

40 | INSURANCE JOURNAL | AUGUST 10, 2020

For example, an ISO HO 00 03 (HO-3) homeowners policy covers three types of direct damage: (1) Coverage A for damage to the dwelling, (2) Coverage B for damage to other structures, and (3) Coverage C for damage to personal property. If a homeowner’s in-ground swimming pool is damaged by a covered peril, coverage usually falls under Coverage A or B. However, in the case of an ISO HO 00 04 (ho-4) renters policy, there is only one type of direct damage coverage and that is Coverage C for damage to personal property. So, what happens if someone insured under an HO-4 policy owns an in-ground pool and it’s damaged by a cov-

ered peril? There’s no Coverage A or B on an HO-4 policy, so does that mean there’s no coverage for damage to this personally owned property? Let’s consider an actual claim.

A husband and wife owned an incorporated machine shop in a rural area.

They insured the steel Butler-type building and business personal property on a commercial package policy. They also lived in the building, in an apartment at the rear of the structure, and insured their personal property and liability exposures on an ISO HO-4 policy.

Often their grandchildren visited on the weekends. Primarily for their INSURANCEJOURNAL.COM

The HO-4 carrier also denied the claim on the basis that the swimming pool was real property, not personal property, and without Coverages A or B, there is no coverage under an HO-4 for real property, ONLY personal property. The adjuster advised that personal property was property that was movable and not affixed to the real estate.

The agent argued for coverage, citing several policy provisions to support that contention. The first issue was what constitutes personal property? If you asked the owners to describe their business property, they’d likely point to the equipment, machinery, stock, etc., owned by and used in their business.

If you asked them what is their personal property, they’d likely indicate their apartment furniture, clothing, and of course, the swimming pool they personally own.

‘So, what happens if someone insured under an HO-4 policy owns an in-ground pool and it’s damaged by a covered peril? There’s no Coverage A or B on an HO-4 policy, so does that mean there’s no coverage for damage to this personally owned property?’

grandchildren’s benefit, they installed an in-ground swimming pool at the rear of the building, presumably because this was less dangerous than playing with lathes, drill presses, and laser cutters.

During a severe storm, a tree was uprooted and caused about $3,000 damage to the swimming pool. The claim was reported to their agent who had placed both their commercial and personal lines insurance with two different insurers. The commercial lines carrier denied the claim as this was an undeclared structure and most of the damage was arguably excluded under the Property Not Covered section of the commercial property policy.

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Black’s Law Dictionary defines “personal property” in a traditional way, but includes the following: “Personal property also can refer to property which is not used in a taxpayer’s trade or business or held for the production or collection of income.

When used in this sense, personal property could include both realty (e.g., a personal residence) and personalty (e.g., personal effects such as clothing and furniture).”

The term “personal property” is not defined in the HO-4, so the agent’s argument was that the Black’s Law Dictionary was, from the insured’s perspective, a reasonable interpretation of what “personal property” means. When a contract term has more than one reasonable interpretation, that term may be deemed

to be ambiguous and, if so, the insured’s interpretation usually prevails.

Next, the agent pointed out that the HO-4’s Property Not Covered section included a lengthy list of property that was specifically excluded. If the policy drafters did not want to cover real property in general or swimming pools in particular, they could have included that in this list of excluded property, but they didn’t.

Finally, the agent directed the adjuster’s attention to the Additional Coverage – Collapse. This coverage says, “Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included…unless the loss is a direct result of the collapse of a building.”

In other words, IF the insured’s swimming pool had been damaged, not by windstorm, but by the collapse of the machine shop building, there the policy clearly would have covered that loss.

However, the adjuster had said that ONLY personal property is covered by the HO-4.

So, if there is collapse coverage for damage to the swimming pool, then the swimming pool must be personal property since, according to the adjuster, that’s the only type of property coverage by the policy.

The adjuster, conceding that the scales of justice appeared to tip in favor of the insureds, paid the claim under the HO-4 policy.

