Insurance Journal West 2023-04-17

THINK UFG for simple

Simple solutions for complex times® is more than just our tagline at UFG Insurance.

We’ve made it our mission to create simple solutions for doing business with us, which begins with providing trusted insurance protection and service that exceeds expectations.

For a carrier committed to making insurance simple, think UFG. After all, insurance can be complicated and we all deserve simple solutions in these complex times. ufginsurance.com/services

Simple solutions for complex times INSURANCE

What Young Agents Want

This issue of Insurance Journal features exclusive results from the 2023 Young Agents Survey where young agents nationwide shared their views on the insurance industry and their experiences as agents. (See page 32 for the full report.)

Optimism overall among young agents took a hit, falling from 2022 to 2023, according to the survey results. The young agents responding to the survey said they felt less optimistic about the future of the agency system, as well as their career choice. The tough insurance market and volatile U.S. economy seems to be a factor in that sentiment.

Despite their concerns, more than half (58.3%) of young agents reported feeling “very optimistic” that their income will be greater in 2023 than in 2022, with another quarter (26.3%) feeling “optimistic” that their income will rise this year over last year’s.

Like in previous years, young agents overwhelmingly report that they would still recommend a career in insurance to other young people entering the workforce, even with their concerns.

“It is a good career with room for lots of growth,” one young agent wrote. “If you put in hard work, you can definitely see it pay off.”

This issue also highlights five current risk management and insurance (RMI) college students who discuss why they chose to study insurance. These future industry workers share their thoughts on what the next generation wants in an employer, why they are drawn to a career in insurance, and more. (See page 28 for this report.)

What do you want from your employer? Here are 10 things that young agents responding to the survey said they’d like to see in a good workplace environment:

1.Good cultures.

2.Good compensation and option for work remote.

3.Respect and honesty are key to forming and keeping a good workplace environment.

4.Work/life balance.

5.Supportive management/leadership, flexibility, compensation, and a positive environment.

6. Flexibility, strong leadership and mentorship/on the job training.

7. Opportunities to grow, feedback and fairness.

8. Having a fun and collaborative environment.

9. The most important thing is having the right people and the best technology to get the job done.

10. Valuing people for their efforts is most important.

Chairman of the Board Mark Wells | mwells@wellsmedia.com

Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com

Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com

Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

V.P. of Content Andrea Wells | awells@insurancejournal.com

Executive Editor Emeritus Andrew Simpson | asimpson@wellsmedia.com

National Editor Chad Hemenway | chemenway@insurancejournal.com

Southeast Editor William Rabb | wrabb@insurancejournal.com

South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com

West Editor Don Jergler | djergler@insurancejournal.com

International Editor L.S. Howard | lhoward@insurancejournal.com

Content Editor Allen Laman | alaman@wellsmedia.com

Assistant Editor Jahna Jacobson | jjacobson@insurancejournal.com

Copy Editor Stephanie Jones | sjones@insurancejournal.com

Columnists & Contributors

Contributors: Dan Abrahamsen, Mark Berven, Christopher Lewis, Don Neff, Jim Sams, Susanne Sclafane, Wendy Watson

Columnists: Chris Burand, Bill Wilson

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com

West Sales Dena Kaplan | dkaplan@insurancejournal.com

Romeo Valdez | rvaldez@insurancejournal.com

Kelly DeLaMora | kdelamora@wellsmedia.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

Advertising Coordinator

Erin Burns | eburns@insurancejournal.com

Insurance Markets Manager

Kristine Honey | khoney@insurancejournal.com

Sr. Sales & Marketing Coordinator

Laura Roy | lroy@insurancejournal.com

Marketing Administrator

Alberto Vazquez | avazquez@insurancejournal.com

Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

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

Web Team Lead Josh Whitlow | jwhitlow@insurancejournal.com

Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com

Web Developer Terrance Woest | twoest@wellsmedia.com

Web Developer Jason Chipp | jchipp@wellsmedia.com

V.P. of New Media

Bobbie Dodge | bdodge@insurancejournal.com

Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com

ACADEMY OF INSURANCE

Director Patrick Wraight | pwraight@ijacademy.com

Online Training Coordinator George Jack | gjack@ijacademy.com

Andrea Wells Vice President, Content

‘It is a good career with room for lots of growth.’

THINK AGAIN. Now known as HudsonPro®, our full-service professional lines underwriting and claims handling facility is stronger than ever. Our existing suite of products has been expanded to cover more exposures, from small to large and from conventional to cutting-edge. We proudly serve private companies, non-profits, financial institutions, public companies, groups and individuals, and our seasoned team will craft personalized solutions that fit your needs.

When there’s no room for error, THINK HudsonPro.

Rated A by A.M. Best, FSC XV

HudsonInsPro.com

MANAGEMENT LIABILITY

FINANCIAL INSTITUTIONS LIABILITY

GENERAL PARTNERSHIP LIABILITY

PROFESSIONAL LIABILITY

MEDICAL PROFESSIONAL LIABILITY

News & Markets

Near $27B Underwriting Loss in 2022; Largest Loss Since 2011

Key financial results for private U.S. property/casualty insurers significantly worsened in 2022 from a year earlier, according to preliminary results from global analytics provider Verisk and the American Property Casualty Insurance Association (APCIA).

The industry recorded a net underwriting loss for 2022 of $26.9 billion, more than six times the $3.8 billion underwriting loss in 2021. The underwriting loss in 2022 was the largest the industry has seen since 2011.

“The insurance industry is being hammered by increasing input costs, natural catastrophes, legal system abuse, and resistance in some states to adequate rates,” said Robert Gordon, senior vice president, policy, research and international for APCIA. “Insurers suffered a 14.1% increase in incurred losses and loss adjustment expenses, contributing to a more than $76 billion contraction in insurers’ surplus at a time when loss exposures are rapidly growing. In 2023, insurers are faced with a significant challenge to close the rate gap in order to meet

their growing cost of capital.”

Policyholders’ surplus recovered somewhat to $952.4 billion from Q3 2022’s $911.7 billion total, but still remains below that of year-end 2021 driven primarily by the large amount of unrealized capital losses accrued during 2022. Insurers’ rate of return on average policyholders’ surplus, a measure of overall profitability,

declined to 4.2% in 2022 from 6.4% in 2021.

AM Best has reported similar findings. The U.S. P/C industry recorded a $26.5 billion net underwriting loss in 2022, according to the rating agency.

Verisk and APCIA said U.S. P/C net income fell 33.6% to $41.2 billion in 2022, compared with 2021. The combined ratio deteriorated to 102.7% in 2022, from 99.6% in 2021.

The preliminary results outlined in the table below are consolidated estimates based on annual statements filed by insurers with insurance regulators. The results are based on about 94% of all business written by U.S. property/casualty insurers, Verisk and APCIA said.

“Hurricane Ian and the effects of inflation resulted in major losses for property insurers last year, while accident severity continued to plague personal and commercial auto lines,” said Neil Spector, president of underwriting solutions at Verisk. “To remain profitable in these challenging times, many insurers are looking for new ways to reduce expenses, increase efficiencies, and enhance the customer experience. And they’re finding help from an ecosystem of advanced technology and analytics that is growing every day.”

‘Hurricane Ian and the effects of inflation resulted in major losses for property insurers last year, while accident severity continued to plague personal and commercial auto lines.’

Figures

Represents the average pay gap between male and female gig workers, according to a study sponsored by Legal & General Group. The study found that across all categories of respondents who provided their earnings, female gig workers in the U.S. make less than males, wear more hats, and are more worried about their futures. Per the study, 64% of top-earning gig workers who make more than $100,000 are male. At the same time, 58% of female gig workers occupy the lowest income bracket — earning less than $50,000 a year from gig work.

The percent increase in the number of captive insurers domiciled in Oklahoma in 2022 compared to the prior year. The Oklahoma Insurance Department (OID) reported the state added 11 new captive insurance companies in 2022 and has already issued three additional captive insurer licenses in 2023. Oklahoma also reported four captive dissolutions in 2022. The state ended the year with 52 captive insurers.

The number of months in prison to which a New York-licensed pain management doctor, Sady Ribeiro, has been sentenced for his participation in a scheme to obtain unlawful insurance reimbursements and other compensation from fraudulent trip-and-fall accidents. According to Damian Williams, U.S. Attorney for the Southern District of New York, over the course of the fraud scheme, Ribeiro, 72, and others attempted to defraud their victims of more than $31 million.

The number of felony charges, including charges for insurance fraud, assault with a deadly weapon and reckless driving that Eliu Canales, 43, is facing after a joint investigation by the California Department of Insurance and San Joaquin County District Attorney’s Office. The investigation found he allegedly staged collisions with unsuspecting drivers in order to collect more than $35,000 in payouts from insurance companies. Investigators say that between 2017 and 2022 while working for AAA as a lead tow truck driver who taught defensive driving, Canales orchestrated roughly 22 vehicle collisions with unsuspecting drivers.

Declarations

Responsibility to Act

“Insurers, as society’s risk managers, have a special responsibility to act and the power to drive change: without insurance most new fossil fuel projects cannot go ahead and existing ones cannot continue to operate.”

— Reads part of a letter sent by 23 climate action groups to insurance companies, calling for the insurers to “immediately” stop underwriting new fossil fuel projects in the wake of a stark climate warning from U.N. scientists, according to a Reuters report. Insure our Future, a global consortium of activists, said it sent the letter dated March 21 to 30 companies including Munich Re, Zurich Insurance and AXA.

Sex Discrimination Lawsuit

“It has been almost 60 years since the passage of Title VII, yet many staffing agencies continue to believe that they can indulge discriminatory customer preferences and engage in stereotype-based selection practices with impunity — and they’re wrong.”

— Said Equal Employment Opportunity Commission (EEOC) Attorney Debra Lawrence about a default judgment obtained in U.S. District Court in a sex discrimination lawsuit against Green JobWorks. The suit alleged the Hanover, Maryland-based staffing agency subjected female workers to a pattern of sex discrimination in job assignments and assignment of work duties. The judgement awarded 48 female workers a total of $2,692,265 in monetary relief — $665,566 in lost wages with interest and $2,026,698 in punitive damages.

‘Profit Over People’

“Big corporations like Kia and Hyundai must be held accountable for endangering our residents and putting profit over people.”

— St. Louis, Missouri, Mayor Tishaura Jones said after St. Louis joined other major U.S. cities in a lawsuit against Korean automakers Hyundai Motor 005380.KS and Kia Corp 000270.KS for failing to install anti-theft technology in millions of their vehicles. Kia and Hyundai vehicles represent a large share of stolen cars in multiple U.S. cities, according to data from police and state officials. Many Hyundai and Kia vehicles have no electronic immobilizers, which prevent break-ins and bypassing the ignition.

A Sympathetic ‘No’

“Oceana never repaired, rebuilt or replaced any property that was allegedly lost or damaged. … While we are sympathetic to the immense economic challenges faced in responding to the pandemic, we cannot alter the terms of an insurance contract under the guise of contractual interpretation when the policy uses unambiguous terms.”

— The Louisiana Court said in an opinion that reversed the Louisiana Court of Appeals and reinstated a trial court decision that found COVID-19 did not cause a direct physical loss to the Oceana Grille, a seafood restaurant in the heart of New Orleans’ French Quarter. Its owner, Cajun Conti, had filed a lawsuit seeking insurance coverage for a COVID-19 shutdown.

‘Totally Demolished’

“Our office is gone. Totally demolished. … But we’re going to be all right. We’re going to rebuild. The building was there for 49 years, so we’re going to rebuild it to last for at least another 50 years in the future.”

— Said Leslie Stephenson, manager of a 49-yearold Farm Bureau Insurance agency on Blues Highway in Rolling Fork, Mississippi, after the agency’s building was ripped to shreds by an estimated EF-4 tornado that hit Rolling Fork, a town of about 2,000 people, in March. Stephenson said despite losses to the office and their own property, agency employees handled more than 360 claims from other residents in the area and wrote insurance checks on the spot.

Right to Know

“If your insurance company is going to increase your premium, you have a right to know why. … This is pretty basic information you should expect from your insurance company, but we hear from hundreds of consumers every year who cannot get a straight answer on why they’re being charged more.”

— Washington state Insurance Commissioner Mike Kreidler refers to a proposed rule that requires insurers to explain premium increases to their policyholders in language consumers can understand. Kreidler said the top complaint his office gets from consumers is that their auto or homeowners insurance premium is increasing but their insurance company has not explained why. Insurers say the proposal has the potential to delay rate filings and would make them more complicated to review.

Judge Clears Class-Action Suit Alleging Geico Underpaid Auto Claims

By Andrew Simpson

Geico General Insurance Co. must face a class action suit alleging it has been underpaying benefits to its insureds injured in automobile accidents.

U.S. District Court Judge Dora L. Irizarry in federal court in Eastern New York certified the class alleging breach of contract against Geico General for shortchanging claimants who earn more than $2,000 a month.

The lead plaintiff in the case, Mary Lanzillotta, who was injured in a car accident, claims she was entitled to $55,000 in insurance coverage but was provided only $51,445 in benefits by Geico General.

The plaintiff contends that the insurer utilizes an improper formula for calculating basic economic loss and first party benefits, resulting in “unlawful deductions and premature policy exhaustion.” The complaint maintains that the insurer has used the same improper formula for all policyholders in the class, who are identified in part as insureds numbering “hundreds if not thousands” who have filed similar claims since March 2013.

The court said the resulting effect establishes an injury in fact and the class definition captures others who suffered this injury.

Lanzillotta submitted a claim for first party benefits. Geico General issued a claim payment of $51,445 and advised her that she had exhausted her basic economic loss and med pay coverages of $55,000. Geico General reached this conclusion by accounting for $2,500 in lost earnings per month, and then subtracting from the total $55,000 in basic economic loss and med pay, 20% of such lost earnings ($500) for the seven months that she received first party wage

benefits, for a total deduction of $3,500.

The complaint asserts that Geico General, instead, should have accounted for only $2,000 in lost earnings per month and not applied the 20% deduction. This allegedly improper calculation of first party benefits deprived her of $3,500 in basic economic loss benefits to which she she says she was entitled.

State law defines basic economic loss as the amount of coverage for medical and wage benefits up to $50,000. It further defines wages as loss of earnings from work that the insured would have earned if she had not been injured, capped at $2,000 per month. First party benefits, on the other hand, are the amount of medical and wage benefits a person is entitled to be reimbursed from the basic economic loss coverage limits for wages by more than the $2,000 cap. Lanzillotta earned more than $2,000 per month.

The suit alleges that Geico General has improperly reduced the basic economic loss coverage limits for wages by more than $2,000 and as a result insureds earning more than $2,000 a month have been

denied full first party benefits because of the premature exhaustion of basic economic loss.

The suit seeks damages, restitution, and attorneys’ fees.

GEICO General, in part, argued that the class should not be certified because the plaintiff is atypical. The court rejected that contention, finding that the the claims “not only arise from the same course of events, but rest on similar legal arguments regarding the premature exhaustion of insurance policies through GEICO General’s basic economic loss reduction formula.”

The final court-approved definition limits the class to those GEICO General policyholders who earned gross monthly wages in excess of $2,000 per month at any point during the period in which they were covered, who have submitted first party benefit claims to and received payment from GEICO General that included claims for lost wages, and which, after paying at least one month of first party wage benefits, GEICO General claimed their coverage was fully exhausted on or after March 13, 2013.

The judge denied extending the class to violations of the New York no-fault statute. In addition, she dismissed the claims as to all the other defendants in the GECO family including Government Employees Insurance Co., GEICO Indemnity Co., GEICO Casualty Co., GEICO Advantage Insurance Co., GEICO Choice Insurance Co., GEICO Secure Insurance Co., GEICO County Mutual Insurance Co., and GEICO Insurance Agency Inc. for lack of standing.

IICF Inclusion in Insurance Global Conference

Register today!

IICF Inclusion in Insurance Global Conference

June 13–15, 2023, New York City

New York Hilton Midtown

Proceeds benefit nonprofit and charitable organizations across the US and UK through the IICF Community Grants Program.

