Insurance Journal West 2023-10-02

A key attribute that makes Safety National a trusted specialty insurance provider is our consistent approach and execution. We communicate early and often, keeping every promise we make along the way.

Opening Note

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

Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Unstable Homeowners

The U.S. homeowners insurance segment has been hit with three consecutive years of net underwriting losses as a result of above-average numbers of natural catastrophes, inflationary pressures and elevated reinsurance costs. These market headwinds have led AM Best to revise its outlook on the segment to negative from stable. Segment carriers are being challenged “by more frequent secondary weather perils and higher retentions and co-participation, given reinsurance pricing trends,” according to the report titled “Market Segment Outlook: US Homeowners.”

“Rising loss costs, inflation and supply chain disruptions are pressuring earnings, making it difficult to maintain rate adequacy,” which has led several market leaders to curtail new business in catastrophe-exposed states, the report said.

“Going forward, homeowners carriers will find it difficult to absorb these underwriting pressures while strengthening their balance sheets. A return to underwriting profitability over the near term appears highly unlikely,” said Maurice Thomas, senior financial analyst, AM Best, in a statement accompanying the report.

Online insurance marketplace Policygenius recently reported that home insurance premiums at renewal increased 21% on average from May 2022 to May 2023.

Despite the operational challenges that homeowners’ carriers face, AM Best said overall risk-adjusted capitalization remains solid for most companies due to their risk management best practices to protect their balance sheets. “Companies remain vigilant is assessing their rate needs, pushing for increases where pricing is inadequate.”

However, AM Best noted that the capital cushion for some insurers — especially those in catastrophe-exposed areas — has started to erode following persistent underwriting losses in recent years. “With companies increasing their reinsurance retention and co-participation levels because of reinsurance market conditions, cat activity is having a larger negative impact on results.”

On a more positive note, AM Best said, technology adoption is accelerating, which is accompanied by improved catastrophe risk management practices.

“In light of the evolving risk environment, insurers have accelerated their shift to digital technology and intensified their focus on product innovation,” the report said, explaining that the homeowners line deals with large homogeneous risks, so initiatives can be scaled and replicated relatively easily.

“Pricing sophistication has helped carriers in their pursuit of rate adequacy. By leveraging proprietary underwriting models and technology platforms, top performers have been able to customize coverage for the right price,” AM Best continued.

“New technologies can strengthen risk selection and mitigation, enhance claims processing, lower expense and service costs, and improve product offerings.”

Chief Financial Officer Terry Freeburg | tfreeburg@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: Linda Bourn, James Burns, Erin Dwyer, Rachelle Holden, Jules Turney

Columnists: Catherine Oak, Mary Newgard

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

‘Rising loss costs, inflation and supply chain disruptions are pressuring earnings, making it difficult to maintain rate adequacy.’

For the Fifth Straight Year, Surplus Lines Sees Double-Digit Growth: AM Best

surplus lines premium annually were among those showing double digit growth: California, up 22.2%; Texas, up 27.3%; and Florida, up 26.5%.

New York, the fourth highest state by annual surplus lines premium, increased by 21.2%, its second consecutive year of over 20% growth after a growth of only 3.9% in 2020.

The greatest growth was seen in Nevada (41.8%), Minnesota (38.4%) and Arizona (29%).

However, mid-year 2023 growth numbers from the 15 stamping offices that oversee transactions in the excess and surplus, or non-admitted, market are lower than the year-over-year numbers from 2022. Surplus lines were up 15.9% yearover-year mid-year 2023 from mid-year 2022, compared to an increase of 32.4% in the mid-year 2021 to 2022 numbers.

While four of the 15 stamping offices reported double-digit increases mid-year 2023, at mid-year 2022, 13 of the 15 offices reported double-digit year-over-year increases.

Surplus lines DPW growth reached a high of 25% in 2021.

Total U.S. surplus lines direct premiums written (DPW) rose by 19.2% to reach a record $98.5 billion in 2022, marking a five-year streak of double-digit growth rate increase, according to a new AM Best report.