Is a renters policy intended to cover damage to real property under Coverage C? Probably not, but in this confluence of circumstances — logic and policy language — the adjuster acquiesced and paid the claim. If there is a need to clarify the contract language, an easy fix would be an entry for real property in the Property Not Covered section of the policy.

Next month, we’ll examine another potentially erroneous preconception about coverage in a CGL policy. We know that there is no coverage if a contractor damages his own work. Or is there?

Wilson, CPCU, ARM, AIM is the founder and CEO of InsuranceCommentary.com and the author of four books, including “When Words Collide: Resolving Insurance Coverage and Claims Disputes.”

AUGUST 10, 2020 INSURANCE JOURNAL | 41

Idea Exchange: The Wedge Who’s Your Best Client -

Creating Your Avatar “

I

hate marketing, and I hate marketers.” I said that over and over, much to my demise.

Marketing is to selling as mustard is

By Randy Schwantz to a hotdog. They are just better together.

A common phrase amongst great marketers is this: “People are not buying a drill and a drill bit; they are buying the quarter-inch hole.”

To be a better marketer, you have to know who you are trying to attract. That person is your Avatar.

An Avatar is a way to make your ideal prospect into an image you can talk to and understand their problems, desires, and roadblocks. If you want to grow your book fast, you’ll want to get a clearer idea of who is your best buyer.

Strengths

There’s a good chance that there are a few things you do well as an insurance broker. Maybe you are a workers’ compensation genius. Or perhaps you geek out on coverage idiosyncrasies. Or you could be the one that writes incredible narratives to market the account better.

42 | INSURANCE JOURNAL | AUGUST 10, 2020

Whatever it is, those are your strengths.

It’s good to know your strengths. When you do, you can better define a set of problems a buyer would be suffering from that you can solve. And that is where the Avatar comes to play. The Avatar (your ideal prospect) has problems, and you have solutions.

When defining your Avatar, you can start with demographics, age, gender, and nationality. That’s the easy part. After the demographics, you can move on to psychographics.

Psychographics help you define their attitudes, concerns, and mental state.

This process will help you dig deeper into their values, desires, goals, interests, and lifestyles.

When you have a clear idea of your Avatar’s mind map, you can start creating compelling messages that resonate with them. You will profoundly gain their attention this way.

My Avatar: • Owner of an independent insurance agency.

• 38-59 years old.

• Makes at least $200,000 a year.

• Has at least three producers.

• Located in a city with at least a 35,000

population size.

• 50/50 mix of personal and commercial insurance.

• Desire to grow the commercial side of their business.

Psychographic profile: • Attitude: There’s endless opportunity.

• Desire: Wants to find a better way to stimulate their producers’ growth.

• Frustration: Doesn’t feel equipped to develop their producers into selling machines.

• Values: Team culture where everyone helps each other perform.

• Lifestyle: Actively involved in the business, community, and family.

When that is clearly defined, it will attract your target audience and repel those that are different.

Agency owners that don’t see an endless opportunity, who think producers should figure it out by themselves and are selfishly pursuing only their desires, will turn the other way immediately because they won’t identify with the messaging.

The same will be true for you when you get your Avatar well-defined.

Imagine that you want the following: • Owner of a construction company.

• Has 30-50 employees.

• Located within a three-county area surrounding your city.

• Male between 35-50 years old.

Make $150,000 a year.

They build single-story mixed-use commercial buildings.

Psychographic profile: • Attitude: Number one asset is his people, not his backhoe (although it makes him proud).

• Desire: Controlled and profitable growth.

• Frustration: Hard to hire and retain people that have his kind of work ethic.

• Values: Safe work environment so his people can get home every night.

• Lifestyle: Enjoys work, spends the week end at his lake house, and loves skiing and fishing with his kids.

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• Roadblock: Doesn’t feel he has enough time to do things right and realizes he needs quality team members to make it happen.

This Avatar may or may not be what you want as a client, which is fine. The important thing here is when you have this defined, your email headlines will start to reflect a voice. Your marketing voicemails will reflect this. Every word will be tailormade just for them.

people don’t pay attention. That makes selling a lot harder on yourself.