Eric M. Bailey

The bestselling author of “The Cure for Stupidity: Using Brain Science to Explain Irrational Behavior” and leading expert on human relationships and communication. Eric has a diverse set of experiences that includes helping NFL All-Pro Larry Fitzgerald pet a rhinoceros, doing barrel rolls in an F-16, and chatting with LL Cool J on the campus of Harvard University.

Claudia Brind-Woody

IBM Managing Director in the UK and Ireland. Recipient of numerous awards, Claudia was named to the Financial Times Global LGBT Role Models Hall of Fame in 2016 after having been in the top 10 on their list for the three previous years. Brind-Woody is the Global Co-Chair for the LGBT Executive Taskforce at IBM.

Register today: inclusion.iicf.org

For sponsorship please contact Betsy Myatt at emyatt@iicf.com or (917) 544-0895

Chris De Santis

An independent organizational behavior practitioner, speaker, podcast host of Cubicle Confidential, and author of “Why I Find You Irritating: Navigating Generational Friction at Work.” He has developed a framework for understanding generational perspectives, explaining when it makes sense to talk about these differences and when it doesn’t.

Jon Macaskill

A Navy SEAL Commander turned mindfulness and meditation teacher. Macaskill has served in Iraq, Afghanistan, off the coast of Somalia and in Panama. His consulting business brings mindfulness and mediation to high performing teams dealing with stress, anxiety, and depression while increasing focus, creativity, and productivity.

Join us for the in-person return of our industry-leading Global Conference, where hundreds of exceptional insurance professionals of all ages and stages will convene for an action-oriented program with a unique focus on leadership and an inclusive future for the industry. Learn more at: inclusion.iicf.org

Thank you to our earliest 2023 Sponsors

Diamond Sponsor Sponsors

News & Markets

High Inflation Hiked P/C Claims Costs Up to 7.5% in 2022

In the U.S., the motor physical damage loss ratio reached 84% for 9M2022, almost 20 ppt above the annual average of the 10 years before the COVID-19 pandemic, Swiss Re said. For 2023, Swiss Re forecasts a P/C combined ratio of approximately 98%, close to the pre-COVID-19 level of 97.7% in 2019.

By L.S. Howard

High inflation alone led to an increase in property/casualty claims of 5%-7.5%, across five key markets in 2022, according to Swiss Re research.

“In 2023, we expect that inflation should lead to an additional increase of 3.5-6.5%,” said Swiss Re Institute’s Economic Insights report, titled “Inflation may be easing, but claims severity pressures in P&C remain,” which analyzed inflation and pricing trends in Germany, France, the UK, Australia, and the U.S.

For property, a short-tail business that is immediately sensitive to the effects of inflation and rising construction costs, the report estimated a 6%-13% increase in claims payouts in 2022, with an additional 3.5%-10% hike expected for 2023.

“The high-inflation environment has been expensive for P&C insurers. The losses from Hurricane Ian at the end of 2022 contributed to a worsening of the P&C loss ratio, but the main driver was the sharp increases in economic inflation,” the report said.

Swiss Re suggested that P/C rate increases achieved in 2022 were not enough to offset the upward pressures from other non-economic factors, such as social

inflation and increased loss frequency in motor and property lines.

Indeed, premium income should have risen 13% in 2022 in order to offset inflation-driven claims gains, said Swiss Re, noting, for example, that property premium income fell short of rising claims costs in Australia, Germany and the UK.

Swiss Re expects P/C claims growth to ease in 2023, along with the decline in inflation. Alongside a repricing in loss-making areas during recent primary market renewals, some of last year’s underwriting pressure may be alleviated, the report continued.

However, the report cautioned insurers to maintain underwriting discipline in pricing and terms and conditions because inflation is likely to continue to affect many claims-relevant price categories, such as labor and medical costs.

The average combined ratio in P/C insurance in Swiss Re’s profitability analysis of eight major markets — Australia, Canada, France, Germany, Italy, Japan, the UK and the U.S. — rose to 99.3% in 2022 from 96% in 2021, driven mostly by inflation.

In France, the loss ratio in P/C in the third quarter of 2022 was 9 percentage points (ppt) higher, year-on-year, while in the UK, the loss ratio for motor was up 5.1 ppt in the same period.

Inflation Drivers

Swiss Re noted that some of the inflation drivers seen over the past few years will ease somewhat in 2023.

“Cost increases in construction, which peaked in 2022, should ease but will remain high by historical standards, as building activity is still strong and China’s re-opening will increase global demand for commodities,” the report said. For example, the producer price index for construction (PPI-C) is expected to rise by 8% this year in the UK, and by 11.4% in the U.S.

Cost rises in motor vehicle repairs and replacements should ease in most key markets, but will still be above pre-pandemic levels, the report noted.

Other inflation drivers include tight labor markets (which will increase wages) and backlogs of medical procedures (which will increase healthcare costs).

Swiss Re explained that ongoing elevated costs will put on long-tail lines of business in casualty and motor liability.

The report was authored by Arnaud Vanolli, economist; Roman Lechner, P/C Economic Research lead, and Li Xing, head Insurance Market Analysis — all with the Swiss Re Institute.

‘The high-inflation environment has been expensive for P&C insurers. The losses from Hurricane Ian at the end of 2022 contributed to a worsening of the P&C loss ratio, but the main driver was the sharp increases in economic inflation.’

News & Markets

APCIA Says Property Insurance Market ‘Hardest in a Generation’

By Jim Sams

Acombination of historic high inflation and a growing frequency of natural catastrophes is creating the hardest market in a generation for property insurance, the American Property and Casualty Insurance Association (APCIA) says in a new white paper.

“The growth of population, housing, and businesses in hazard-prone areas are exacerbating the effects of climate change, leading to more frequent and severe catastrophe losses,” stated Karen Collins, the APCIA’s vice president, property and environmental. “The higher costs of capital and reduced reinsurance capacity are further exerting upward pressure on insurance rates and may result in stricter underwriting in cat-exposed markets.”

APCIA noted that the U.S. inflation rate hit a 41-year high of 8% in 2022, peaking at 9.2% last June. Insurance claims have risen even faster, contributing to underwriting losses that pushed the estimated combined loss ratio for property/casualty up to 104% according to a preliminary estimate by A.M. Best, the report says. That was the first underwriting loss since 2017.

Both claims frequency and claims severity play a role in those losses. The report says 2022 was the eighth year in a row that the U.S. suffered 10 or more catastrophes with losses exceeding $1 billion. Natural disaster losses from 2020 to 2022 exceeded $275 billion, the highest-ever three-year total for U.S. insurers. In the meantime, the cost of materials needed for repairs and replacement has increased. The APCIA said the producer price index for residential construction goods jumped 33.9% from January 2020 through December 2022. The Consumer Price Index for home furnishings grew 18.7% during that period.

U.S. spending on residential construction has been generally rising since 2010. Construction spending remains “resilient,” the report said, in part because of spending made necessary by natural catastrophes.

According to the National Oceanographic and Atmospheric

Administration, 2022 was unique for landing in the top three years for both frequency of events and overall disaster costs. There were 18 U.S. weather/climate disaster events with losses exceeding $1 billion each, a number that was surpassed only twice before, in 2020 and 2021. Total losses reached $167 billion, a number that also was surpassed only twice before, in 2005 and 2017. (adjusted for inflation.)

Reinsurers have pulled back, resulting in higher prices. Guy Carpenter estimates property-catastrophe reinsurance prices rose 30.1 percent this year following a 14.8 percent increase in 2022.

Collins said homeowners’ and business owners’ own choices are helping drive the hardening market. “The growth of population, housing, and businesses in hazard-prone areas are exacerbating the effects of climate change, leading to more frequent and severe catastrophe losses,” she said. “The higher costs of capital and reduced reinsurance capacity are further exerting upward pressure on insurance rates and may result in stricter underwriting in catastrophe-exposed markets.”

Collins said insurers are encouraging property owners to harden homes and businesses by upgrading with disaster-resistant materials. Combustable materials

such as bark and wood piles should be kept five feet away from homes. Safety devices that use smart technology are also recommended to reduce losses.

Building codes can also play a role in reducing losses. Researchers for the National Institute of Building Sciences say that for every $1 spent on natural hazard mitigation in new code construction can save $11 in disaster repair and recovery costs. In 2020, the Federal Emergency Management Agency released a report that says building in compliance with modern building codes leads to major reductions in property losses from floods, hurricane winds and earthquakes.

The report says the amount of damage caused by Hurricane Ian last year is a case in point. Compared to Hurricane Charley, which followed a similar path across the Florida peninsula in 2004, Ian caused considerably less wind damage and there were fewer partial and total roof failures.

“Commercial and residential properties with mitigation measures such as flood vents, updated roofs and hurricane shutters inherent to their construction were able to withstand the storm’s wrath and limit damage,” the report says.

Sams is the editor of Claims Journal.

Business Moves

northern Indiana.

Jason Brimner, John Brimner, Jeff Peters, Mick Stewart and their team will remain in their current location under the direction of Sean Gallagher, head of Gallagher’s Great Lakes region retail property/casualty brokerage operations.

NFP, David A. Marcus & Associates, Deerfield Financial Group

NFP, a property/casualty broker, benefits consultant, wealth manager and retirement advisor, has acquired David A. Marcus & Associates Inc. and Deerfield Financial Group LLC (David Marcus).

National

NSM, Sequoia Reinsurance Services, Rockport Benefits, Insurance Resources and Auditing Services

Pennsylvania-based insurance program specialist NSM Insurance Group completed its acquisition of three businesses that specialize in the field of medical stop loss insurance and managed care insurance.

The firms are Sequoia Reinsurance Services in Minnesota, and IOA Re’s two divisions, Rockport Benefits in Massachusetts and Insurance Resources and Auditing Services (IRAS) in Pennsylvania.

Rockport and IRAS are subsidiaries of ELMC Risk Solutions in New York, a portfolio company of private investment firm J.C. Flowers & Co.

Richard Fleder is CEO of ELMC; John Parker is president and CEO of IOA Re; and Dan Bolgar is president and CEO of Sequoia Reinsurance Services. Rockport Benefits is co-led by managing directors Amy Argeros and Heidi Herlihy.

Carlyle purchased NSM from White Mountains last August.

NSM has more than $1.5 billion in premium across more than 25 specialty insurance programs and brands in the U.S. and UK. Its programs focus on collector cars; pets; social services and behavioral health; addiction treatment; coastal condominiums; towing and garage; trucking; sports and fitness; professional liability for contractors, architects and engineers; habitational; staffing; and workers’ compensation.

East

World Insurance Associates, Finger Lakes Partners Insurance Services

National insurance broker World Insurance Associates has acquired the business of Finger Lakes Partners Insurance Services Inc. of Geneva, New York.

Finger Lakes was formed in 2007 with the merger of Chacchia & Parrott and Henry Shepard Smith. In addition to its Geneva office, it has an office in Waterloo. The agency sells auto, home, business, life, boat and other insurance products.

According to the acquisition announcement, all the principals of Finger Lakes Partners are joining World to continue to operate the business. Partners include Edward Boudreau, Charles Bartishevich, Daniel Chacchia and John Parrott Jr.

World Insurance is headquartered in Iselin, New Jersey.

The transaction closed in January. Terms were not disclosed.

Midwest

Arthur J. Gallagher; Stewart, Brimner, Peters & Company

Arthur J. Gallagher & Co. has acquired Fort Wayne, Indiana-based Stewart, Brimner, Peters & Company Inc. (SBP). Terms of the transaction were not disclosed.

SBP is a retail insurance broker offering a variety of commercial and personal insurance products along with employee benefits consulting to clients in central and

Based in Deerfield, Illinois, David Marcus is a multidisciplinary insurance broker and consultant that provides a wide range of financial products and services to individuals and business owners.

Firm founder, David A. Marcus, will join NFP and report to Michael Schneider, president of NFP’s Central region.

The acquisition closed on January 13. Marcus and his team offer advice and counsel on group benefit programs, individual benefits, and life insurance and related individual solutions (including long-term care insurance, annuities and disability insurance). They also offer retirement plan advisory and wealth management services to corporate and individual clients.

South Central

Porch Group Inc., Homeowners of America

Porch Group Inc. announced that its insurance business, Homeowners of America (“HOA”), filed an application to form and license a Texas reciprocal insurance exchange (reciprocal) with the Texas Department of Insurance (TDI).

If approved and fully implemented by Porch, its insurance underwriting business would be conducted exclusively through the reciprocal.

A reciprocal insurer is an insurance association owned by its policyholder-members who spread risk by pooling their risks together.

The day-to-day operations of the reciprocal would be managed by a subsidiary of

Porch, which would receive ongoing fees for originating, underwriting and processing claims on behalf of the reciprocal.

The launch of the reciprocal remains subject to review and approval by TDI.

Southeast

Correll Insurance Group, SouthPoint Risk, Insight Risk Management

Correll Insurance Group, based in Spartanburg, South Carolina, has acquired two Tennessee-based agencies: SouthPoint Risk, in Nashville; and Insight Risk Management, in Memphis.

Correll has made 10 acquisitions in the last three years, expanding its reach in South Carolina, North Carolina, Tennessee, Kentucky, Mississippi and Arkansas.

SouthPoint Risk is a full-service independent agency with 85 employees and offices across Tennessee and Kentucky.

Insight Risk Management is more than 100 years old and has locations in Tennessee, Arkansas and Mississippi.

The acquired firms will maintain their brands as branches of Correll.

Warner Pacific, Agents Marketing Group

Warner Pacific, a general agency that operates in several Western U.S. states, has acquired Agents Marketing Group, a general agency based in Miami.

Warner said it is a top-producing general agency for some of the largest U.S. insurance carriers and has more than $4 billion of in-force premiums. It has worked with brokers and agents in California, Colorado, Texas and Oklahoma.

AMG was founded in 2001 by Robert Kilian. It offers brokers consultation, analysis and strategy on employee benefits.

West

EPIC Insurance Brokers & Consultants

EPIC Insurance Brokers & Consultants, the San Francisco-based retail property/ casualty insurance brokerage and employee benefits consultant, expanded its financial services division with the launch of its Insurance Capital Solutions (ICS) group.

To foster collaboration and leverage cross-functional expertise, ICS will align and coordinate origination, placement, and service capabilities across four key business lines: Professional, Executive and Cyber, Transactional Risk, Capital Advisory, and Financial Services Industry Advisory.

With the formation of ICS, organizational changes and new leadership appointments have been made.

Kelly Geary will serve as the national practice leader of the Professional, Executive and Cyber Solutions group; John Prentis will serve as national growth leader; Larry Bowlus will serve as national public D&O leader; Michael Klaschka will serve as national financial institutions group leader; and Vincent Caracciolo will serve as national claims and coverage advocacy leader.

Parker, Smith & Feek; Professional Benefit Services Inc.

Parker, Smith & Feek acquired Professional Benefit Services Inc. in Washington.

PBS President Jere Meyer and Account Executives Katie Stewart and Lesley Behrndt will join Parker, Smith & Feek’s team of more than 350 associates.

PBS, an IMA company, provides group employee benefits and individual insurance products, focusing on people under 50.

IMA Financial Group Inc. is an insurance and risk management broker specializing in emerging risks.

Arthur J. Gallagher, Viking Bond Service

Arthur J. Gallagher & Co. acquired Phoenix, Arizona-based Viking Bond Service Inc.

Tom Buckner, Bill Belpedio and the Viking Bond team will operate under the direction of Kevin Garvin, head of Affinity North America for Gallagher’s retail property/casualty brokerage operations.

Viking Bond Service is a surety bond agency specializing in commercial, contract and fidelity bonds for clients across the United States.

Arthur J. Gallagher is an insurance bro-

kerage, risk management and consulting services firm headquartered in Rolling Meadows, Illinois.

Reliance Partners, Truck Team Insurance

Reliance Partners acquired the assets of Truck Team Insurance in Salt Lake City, Utah. Truck Team Insurance owner Brent Tate will join Reliance Partners’ team as vice president of sales. He has more than 20 years of commercial insurance experience. He founded Truck Team Insurance five years ago.

Truck Team Insurance is an insurance brokerage providing commercial trucking insurance in 23 states across the U.S. Reliance Partners is a commercial insurance agency with locations in Chattanooga, Tennessee; Birmingham, Alabama; Chicago; Austin, Texas; Tempe, Arizona; Milwaukee, Wisconsin; Sacramento, California; and Tampa, Florida, with a national client base largely concentrated in the transportation and logistics space.