Best’s Market Segment Report, “Surplus Lines Insurers Focus on Evolving Risks to Sustain Premium Growth,” showed eight of the top 10 lines of the segment’s coverage grew DPW by more than 10% in 2022, led by the commercial property, commercial auto, and general liability lines, with the latter including boosts from the umbrella and excess liability, cyber, and professional liability segments.

Pricing pressures have continued for many commercial lines of coverage in the

past two years, with both non-admitted and admitted companies focusing on core business and culling what they considered underpriced, borderline surplus lines accounts from their portfolios. These factors help drive the surplus lines share of property/casualty commercial DPW above 20% for the first time in 2021, ending 2022 at 21.6%.

Multiple weather-related catastrophe losses, property risks, and an increase in claims totals due to elevated construction costs have enabled surplus lines writers to carve out a bigger portion of total P/C industry premium, which increased to an all-time high of 11.2% in 2022, up from 10.4% a year earlier.

The three states that generate the most

The report also notes that the demand for cyber coverage has driven an increase in premium growth — 57.4% is now provided by surplus line writers, up from 24.5% in 2020.

“In our view, the excess and surplus lines segment should continue reporting favorable underwriting results and organic capital generation,” said Robert Raber, director, AM Best. “Volatility in the investment markets could constrain overall operating earnings, but excess and surplus lines insurers typically fare well during cycles when market conditions stress standard market insurers.”

New distribution platforms and partnerships along with geographic or product line diversification also have played an integral role in allowing the surplus lines groups to defend their market positions and fuel the growth of newer surplus lines entities.

J.D. Power: Auto Insurance Shopping Reaches All-Time High

The percentage of American households with cars and without auto insurance rose during the first half of 2023, and the share of customers who say they are shopping for auto insurance reached a record high.

J.D. Power recently shared these findings in an insurance intelligence report.

The consumer insights company found that the percentage of households with at least one car and no auto policy reached 5.7% through the first six months of the year, up from 5.3% in the second half of 2022. Meanwhile, the percentage of customers who say they are shopping for auto insurance hit 12.5% through the second quarter of 2023 — representing an all-time high.

“As inflation has affected all sectors of the economy, the costs of repairing and replacing damaged vehicles, medical costs

and all other costs associated with an auto insurance claim have increased substantially,” reads the J.D. Power report. “Consequently, auto insurance premiums have increased at an unprecedented rate during the past two years (7.9% in 2022, and another 5.9% in the first six months of 2023).”

Per the report, states with the highest levels of increases in uninsured driver rates between the second half of 2022 and the first half of 2023 are South Dakota (106%), New Hampshire (84%), West Virginia (50%), Oregon (47%) and Indiana (36%).

TransUnion recently reported that auto insurance shopping rates rose 12% year-over-year in the second quarter of 2023. While vehicle sales played a role in the increase, TransUnion said in an August

press release that the search for lower insurance premiums was the primary driver.

“Customer loyalty is usually earned in times of turbulence,” reads the J.D. Power report. “Insurers that can rise to the occasion may see added benefits in the form of increased customer loyalty and advocacy when conditions improve.”

$24.5 Billion

The total net underwriting loss for the U.S. property/casualty industry after the first six months of 2023, $2 billion less than the total loss recorded for all of 2022, according to AM Best. In a report titled, “First Look: 6-Month 2023 US Property/Casualty Financial Results,” AM Best said catastrophe losses added 9.6 points to the industry combined ratio, which is estimated to be 104.5 for the first six months of 2023.

The weekly minimum benefit for permanent or temporary partial disability in New York will increase to $275 in 2024 under a bill signed by Gov. Kathy Hochul. The legislation raises the minimum disability benefit under workers’ compensation over three years. The benefit will rise to $325 in 2025, and to one-fifth of the state average weekly wage in 2026.

$275

The amount Kaiser Permanente has agreed to pay as part of a settlement with California prosecutors who say the health care giant illegally disposed of thousands of private medical records, hazardous materials and medical waste, including blood and body parts, in dumpsters headed to local landfills. Kaiser is California’s largest health care provider and has more than 700 health care facilities that treat about 8.8 million patients in the state.