By the way, are you tired of carrying the “new business” production load in your agency?

If you want to help your producers become better sellers and marketers, I’ve got a book you ought to read. Download a

free digital copy here: https://thewedge.net/ free-ebook-agm/. Or if you’re like me and prefer the real deal, get a hard copy for only $7.95 to cover shipping and handling.

Schwantz is founder of The Wedge Group. He’s also the author of the book Agency Growth Machine.

Phone: 214-446-3209. Email: randy@thewedge.net.

Let me give you a few email headline examples: • Spend time at the lake and less time worrying about insurance. Here’s how.

• Your kids are #1. Stop wondering what happens if your backhoe gets stolen. It’s handled.

• Stop letting your employees get hurt.

You want to know how.

You could also reflect this in your voicemails. Consider this if you will. Voicemails are just like the Verizon billboard you drive by every day on the way to work. Verizon doesn’t expect you to pull the car off the road and buy cell phone service.

Instead, it is positioning itself in your mind for the day you get sick and tired of dropped calls.

Think of your voicemails as billboards that position “you” as the go-to resource for when your buyer gets fed up with the person they are working with now.

Here are a few voicemail examples:

Hey Bob, Randy Schwantz. If you’re ready for a new boat, I have an idea that could save you enough money on your insurance to pay for it. Call me. XXX-446-3204.

Hey Bob, Randy Schwantz. When your people get hurt, you not only lose them for a day or week, you also spend more on insurance. Looking for a proven solution? Call me XXX-446-3204 When you have an Avatar, you can direct your message to them. If you don’t, you get stuck in the “generalist” zone and might not appeal to anyone.

When your message is not appealing, INSURANCEJOURNAL.COM

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AUGUST 10, 2020 INSURANCE JOURNAL | 43

Idea Exchange: Risk Management

Is Crisis the New Normal?

5 Steps to Consider When Crisis Planning in the Post-COVID World

I

s crisis the “new normal?” We have always seen our fair share of catastrophic events and crises. But, in recent years those events

By Kelly Geary seem to be increasing in frequency and severity. We are seeing more headline-grabbing disasters like data breaches, corporate scandals, extreme weather events and now, pandemics.

New technology introduced in the past decade has fundamentally and dramatically changed the way we communicate with one another and the way businesses operate and deliver value to customers and clients. Our constant state of digital transformation together with, what appears to be more frequent and severe crisis events, highlights the need for proactive, interdepartmental crisis planning and a strong crisis response strategy. Begin able to manage crisis effectively from initial identification through the public relations 44 | INSURANCE JOURNAL | AUGUST 10, 2020

barrage has never been more important than it is today.

The Nature of Crisis

The word crisis originates from the Greek krisis, which means “decisive point in the progress of a disease,” and, also “vitally important or decisive state of things, point at which change must come, for better or worse.” No one is immune from crisis. Organizations, large and small, regardless of industry and geography are all vulnerable. Crisis does not discriminate.

‘We are all running with scissors right now.’

A crisis that hits an organization is typically, some sort of event or trend that threatens the viability of the organization in some, or multiple ways. A crisis can arise quickly or build slowly. It can last for a long time or conclude abruptly. Once the crisis passes it can be forgotten or linger

in public memory. The key aspect of crisis is that the outcome is fundamentally uncertain. To experience a true crisis is a bit like walking a tightrope, blindfolded, without a net.

The Crisis of the Century: COVID-19

Many believe the COVID-19 pandemic will be the defining crisis of the century.

The COVID-19 crisis is not likely a risk most companies contemplated or planned for.

The outbreak and the resulting shelterin-place orders issued around the globe literally shut the world down in a matter of weeks.

From the moment the pandemic was declared, companies were faced with overwhelming, competing challenges and have been forced to operate in uncharted territory. Some organizations were more prepared than others. Organizations without comprehensive crisis plans were scrambling to react and respond. Even those with plans in place struggled. In many instances, the fast moving and unexpected elements of the crisis, exposed weaknesses in plans and teams.