Ranger Ranger, an “agent-first insurance technology company,” has launched in Arizona in what is planned as the first state in a multi-state national rollout.

Ranger touts itself as an insurtech to elevate the role of the insurance agent with a full-stack software solution. The company reportedly has agents on-the-ground and is actively recruiting throughout the state.

Ranger raised $5.3 million in seed round in 2022, led by industry veterans and backed by major investors including Lerer Hippeau, Alex “A-Rod” Rodriguez and Montauk Ventures.

Apex Risk & Insurance Services

Apex Risk & Insurance Services launched in the San Diego, California, area. CEO Peter Katkov, a seasoned insurance professional with more 15 years in the industry, founded Apex Risk & Insurance. Apex specializes in personal and commercial property/casualty insurance. The agency serves businesses in a broad range of industries, including manufacturing, real estate, life sciences, technology, and construction.

People

National WKFC

Underwriting Managers, Ryan Specialty’s managing general underwriter headquartered in Melville, New York, promoted Ravi Singhvi to president of WKFC and Joan Bauer to chief operating officer.

Singhvi joined WKFC in 2018 and was most recently the MGU’s chief operation officer. Before WKFC, Singhvi served as vice president of analytics at AJG/RPS from 2011-2018.

Bauer has been with WKFC since 2010, initially training as an underwriter before being promoted to vice president, deductible payback lead and property underwriter.

AmTrust Financial Services Inc., a global specialty property/casualty insurer headquartered in New York, added Ken Surian and Brian White to its commercial lines team.

Surian joins AmTrust as senior vice president, product management. He most recently served as vice president, small commercial state product management at Travelers. He also held product management positions at Liberty Mutual Insurance, OneBeacon Insurance, Unitrin Insurance (now Kemper) and Leader Insurance.

White joins AmTrust as vice president, product strategy. He most recently served as director — P/C, product and underwriting at Nationwide.

QBE North America promoted Michael Foley to president, commercial insurance. Foley will be responsible for planning,

Michael Foley

directing, and executing the vision for lines of business, including middle market, commercial casualty, workers’ compensation programs and commercial property programs.

Before joining QBE in April 2022, Foley served as the global chief underwriting officer for casualty and healthcare at Berkshire Hathaway Specialty Insurance and in leadership roles at AIG. He started his insurance career in the middle market business at The Hartford.

QBE is headquartered in Sydney, Australia, and the North American division is headquartered in New York, New York.

Allianz Global Corporate & Specialty (AGCS) appointed Gordon Browne as global head of specialty. Browne joins AGCS in New York to lead the underwriting and further development of its specialty business, which includes aviation, energy and construction, entertainment, and marine.

Browne was most recently global head of energy and construction and head of North America Specialty for AIG. He has almost 20 years of industry experience in the United States and United Kingdom.

East

The MEMIC Group, headquartered in Portland, Maine, promoted three veteran team members to key managerial roles.

Janine Bard has been promoted to director of claims,

Maine region. Bard started as a compensation specialist in 2002 before being promoted to claim team manager in the Northeast and then a claim team manager in the Mid-Atlantic region. She has more than 25 years of experience in workers’ compensation.

Ben Delcourt has been named director of underwriting. Since joining MEMIC in 2012 as an account analyst, Delcourt has been promoted to associate underwriter in 2014, underwriter I in 2015, underwriting supervisor in 2016 and manager of underwriting in 2018.

Kaila McCracken is now director of financial planning. McCracken joined MEMIC in 2017 and, prior to her current position, served in a series of progressively more supervisory roles, from data analyst to supervisor of financial planning.

Midwest

Sarah Stephens, Marsh’s current head of cyber for the UK and international, Marsh Specialty, will assume the role of U.S. central

zone leader on May 1. Stephens will relocate to Chicago from London, England, and will lead Marsh’s 18 offices across the central region of the U.S., with responsibility for client initiatives, new business and talent development.

Stephens joined New York, New York-based Marsh from JLT in 2019 as cyber, media and technology leader within the UK financial and professional services practice.

Before JLT, Stephens spent 12 years with Aon, starting as a client specialist, and was named Aon’s head of cyber and commercial errors and omissions for Europe, the Middle East and Africa in 2014.

AAdvantage Insurance Group, headquartered in Glen Carbon, Illinois, hired Sondra Berg as personal lines account executive. Berg will focus on maintaining, expanding, and servicing the agency’s clients.

Berg has worked in the insurance industry for nearly 10 years. Before joining AAdvantage, she worked in various capacities at a local insurance agency.

Founded in 2009, AAdvantage Insurance Group serves clients in 19 states, with the majority in Illinois and Missouri.

Alive Risk, an amusement, sports and entertainment-focused managing general underwriter of Ryan Specialty, hired Richard Rutkin as a relationship and marketing executive.

Alive Risk is headquartered

Gordon Browne

Janine Bard

Ben Delcourt

Kaila McCracken

Sarah Stephens

Sondra Berg

in Minneapolis, Minnesota.

Rutkin joins Alive Risk with more than 30 years of experience in the development and management of property, casualty and specialty contingency insurance.

In 2018, Rutkin sold his 25-year-old wholesale brokerage firm, focused on the entertainment and sports industries, to a national excess and surplus broker. Rutkin also served as senior vice president, development, at U.S. Risk LLC.

South Central

Watkins Insurance Group named Joe Guyton and John Aoueille as new shareholders.

With over a decade of commitment to the agency, Guyton and Aoueille have demonstrated their expertise in risk and insurance solutions.

Guyton, vice president, brings a wealth of knowledge about industry trends and regulations.

Aoueille, vice president, is an experienced insurance professional who leads the agency’s Marble Falls, Texas, office.

Watkins Insurance Group is based in Austin, Texas.

Kristin Lonergan joined Cadence Insurance Inc., headquartered in Houston, as Dallas/Fort Worth market president. In her new role, she will build and lead a commercial, personal and group benefits practice and introduce key offerings such as Cadence Business Solutions and Cadence Risk Solutions to the Dallas/Fort Worth market.

Lonergan is a second-generation insurance specialist with

nearly 40 years of insurance experience. Before joining Cadence Insurance, Lonergan served for almost 23 years as partner and executive vice president for Dallas-based Sleeper Sewell Insurance.

David Bolduc has been appointed public counsel for the Texas Office of Public Insurance Counsel (OPIC) for a term set to expire on Feb. 1, 2025. OPIC represents the interests of insurance consumers in regulatory matters relating to insurance rates, rules, and forms.

Bolducis has been the acting public insurance counsel for OPIC. Previously, he served as the deputy public counsel for OPIC, as an attorney for the Office of Policy Development Counsel for the Texas Department of Insurance, as general counsel for the Texas Natural Resource Conservation Commission, as a division chief in the Office of the Attorney General of Texas, and as deputy general counsel at the Texas Department of Agriculture.

Southeast

Keystone Insurers Group, a Pennsylvania-based participant-owned agency network, named Brian Erwin as state vice president for Kentucky and Ohio.

Erwin comes to Keystone from WestBend Mutual Insurance, where he was senior regional sales manager, the company said in a news release.

Keystone, launched in 1983, now includes 300 agencies in 19 states.

The Tennessee Department of Commerce and Insurance appointed Robert Judson

Jones, a licensed pharmacist, director of pharmacy benefits manager compliance.

As a clinical pharmacist and TennCare provider educator for more than 20 years, Jones has worked directly with PBMs and pharmacies, TDCI said in a bulletin.

The position is a new one, created by a law approved in 2022 by the Tennessee General Assembly that allows pharmacies to appeal their reimbursement from PBMs, directly to the TDCI. Pharmacists may also file formal complaints about PBMs.

Atlantabased InsureTrust, a cyber insurance specialty broker, named Florence Levy executive vice president.

Levy previously was a director of cyber incident management with another global broker. She also served in senior cyber roles at three other brokerages.

InsureTrust is part of Starwind Specialty, a division of CRC Group.

West

PCF Insurance Services in Lehi, Utah, named

Brandon Gray to the newly created role of vice president of treasury.

Gray leads investment strategies, treasury operations and financing activities, and provides treasury-related acquisition due diligence and integration support.

Gray comes to PCF Insurance from Ancestry, where was treasurer. Before Ancestry, Gray held several roles over 13 years at Huntsman Corp., served as senior internal auditor at Novell, and spent three years as a senior auditor at PwC.

The Surplus Line Association of California, headquartered in San Ramon, promoted Barbara Trumbly to senior vice president and hired Yusuf Mayet as the organization’s vice president for compliance.

Trumbly previously served as the association’s vice president for human resources. An attorney, Trumbly previously served as president of TruHR Legal Consultants PC; director of human resources and client services at Centricity Solutions; and human resources manager at ATI Architects and Engineers.

Mayet, an insurance professional for more than 22 years, has worked at Brown and Riding, Worldwide Facilities and AmWINS.

Alera Group appointed Cynthia Ballantyne as managing director of the West region.

The West region includes 18 offices, 36 locations and 600 employees across California, Arizona and Nevada.

Ballantyne joined Deerfield, Illinois-based Alera Group from Gallagher, where she was area president since 2016. Previously, Ballantyne was president of Bagnall, which Gallagher purchased in 2016.

Robert Judson Jones

Kristin Lonergan

Florence Levy

Brandon Gray

Spotlight: Workers’ Compensation

Taking Care of Business: Workers’ Comp Opportunities in a Soft Market

By Jahna Jacobson

Workers’ compensation is getting the job done. Premiums are decreasing, claims are stable and retention is high.

But even good news can present its own set of challenges, Burns & Wilcox indicated in its webinar, Navigating a Soft Workers’ Compensation Market, which explored the state of the market and how agents can find and take advantage of available opportunities.

A Profitable Soft Market

“It’s a little longer for some

states, but nationwide we’re on an eight-year soft market, which is probably the only line that is a soft market right now,” said Justin Dorman, workers’ compensation national product manager for Burns & Wilcox, who is based in Charleston, South Carolina.

Most markets are hard right now, so “why are we still in a soft market? And really, it’s because workers’ comp is still profitable,” Dorman said. “It’s highly desired by most carriers, and most carriers are writing other lines of business and including work comp, requiring work comp, because it is prof-

itable and allows them to write other business that maybe [is] not as profitable.”

The net written premium for private carriers for 2021 was $38.2 billion, only up over half a percent over 2020, said Burns & Wilcox workers’ compensation underwriter Morgan McCoy, also based in Charleston. “However, in the first two quarters of 2022, it was a 10% increase just for those two quarters. So, it looks like 2022 is going to be much higher.”

Without the restrictions seen in the excess and surplus (E&S) markets, you can write

an almost unlimited capacity, Dorman said. Because workers’ comp rates are determined retrospectively, carriers can confidently project that rates will continue to drop over the next few years.

Plus, there are not a lot of surprises when it comes to workers’ comp claims, Dorman added.

“Frequency has been basically flat over the last couple years,” Dorman said. “Severities are up a tick but not enough to warrant any big changes.”

He added that they’re “seeing some of these larger claims

arise, but with less frequency, carriers are still able to control their profit margins on that.”

Safety innovations and automation, OSHA guidelines and better safety management are helping to keep workers a lot safer, Dorman said. “We’re always going to have the claims — we’re human and we make mistakes — but they’re trending in a good direction.”

Unlike some other lines, workers’ compensation isn’t severely impacted by losses caused by hurricanes, wildfires and other catastrophic events, he added.

Challenges

Writing new workers’ comp business can be a challenge for agents because rates are low and employers aren’t shopping around for lower coverage prices, the presenters noted.

Insureds “are tending to stay with the carrier for a longer period of time, so it’s much harder to write new business for agents,” McCoy said.

In the high retention market, communication with the client and finding out what they need is key to offering coverage that is a better fit, Dorman said.

“They may have a lower renewal quote, but they do not like this carrier’s audits or their billing system or something like that,” he said. “Now is the time to find out what they need and use that as leverage to get their workers’ comp, because the general thing is that work comp is the foot into the door for the whole package.”

Bringing the whole agency in on every line of business will encourage

agents to look for openings that could be useful to other teams.

The mass shift to working from home is one area that also has presented some challenges in the workers’ comp line.

“Depending on the state, there’s different wording on what’s covered and what’s not covered when you’re working from home, and really there’s a lot of gray area,” Dorman said. “It could be a lot harder to write than you would think.”

He said the telecommuting class is clerical and has low rates, but that means a single large claim can render an account unprofitable.

Outlook

What does inflation mean for workers’ compensatoin? Under current conditions, inflation would balance out the decrease in premiums, Dorman said. “Usually, it leads to higher payroll, and workers’ comp is based off of payroll. It’s going to keep those premiums around where they were even though the rates

are decreasing.”

He added that the opposite would happen if the economy goes into recession. In 2005, economic changes led to a wave of audits that resulted in returned premiums, Dorman said.

“If you see trends, talk to your clients, and they’ll really appreciate that, too, especially if it’s something where they would owe extra money on an audit,” he said.

“Carriers’ appetites are changing, so in the last couple years, you’ve seen them expand what they’re looking for as far as classes,” Dorman said. But he added that eventually, a hardening workers’ comp market might cause carriers to withdraw from certain classes or the industry in general.

Staying on top of the shifting market means agents can

create seamless coverage for clients if their carrier drops their class.

Since retention rates are so high, McCoy said many agents are going after new ventures. Higher risk pools are looking more appealing, he said.

“There are not too many things we’re going to decline right off the bat,” McCoy said.

Dorman said there’s also a market for non-renewal business, depending on the reason for non-renewal. If insureds are upfront about the causes of their non-renewal, it’s easier for agents to find carriers willing to take on those specific issues in a short time frame.

Specialty Solutions

New, specialized markets are one place agents can go to grow their clientele.

“Cannabis is starting to boom everywhere, and we do have a market that is all that they are looking for,” Morgan said. “Before, there were hardly any carriers at all that would look at that class, but now they are starting to open up, be more open-minded about it.”

There is also a broader appetite for higher-risk classes such as tree trimming, roofing, trucking and home health care, especially skilled nursing, he added. But in the end, it all falls back to old-fashioned legwork and customer service. “Get out there, knock on some doors, call some people, ask them what they’re doing with their work comp because they probably aren’t even thinking about it,” Dorman said. “Work comp is a foot in the door to the whole account.”

Closer Look: Metaverse

Can Insurance Find a Home in the Metaverse?

By Allen Laman

ACognizant report published last year, titled a pragmatist’s guide to the Metaverse, said if you ask three people what the Metaverse is, you’ll get three different answers.

Insurance Journal recently tested that theory — and dissected the developing virtual landscape through an insurance-focused lens.

Late last month, a panel of three insurance experts discussed their views and predictions regarding insurance and the Metaverse for Insurance Journal’s webinar, Insuring the Metaverse: Immersive Tech and the Future of Coverage. While their definitions of the Metaverse varied slightly, they did agree on one thing: Insurance can find a home in this new, immersive world.

What Is the Metaverse?

Craig Weber called it “the next revolution in how people interact with things.”

Garrett Droege explained that it’s essentially “a real-time, 3D environment that all the

users experience simultaneously.”

Dennis Winkler said he thinks of it as “a virtual reality space where users can interact with each other in a computer-generated environment.”

If this sounds familiar, that's because the Metaverse isn’t some faraway idea. Components of it already exist.

“The answer I normally give people is, if you have children (or grandchildren), look at the video games they’re playing right now,” said Droege, director of innovation and strategy for IMA Financial. “Fortnite. Roblox. Minecraft. These are all Metaverses. They’re having shared experiences in a 3D environment with their friends, solving little objectives (and) having fun hanging out in the same place. Just a virtual environment.”

Still, the idea of the Metaverse as a singular concept that unifies many platforms — like the ones listed above — has yet to be realized. Droege believes it will get there. But he said that currently, “we are nowhere close to having the computing power necessary to

actually operate the Metaverse at scale.”

He thinks we’re five to 10 years away from that materialization.