The number of people injured when a driver crashed his SUV into a Denny’s restaurant outside Houston on Labor Day. Police in Rosenberg, Texas, said the vehicle slammed into the restaurant’s south wall injuring the diners, who ranged in age from 12 to 60 years old. Wet roads and speed factored into the accident, authorities said.

Declarations

Third-Party Litigation Funding Ban

“Settlements of this size and nature have often attracted the attention of third-party litigation funding entities intending to prey on litigants, including settlement participants seeking litigation funding pending the receipt of potential settlement funds.”

— District Judge M. Casey Rodgers in the U.S. District Court for the Northern District of Florida said in an order issued Aug. 29 related to 3M’s $6 billion settlement with U.S. military service members over 3M’s Combat Arms Earplug products. The judge barred attorneys and claimants involved in the settlement from any third-party litigation funding agreements. Rogers noted that such arrangements often include unreasonable fees and interest rates.

Ethical Museum Standards

“We are very thankful for the new information provided to us. … The ethical standards applicable to museums are much changed since the 1960s, and the Museum is committed to managing its collection consistent with modern ethical standards.”

— Matthias Waschek, director of Worcester Art Museum in Massachusetts, said in a statement after a bronze bust believed to depict the daughter of an ancient Roman emperor was seized from the museum by New York authorities investigating antiquities stolen from Turkey. Museum officials said they had “limited information” about the bust’s history when they acquired it in 1966. The bust is known as “Portrait of a Lady.”

Kansas Refunds

“If I can find an efficiency that helps lower the cost of doing business, we’re going to implement it. … This was an unnecessary fee and I’m thrilled we are returning tax dollars to the folks who have paid them.”

— Kansas Insurance Commissioner Vicki Schmidt said in a statement that the Kansas Insurance Department (KID) returned $153,247 to 16 group-funded pools following the enactment of legislation abolishing two assessment fees — the Group-Funded Pools Fee and the Group-Funded Workers’ Compensation Pools Fee. The money has been distributed to the pools on a pro-rata basis, based on premium taxes paid by each pool for Fiscal Year 2022.

Louisiana Citizens Depopulation

“While there may be legitimate reasons to reject an offer for removal from Citizens, Citizens policyholders have the absolute right to make informed decisions about their insurance coverage. … They can’t do that if their agents don’t tell them about the opportunity to save significant dollars on their premium costs by getting out of Citizens.”

— Louisiana Insurance Commissioner Jim Donelon commented on a Sept. 7 directive that orders agents to notify their Louisiana Citizen policyholders when they receive an offer to be placed with a significantly less expensive insurer in the private market. Directive 222 advised property/casualty producers of the ongoing round of depopulation from Citizens, the state’s insurer of last resort.

Kentucky Public Adjusters

“Several public adjusters have submitted contracts for Department approval that include language that would allow them to collect a percentage of claims money negotiated and paid prior to execution of the contract with the insured.”

— Kentucky Insurance Commissioner Sharon Clark, in an advisory opinion, reminded public adjusters that they are not authorized to get paid up front, before a contract with a homeowner is signed, unless approved by the commissioner. Fees are limited to 15% of insurance awards for non-catastrophic claims and 10% for catastrophic events. Most up-front charges are not allowed under House Bill 232, which took effect in June.

Breathing Space

“A lot of us (in the fast-food industry) have to have two jobs to make ends meet, this will give us some breathing space.”

— Said Ingrid Vilorio, a fast-food worker at a Jack In The Box in the San Francisco Bay Area, who also works as a nanny, said about the $20 minimum wage most fast food workers in California would get next year under a deal between labor unions and the industry that will avoid a costly referendum on the November 2024 ballot. The negotiated wage hike represents a raise of nearly $5 per hour.

Insurance Industry Should Expect $130 Billion in Catastrophe Losses Every Year: Verisk

By Chad Hemenway

Total global insured losses from natural catastrophes of more than $100 billion a year may be less newsworthy than in the past. In fact, the industry should expect loss totals of much more than that every year, according to models from data and analytics firm Verisk.