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Crisis Planning

Crisis planning has never been as important as it is today. The COVID-19 crisis will transform the world. We cannot rely on crisis plans that were drafted two year ago, or even ones drafted two months ago! This is the time to reevaluate, revise, and renew your organization’s crisis plan – or create one if you do not already have a formal plan in place.

Each crisis and its impact will be unique.

Crisis plans should be customized to your business based on several different factors such as size, industry, geography etc. The plan should be short, easy to follow and flexible. Below are a things to consider as you re-think and re-invent crisis planning:

1. Consider and Incorporate the Impact of Social Media. Social media has

fundamentally changed the way news is developed, delivered, and consumed.

Today, social media is the primary source of news for most people and everyone is a reporter. People need information during a crisis. A crisis – large or small – will likely hit social media channels in the blink of an eye. You have very little time to think and consider your response to a crisis. Our news cycle is 24/7. Organizations must be prepared to react in a matter of minutes or risk being thrown into a downward social media spiral. The speed and transparency of your response will be key.

2. Consider and Incorporate the Impact of a Crisis within a Crisis. There is no

rule that says just because you are in the middle of a crisis you can’t experience another one. Consider, and plan for, how your organization will respond to a crisis while in a crisis. For example, many organizations are being hit with ransomware attacks while trying to operate in a fully remote work environment. Employees are distracted and dispersed. IT professionals are stretched thin. Executives are exhausted and juggling multiple priorities. We are all “running with scissors” right now.

Consider whether your organization would be able to respond quickly and effectively to a cyber-attack that happens today?

Would your response be as strong as it would have been pre-COVID-19?

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3. Conduct a Holistic Risk Transfer and Insurance Gap Analysis. The speed and

efficiency with which your organization responds to a crisis will affect the resulting financial impact on the organization.

Liability lawsuits and regulatory investigations are inevitable. Now is the time to conduct a holistic risk transfer and insurance gap analysis. Take the time to fully evaluate your risk transfer mechanisms (contract-based and insurance-based) so you have a firm understanding of where your unprotected financial risk lies. Look for gaps (or overlap) in your individual insurance products as well as your overall insurance portfolio. Review and evaluate contracts with vendors and other business partners to identify strengths and weaknesses in contract wording, specifically addressing obligations in unforeseen circumstances and indemnification.

‘This is the time to reevaluate, revise, and renew your organization’s crisis plan – or create one if you do not already have a formal plan in place.’

4. Consider Executive Coaching for Crisis Leadership. Even accomplished leaders

can struggle when crisis hits. Not every leader will be able to respond to each and every crisis effectively. Leading through crisis not a skill every leader has. Consider incorporating some level of executive coaching specifically for leading through crisis events.

5. Practice, Practice, Practice. Even the

best of the best crisis plans will fail if they are not routinely practiced. Use different methods to stress-test and practice your plans. Case studies, decision-making trainings, incident simulations and full-on drills creating as close to a “real” scenario as possible. Be creative. Every crisis will present different challenges and may require different members of your Crisis Team to engage in different ways.

Challenge, train and educate your Crisis Team and your Executive Leaders.

Conclusion

The impact of the COVID-19 crisis has been severe and extensive on many levels.

Even though we are starting to see signs of a return to “normal,” the long-term impact of the pandemic will be with us for years to come.

What comes next will not likely be a return to pre-COVID life or business practices. We will likely see shifts in cultural norms, societal values and behaviors, as well as changes in the way businesses deliver value to their customers and clients.

Crisis transforms us. How prepared we are for the next crisis will determine how strong we are coming out of it. Proactive and creative crisis planning is more important than ever as we move into the post-COVID world.

Geary is a managing principal with EPIC Insurance Brokers and Consultants based in the New York City area. She serves as the national practice leader – executive and cyber risk as well as coverage counsel and claims leader for Lemme, a division EPIC.