“We don’t really have the computing power to provide ubiquity, and reach and the ‘always on’ aspect of the Metaverse that is where people think it could eventually go,” added Weber, the head of insurance strategy at Cognizant. “We’re very early on, and it’s hard to imagine how we make these jumps that are 10 years out. But it’s certainly on a progression where we’re headed that way.”

Future Opportunities for Insurers

Panelists said in some ways, insurance will be no different in the Metaverse, with big dollars simply being invested in digital assets.

that doesn’t currently exist for them. And the demand is there.”

He later said that while “we aren’t seeing a lot of insurance requirements yet,” they are coming, pointing to examples of virtual concerts that can be sponsored, like traditional, in-person events. If the event became inaccessible, he said, sponsors could stand to lose money.

This is why Droege believes traditional insurance — like event cancellation insurance — will become a required product. He explained that digital assets of all kinds are already being insured today, and he can only dream of how that will evolve.

Silent Metaverse?

To access Insurance Journal’s free webinar, Insuring the Metaverse: Immersive Tech and the Future of Coverage, visit: https://www.insurancejournal.com/research/research/ insuring-the-metaverse-immersive-tech-and-the-future-ofcoverage/

“The opportunity is an entirely second world that insurance companies could insure,” Droege explained. “So I think that the more progressive insurance companies out there could look at that opportunity as a new revenue stream

An important question remains: Could Metaverse coverage be unintentionally wrapped into a policy?

Winkler, a director in the ISG insurance industry vertical, encouraged carriers to gather legal teams to discuss this issue as quickly as possible. Whether digital assets are included or excluded, he advocated against

ambiguity and in favor of clarity.

Droege said some carriers are, whether knowingly or unknowingly, picking up this coverage today. He recommended they not eliminate coverage entirely to collect actuarial data for future products.

Creating New Experiences and Connections

Weber believes the Metaverse platform could be tapped to improve customer experiences. As younger demographics enter their primary insurance consumption years, more interacting through new technology is an opportunity, he said. The big uptick in remote work prompted by COVID-19 also familiarized

many people with virtual possibilities, he added.

Winkler sees the Metaverse as an opportunity for “insurance companies to start thinking about a way to be more hip, more modern and attract some of the younger staff.” He believes the Metaverse presents new ways to build culture and gather teams. He shared that Accenture, for example, is already tapping into virtual reality onboarding and training.

Insurance is relationship-driven, so Winkler encouraged agents and companies to begin envisioning how they could facilitate their relationships in the Metaverse. Maybe it’s a virtual recreation of an agent’s office.

“There’s lots of cool things people could do to sort of give

people an experience that they’ll remember,” Winkler explained. “And increase the brand value and build relationships. And maybe they might sell some insurance.”

Go Deeper

Droege offered parting words to insurers regarding the Metaverse, saying “There’s plenty of money here. There’s money and digital assets that people would like to protect. So I would just say we need to get away from the mindset that we have to have everything figured out before we start writing products for this space. The only way this space is going to grow is if we provide some protection. And we’ll learn along the way.

Droege says the industry

will pay some claims. “But ultimately, we’ll further expand this entire ecosystem because of it.”

The full webinar, Insuring the Metaverse: Immersive Tech and the Future of Coverage hosted by Elizabeth Blosfield Deputy Editor at Carrier Management, includes discussions that touch on NFT insurance, potential regulation within the Metaverse and technology fatigue. The webinar’s panelists included Dennis Winkler, director, insurance practice at ISG; Craig Weber, head of strategy, insurance practice at Cognizant; and Garrett Droege, SVP and director of innovation and strategy at IMA Financial Group, and is available for free at: https://www.insurancejournal. com/research.

Spotlight: Directors & Officers

D&O 2022: Prices Down; Loss Ratios Up; Top Carriers Ranked

By Susanne Sclafane

Although analysts at Fitch Ratings estimate that combined ratios for the directors and officers liability line remained below breakeven in 2022, with competition fueling price declines and the economic conditions uncertain, the line is under pressure.

Fitch delivered the conclusion in a report, “U.S. Directors and Officers Liability Market,” summarizing a 5-point rise in direct loss ratios, a 9 % drop in direct written premiums and a 10 % climb in earned premiums (the lagged impact of prior-year price hikes). The insights are based on an analysis of data from D&O supplemental filings in statutory financial statements.

The supplement does not provide complete information on loss adjustment expenses and excludes other underwriting expenses. Fitch approximated the missing figures by using information available for the other-liability claims made line, which includes D&O as well as professional liability and employment practices liability, to estimate a 2022 D&O combined ratio in the 97-98 range. That’s up from 93 in 2021 but way down from an average of 107 for 20172020, the report says.

The direct loss ratio (including defense and cost containment expenses but not unallocated adjustment expenses) came in at 69 for the industry, up from 64 in 2021.

For individual carriers, these ratios varied from a low of 54 for Fairfax Financial Holdings and W.R. Berkley to a high of 116 for American International Group, a chart in the Fitch report shows.

The 5-point uptick in the industry aggregate figure from 2021 to 2022, following an improvement from an average loss and DCC ratio of 75 from 2017-2020, is just one of the factors that Fitch analysts point to in concluding that the 2021 rebound was short-lived.

“An uncertain loss environment and anticipated reduction in earned premiums in the near term point to a likely increase in the loss ratio to 70 or higher in 2023,” the report says.

While earned premiums were still rising as written premiums fell last year, price

declines continued throughout the year, Fitch noted, citing the decline in Aon’s Public D&O Quarterly Pricing Index for three consecutive quarters beginning in second-quarter 2022. The declines came after three consecutive years of reunderwriting with more restrictive coverage and double-digit rate hikes. Aon’s Index for primary policies renewing at the same limit and

deductible dropped 5.1 % in fourth-quarter 2022.

“A more fragile economic environment and persistently high inflation adds risk to the D&O market, particularly if more bank failures, business insolvencies or a sharp equity market downturn materialize,” the Fitch report notes. “D&O claims risk evolves with socioeconomic changes, exposure emerging related to COVID-19, cryptocurrency, cyber risk and other new technology.”

While heightened activity tied to federal court class action merger objection lawsuit filings from 20172019 subsided last year, carriers are still seeing adverse loss developments from those years. In fact, the 2018 accident year has generated 10 points of unfavorable development since inception (for the

other-liability claims made line in total).

Going forward, growing regulatory and compliance obligations expand potential for litigation tied to ESG, climate risks, and employment practices.

The report also includes a ranking of writers in the U.S. D&O market, based on 2022 direct premiums, putting AXA and Chubb at the top of the heap. AXA and Chubb recorded premium declines of 19 % and 9 % last year — and every other carrier listed among the top 10 saw drops in written premium with the exception of Berkshire Hathaway group.

Berkshire’s 2022 deal to buy Alleghany fueled a 78 % jump in D&O premiums for the combination and landed

Berkshire in third place on the premium ranking.

Carrier Management has combined information from the recent Fitch report with a similar report published in May 2013 to reveal the market leader changes over the decade.

Several of the top writers in 2012 — XL Group (now AXA XL), HCC (now part of Tokio Marine), and ACE (now part of Chubb) — were involved in M&A activity that pushed them up the higher on the ranking.

AIG fell from first place in 2012 to fourth in 2022. While Fairfax Financial and W.R. Berkley climbed into the top 10, Travelers (ranked fifth in 2012) dropped off the list.

With premiums for the top

10 carriers almost tripling over the last 10 years, the top-10 cohort now commands twothirds of the D&O premiums in the industry, up from just over half in 2012.

Sclafane is the executive editor of Carrier Management, a publication of

Media

serving property/ casualty insurance carrier executives. She is a media professional with deep background in the P/C insurance industry including 25 years as editor and reporter for trade magazines, online news services, digital journals. Her prior experience includes 14 years as a casualty actuary.

Wells

Group

My New Markets

Fine Art Insurance

Market Detail: Art Insurance Now, a national broker, offers insurance coverages for art collectors, galleries, museums, dealers, artists, and auctioneers. If you or your client create, own, sell, buy, loan, display or preserve works of art on a private or professional basis, Art Insurance Now has comprehensive coverages with great pricing. Each program provides cost-effective protection, tailored to meet your individual requirements. Art Insurance Now policies are tailored to cover works of art while on or off premises, in transit, in storage, in an exhibition, in a museum, auction house, and worldwide. $255 minimum premium; has pen.

Available Limits: Not disclosed.

Carrier: Various USA insurance carriers; admitted; rated A by AM Best.

States: Available in all 50 states plus District of Columbia.

Contact: William Fleischer, wfleischer@ artinsurancenow.com, 800-921-1008.

Healthcare Workers’ Compensation

Market Detail: Total Program Management’s core expertise is workers’ compensation for the healthcare and social services industry. In the rapidly growing segments of home health care and long-term care facilities, Total Program Management can deliver unique products and services for insureds through nationwide reach and A-rated carrier relationships. Offerings include: long-term care, assisted living, residential care; regional hospitals, professional and all other; home health care; traveling; professionals and non-professional, social case workers; social service risks; home medical equipment; cannabis; oil extraction and except oil extraction risks; emergency and non-emergency transportation.

Appointment required.

Available Limits: Not disclosed.

Carrier: Multiple nationwide options; admitted.

States: Available in most states and District of Columbia; not available in North Dakota, Ohio, Washington and Wyoming.

Contact: Kim Sather; kimberly.sather@ tpmrisk.com; 952-254-2793.

Mechanic Lien Release Bonds

Market Detail: BFBond.com offers mechanic lien release bonds, working on all types of solutions to help your client with liens. We are knowledgeable and get the bond issued quickly with many different sureties we partner with. A discharge of a mechanic’s lien bond allows property owners to do with their property what they would if a lien was not present: Sell the property; get the further remodeling done, etc. In a way, it works as an extension of credit. The bond proves that the property owner has sufficient funds to pay the people involved. $255 minimum premium; has pen.

Available Limits: Not disclosed.

Carrier: Various USA insurance carriers; admitted; rated A by AM Best.

States: Available in all 50 states plus District of Columbia.

Contact: Kevin Silas; ks@bfbond.com; 212-566-1881.

Security Guards Workers’ Comp — Armed or Unarmed

Market Detail: Omega Insurance Solutions offers a workers’ compensation program for security guards, both armed or unarmed. Send WC ACORD for review. If prior, send loss runs. If no prior, please send owner’s resume. We also need our security guard supplemental. $255 maximum premium; $250 minimum premium; has pen; appointment required.

Available Limits: Not disclosed.

Carrier: MCIM; admitted.

States: Available in Florida, Georgia, Illinois, Indiana, Michigan.

Contact: Keith Steverson; keith@ omega4agents.com; 866-997-0711 x 205.

Commercial Truck Insurance

Market Detail: Great West Casualty Co. specializes in truck insurance products and services. Our company was founded on a service philosophy over 60 years ago, and today our goal of meeting the trucking industry’s changing needs has not changed. Our mission is to be “the” premier provider of insurance products and services for truckers. Our identity, our business, and our success are all linked to trucking. Products include auto liability,

cargo, general liability, owner operators, physical damage, specialty coverages, umbrella, and workers’ compensation. Here is what we contribute to that partnership: dependability, responsiveness, loyalty, and trust in the pursuit of common interests. Has pen; appointment required.

Available Limits: Not disclosed.

Carrier: Great West Casualty Co.

States: Available in most states and District of Columbia; not available in Alaska, Hawaii, Massachusetts and New York.

Contact: Mark Theisen; m.theisen@ gwccnet.com; 800-228-8602.

Real Estate Investment Properties

Market Detail: REInsurePro is a program manager offering licensed agents access to a property and liability insurance program for non-owner occupied, renovation and vacant investment properties, with customized coverage options for each unique real estate investor client. Available coverages include: basic and special coverage forms available; premises liability starting at $1 million per occurrence (higher limits available); flood (with no waiting periods); earth movement (earthquake shock and sinkhole); loss of rents; business personal property; ordinance or law available; lender-placed insurance alternative available. Has pen.

Available Limits: Premises liability starting at $1 million per occurrence (higher limits available).

Carrier: Not disclosed.

States: Available in most states and District of Columbia; not available in Florida, Louisiana and New York.

Contact: Julie Prewitt; info@reinsurepro. com; 816-398-4080.

News & Markets

California Commissioner and FAIR Plan Agree to up Commercial Coverage to $20M

California Insurance Commissioner Ricardo Lara and the California FAIR Plan Association agreed to more than double its existing commercial coverage limits to $20 million for businesses unable to find coverage in the normal insurance marketplace.

Lara and the FAIR Plan have been working on this issue since the commissioner’s investigatory hearing into the FAIR Plan.

The agreement signed by Lara and FAIR Plan President Victoria Roach will increase the combined coverage limits for the FAIR Plan, under its Division I Commercial Property Program, from $8.4 million to $20 million per location

and, under its Division II Businessowners Program, from $7.2 million to $20 million per location.

The new coverage limits will take effect after the FAIR Plan submits a new rule filing for approval by the California Department of Insurance. The FAIR Plan has 60 days to submit a rule filing to the department, with the goal of the CDI approving the limit increases, meaning coverage could be available in the fourth quarter.

Under the agreement, the FAIR Plan will increase liability protection up to $3 million.

California Jury Awards $46M to Paralyzed Jiu-Jitsu Student

ASan Diego jury has awarded more than $46 million to a man who suffered a catastrophic spinal injury during a beginner jiu-jitsu class five years ago, attorneys said.

Jack Greener was enrolled at Del Mar Jiu-Jitsu Club in 2018 when he was pinned to the mat by an instructor who placed his entire bodyweight on Greener’s neck, according to the lawsuit.

“The extreme force of the maneuver crushed Mr. Greener’s cervical vertebrae causing the student to fall limp, paralyzed in all extremities,” according to a statement from his law firm, Panish Shea Boyle Ravipudi.

Greener, who was 23 at the

time, underwent multiple surgeries and was hospitalized for months, his lawyers said.

Now a quadriplegic, he sought compensation for medical expenses, loss of earnings and emotional distress.

Jurors ruled in Greener’s favor in late March after a fourweek trial.

Attorneys for the martial arts club and the instructor didn’t immediately respond to requests for comment.

Copyright 2023 Associated Press. All rights reserved.

The FAIR Plan is an association comprised of all insurers authorized to transact basic property insurance in California, and it is designed to

be the state’s property “insurer of last resort,” writing coverage for businesses and residences when other insurance options are not available.

California’s Office of Administrative Law OKs Privacy Regulations

The California Privacy Protection Agency finalized its first substantive rulemaking package to further implement the California Consumer Privacy Act, which was approved by the California Office of Administrative Law.

The approved regulations, which are effective immediately, update existing CCPA regulations to be in line with amendments adopted pursuant to Proposition 24, the California Privacy Rights Act. The new regulations also operationalize new rights and concepts introduced by the CPRA, and consolidate requirements in the law to make the regulations easy to follow.

The agency filed the final rulemaking package with OAL on Feb. 14, initiating a 30-business day review period. This followed the CPPA board’s vote on Feb. 3 to adopt the agency’s rulemaking package. The regulations have not changed substantively since the board voted on modifications made at its Oct. 29 meeting.

The formal rulemaking process began on July 8, 2022, with the publication of the agency’s notice of proposed rulemaking action.

News & Markets

Las Vegas Lawyer Indicted in $460M ‘Slip-and-Fall’ Scheme

Alongtime Las Vegas attorney was indicted on federal charges that he orchestrated a $460 million Ponzi scheme spanning multiple states, from Nevada and Utah to California and Arizona. The eight-count indictment accusing

Matthew Wade Beasley of wire fraud and money laundering comes almost one year to the day after the personal injury attorney was shot and wounded by FBI agents at his $1.1 million home in Las Vegas, leading to a four-hour standoff that

ended with his arrest. He was charged with assault on a federal officer.

Beasley has been in federal custody since the standoff – during which prosecutors have said the lawyer “repeatedly confessed” to his involvement in the investment scheme while on the phone with a negotiator. Beasley remained in the house until FBI SWAT agents entered.

Jacqueline Tirinnanzi, Beasley’s attorney, declined to comment. Beasley has not yet entered a plea in the case.

According to the indictment, Beasley enlisted investors for a company that claimed to offer short-term loans with high interest rates to clients awaiting payment after settling their personal injury “slip-and-fall” cases. Authorities have said investors were promised a return of up to 13% within 90 days of investing their money.