The average loss over the last five years was $101 billion, an increase from an average of $70 billion over the previous five years, 2013-2017. Now, Verisk’s models say the average annual loss from global natural catastrophes is $133 billion, driven by factors other than weather.

“ The growth in exposure values, driven primarily by continued construction in high-hazard areas, and rising replacement costs — largely due to inflation — are the most significant factors responsible for increasing catastrophe losses,” Bill Churney, president of Verisk extreme event solutions, said in a statement. “The other significant factor is the impact of climate change, which is often cited as the primary reason for the increase in losses. But, while this plays a role, year-over-year growth of exposure and rising replacement values have a far greater short-term impact.”

Adding to the findings, Verisk said its global average annual losses should be considered a baseline. With an increase in significantly higher losses, the industry should prepare for the possibility of a year of losses in excess of $200 billion, Verisk said.

Verisk said its models also highlight a significant gap in insurance protection, with annual global economic losses in excess of $400 billion. “On a regional basis, the percentage of economic loss from natural disasters that is insured varies considerably,” Verisk said in its report, 2023 Global Modeled Catastrophe Losses. “In North America,

for example, about 51% of the economic loss from natural disasters is insured, while in Asia, insured losses account for only about 12% of economic losses, respectively, reflecting the very low insurance penetration in these regions.”

The average annual loss from global catastrophes is $133 billion — a new high.

Verisk said it does not distinguish between so-called “primary” and “secondary” perils, as all catastrophes contribute to loss, “whether they are a single major event, an aggregation of smaller ones, or a combination of the two.” Severe thunderstorms, often referred to as a secondary peril, have accounted for 70% of insured losses from eight multi-billion dollar events in 2023 so far, Verisk said.

Climate change is a “significant factor” in the increase of catastrophe losses, impacting all perils, said Verisk, adding that “perils like floods, droughts, wildfire, and sea level rise (and therefore storm surge) are becoming more severe and the observational data cor-

roborates the science.” The contribution of climate change on other perils is more difficult to quantify but Verisk said it is working to combine the science with historical trends to ensure the models reflect climate risk.

First-Half P/C Underwriting Loss Just $2B Shy of Loss for All of 2022

The total net underwriting loss of $24.5 billion for the U.S. property/ casualty industry after the first six months of 2023 is $2 billion less than total losses recorded for all of 2022, according to AM Best.

Catastrophe losses added 9.6 points to the industry combined ratio, which was at 104.5 for the first six months of 2023, according to the AM Best report, “First Look: 6-Month 2023 US Property/ Casualty Financial Results." A year-toyear comparison in the report shows that last year’s first-half combined ratio of 100.2 included 5.6 points attributable to catastrophe losses.

The overall combined ratios for both six-month periods included a few points of favorable prior-year loss reserve development — 1.4 points this year and 1.8 points in 2022, according to breakdowns presented in the report.

AM Best analysts said the personal lines segment, specifically the homeowners line of business, was

primarily responsible for the decline in underwriting results.

“Secondary perils continued to drive poor loss experience as we see in the catastrophe losses for the first half of 2023,” said Christopher Graham, senior industry research analyst, AM Best.

The $24.5 billion underwriting loss in the first half of 2023 compares with $6.6 billion for the same prior year period, underscoring “the ongoing headwinds such as rising loss costs, above average catastrophe activity, and adverse trends in personal auto, that U.S. P/C insurers face,”

AM Best reported.

During the period, net investment income declined 8%. Together, the higher underwriting loss and lower investment income results drove pre-tax operating income down 69.5%, to $9.4 billion, in the first half of 2023, according to the report. A 40.7% drop in realized capital gains pushed net income down 71.9% to $8.8 billion, AM Best’s preliminary figures show.

Still, the U.S. P/C industry’s surplus increased 6.7% from year-end of 2022, with unrealized capital gains helping to push total surplus up over $1 trillion — to $1.05 trillion. Net of reinsurance, overall premiums for the U.S. P/C industry grew 9.7%, AM Best said.