AUGUST 10, 2020 INSURANCE JOURNAL | 45

Idea Exchange: Disaster Planning Hurricane Planning During COVID-19

By Robert Tull and Monique McQueen

C

OVID-19 has thrown the world into a tailspin over the past several months, and businesses everywhere have had to adjust their models to accommodate the new environment. With hurricane season now in full swing, planning and preparation for natural disasters must also change.

The tried and true preparation measures that have worked in the past may no longer suffice in the midst of the pandemic. This shift further stresses businesses operating in hurricane-prone areas, who must prepare for the season within the new constraints of the virus. There’s a lot to think about, at a time when executives already have more than their share of worries. As plans are developed, it’s important to keep resulting insurance implications in mind.

Business models and business conditions have changed. Planning and preparation must change as a result.

COVID-19 has heavily disrupted supply chains, and the resulting declines in availability necessitate advanced planning to make sure businesses have the proper inventory in place for a storm. From

46 | INSURANCE JOURNAL | AUGUST 10, 2020

supplies for the physical property such as chainsaws, fuel for generators, plywood, pumps and other key machinery to human survival needs like PPE, disinfectants, water, food items, batteries, first aid kits, and medications, it may be a greater challenge than usual this year to predict which items will be in short supply. Businesses should start early to ensure they have what

they need to be both safe and compliant.

Social distancing is a new need to consider across all industries, especially with the potential for additional on-site workers such as outside responders, contractors and vendors in the event of storm damage. Businesses should have formalized procedures for protecting ALL workers that can be used during response and restoration periods.

Industry-specific issues will also arise.

In the restaurant industry, for example, some businesses have had to completely redesign how they operate, with new processes for delivery, pick-up methods, etc.

Others may have significantly altered their physical spaces to accommodate social distancing. Restaurants that have shifted their models to accommodate increased outdoor dining or curbside purchases must now consider whether their new outdoor areas are covered by insurance. They must also examine physical property protections such as sprinkler systems, alarms and security procedures to ensure that all are up to date and maintained.

As always in the aftermath of a storm, business continuity is key. Employers should be sure to have an up-to-date formal business continuity plan in place, INSURANCEJOURNAL.COM

provided by their insurance carriers?

Above all, be prepared.

keeping in mind new situations like splitshifts. This plan should be shared with key staff well in advance of a natural disaster. Consider what may be different about business operations due to the pandemic; for instance, how will the business handle employees that may have been working from home and are now displaced?

All of these changes have insurance implications.

Here are some important insurance considerations for businesses: • Have you reviewed your clients’ operational changes?

DIRECT

• Has the property changed and are the changes reflected in property policies?

• How are new business models factored into hurricane preparation and property insurance for your clients?

• Are insurance valuations up to date and have insureds duplicated key documents off-site or stored electronically?

• Have you explored workers’ comp policies with your insureds working in a pivoted way?

• Are clients following recommended hurricane risk management procedures, and are they taking advantage of resources

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The 2020 hurricane season has already proved itself to be an active one, with a record six named storms by the second week of July, and forecasters are predicting it will remain an above-average season.

This is not the year for anyone to be caught unaware. We’ve had enough surprises already this year, and COVID-19 and civil unrest have already put enough pressure on business sustainability. Armed with the knowledge that storms are coming, companies should prepare for the 2020 hurricane season with more diligence than ever. By the time there’s a storm on the horizon, well-prepared businesses should already be prepared to respond.

McQueen is assistant vice president, property at QBE North America, and Tull is assistant vice president, lead property consultant global risk solutions at QBE North America.

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AUGUST 10, 2020 INSURANCE JOURNAL | 47

Idea Exchange: Minding Your Business Motivating Employees During the COVID Pandemic

T

he coronavirus pandemic has led to various versions of lockdowns and quarantine orders, which are now being revised during the summer due to a resurgence of cases.

Many businesses still have workers who are now required to work remotely.