But there were no clients, prosecutors said. Instead, according to the indictment, Beasley used new investor money to pay his earlier investors, creating the illusion that the company had real clients who were repaying the loans with interest.

Between 2017 and March 2022, when Beasley was arrested, hundreds of people invested more than $460 million into the scheme, according to the indictment. The attorney allegedly used that money to fund what prosecutors have described as an “opulent” lifestyle, including luxury homes and cars and recreational vehicles.

The Nevada Supreme Court suspended Beasley from practicing law in the state and barred him from handling client funds shortly after his arrest last March.

Copyright 2023 Associated Press. All rights reserved.

News & Markets

did the Tribe approve BNSF’s unilateral decision to transport unit trains across the Reservation, agree to increase the train or car limitations, or waive its contractual right of approval,” Lasnik wrote.

In 2013, BNSF’s in-house counsel cited the railway’s “common carrier obligation to serve its customers” in a meeting with the Swinomish. Under federal law, rail companies are required to provide reasonable freight transportation upon request.

Swinomish counsel pushed back in that meeting, “pointing out that this was not the typical right of way case involving state or local regulation,” Lasnik wrote, “but rather involved limitations arising from a federally-approved easement crossing tribal trust lands established by treaty, the supreme law of the land.

Meanwhile, 100-car trains hauling crude oil from the Bakken Formation in and around North Dakota ran through the reservation.

Judge Rules BNSF Intentionally Violated Agreement with Washington Tribe

Ajudge ruled that BNSF Railway intentionally violated the terms of an easement agreement with the Swinomish Indian Tribal Community in Washington by running 100-car trains carrying crude oil over the reservation.

The ruling in the civil case comes after two BNSF engines derailed on Swinomish land earlier this month, leaking an estimated 3,100 gallons of diesel fuel near Padilla Bay. BNSF operates a rail line through the Swinomish Reservation under a 1991 easement agreement that allows trains to carry no more than 25 cars per day. It also required BNSF to tell the tribe about the “nature and identity of all cargo” transported across the reservation.

In his written order U.S. District Court Judge Robert Lasnik said the railway made a unilateral decision in increasing the number of trains and cars crossing the reservation without the tribe’s consent, The Seattle Times reported.

Lasnik ruled that BNSF “willfully, consciously and knowingly exceeded the limitations on its right of access” from

September 2012 to May 2021 “in pursuit of profits.”

A BNSF spokesperson declined to comment to the newspaper on the ruling.

“The tribe takes its agreements very seriously and it expects them to be honored, and we are thankful that BNSF is being held to the promises it made,” Swinomish Indian Tribal Community Chair Steve Edwards said in a statement.

The railroad easement crosses sensitive marine ecosystems over a swing bridge at the Swinomish Channel and a trestle across Padilla Bay within the reservation. The water bodies connect other waters of the Salish Sea, where the tribe has treaty-protected rights to fish.

The tribe learned through a 2011 Skagit County planning document that a nearby refinery would start receiving crude oil trains. It wasn’t until the following year that the tribe received information from BNSF addressing current track usage, court documents show.

The tribe and BNSF discussed an amended agreement, but “at no point

Bakken oil is easier to refine into the fuels sold at the gas pump and ignites more easily. After train cars carrying Bakken crude oil exploded in Alabama, North Dakota and Quebec, a federal agency warned in 2014 that the oil has a higher degree of volatility than other crudes in the U.S.

The tribe sued in 2015, alleging BNSF was running trains with four times the number of cars permitted under an easement agreement with the tribe.

In 2020, the Ninth Circuit Court of Appeals affirmed an earlier federal court ruling that found BNSF had breached the easement agreement, and the tribe has the right to enforce it. Later that year, BNSF requested permission to move 16 Bakken crude trains each month in each direction across the easement during 2021. The request was denied.

Lasnik found previous intentional easement crossings by BNSF exceeded what was outlined in the agreement, and therefore, the railway “trespassed on Indian lands and is liable for the damages caused by its overburdening of the easement.”

A second phase of the trial will evaluate the tribe’s claim for damages.

Copyright 2023 Associated Press. All rights reserved.

WCRI: Injured Workers’ Emergency Room Use Varies Widely by State

Nearly a third of injured workers in Massachusetts sought treatment for strains and sprains in a hospital emergency room, while in California and Nevada only 10% did, according to a study by the Workers’ Compensation Research Institute.

That wide disparity was repeated for other types of injuries in the first-ever multi-state comparison of where workers’ compensation payments choose to seek treatment. The findings suggest that some state workers’ compensation systems are not steering care to the most cost-effective health care facilities.

“You wouldn’t expect to see such variation,” said William Monnin-Browder, co-author of the study.

The findings were presented during the WCRI’s annual conference, which concluded March 22.

Olesya Fomenko, the lead author of the study, said she is puzzled by the wide variation among the states. Fomekno said that Massachusetts has one of the highest percentages of residents with health insurance in the nation, in part because of a subsidized health insurance plan shepherded into law by former Gov.

Mitt Romney. Generally, health insurance brings with it managed-care incentives that direct routine care away from hospital emergency rooms.

She said it appears, however, that local norms influence where people seek care.

The study examined pre-COVID 2019 data from 28 states. The findings revealed that 44% of all new workplace injuries in Massachusetts were treated initially in a hospital emergency room, 37% in Mississippi and 33% in New York. On the other end of the spectrum, only 17% of new workplace injuries in California were treated in an emergency room, 19% in Nevada and 20% in Arizona.

The data showed that some emergency room use was driven by medical necessity. For example, 58% of fractures that resulted in lost-time claims were initially treated in emergency rooms in the 28 study states. In contrast, only 17% of strains and sprains that did not result in lost time were.

However, several states exhibited a high use of emergency room use even for less urgent injuries. In New York, 25% of injured workers sought initial treatment for strains and sprains in an emergency room; in Mississippi, 23%; in Louisiana,

21%; and in New Mexico, 20%.

Injured workers in states where employees control the place of care tended to use emergency rooms more than states where employers direct care. Louisiana, Mississippi, New York and Massachusetts are all employee-choice states. In California, by contrast, workers generally must choose treatment facilities from medical provider networks established by employers, while in Nevada, employers decide where workers get care.

Higher emergency room usage rates by injured workers tended to follow patterns in general health care. Massachusetts and New York, for example, have per-capita emergency room discharge rates of more than 450 per 1,000 population, while California, Nevada and Arizona had per-capita discharge rates of less than 350 per 1,000.

Emergency room use was also higher in states with relatively low prices for evaluation and management services (E&M). The workers’ compensation systems in Massachusetts, New York and Louisiana each have relatively low E&M prices, according to WCRI’s study.

Special Report: Young Professionals

Gen Z Talks Insurance

5 Risk Management Students Share What the Next Gen Wants & Why It Matters

By Allen Laman

Like so many teenagers, they didn’t know much about insurance.

When Gabby Banks, Henry Cram, Taylor Trafton, Filmon Futsum and Casey Alexander set foot on their respective college campuses, underwriting and claims were another language. But professors guided them to risk management and insurance courses, which led to internships — and for most of them, jobs in the insurance industry after college.

As these risk management and insurance (RMI) students prepare to graduate and enter the workforce, Insurance Journal picked their brains about why they chose to study

insurance — and how the industry can better attract their Generation Z peers.

These young adults’ perspectives on the insurance space highlight the importance of offering career growth opportunities, emphasizing diversity efforts and connecting with potential employees long before they have a concrete career path in mind.

“It’s really, really important for people in the industry and media and the like to talk to the actual students themselves,” said Robert Hartwig, an industry veteran who currently is director of the University of South Carolina’s Darla Moore School of Business’ Center for Risk and Uncertainty Management. “The people who, on a day-to-day basis, are thinking about what they want to do with the rest of their lives … This, in many ways, is one of the most important decisions they will ever make in their lives.”

She wanted to learn something she knew nothing about. Insurance fit the bill.

Gabby Banks

Gabby Banks

Scan QR Code to watch a video on 'Gen Z Talks Insurance'

After Gabby Banks began studying finance at East Carolina University in 2018, she met with Brenda Wells, a distinguished risk management and insurance program director and professor at the ECU College of Business. The conversation they shared struck a chord. Hearing about opportunities in the risk management and insurance industries resonated with Banks.

“And I decided that’s where I needed to be,” Banks recalled.

Her years in ECU’s RMI program were formative — empowering her to grow as a communicator and become a young ambassador who strives to bring awareness of the industry’s opportunities to her peers. Banks took a claims internship the summer after she enrolled in the ECU RMI program, and she’ll begin working as a risk analyst for Credit Suisse following graduation.

“I just want to branch out and explore different parts of the industry,” she said. “Since my degree is in risk management and insurance, I explored the insurance side a little bit — so I want to look into my risk management side and see what that side of the house looks like.”

Her experiences highlight

something the insurance industry must understand: Insurance organizations aren’t competing only against themselves, but also against other industries entirely. As more and more baby boomers retire, the insurance industry isn’t the only one experiencing a demographic cliff.

Hartwig said many other industries are also in this boat.

“They’re all looking for people,” he explained. “They’re all talking about their own talent crises. So, part of the crisis is the multitude of crises. And I don’t think that the industry is generally aware of the fact that while they think about their own crisis … the reality of it is, other corporations, other industries are looking for the exact same talent. And the same talent that would be a good fit for an insurer or for a broker or for an agency might also be a great fit for a bank, for a government agency or for a manufacturer.”

When reflecting on Gen Z’s career priorities, Banks said her generation is “very money-oriented” and needs to see growth potential in possible careers. She believes insurance companies would benefit from highlighting clear opportunities for advancement.

Banks also spoke of the importance of diversity, equity

and inclusion. When asked, she said inclusive environments are guiding her peers’ career paths. Feeling included and respected is extremely important.

“I believe putting your younger professionals at the forefront would be something that the insurance industry can do,” Banks said. “When I was first getting into it, I heard that it was maybe an older, white-male-dominated industry. Coming into it and seeing that there are so many younger professionals, younger women, people of color in the industry — it’s been amazing to see.”

cided, then to finance — before learning of the opportunities the insurance industry offers. Speaking with two female industry professionals opened her eyes and shattered stereotypes.

“It opened up the door,” Cram recalled, “and I figured, ‘Well, there must be a spot for everyone within the industry.’ And I thought that was a really interesting component.”

Banks suggests that highlighting younger professionals from the get-go could be helpful in recruiting efforts. “I’ve seen these people at conferences and career fairs, but maybe [including those individuals] in marketing materials — that would be awesome.”

Henry Cram

She wasn’t sure which path she’d follow.

Growing up, Henry Cram’s older sisters always knew their direction. Cram’s hadn’t “clicked” by the time she enrolled in the University of South Carolina’s nursing program. Her major flipped a couple of times — first to unde-

A claims department internship with Liberty Mutual last summer further familiarized her with insurance policies and the claims process. She also job shadowed employees with other positions at the company — a conscious decision that helped her refine her direction and move forward confidently. After graduation, she will enter Liberty’s underwriting training program.

Like many students included in this story, Cram’s experiences show how a young adult who knows little about the inner workings of the insurance industry can be enticed by industry professionals who take the time to explain the opportunities available to them.

Beyond that, she exemplifies the potential power an internship can have on landing lasting talent. Hartwig believes offering internships is “one of the number one predictors” of

continued on page 30

‘The same talent that would be a good fit for an insurer or for a broker or for an agency might also be a great fit for a bank, for a government agency or for a manufacturer.’

Henry Cram

Special Report: Young Professionals

know you could do that,’” Cram said.

Taylor Trafton

continued from page 29

attracting and retaining talent.

“That means by the time they’re actually making the decision about a job, they’ve heard about you (and) they may have actually worked for you if they were one of your interns,” Hartwig said. “And generally speaking, most successful internships are able to be converted into a position, meaning a new individual, new key talent coming in the door.

“And in my experience, now about seven years here at the University of South Carolina, is that successful internship opportunities are the top predictor of whether an individual will join your organization.”

When asked what she believes the industry can do to entice more young people, Cram pointed to highlighting career stability in interactions — and expanding risk management programs to more schools to bring more awareness to the industry’s offerings. She wondered if there could be ways to incentivize finance teachers to incorporate more insurance information in their curriculums.

“It’s interesting, because I’ve been talking to my peers, and I’ll try to lure them into insurance, and just discussing with people, I’ve realized that a lot of people have said, ‘Oh my gosh, I didn’t know that that was part of insurance. I didn’t

She decided to study RMI because she knew of the insurance industry talent crisis — and because of an academic program that offers students studying certain majors with in-state tuition at out-of-state colleges.

When Taylor Trafton enrolled at the University of South Carolina as a business major, finding an area of specialization that would guide her career became a priority. A family friend who works as a broker pointed her to insurance. He highlighted growth opportunities in the industry that were opening due to the retirement cliff.

Still, Trafton was wary. As a freshman, she questioned: Is this really the path I want to pursue?

Like so many others, what eventually solidified her decision to continue studying RMI was learning of all the opportunities in the insurance and reinsurance spaces. That flexibility was empowering.

“And I think having that background of knowing in insurance — you can go anywhere with it,” Trafton said.

“You can get a job … there’s a ton of companies looking to hire young people. And they’ll train you, too. You don’t need to have all the information.”

She tapped into the breadth of the industry’s offerings by holding internships that centered on marketing, web development and content creation for various insurance organizations. Ultimately, though, Trafton’s career will begin outside the insurance industry.

She is set to soon begin work as a global risk analyst at Bank of America. “I was exploring insurance jobs, obviously, but the job that I decided that I wanted to go with had a lot of opportunities for growth and a lot of opportunities,” Trafton reflected. “So, I’ll be in a two-year rotational program that goes around the risk management department. And I think that was important to me because I wasn’t sure exactly what avenue I wanted to go through. So being able to rotate through different departments kind of lets me see what I like, what I don’t like.”

Still, Trafton believes highlighting the potential for exploration and growth in the insurance industry is important when insurance organizations connect with Gen Z. Think specialty risks, like sports insurance — as well as niche areas like marine underwriting. The uniqueness of these areas is enticing, she said.

Emphasizing all the potential opportunities available is key. “Making sure that the students are aware of the very wide, wide range of opportunities that are available to them if they stick with the organization and they work hard in this organization is absolutely critical,” Hartwig said. “I have students every year who have misgivings about joining a particular organization because

the company is not sufficiently forthright on these areas.”

Trafton also urged employers to highlight their diversity. While many conjure images of a male-dominated workforce, she sees value in spotlighting the whole picture. “There are so many amazing women that work in it,” Trafton said. “So, I feel like that’s important for me to highlight, too, for younger girls that are thinking about it. There’s a spot for you, too.”

First-generation college student Filmon Futsum thought he’d become a physician’s assistant. That quickly changed, though, and a meeting with Wells opened his eyes to the recession-proof nature of the insurance industry and opportunities for advancement. Two years later, he joined the ECU RMI program.

Soon, he’ll begin working as an underwriting trainee for Markel.

“I would say the one thing that stuck out to me was that insurance is a part of everybody’s daily lives,” Futsum said when recalling what attracted him to the insurance business. “You’re going to need it every step of the way of your life. So, it just stuck out to me that it’s going to be there for everybody at some point in time.”

He views the industry’s talent crisis as an opportunity for members of his generation to “join in an entry-level position, and really just put your foot forward and work really hard,” he said — and potentially reach a management position in less than five years. That appealed to him.

Futsum double majored in RMI and human resources,

Filmon Futsum

Filmon Futsum

Taylor Trafton

and for a period, he considered pursuing a career in the latter. He also thought about working in insurance claims. After completing an internship at his future employer, though, he received the clarity that will guide his path forward.

“Going in, I thought maybe claims was something I was interested in,” Futsum recalled, “but after sitting with different underwriters and seeing the process that they go through in their day-to-day lives — that was something that stuck out to me and what ultimately changed my mind and what I wanted to do after college.”

ECU’s Wells strives to instill professionalism and a deep sense of self-awareness in her students. Many of them — Futsum included — go on to work in the insurance industry, and when they do, they have a thorough understanding of the business and why their roles are important— and valuable.