The preliminary results set forth in the AM Best report are based on data from companies whose six-month 2023 interim period statutory statements were received as of Aug. 30, 2023. These companies account for an estimated 98% of total industry net premiums written and 98 % of policyholder surplus.

New Study Says Autonomous Vehicles Significantly Reduce BI/PD Claims

Anew study has revealed that autonomous-vehicle technology reduced bodily injury claims frequency by 100% and property damage claims frequency by 76%.

Global reinsurer Swiss Re and automated driving company Waymo partnered on the study

The two compared Waymo’s third-party liability claims data with mileage and ZIP code-calibrated, human-driven private passenger vehicle baselines established by the insurer for the period of 2016-2021, from over 600,000 claims and over 125 billion miles of exposure.

The study indicates the use of liability insurance claims provides a more comprehensive assessment than collision databases from police reports because claims data has more consistent standards for reporting along with a higher frequency of reporting, as well as information relating to crash and injury causation. In addition, police reports don’t always capture non-collision related injuries.

The study found that the Waymo Driver significantly improved road safety over

3.8 million fully autonomous miles driven in San Francisco and Metro Phoenix.

The difference between the autonomous functions is as follows:

• In “Manual” mode, the Waymo vehicle is driven completely manually (i.e., without the ADS engaged) by an autonomous specialist (human driver) who is capable of reacting to a dynamic environment and operating vehicles under strict safety guidelines.

• In testing operations “TO” mode, the ADS is engaged to operate the vehicle under monitoring of trained human autonomous specialists.

• A collision that follows after the autonomous specialist takes over control

of the driving task does not count as a Manual claim but as a TO claim if the ADS performed a driving maneuver that placed the vehicle in the situation that led to the collision, the study noted.

• A collision is categorized under TO as long as the ADS was engaged at any time during the five seconds leading up to the impact. A collision could still be categorized under TO under the five-second rule even if a human maneuver may have led

US Already Sets Record for Yearly Billion-Dollar Weather Disasters

By Seth Borenstein

The deadly firestorm in Hawaii and Hurricane Idalia’s watery storm surge helped push the United States to a record for the number of weather disasters that cost $1 billion or more. And there’s still months to go on what’s looking more like a calendar of calamities.

The National Oceanic and Atmospheric Administration announced that there have been 23 weather extreme events in America that cost at least $1 billion this year through August, eclipsing the yearlong record total of 22 set in 2020. So far this year’s disasters have cost more than $57.6 billion and claimed at least 253 lives.

And NOAA’s count doesn’t yet include Tropical Storm Hilary’s damages in California and a deep drought that has

struck the South and Midwest because those costs are still to be totaled, said Adam Smith, the NOAA applied climatologist and economist who tracks the billion-dollar disasters.

“We’re seeing the fingerprints of climate change all over our nation,” Smith said in an interview. “I would not expect things to slow down anytime soon.”

NOAA has been tracking billion-dollar weather disasters in the United States since 1980 and adjusts damage costs for inflation. What’s happening reflects a rise in the number of disasters and more areas being built in risk-prone locations, Smith said.

“Exposure plus vulnerability plus climate change is supercharging more of these into billion-dollar disasters,” Smith said.

NOAA added eight new billion-dollar disasters to the list since its previous update. In addition to Idalia and the Hawaiian firestorm that killed at least 97 people (down from an initial estimate of 115, according to figures that were released in mid-September), NOAA newly listed an Aug. 11 Minnesota hailstorm; severe storms in the Northeast in early August; severe storms in Nebraska, Missouri, Illinois, Indiana and Wisconsin in late July; mid-July hail and severe storms in Michigan, Wisconsin, Ohio, Tennessee and Georgia; deadly flooding in the Northeast and Pennsylvania in the second week of July; and a late June outbreak of severe storms in Missouri, Illinois and Indiana.

“This year a lot of the action has been across the center states, north central,

to the collision, leading to a conservative estimate.

When Waymo vehicles were driven manually by trained human drivers for 14,436,298 miles for data collection, bodily injury claims frequency was reduced by 45% compared to the Swiss Re human driver baseline, while property damage claims frequency was significantly reduced by 34% (2.22 vs 3.34 claims per million miles).