With everyone sheltered at home, trying to work with

By Catherine Oak & distractions: children, pets, noise and fear can make things more difficult for employees. These changes have led employees to have concerns about the virus, Bill Schoeffler stress about keeping their jobs and many are struggling with loneliness. Employees also find it difficult to collaborate and communicate online, as 48 | INSURANCE JOURNAL | AUGUST 10, 2020

well as face challenges staying focused on their job. Morale is down for many firms.

Employee morale affects a business’ success. There is so much happening outside of our control right now, which will lead to frustration, disconnection and low morale. But the lack of staff morale affects companies in more ways than expected.

Overtly stressed and anxious employees result in poorer quality of work, as well as disengaged employees. At times, it can even lead to a higher turnover rate, which will be detrimental to organizations.

During these stressful and uncertain times, it is extremely important as leaders of insurance firms to address employees’ concerns and be the beacon of hope and positivity for employees. Employees want to feel that their managers listen to their needs and concerns.

This is the time when owners and managers can step up and be the leader that employees need.

The first thing to do is make sure the

communication is good between all parties and always transparent. There are plenty of ways for remote workers to keep in touch with management, fellow employees and clients. It is important to always provide specific information and clear instructions. This will make virtual meetings more effective.

Next, help any employee with their immediate needs and concerns. Offer counseling or exercise classes to staff that might be suffering from anxiety or stress-related issues. If possible, set up virtual team lunches or happy hours to let people blow off steam and bond. People want to know that management is in their corner, and that everybody is in it together.

When the basics are handled, offer encouragement and recognition. Send regular email messages to the staff and reassure them that their role is essential.

Employees want to know their work is meaningful. Recognize and reward good performance. Provide the remote employINSURANCEJOURNAL.COM

The author Laura Kelly Fanucci wrote a poem that should provide inspiration and a different slant on the effect of this pandemic.

“When this is over, may we never again take for granted; A handshake with a stranger, Full shelves at the store, Conversations with neighbors, A crowded theater, Friday night out, The taste of communion, A routine checkup, The school rush each morning, Coffee with a friend, The stadium roaring, Each deep breath! A boring Tuesday. Life itself.

When this ends, may we find that we have become more like the people we wanted to be, we were called to be, we hope to be, and may we stay that way — better for each other because of the worst.” ees a gift card or home delivery from a local restaurant for their extra diligence.

Reward those acts of kindness that foster a sense of calm and understanding during these crazy times. Employees that get accolades will have a sense of obligation and act appreciative that they work for the firm.

Help clarify the employee’s priorities.

The focus needs to be only on the bare essentials of the business. Where possible, managers should drop projects that are low value because they will slow the team down. Clear communication and addressing the employee’s concerns helps improve their focus and ability to complete the tasks on hand.

Be flexible and loosen some work restrictions. With schools closed and employees adjusting to working from home, be understanding, empathize and listen to employees. Do celebrate the company accomplishments and goals with public praise and consistent communication.

Now is also a good time to provide opportunities for professional and personal development. With no commuting and business slowdowns, people are finding that they have spare time. This allows for the opportunity to tackle new projects, learn new skills, and expand one’s talent stack. Businesses should make this a creative way to reward and recognize employees from afar by providing them professional development opportunities.

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Offer online classes to employees, so they can grow professionally and personally during a time where one might feel stagnant.

We all need a little encouragement today and to feel appreciated for what we do for others, not just at the job, but at home and in our community.

Thank and praise employees (and yourself) for what they are doing for the firm under such difficult times. Let them know that they are not alone, and things will eventually get better. Humans are social creatures. It is important that we band together and leverage the available resources we have to stay connected.

After the pandemic winds down, we will need to take stock of the significance of these changes. There’s much to be learned from this new way of life. This is an opportunity to evaluate and improve the business’ ability to support employees during a time of upheaval and isolation.

Kindness and positive encouragement shown by you as owners and to others as clients, friends and loved ones, will long be remembered. This is our chance as leaders to help those who are struggling during these desperate and lonely times.