“Our students realize that there are opportunities — lucrative opportunities — to be at a six-figure salary, five years out of school,” Wells explained. “To help people in their time of need. And our students look forward to that — but that’s because we’re training them that they’re playing something

Casey Alexander

bigger than just somebody at a desk with a calculator and a computer. You’re playing a much bigger role in how this industry works.”

Casey Alexander

Through high school, Casey Alexander’s familiarity with insurance was limited to big-brand TV commercials and hearing his parents talk about claims. He enrolled at ECU and set his sights on a finance degree. When he graduates in May, he’ll take home that one — and another in risk management and insurance.

RMI classes and conferences broadened his understanding of the insurance career landscape. He’s now set to join Markel’s underwriting training program where he will work mainly with the company’s small business product.

“Commercial lines isn’t something people really

Hotels and Motels

Broad coverage for well-managed Hotels & Motels

know about right away,” he explained. “You kind of think of health or personal (lines) and because that’s what you see on TV, or that’s what your parents are dealing with — or you were dealing with — from a younger age. And just learning more about the different niche markets was an area that made me feel more attracted to the industry.”

the insurance industry can highlight to attract more talent, he spoke of the importance of highlighting non-finance-background opportunities, including the need for marketing and information technology professionals.

“I think people don’t realize how you can basically pair anything that you like to do with insurance, or with risk management,” he said. “And (this) is another way to draw talent in.”

He also spoke of the importance of tailoring benefits programs to young prospects. A single, 22-year-old college grad won’t be as interested in a benefits package with full life and health, he said.

He picked that path specifically because of the training program and career accelerant it provides. A positive review from a friend who interned with Markel factored into the decision-making process, and the position fell in line with his location goals, too.

Like others interviewed for this story, he believes the industry is appealing to his generation from the standpoints of stability and passion-exploration. When asked what he believes

Offering ancillary benefits that might appeal more to the younger generation can help employers stand out, according to Wells. “I think you really need to think about the stage of life that these students are at when you’re trying to hire them and think about what needs, what their needs are,” she said, adding that some companies have begun offering pet insurance and student loan repayment benefits as perks. “All benefits are not created equal, and all benefits do not fit all demographics.”

Older frame construction? Exterior corridors? Non-sprinklered property? Hundreds of hotels and motels rely on AIU for complete property coverage. Policies include a $500 million blanket limit per occurrence, plus enhanced coverage like flood, earthquake, and water damage.

aiu-usa.com.

‘And just learning more about the different niche markets was an area that made me feel more attracted to the industry.’

Special Report: Young Agents Survey

Young Agent Optimism Wanes as Challenging U.S. Economy, Hard Market Continues

Young Agents' Biggest Challenges

By Andrea Wells

Optimism among young agents took a hit, falling from 2022 to 2023, according to Insurance Journal’s annual Young Agents Survey.

When it comes to their career choice and the future of the independent agency system, 53.9% of young agents responding to this year’s survey reported they feel “very

optimistic” about the outlook of their career, down from 62.4% of respondents who felt “very optimistic” in the 2022 survey.

Young agents felt less positive about the future of the agency system, as well, this year. According to the survey, only 38.7% of young agents felt “very optimistic” about the future of the agency system, compared to 47.2% in the 2022 survey.

Young agents felt even worse about the condition of today’s U.S. economy, the survey found.

Only 4.1% of young agents responding to this year’s survey felt “very optimistic” about the outlook of the U.S. economy in 2023, while just 11.9% reported feeling “optimistic.” That’s down from 6.4% of young agents responding to the 2022 survey who said their view on the U.S. economy was “very optimistic” with 17.5% as “optimistic.”

Nearly one-third of young agents (30.9%) do not feel optimistic about 2023’s economy at all.

“It would be reckless not to be cautious given the current state of the U.S. economy,” one young agent wrote in the survey. “However, being further removed from the initial pause created by the pandemic has me optimistic about the future success of my agency as well as me personally.”

Another young agent said: “I’m concerned about my clients, and how they will be able to afford these never-ending premium increases,” adding that it is challenging to write new business in urban and coastal areas today.

Another young agent blamed the negative outlook on the industry’s need to catch up to other economic sectors when it comes to efficiency.

“There is a ton of room for improvement on the independent side for both PL and CL as it pertains to technology and efficiencies. We’re lightyears behind other industries,” that young agent wrote.

Despite their concerns, more than half (58.3%) of young agents reported feeling “very optimistic” that their income

will be greater in 2023 than in 2022, with another quarter (26.3%) feeling “optimistic” that their income will rise this year over last year’s.

While most young agents (82.0%) told Insurance Journal they would recommend being an insurance agent to another young person, there were some (6.6%) who wouldn’t recommend the career to others.

“This is the worst white-collar job there is,” one respondent said.

Another added: “They have to be willing to be underpaid for a couple years and that is not for everyone.”

However, many young professionals responding to the survey believe a career as an independent agent can offer great opportunity.

“It is a good career with room for lots of growth,” one young agent wrote. “If you put in hard work you can definitely see it pay off.”

Another added: “To be a good agent you cannot think of this career as just a job you clock in and out of every day. It is a lifestyle or mentality to want to help and serve others. Writing an improper insurance policy is someone else’s livelihood that will not be made whole. You have to care about your clientele as they put their trust in you.”

There were some recommendations by young agents on what they would change about the property/casualty industry.

In today’s hard market, policy pricing stood out as a barrier for some.

“I would like to see rates be somewhat consistent verses being a roller coaster like some carriers are doing today. This makes doing renewal business continued on page 34

Profile of Young Agents

Older Side of Young

64.2% are 31 to 40 years old.

35.8% are 30 and under.

Career Choice

82.0% consider insurance to be a permanent career choice;

15.0% are unsure.

81.6% would recommend career choice to another young person — but

11.9% are not sure they would while

6.6% wouldn’t recommend being an agent.

Experience

19.1% have less than three years in insurance;

25.1% have three to ve years;

28.1% have six to 10 years;

15.1% have 11 to 15 years;

12.6% have more than 15 years.

Education

63.9% have a college degree;

7.1% have a master’s, doctorate or other advanced degree;

52.0% have completed or are working on an insurance designation.

67.5% have an insurance agent mentor.

Family Affairs

60.5% work in family-owned agencies.

29.2% are members of the family that owns the agency.

Size

31.7% work for agencies generating $5 million or less in P/C premium.

31.2% work for agencies generating $6 million to $25 million in P/C premium.

27.1% work for agencies generating more than $26 million.

87.9% are privately held independent agencies.

Employment Status

84.0% are independent agents;

11.1% presently are sole owners of an agency;

22.2% share ownership with a partner(s).

Ownership Dreams

66.7% do not presently own an agency. Of these, 49.6% would like to own someday and 21.7% of those feel very con dent ownership dreams will come true — but 33.3% don’t believe it will happen.

Book of Business

58.3% target mostly commercial lines.

41.7% target mostly personal lines.

Gender ID

52.3% Male

47.7% Female

45.9% Describe their political a liation as Republican;

14.8% Democrat;

18.9% Independent;

3.6% Libertarian;

20.4% Did not wish to say.

Ethnic Background

84.3% White/Caucasian

7.6% Hispanic/Latino

2.0% Black

2.0% Asian

2.5% Native American

6.6% Other or did not wish to say

What Young Agents Do

61.3% attend local business or community meetings;

58.8% volunteer in the community;

10.8% get involved in local politics;

59.8% use Facebook;

67.0% use LinkedIn;

15.0% use Twitter;

11.9% write a blog;

61.3% utilize insurance coverage or other checklists;

76.8% take insurance courses online.

Special Report: Young Agents Survey

continued from page 33 hard especially when you want customers staying with that carrier you originally put them with unless violations or accidents happen which force them to move elsewhere.”

Another young agent said: “I would like carriers not to be able to ‘double dip’ in the markets, for example, changing their replacement cost calculators due to inflation and doing a rate increase on

the policies at the same time. To me that is taking from the same insured twice.”

Young agents also wish for better efficiencies through technology, more diversity in leadership, more support

from their carrier partners, and an upgrade when it comes to professional standards for agents.

“I believe it should be harder to achieve your insurance license,” one young agent said.

Opportunities in Family Owned Agencies

How Young Agents Became an Owner

“There are a lot of bad apples … being unethical gives the whole industry a bad rep.”

Another said the industry is “several decades behind in its use of technology,” adding that “the lack of technology available to the end consumer is disappointing.”

One young agent said they hope for carriers to support independent agents more. “Although they say they do, they will go and make deals with independent agents’ competitors to support their own causes.”

Another added: “I would like to see carrier employees take more time to try to understand an agent’s day-today tasks and help alleviate some of the pressure from carriers by understanding positions and trusting their agents more.”

The annual Young Agents Opinion Survey by Insurance Journal polls the views of independent agents 40 years old and younger. About 200 young agents responded to this year’s online survey, which ran online during early March. continued on page 36

What Young Agents Think

As a younger agent, I have to work harder to gain the con dence of clients.

I fear that my career will be hurt by a merger or sale of my agency.

Iwish I could specialize more than I am now permitted to do.

I have one or more areas of specialization.

Much of my production supports older producers in the agency.

During my career, I have worked for more than one agency.

While in my present position, I have been o ered a job with another agency.

Success in this business is mostly about building relationships.

E ciency and e ectiveness are more important than relationships to succeed in this business.

I propose new ideas but our rm rarely seems to get to them.

The agency ranks could use more women and minorities.

I have already completed or am working to complete a CPCU, CIC, ARM or other insurance designation program.

I wish my agency would expand into new markets.

I think my compensation is fair.

I think my agency's management is fair.

I believe advancement is based on relationships more than performance.

I would like to increase the time I spend on sales versus servicing or administrative tasks.

The industry has been too slow to adopt new technology.

In 25 years, the independent agency system will be stronger than it is now.

Young Agent Opinions on Current Employer

Basically Basically TrueFalse

Special Report: Young Agents Survey

continued from page 35

What Young Agents Think About the P/C Industry

What Young Agents Like Most

1. Opportunity, freedom, flexibility, and being a face in the community.

2. As an independent agent, I enjoy the flexibility of having many direct appointments with carriers while at the same time never being beholden to one single carrier.

3. What I like most is the variety of clients that I work with. In one day, I can go from the conference room to a construction site.

4. Learning something new every day.

5. The flexibility of the career, work/life balance, as well as the uncapped potential earnings.

6. Building relationships with my clients.

7. It’s one of the few businesses that you can build up near guaranteed residual income without any major risk of huge blows to the revenue stream. It’s a very solid dependable career.

8. Being able to help people protect their livelihoods in case something happens that causes issues in their life. I want to make that mountain in the road feel more like a speed bump.

9. Being my own boss. I can work as hard or easy as I want.

10. I love to educate my clients. If they can understand that background of insurance which has led us to the market space we are in now, then I have succeeded.

11. No micromanaging, you get what you give!

12. We are a true advocate for our clients and can provide the best possible insurance solution for them.

13. The people within the insurance industry are a great community and helpful resources.

14. I love all of the avenues that being an independent agent offers you to grow as a true risk manager. It is exciting to help a new business with their insurance and see them thrive.

15. Every day is different. There are a lot of challenges that keep you busy and make each day interesting. It is very rare that you get a day you could describe as boring.

What Young Agents Like Least

1. Learning all the differences between carriers and guidelines.

2. What I like least is some of the systems that we work with could beupdated and become more user-friendly. Anything to make us more effective and efficient is beneficial.

3. The reputation brokers and agents have because of other unethical agents and brokers.

4. The market is tough with every carrier taking rate. Spending more time shopping policies and doing maintenance work which is tedious.

5. There is a reactive nature in the industry across the board. Carriers change rates; we have to figure it out. The rest of the world has new technology; we’re still learning how to not fax. Covid was great for us having a renaissance of technological innovations, but it merely got us to within earshot of the rest of the world.

6. As a young agent, earning business from other established agents who aren’t working or doing right by their clients.

7. Lack of standardized training and processes for employees, especially new hires. Difficult to recruit young talent.

8. Claims. Always a nightmare.

9. Sometimes, being in the middle means we can’t really make anything happen.

10. The disconnection between carriers, agents, and technology vendors - there is a serious deficiency in effective communication and transmission of information.

11. Dishonest insurance agents as competitors.

12. Carriers wanting to eliminate agents (which are their boots on the ground).

13. The ever changing guidelines for each carrier and receiving little to no guidance from certain carriers.

14. The challenge of working against direct writers for business.

15. This is not a 9-5 job. You get out what you put in, so there are a lot of long hours and weekends that must be worked. Our biggest issue right now is finding employees.

Thanks to Karlee for the kind words and thank YOU for reading. Our journalists take pride in serving the industry. If this publication is valuable to you, please consider upgrading your subscription at www.insurancejournal.com/pro

“Thankful for the reliable communication, news, and products.”

Commercial Account Manager at Oseman Insurance Agency, Inc. & Satisfied Insurance Journal Subscriber

Karlee Wakeley

Idea Exchange: Transportation

5 Things to Consider When Transporting Cannabis

By Wendy Watson and Christopher Lewis

When it comes to general insurance issues, cannabis-related businesses face the same general liability and property risks faced by other industries, like workplace accidents, damage to property, crop failure and transporting their products to market. However, cannabis businesses require more comprehensive commercial insurance due to the high risks involved in transporting cannabis-related products.

Cannabis is still an illegal substance under the Federal Controlled Substances Act. It is classified as a Schedule 1 drug. Cannabis, regardless of whether it is sourced from cannabis or hemp, is still subject to Federal Drug Administration approval under the Federal Food, Drug, and Cosmetic Act.

The availability of cannabis-related transport coverage is evolving as more states make it legal. However, because it is still illegal on the federal level, insurers may be hesitant to work with cannabis-related businesses. Therefore, it is important

for agents and brokers to learn as much as possible about what is available, which companies offer coverage, and most critical of all, whether the coverage offered adequately protects your client.

What to Know

The availability of insurance is evolving rapidly due to the changing market landscape, so be sure to check around for all the available insurance and coverage options.

Since legality varies state by state, look for a transportation insurer that works in the same state or states in which your insured operates.

The legal limbo of cannabis means these businesses are considered a risky, high value, cash operation. Licensing and insurance requirements are other important considerations. Most states require cannabis-related businesses to maintain certain levels of insurance and will require additional information about

drivers, as well as owned and non-owned vehicles.

Since cannabis is basically a cash-only business, financing premiums may offer agents and brokers a challenge. Roughly 70% of cannabis-related businesses operate as cash-only, according to the National Association of Insurance Commissioners. Many financial institutions stay away from cannabis-related businesses due to the legal risks. A fraction (518) of the nearly 5,000 U.S. commercial banks worked with the cannabis industry in 2021, according to the CATO Institute. It’s important to look around for options because some insurers can accommodate this cash-only business and offer legal options.

Cannabis transportation insurance policies depend on the type of operation your client is running.

‘Some cannabis-related busineses may need coverage for a single van, while others may need armored transport for cannabis products, requiring substantially more coverage than the average cannabis-related local product delivery.’

Some cannabis-related businesses may need coverage for a single van, while others may need armored transport for cannabis products, requiring substantially more coverage than the average cannabis-related local product delivery. Other factors to consider include the quantity and value of the goods, how far the goods will be transported and how many vehicles the business will have on the road at any one time.

Harvested crops such as cannabis and hemp take months of cultivation before they are ready for distribution. This means that when the crop or products ship, they are irreplaceable if they are lost, stolen or damaged.

Cargo insurance covers any cannabis-related products transported by the cannabis-related business or in its custody. Coverage pertains to seeds, seedlings, harvested crops, raw flowers, tinctures, edibles, vape pens, pipes, and any other paraphernalia, and may apply to cash or securities. Cargo insurance is designed to pay out the actual cash value of the shipment and covers any loss of income experienced due to theft, fire, or accident.

It should be noted that seizure of goods by law enforcement is generally not covered.

Cargo transportation insurance options are available to cannabis-related businesses. The choice of type of insurance is based on who owns the vehicles. If it is the cannabis-related business, then business auto is a good choice. If the business opts for using hired and non-hired autos for distribution, it should investigate a hired and non-hired auto option. Just remember, the coverage will require underwriting including knowing how many vehicles are on the road at any time, what kind of products are being shipped, and of course, the driving records of drivers.