While driving 35,228,320 miles in TO mode, the Waymo Driver, together with autonomous specialists, significantly reduced bodily injury claims frequency by 92%.

While driving without a human behind the steering wheel in rider only (RO) mode for 3,868,506 miles, the Waymo Driver reduced bodily injury claims frequency by 100%, while property damage claims frequency was significantly reduced by 76%.

When TO and RO datasets were combined, totaling 39,096,826 miles, there was a significant reduction in both bodily injury and property damage claims south and southeastern states,” Smith said. Experts say the United States has to do more to adapt to increased disasters because they will only get worse.

“The climate has already changed and neither the built environment nor the response systems are keeping up with the change,” said former Federal Emergency Management Agency director Craig Fugate, who wasn’t part of the NOAA report.

The increase in weather disasters is consistent with what climate scientists have long been saying, along with a possible boost from a natural El Nino, University of Arizona climate scientist Katharine Jacobs said.

“Adding more energy to the atmosphere and the oceans will increase intensity and frequency of extreme events,” said Jacobs, who was not part of the NOAA report. “Many of this year’s events are very unusual and in some cases unprecedented.”

Policygenius Finds Average Home Insurance Prices Up 21%

Online insurance marketplace Policygenius has found that home insurance premiums at renewal increased 21% on average from May 2022 to May 2023.

The state that saw the highest average increase for homeowners insurance during the time period analyzed by Policygenius was Florida, at 35%.

Policyholders there paid nearly $490 more.

On a percentage basis, Idaho (31%), Colorado (30%), South Dakota (28%), Louisiana, Oklahoma, and Texas (each tied at 27%) had the next highest average homeowners insurance increases, said the 2023 Policygenius Home Insurance Pricing Report.

East Coast states saw the smallest increases at renewal in 2023, according to the Policygenius analysis based on internal data from about 17,400 policy renewals from May 2022 to May 2023.

Policygenius said that in each of the 44 states it analyzed for the report, the average premium increase was higher than the previous year.

More extreme weather, a decrease in insurers in some regions due to exposure reductions, and inflation and supply chain issues were listed by the company as reasons for the homeowners insurance premiums increases.

frequency, by 93 %.

The researchers concluded there is strong evidence proving the ability of ADS to reduce bodily injuries on public roads.

The purpose of the joint study was to construct performance baselines to benchmark autonomous vehicle safety

performance. Researchers indicate the study method used overcomes existing challenges facing autonomous and human driver crash rate comparisons, and can be applied within the industry to assess the safety performance of future autonomous vehicle deployments.

Smith said he thought the 2020 record would last for a long time because the 20 billion-dollar disasters that year smashed the old record of 16. It didn’t, and now he no longer believes new records will last long.

Stanford University climate scientist Chris Field called the trend in billion-dollar disasters “very troubling.”

“But there are things we can do to reverse the trend,” Field said. “If we want to reduce the damages from severe weather, we need to accelerate progress on both stopping climate change and building resilience.”

Business Moves

To ensure a smooth transition, key personnel from both Kapnick Insurance and Michigan Group Benefits will work closely together.

South Central

Novatae Risk Group, American Management Corporation

Novatae Risk Group has acquired the assets of American Management Corporation (AMC), a managing general agency based in Conway, Arkansas, on Sept. 1.

Terms of the transaction were not disclosed.

East

McConkey Insurance & Benefits, Gallen Insurance Agency

McConkey Insurance & Benefits, an independent insurance agency based in York, Pennsylvania, has acquired Gallen Insurance Agency, located in Berks County.

According to Michael Harter, president and CEO of McConkey, the acquisition of expands McConkey’s geographic footprint and reinforces its mission to serve neighboring communities.

Gallen Insurance Agency has served Berks County since 1957. MConkey Insurance & Benefits was established in 1890.

Midwest McGriff, Alternative Risk Resources

McGriff has acquired Alternative Risk Resources (ARR), a Wisconsin-based commercial brokerage firm that specializes in captive insurance.