Oak is the founder of the consulting firm, Oak & Associates, based in Northern California and Central Oregon. Schoeffler is an associate of the firm. Oak & Associates specializes in financial and management consulting for independent insurance agencies.

Phone: 707-935-6565. Email: catoak@gmail.com.

August 10, 2020 MMG Insurane Company 44 Maysville Road Presque Isle, ME 04769 The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.

Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

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AUGUST 10, 2020 INSURANCE JOURNAL | 49

Closing Quote Autonomous Vehicle Design Should Take Nothing for Granted

By Jessica Cicchino

‘Conventional thinking has it that self-driving vehicles could one day make crashes a thing of the past. The reality is not that simple.’

D

river mistakes play a role in virtually all crashes. That’s why automation has been held up as a potential safety game changer. But autonomous vehicles might prevent only around a third of all crashes if automated systems drive too much like people, a recent analysis by the Insurance Institute for Highway Safety finds.

While fully self-driving cars may eventually identify hazards better than humans, that alone won’t prevent the bulk of crashes. Conventional thinking has it that self-driving vehicles could one day make crashes a thing of the past. The reality is not that simple.

According to a national survey of police-reported crashes, driver error is the final failure in the chain of events

leading to more than nine out of 10 crashes.

But the Institute’s analysis suggests that only about one-third of those crashes were the result of mistakes that automated vehicles would be expected to avoid simply because they have more accurate perception than human drivers and aren’t vulnerable to incapacitation. To avoid the other two-thirds, they would need to be specifically programmed to prioritize safety over speed and convenience.

To estimate how many crashes might continue to occur if self-driving cars are designed to make the same decisions about risk that humans do, IIHS researchers examined more than 5,000 police-reported crashes in a federal government database.

They reviewed the case files and separated the driver-related factors that contributed to the crashes into categories such as “sensing and perceiving” errors, which included things like driver distraction, “predicting” errors like misjudging a gap in traffic, or “planning and deciding” errors, including driving too fast or too slow for conditions.

The researchers also determined that some crashes were unavoidable, such as those caused by a vehicle failure like a blowout or broken axle.

The researchers imagined a future in which all the vehicles on the road are self-driving.

They assumed these future vehicles would prevent those crashes that were caused exclusively by perception errors or involved a driver who

50 | INSURANCE JOURNAL | AUGUST 10, 2020

is incapacitated by drugs or alcohol or has fallen asleep.

That’s because cameras and sensors of fully autonomous vehicles could be expected to monitor the roadway and identify potential hazards better than a human driver and be incapable of distraction or incapacitation.

Crashes due to only sensing and perceiving errors accounted for 23 %of the total, and incapacitation accounted for 10%. Those crashes might be avoided if all vehicles on the road were self-driving — though it would require sensors that worked perfectly and systems that never malfunctioned. The remaining two-thirds might still occur unless autonomous vehicles are also specifically programmed to avoid other types of predicting, decision-making and performance errors.

Consider the crash of an Uber test vehicle that killed a pedestrian in Tempe, Ariz., in March 2018. Its automated driving system initially struggled to correctly identify 49-year-old Elaine Herzberg on the side of the road. But once it did, it still was not able to

predict that she would cross in front of the vehicle, and it failed to execute the correct evasive maneuver to avoid striking her when she did so.

Planning and deciding errors, such as speeding and illegal maneuvers, were contributing factors in about 40 %of crashes in the study sample. The fact that deliberate decisions made by drivers can lead to crashes indicates that rider preferences might sometimes conflict with the safety priorities of autonomous vehicles.

To eliminate these kinds of crashes, self-driving vehicles will need to put safety first.

That means not only obeying traffic laws but also adapting to road conditions and implementing driving strategies that account for uncertainty about what other road users will do, such as driving more slowly than a human driver would in areas with high pedestrian traffic or in low-visibility conditions.

Cicchino is vice president of research for the Insurance Institute for Highway Safety. Before IIHS, she was a research psychologist at the National Highway Traffic Safety Administration.

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