Transporting cannabis across state lines is illegal. However, when transporting hemp, the product must be produced lawfully under the 2018 Farm Bill, which has issued approved regulations and procedures (under 0.3% THC) within specific states.

While a driver can transport cannabis-related products within a legal state, if a driver crosses over into a state where cannabis

is illegal, the business could be subject to seizure and impounding of vehicles and equipment, large fines, and imprisonment. Cannabis-related businesses will therefore need state-issued distribution licenses and will be subject to “secure transit” regulations. This means equipping vehicles with secured lockboxes, GPS tracking systems and heating or air conditioning systems to adequately maintain correct temperatures for cannabis storage.

Cannabis-related businesses that transport cannabis will need transportation insurance coverage. Few insurers offer cannabis transport insurance that includes cargo. Another important factor to consider is whether the transportation insurance includes both physical damage and cargo insurance. Can it be purchased as a stand-alone coverage, for example? Some insurers will do that and marry the cannabis transport coverage with another carrier’s liability coverage.

Conclusion

If your client is transporting cannabis, be sure to check if the policy covers physical damage and cargo, as well. Not all commercial auto policies will. Other issues to consider might include workplace accidents, property damage, fires from both wildfires and internal sources, theft, general liability, refrigeration breakdown, and cash in transit endorsements. Does the insurer offer higher limits — say up to $1 million? What about new ventures? Are they covered? Is there coverage for cash-intransit? What about in-transit property for owned products?

It pays to know the insurance landscape to ensure that your CRB has the proper coverage for their risk.

Watson is chief underwriting officer and Lewis is underwriting manager at GMI Insurance. GMI Insurance is a family-owned and operated commercial transportation managing general agent. Watson can be reached 610-933-4679, ext. 241 or email: wwatson@ GMI-Insurance.com. Lewis can be reached at 610933-4679, ext. 278, or email: CLewis@GMI-Insurance.com.

Idea Exchange: The Competitive Advantage Are Commercial Property Insurance Companies Dinosaurs?

The vast majority of commercial property, i.e., assets, are no longer physical. The majority of commercial assets are intangible. In fact, the overwhelming majority of assets owned by insurance agencies are intangible. They consist of those things called “expirations.” Other intangible assets that constitute a large proportion of a commercial enterprise’s value include software, trade secrets, patents, trademarks, proprietary processes, copyrights, and often most valuably — customer data. Yet virtually no insurance product exists to cover the majority of a company’s commercial assets.

By Chris Burand

The COVID-19 pandemic brought this issue to light with insurers celebrating what will likely be an extended Pyrrhic victory. They won their cases based on there being no physical damage to the insured’s tangible assets. I recently read about a cyber claim case that an insurer won because, “the ransomware attack caused no direct physical loss of or damage to the software … .” I am glad the court stuck to the policy language, but these rulings should be a major wake-up call for the insurance industry.

The most important assets a company needs to insure are now intangible assets, not physical assets. Aon completed a wonderful study, one that all carriers and all professional producers should read several times — the “2022 Intangible Assets Financial Statement Impact Comparison Report.” The study showed that intangible asset values have increased 255% since 2009. Physical asset values have only increased 97%. The future of the industry

The most important assets a company needs to insure are now intangible assets, not physical assets.

is in insuring intangible assets, and yet intangible assets only have, at best, 17% insurance coverage, versus 58% for physical assets. The report found an “average potential loss to certain intangible assets of $1.2 billion [versus] $839 million to PP&E …” The study does not even touch business income coverages, the understanding of which most producers are basically incompetent — that is not an opinion but a fact based on E&O audits and test scores.

The average value of information assets in the study, which does not include all intangible assets, was $1.21 billion per company. The average value of PP&E was $1.11 billion and the frequency of loss was higher — think cyber versus fire claims. In Aon’s study, a majority of companies reported the occurrence of a material or significantly disruptive security exploit at least once in the last 24 months.

Another study on the website www. ipcloseup.com showed that for the S&P 500, the percentage of firms’ values attributable to intangible assets has increased from 17% in 1970 to 90% in 2020. Intangible assets are increasing in value 2.5 times faster than tangible assets, are more valuable, possess a larger exposure to loss, have far higher frequency of loss, and have far less insurance coverage. The picture is plain to see: Why buy property insurance when your most important property is not covered?

In a typical property insurance policy, co-insurance kicks in if the coverage amount is less than 80% of replacement cost, yet insurance companies are refusing to insure 80% of the property. There are some deductibles on real property that are approaching 20%. What is it that insurers actually want to insure? Only agreeing to insure 10% of assets is silly.

A good way for a business to die is to keep focusing on yesterday’s needs. In 1970, tangible property needed to be insured. In 2023, intangible property is far more valuable and often far more difficult to replace. Commercial buildings typically are not that difficult to replace relative to replacing lost data, especially self-created

data (i.e., all that customer data that agencies and insurance companies possess).

Insurance companies are making too much money to change course now. They are simply the proverbial frog in a slowly warming pot set to boil. No one needs an insurance company that will not insure their most valuable assets, assets that constitute 80% of a firm’s overall value. The remaining 20% is just a deductible and as that percentage gets smaller and smaller, the importance of buying insurance for real property decreases to the point of not being worth it.

For professional producers who want to provide a 90% solution rather than a 10% solution for their clients (seriously, who ever heard of anyone making a living offering 10% solutions?), finding an appropriate product is difficult to impossible because insurance companies are still living in 1970 (well, maybe 1980, since we have inflation again). The argument many insurance companies make for not providing 90% solutions is they do not know how to value intangible assets. This is a ridiculous argument because intangible assets are valued every day, including the valuations they put on the intangible assets they purchase when they buy other insurance companies.

Alternatives

For professional producers to provide a comprehensive solution, they must remember that insurance is only one of the mechanisms with which to transfer risk. Traditional insurance is actually only a subcategory within the insurance risk transfer mechanism.

The best and brightest are working within the alternative risk transfer portion of the insurance world by developing bespoke solutions for their clients. This market is not for everyone. Participants must know what they are doing, meaning they must obtain considerable education prior to entering this market because otherwise they are quite vulnerable to the sharks looking for the innocent and uneducated.

A somewhat safer alternative is working with clients on their risk management to help them reduce their need for insurance. If insurance companies want to focus on the 10%, then eliminate the need for insurance companies from the entire equation as much as possible. Many options exist with which to offer risk management on each kind of intangible asset so that your clients do not need to become their own insurance company (this is called self-insuring). You do not need to become an expert risk manager either. In fact, doing so does not make sense. Instead, think of becoming a general manager, like a general contractor, whereby you have relationships with subs who have the exact expertise your clients need. The subs might be IT experts, security experts, intellectual property attorneys, and so on. Become an expert in putting together each sub to build a comprehensive risk management plan that protects 90% of your clients’ assets. If they still need coverage for the other 10%, then find them a traditional property policy.

Commercial clients need 90% coverage. If the insurance companies will not provide it and their agents throw their hands in the air declaring, “… but I can’t sell them the coverage because none of my regular carriers will provide it!,” these clients will eventually be approached by someone more knowledgeable who can and will provide a solution.

The real question then is this, are you here to sell insurance or are you here to take care of your clients?

Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-4853868. E-mail: chris@burand-associates.com.

Idea Exchange: Is It Covered?

Logic & Language and Forms & Facts

What Is a Pedestrian?

The first time I can recall asking this question was in 2010 and it involved a claim denial under personal auto uninsured motorists and medical payments coverages for someone who was hit by a car while sitting on a snowmobile on the side of a street.

upon horseback or in vehicles drawn by horses or other draft animals.”

One of the reasons often cited for a lack of a definition of “pedestrian” in auto policies is the variety of state and federal laws that define this term. However, few of these statutes appear to directly govern how the term may be defined in an auto insurance contract. So why not define the term?

bicycle, roller skates, snow skis, horseback, and the list goes on. What about a scooter, Segway, e-bike, etc.? If, for example, the e-bike is deemed to be a motor vehicle designed for use on public roads and the claimant is “occupying” it, then there would appear to be coverage under many, if not most, auto policies. But not for a regular bicycle? One could argue that this makes no logical sense.

By Bill Wilson

Medical payments coverage was identical to that under the ISO Personal Auto Policy (PAP) and applied to the named insured(s) and resident family members while occupying “or as a pedestrian when struck by” a motor vehicle designed for use on public roads or a trailer of any type. The state-specific underinsured motorist coverage, unlike the countrywide ISO coverage, also required that the insured be a “pedestrian” if not occupying a motor vehicle at the time of the accident.

So, to recover medical or, in some states, uninsured motorist or no-fault payments, what constitutes being a “pedestrian,” a term not defined in the ISO PAP or most other auto forms.

There are statutes that define “pedestrian” within the governance of said statutes. For example, federal Title 23 U.S.C. 217, which deals with the accommodation of bicycle and pedestrian traffic for transportation projects, defines “pedestrian” to mean “any person traveling by foot and any mobility-impaired person using a ‘wheelchair’.” The term “wheelchair” means a mobility aid, usable indoors, and designed for and used by individuals with mobility impairments, whether operated manually or motorized.

Massachusetts Annotated Laws Title XIV, Chapter 90, 34A, which also governs transportation issues, defines “pedestrian” to include “personal operating bicycles, tricycles and similar vehicles and persons

Why, you say? A Nevada insured was struck by an auto while skateboarding, incurring medical expenses of $24,000. The claim was denied on the basis that he was not a “pedestrian.” The insurer interpreted “pedestrian” to require that the claimant literally be on foot. A bicyclist in Ohio was hit by an auto and taken to a local hospital. The agent turned in a medical payments claim, which was denied because the claimant was not on foot.

According to these carrier interpretations, a “pedestrian” would not include someone sitting down or on a skateboard,

As for the courts, decisions are all over the place. For example, in State Farm Mut. Auto Ins. Co. v. Stein, 940 P.2d 383 (Colo. 1987) and in Cole v. Auto-Owners, 272 Mich. App. 50, 723 N.W.2d 922 (2006), the courts opined that a bicyclist was not a pedestrian as required to trigger uninsured motorist coverage.

On the other hand, in Tucker v. Fireman’s Fund, 308 Md. 69, 517 A.2d 730 (1986), the court ruled that someone who was sitting on a stool was a pedestrian and that the undefined term “pedestrian” could be ambiguously applied to different

sets of facts and circumstances.

That being said, courts often reference dictionaries to determine the common meaning of terms and, if you examine most dictionaries, you’ll find they define “pedestrian” to mean a person “on foot.” The Cambridge Dictionary defines “pedestrian” to mean “a person who is walking,” and gives an example of its use in a sentence: “Bicyclists and pedestrians use the path.” Clearly, this dictionary is distinguishing pedestrians from bicyclists.

It is usually a good thing to remove ambiguity from an insurance contract.

No doubt there are dozens, if not hundreds, more judicial examples of how the undefined term “pedestrian” may be interpreted. It is usually a good thing to remove ambiguity from an insurance contract.

A good example is the Washington state Supreme Court case of McLaughlin v.

Travelers Commercial Ins. Co. In this case, the court considered dictionary definitions, as well as at least two state statutes.

For example, motor vehicle statute RCW 46.04.400 stated that “‘Pedestrian’ means any person who is afoot or who is using a wheelchair, a power wheelchair, or a means of conveyance propelled by human power other than a bicycle.”

On the other hand, casualty insurance statute RCW 48.22.005(11) stated that “‘Pedestrian’ means a natural person not occupying a motor vehicle as defined in RCW 46.04.320.”

The court found that this variance in definitions created an ambiguity as to the meaning and intent of the word “pedestrian” and, therefore, found in favor of the insured claimant. Regardless of ambiguity, one would think that an insurance-specific definition should prevail anyway over a motor vehicle definition.

Another issue is, if an insurer interprets “pedestrian” to include someone on foot but not in a wheelchair, is that potentially discriminatory under insurance or ADA-

like laws? Not being an attorney, I can’t answer that, but as a matter of fairness and equity, it doesn’t seem right. Even if legal, is it ethical?

My personal opinion, as a matter of equity and consistency, is that auto medical payments coverage should apply in the same way that un(der)insured motorists coverage under the ISO Personal Auto Policy applies — to named insureds and resident family members when struck by a vehicle designed for use on public roads without regard to whether the insured is on foot or occupying a vehicle of any type.

With kids hopefully headed off to college this fall, check out next month’s column about insuring college students so you can address these issues on your upcoming home and auto renewals.

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

Idea Exchange: Trucking

How Generative AI Could Steer Commercial Trucking Insurance in New Direction

Generative AI is the next big technology trend in just about every industry. But for such a people-centric industry, how will ChatGPT, DALL-E 2 and Bing

AI truly impact the insurance sector?

Just ask ChatGPT, as some insurance pros have done: When prompted, ChatGPT says it will have a positive impact on the industry. And if you ask a human, I would agree, with conditions. Generative AI’s success in insurance applications will really depend upon who is using the technology and its specific use cases.

Conversational Customer Service

The greatest and most direct opportunity for generative AI in insurance is in customer service applications. And the ultimate win in insurance customer service is processing claims. While claims adjusting is complex and requires human interface, there’s room for automation.

AI models excel at processing repetitive, predictable queries to readily assist in increasing response speed and — in auto insurance — how quickly drivers can get back on the road. AI can reduce friction around part ordering and acceleration of repair, and even aid adjusters in total loss decisioning. It can also respond quickly in natural, conversational language, which helps a claims representative solve stressful problems.

Insurtechs have been improving AI models for a long time, but AI has yet to really penetrate the commercial trucking sector. Even though, for example, image-based AI could capture exterior damage and risk potential for different types of impacts on commercial vehicles to improve the claims process.

Expanding Prospects, Growth with AI

There is an untapped opportunity for

brokers in the commercial trucking insurance sector as they prospect new business and offer quotes.

There is a lot to learn, especially for agents writing small commercial policies. If brokers aren’t familiar with a particular class of business, they don’t prospect it. If brokers receive cold inbound leads, they may struggle to nail the details of a new type of policy.

For example, a broker more familiar with property insurance may not know to request a driver roster when writing a trucking insurance policy. Situations like these become more navigable with AI assistance.

In the future, generative AI could act as a coach for agents by answering questions and helping them understand the long list of options prompted by quoting engines. This technology can help smaller agents grow by expanding into other industries effectively rather than through trial and error, which would in turn give niche policyholders access to more coverage options.

Supply Chain and Demand Prediction

Keeping trucks on the road is an essential part of ironing out recent supply chain issues. But the stress drivers face working long hours to fulfill demand, on top of

complex and shifting delivery routes, adds up to increased safety risks for truckers and problems for insurers.

Generative AI could play a role in lowering risks for truck drivers by assisting them along their regular and demand-driven routes.

For example, hotshot drivers run time-sensitive deliveries using lighter vehicles and tow trailers. With delivery times a priority, truckers could rely on technology for more than just route guidance. Generative AI could step in to balance a driver’s delivery destinations with time, traffic, road safety and even vehicle and service data to track a truck’s wear and tear.

For a hotshot driver making a delivery in Chicago, the route through the city instead of around it may have completely different risks and schedules. As truckers go along their routes, an interactive, personalized AI experience could make the difference between a safe, on-time delivery and an accident.

Going a step further, hotshot drivers make their job and delivery decisions based on demand — unbound to one factory or job site. With enough datapoints, AI-driven demand prediction built into a trucker’s tech stack could be an invaluable tool for this type of driver. This puts more

By Dan Abrahamsen

money in drivers’ pockets, reduces risk, decreases claims and improves the strain on the supply chain — an all-around win for truckers, suppliers and insurers.

Driver Health and Safety

In addition to protecting drivers, generative AI could improve their overall health through personalized experiences.

The trucking profession is challenging, especially for semi drivers on long haul routes. Research by the Centers for Disease Control and Prevention (CDC) reveals long-haul truckers have higher rates of heart disease, diabetes, hypertension and obesity than the average U.S. working adult.

Beholden to tight delivery schedules and strict hours of service caps, truckers sometimes have limited options for essential daily activities like eating, sleeping and showering.