The transaction expands McGriff’s presence in the captive insurance market with a firm that has been active in the industry for more than 25 years. The acquisition also broadens McGriff’s operations in the Midwest, representing the business’ first move into Wisconsin.

ARR will transition to the McGriff brand over the next six months. The terms of the transaction were not disclosed.

McGriff Insurance Services LLC is a subsidiary of Truist Insurance Holdings LLC, headquartered in Charlotte, North Carolina.

Higginbotham, Community Insurance Group

Fort Worth, Texas-based Higginbotham has acquired Community Insurance Group, its first acquisition in Ohio. With this transaction, Higginbotham now has a presence in 16 states across the country.

For over a quarter century, Community Insurance Group has cared for clients in western Ohio, selling a variety of coverage lines, including personal, commercial, agribusiness, life and employee benefits.

The group is led by President Jeff Sargeant and envisions successful client relationships based on proven, valued solutions from highly trained and empowered agency associates.

Kapnick Insurance, Michigan Group Benefits

Kapnick Insurance, an insurance provider with over 75 years of experience, announced the acquisition of Michigan Group Benefits. This transaction represents a significant milestone in Kapnick Insurance’s growth plans, expanding their capabilities and solidifying their position as a trusted partner in the group benefits industry, the company said.

The acquisition will also expand Kapnick’s geographical footprint, as they will retain Michigan Group Benefit’s East Lansing office.

This strategic move allows Michigan Group Benefits to leverage Kapnick’s existing reputation, reach, and expertise to further enhance the offerings to their valued clients.

AMC was founded over 60 years ago and has grown into a highly respected and specialized national agency. AMC began with a specialized insurance program for service stations and convenience stores, later expanding to fuel marketers. By developing a top-rated, nationwide program for service stations and then for fuel marketers, it allowed AMC to implement plans for aggressive growth.

Giordano Halleran Ciesla provided legal counsel, and Sica Fletcher advised Novatae. Mitchell Williams provided legal counsel to AMC on the transaction. No other advisors, diligence firms or legal counsel were disclosed.

With offices across the nation, Novatae Risk Group is a wholesale insurance distributor headquartered in Dallas, Texas.

Brightway, The Herron Family Agency

VeinTwain Herron, a Texas commercial real estate specialist, is opening Brightway, The Herron Family Agency in Cedar Park. The agency offers customized home, flood, auto, boat, condo, renters, personal articles, RV, motorcycle, umbrella, commercial and life insurance.

Herron is a former paratrooper in the U.S. Army, where he spent seven years. Herron also served as a firefighter and holds certifications in paramedicine and carpentry trades.

One80 Intermediaries, Enviant

One80 Intermediaries, a specialty insurance broker headquartered in Boston, has acquired the assets of Texas-based Enviant

from Euclid Program Managers.

Headquartered in Houston, Enviant is focused exclusively on providing a comprehensive suite of environmental products and services to a range of commercial clients. Enviant provides environmental casualty, site pollution and contractor’s pollution and professional insurance, and has been part of the Euclid Program Managers group of MGA companies since 2016.

Marsh, Berry & Company was the exclusive financial advisor to Enviant. The terms of the deal were not disclosed.

Southeast

King Insurance Partners, Hartley Insurance Services

King Insurance Partners, a brokerage based in Gainesville, Florida, has acquired Hartley Insurance Services.

Hartley, with offices in Port Orange, Florida, was founded in 2012 by Paul Hartley. He will remain in charge of its operations, which focus on commercial lines, especially transportation customers.

Malcolm Chad King is CEO of King Insurance Partners, a rapidly growing brokerage/agency his father founded. King also partnered with First Florida Insurance Network in late 2022.

Oakbridge Insurance, Bishop-DurdenHale Insurance Group

Oakbridge Insurance has acquired Georgia-based Bishop-Durden-Hale Insurance Group.

Bishop-Durden, which specializes in coverage for manufacturers, municipalities and schools, will keep its offices in Vidalia and Savannah. The firm was founded in 1996. Brian Bishop is the agency’s president and Nick Hale is vice president.