Generative AI could soon offer drivers more sophisticated recommendations for their stops, factoring in personal and route data, traffic and map information, and lifestyle factors.

10 Years Down the Road

The question remains: Will generative AI completely upend the insurance industry?

As with any new technology, the early adopters could be on the bleeding edge of this change, though it will take time. Instead, we should think about how to support and accelerate this digital transformation.

In the trucking sector, the first major barrier is hardware.

Trucks — especially semis — are expensive to replace and built to last with fleets using an average seven- to eight-year replacement cycle. It takes much longer for new technologies to penetrate large commercial vehicles than their automobile counterparts.

Features that may become standard in lite trucks and autos by 2030 may not fully be adopted by the commercial trucking industry by 2045, for example. Although there is legislation addressing issues of fuel efficiency, emissions and safety tech that will be required for trucks, expect it to take extra time to fully penetrate a fleet’s physical system.

For process-oriented technology, like systems that help claims adjusters and brokers, one of the biggest challenges for any AI model is the lack of data.

There is much more available data relating to personal autos — insurtechs have been at it for longer, and there are more vehicles from which to collect data. In commercial trucking, data to train AI models is lacking and will take some time to build.

With more sensors on a vehicle, insurers can operate beyond one simple row of static data for each vehicle to better understand risk, driver safety, vehicle utilization over time, and ultimately improve outcomes on the road.

Abrahamsen is founder and CEO of Cover Whale. Previously, he was a partner at Underwriting Cloud, an insurtech provider specializing in Geographic Information Systems (GIS), exposure mapping and referrals. Prior to joining Underwriting Cloud, he worked in the project management office at Allied World. Abrahamsen began his career working in operations, business intelligence and special projects at both Aspen Insurance and Endurance.

The trucking profession is challenging, especially for semi drivers on long haul routes.

Idea Exchange: Construction

‘An Ounce of Prevention Is Worth a Pound of Cure’

By Don Neff

What can insurance carriers expect in 2023 in terms of new codes and construction technologies in the wake of one of the most devastating natural disasters that the nation has ever experienced? Much stronger building and site development regulations in the next three-year cycle of code updates are certainly on the horizon.

The history of mother nature’s fury and society’s responses have been well documented. Devastation from the Category 5 Hurricane Andrew in 1992 with 175 mile per hour winds resulted in new Florida building codes, replacing an estimated 400 local codes on the books at that time.

When Hurricane Ian hit the Southwest Florida coastline in September 2022 with winds of more than 120 miles per hour, it flooded cities and devastated homes across Florida and coastal South Carolina. Data posted by the Florida Office of Regulation show that an overall 471,783 claims have already been filed from Hurricane Ian, with estimated losses of $4.5 billion. Hurricane Ian’s projected

economic damage could be as high as $75 billion, and may end up among the five costliest storms to hit the U.S., after the economic damage is fully assessed.

New Codes, Practices

Going forward, new codes and construction practices will need to be implemented in the construction of new homes and buildings. Studies from agencies like FEMA have shown that the adoption of modern building codes averts over a billion dollars a year in structural damage in California and Florida alone. It makes sense for insurance professionals to learn more about these updated building codes and construction products and principles. After all, as the adage goes: “An ounce of prevention is worth a pound of cure.”

The impact of Hurricane Ian will result in further strengthening of building standards with respect to living levels and mean flood elevations. Federal flood maps, which are used for tracking and analysis, may underestimate flooding risk, but FEMA is required to review these flood elevation maps every five years to identify any changes or inaccuracies. These reviews

are to account for accelerating climate change, intense rainfall events and sea level rise. It’s hoped that stricter standards will help insurance carriers by reducing the amount of damage from hurricanes and other natural disasters.

Homes anchored on concrete piers and designed with open garages protect elevated living spaces where storm surges do not rise to that level are examples of expected refinements in the current building codes. Building pad elevations will also rise. The challenge larger builders face is differential building pad elevations within a master planned community or large subdivision in which the build-out spans one or more building code cycle updates.

Presently, when building in South Florida, concrete block construction is also required, and these homes perform well in hurricane wind conditions. Concrete block construction will replace older wood framed structures. Even at inland locations in north Florida, which are more insulated from coastal hurricane winds, wood framed construction exists in older structures, but most new homes are proactively built with concrete block.

In the coastal city of Punta Gorda, Florida, over which the eye of Hurricane Ian passed directly, several homes and buildings were left intact with minimal damage to the building exteriors, to the surprise of many. After Hurricane Andrew, Florida enacted new statewide building code updates that included some of the toughest storm-specific regulations in the country. In 2004, Hurricane Charley devasted Punta Gorda, and the reconstruction of the destroyed homes and buildings included updated building code requirements introduced in 2007. The buildings that survived Hurricane Ian in Punta Gorda used those 2007 building codes.

The 1994 Southern California Northridge earthquake, registering 6.7 on the Richter Scale, resulted in 8,700 injuries, fifty-seven deaths and caused upwards of $93 billion in damages (2021 dollars). Following Northridge, new significant structural building code updates for the Los Angeles region were generated.

Champlain Tower Collapse

Not all building failures are a result of mother nature’s fury. The Champlain Tower collapse in Florida in 2021 is one example. The causes of its collapse have been attributed to beach erosion undermining structural support columns, questionable concrete design mixes during original construction, and/or extensive deferred maintenance by the HOA.

Given that the HOA was to implement an estimated $15 million-$16 million of recommended repairs, but sadly were

never begun, deferred maintenance played a significant role in the collapse, in the author’s opinion.

Building Cycles

Buildings go through cycles. The pre-construction cycle is governed by economic and financial feasibility, design development and preparation of construction documents (i.e., architectural and engineering plans — civil, structural, mechanical, electrical and plumbing, among others). Creation of specification manuals, construction contracts for the general contractor and trade/specialty contractors, and preparation of the HOA CC&Rs (Conditions, Covenants and Restrictions) are also developed. The CC&Rs are governing documents for the common ownership and maintenance over time of common interest HOA communities. Material selections are made during this time for the tower core, public area amenities and build-out of specific design elements and features inside the residential units. And the marketing/sales process begins during this pre-construction cycle.

During construction is the cycle of creation where the rubber hits the road and includes mobilization of the site work — excavation, rough grading, removal of organic matter from bearing soil (which otherwise will rot and create voids and weakness in the bearing strata), below grade foundation construction and waterproofing assemblies — taking place prior to going vertical. Once a tower building goes vertical the construction schedule can

span up to four years.

Post-construction is the cycle of ownership and maintenance and lasts for decades, if not centuries in the case of many national and international landmarks such as monuments, cathedrals, and government buildings. Preventative maintenance procedures and practices are necessary to ensure a building’s longevity.

We know that mother nature also has cycles, and the study of building science is in part the study of these cycles. Building science has improved building durability and enhanced comfort for occupants. It is commonly known in physics that every action embodies a reaction. Energy, wind, sun and moisture are natural elemental interplays of actions and reactions in the context of physics, chemistry and biology — all of which impact buildings. Building science as a discipline plays out over the life cycle of a building or structure and contributes to the development of new construction materials, methods and practices. These innovations in turn become adopted in the uniform building code updates, typically on a three-year cycle.

Legislative Responses

In the event of a major catastrophe such as the Surfside Champlain Tower collapse, building code updates may be insufficient to solve the problem, and a legislative response is required. For instance, Senate Bill 4-D (2022) Building Safety in Florida requires building inspections and recertifications on a regular cycle of years, “requiring condominium associations and cooperative associations to have milestone inspections performed on certain buildings at specified times; authorizing local enforcement agencies to prescribe timelines and penalties relating to milestone inspections. It also requires funding replacement reserves for building of a certain height and location relative to the coastline.

Similarly, following a partial building failure in Berkeley, California, in 2015, due to a balcony collapse, the California State Legislature enacted the “Balcony Bill,” SB 326, requiring regular and routine struccontinued on page 48

Idea Exchange: Construction

continued from page 47

tural inspections over time, specifically for exterior building elements above a specific floor height.

Protocols, Funding

These legislative responses were necessary but are not sufficient. Required preventative maintenance protocols and regularly budgeted funding to implement the necessary maintenance are needed.

A relevant example is the advent of residential green building practices. LEED for Homes, Build It Green, Cal-Green, Earth Craft, Green Globes, and Passive Haus, are examples and each is a noble initiative to increase resource efficiency and sustainability in housing production. These evolving “green” building codes drive contractors to construct more energy efficient homes through improvements in the building envelope, improving indoor air quality and reducing water consumption requirements, but changing occupant behavior is also important. Just because a home has a dual flush toilet does not mean the occupant will push the right button. Opening and closing windows, the use of light and heat and excessive plug loads in green built homes can waste energy, regardless of the highly energy efficient building envelope.

In classical economics, there is a concept called “The Tragedy of the Commons,” in which commonly owned assets are cared for by no one, as everyone is seeking a “free-ride” from others who are expected to be responsible for clean air, clean water, traffic free highways, and shared area building maintenance. The tragedy is a “lack of pricing mechanisms” or “feedback loops” to properly allocate the assets’ use, and thus overuse occurs. In the case of the Champlain Tower, the price of avoiding building maintenance became a horrific tragedy.

Specific to high-rise residential condominium towers, general contractors close out their contracts with developers by providing a building “O&M” manual — a final specification book with operational details of the various building systems and materials. These manuals include technical information that may not be easily under-

stood by the homeowner association’s board of directors.

A more user-friendly version that outlines maintenance tasks, schedules and frequencies is useful to facilitate understanding and implementation of the maintenance program. The practice of providing HOA maintenance manuals is common in California and other western states, which have had 25 years’ experience of construction defect litigation and pro-active legislative reform measures codified in their state laws. Florida and other eastern states can learn from normal California practices on this topic.

Strong language in the CC&Rs, which require HOA boards of directors to implement maintenance and inspection protocols, is also crucial to ensure critical maintenance and inspections are being conducted. A funding mechanism to cover the costs of maintenance and inspection protocols should also be required and documented. This is part of the HOA monthly dues paid by the homeowners.

Again, we look to California for a well-developed model to follow. The California State Department (or Bureau) of Real Estate is the oversight agency publishing regulatory standards and budgets for developers setting up HOA communities, including three levels of disclosure reports — pink, yellow, and white — designed to inform buyers about the specific project risks, risks in the vicinity of the project and estimated HOA dues which cover all the pertinent costs for operating and maintaining the building project.

More information and a list of relevant publications is available at www.dre. ca.gov. Two particularly useful documents are the “Operating Cost Manual for Homeowners Associations,” and “Reserve Study Guidelines for Homeowners Association Budgets.” The first is a 60-page guidebook for creating a well-thought-out HOA Operating Budget, initially published in 1975 and now in its 14th edition. The second is a 43-page reference guide outlining the steps for properly setting up HOA Reserves, conducting a physical analysis and developing a funding analysis. Each contains examples and worksheets to follow.

Concluding Thoughts

Paralleling the impact of mother nature’s natural disasters, building codes will be strengthened and homes will become ever more durable. Echoed in a research article by John Burns Real Estate Consulting, “The average repair/remodel spending per homeowners due to Hurricanes/Tornados from the 2017-19 storm season declined significantly over three time periods: 19701989, 1990-1999, and 2000 or later.” In effect, “Stronger building codes for newer homes mitigate the impact of wind and rain damage.”

There are many builder trade groups across the nation meeting with legislators (not just Florida) speaking with a somewhat common voice to review and support or oppose various legislative initiatives. For example, there are currently discussions to reduce the Florida statute of limitations from 10 years to seven years for construction defects. This may help builders, risk managers and insurance companies. Other reforms addressing Hurricane Ian may also be presented, discussed and become law.

Neff is president of LJP Construction Services, headquartered in Irvine, California, with regional offices in Miami, Atlanta, and Las Vegas. LJP has been at the forefront of the quality assurance movement on behalf of builder and insurance clients for over 29 years. LJP has assisted clients in the residential, commercial and hospitality sectors nationwide. For more information, visit www.ljpltd.com.

April 17, 2023

Mainsail Insurance Company

1 Pluckemin Way, Suite 102 Bedminster, NJ 07921

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.

April 17, 2023

The Gray Casualty & Surety Company

1625 West Causeway Approach

Mandeville, LA 70471

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.

April 17, 2023

Park National Insurance Company

800 Superior Avenue East Cleveland, OH 44114

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.

April 17, 2023

Landcar Casualty Company

351 W. Opportunity Way, Suite 440 Draper, UT 84020

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.

April 17, 2023

BITCO National Insurance Company

3700 Market Square Circle

Davenport, IA 52807

The above company has made application to the Division of Insurance to amend their 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.

April 17, 2023

WestGUARD Insurance Company

39 Public Square Wilkes-Barre, PA 18701

The above company has made application to the Division of Insurance to obtain a Certificate of Authority 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.

April 17, 2023

Greater Mid-Atlantic Indemnity Company 200 Madison Avenue, Third Floor New York, NY 10016

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.

April 17, 2023

Rochdale Insurance Company

800 Superior Avenue East Cleveland, OH 44114

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.

April 17, 2023

Intrepid Casualty Company

5400 West 110th Street, 4th Floor Overland Park, KS 66211

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.

Closing Quote

It’s Time to Play Offense

By Mark

During my time playing wide receiver at the University of Northern Colorado, I learned firsthand there are a lot of advantages to being on offense. Being on offense is proactive. It means you know where the ball is going before the play begins, which typically gives you the advantage over the defense. But when it comes to protection, the insurance industry has traditionally spent a lot of time playing defense. Being on defense is generally reactive. As we reimagine the future of protection, carriers and agents should embrace the idea of going on offense to help customers and clients prevent a loss before it happens.

Here are three key plays that agents can have in their playbook to be proactive for their customers:

The Forward Pass: Anticipate Customer Needs

Customers are facing a prolonged period of uncertainty. From increased weather risks to murky financial futures, clients don’t know what tomorrow will bring and how to protect themselves from perils they haven’t even thought of yet. Agents can help ease these fears by working with

like-minded carriers that offer technology and customer-centric solutions to anticipate their future needs and mitigate risk.

Find the Edge: Make Customer Education a Priority

As important as it is to anticipate a client’s needs, it’s just as important to let them know why they should take proactive steps to prevent a loss before it happens. Not only do losses take a financial toll (lost business, rise in insurance premiums, etc.); they also take an emotional toll. A loss disrupts a person’s day-to-day routine, causing undue stress and strain on all involved. Sometimes, one or two small actions can prevent a loss and all the headaches associated with it. Agents should partner with carriers who provide tools and resources that empower them to educate customers about preventative measures within their control and encourage them to take action.

The Ground Game: Advocate for Change

They may not realize it, but an agent’s voice carries a lot of weight. As trusted community members and counselors, agents are representatives of their client’s interests and carry

a great deal of influence with political leaders and policymakers — when they speak up. Now more than ever, agents must take a more hands-on role in the change that will protect their customers and be vocal proponents for measures like enhanced building standards such as Institute for Business and Home Safety (IBHS) Fortified and distracted driving laws — actions that have been proven to save property and lives.

Into the Endzone

Shifting to an offense-first mindset won’t happen overnight, and it will take consistent effort on the part of carriers, agents and other industry partners. By working together, we can reimagine the future of protection and help customers take a greater role in mitigating risks for themselves, and their businesses.

Our customers are counting on us. Are you ready to get in the game?

Berven is president and chief operating officer of Nationwide Property & Casualty, which includes agency-based and direct-to-consumer distribution, excess & surplus/specialty insurance, agribusiness insurance, claims, strategic partnerships, member solutions, and the commercial and personal lines organizations.

Berven

‘As we reimagine the future of protection, carriers and agents should embrace the idea of going on offense to help customers and clients prevent a loss before it happens.’

Presented by

Get Your Free Ticket at theinsurtechsummit.com

VIRTUAL CONFERENCE MAY 9, 2023

On the InsurTech Horizon: Change and Agility

Change is constant. And in InsurTech, it’s no exception. At this year’s InsurTech Summit, you’ll learn what the big players in the space are up to, and gain insights into how to embrace change and stay agile in 2023—and beyond.

Get your free ticket at www.theinsurtechsummit.com