Atlanta-based Oakbridge, which has grown rapidly through acquisitions since it was founded in 2020, provides a partnership model for agencies seeking accelerated growth and access to capital, Oakbridge said.

Oakbridge Insurance announced in August that it had partnered with another Georgia agency, the Cole Agency in Montezuma.

Burns & Wilcox, Environmental Underwriting Solutions

Wholesale insurance brokerage Burns & Wilcox has agreed to acquire Alabamabased Environmental Underwriting Solutions, a wholesale broker specializing in complex environmental exposures, from Insurance Office of America.

The move supports Burns & Wilcox’s strategy of aggressively pursuing independent and specialized brokers, company President Danny Kaufmann said in the transaction announcement. Burns & Wilcox has offices around the country and is headquartered in Michigan.

EUS President Beth Linton will become vice president of Burns’ environmental brokerage, based in Atlanta. She will continue to oversee teams in Atlanta, Birmingham and Charleston, and will report to Blaise D’Antoni, executive vice president for the eastern United States at Burns & Wilcox.

Arthur J. Gallagher, Southern Insurance Group

Arthur J. Gallagher & Co. acquired Columbia, Mississippi-based Southern Insurance Group LLC. Terms of the transaction were not disclosed.

Southern Insurance Group provides commercial and personal property/ casualty insurance coverages to clients in Mississippi and the Southeast U.S.

The Southern Insurance Group team will remain in their current location under the direction of Bumpy Triche, head of Gallagher’s Mid-South retail property/ casualty brokerage operations.

Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois.

Orion180

Orion180, one of the latest entrants into the Florida insurance market, has also begun writing homeowners policies in noncoastal areas of Mississippi and Alabama.

The policies will be written through the admitted insurer Orion180 Select Insurance Co., the Melbourne, Floridabased firm said.

The company will market its products through independent distribution partners in Alabama and Mississippi.

Its surplus lines carrier is Orion180 Insurance.

Ken Gregg is CEO of Orion180. He said the company plans to continue its expansion in 2023 and 2024, including into Indiana and Georgia, and that independent agents are invited to inquire at the firm’s website.

West

LP Insurance Services, Wasserman & Associates

LP Insurance Services LLC acquired Wasserman & Associates in Northern California.

Wasserman & Associates joins the LP Insurance Services Gold River/Sacramento, California, office.

Wasserman & Associates has been serving the Sacramento community since its inception in 1981, when it was founded by Rick Wasserman. The firm is focused on commercial insurance and risk services.

LP Insurance Services is headquartered in Reno and has additional Nevada offices in Carson City, Elko, Fernley, Las Vegas and Sparks. LP also maintains offices in Phoenix, Arizona; Gold River/Sacramento, Truckee, and Fresno, California; and Roswell and Portales, New Mexico.

Risk Strategies, Benefit Design Group Risk Strategies acquired Benefit Design Group LLC in Portland, Oregon.

The purchase of BDG adds to Risk Strategies’ presence in the Pacific Northwest. It builds upon the firm’s previous acquisition of the Fournier Group, a commercial and personal lines retail insurance agency that is headquartered in Portland, as well.

Benefit Design Group is a retail agency specializing in health, life and retirement solutions, and is led by Joel Biernat and Dennis Warneke.

Boston-based Risk Strategies is a national specialty insurance brokerage and risk management firm with more than 100 offices.

National

Charles Symington is the new president and chief executive of the Independent Insurance Agents & Brokers of America (the Big I), effective Sept. 1.

Financial Lines and Professional Liability, a new position focused on growing the business outside the U.S. and helping clients manage their risks around the world.

global head of communications and government affairs at American International Group (AIG), transitioned to the newly created role of vice chair at AIG on October 1.

Charles Symington

In September 2022, Symington was promoted to executive vice president and recently was selected to succeed Bob Rusbuldt, who has retired as president and CEO.

Symington joined the organization nearly 20 years and was previously senior vice president for external, industry and government affairs.

Before joining Big I, Symington served as a senior counsel with the U.S. House of Representatives Committee on Financial Services, from 2000 to 2003, where he focused on insurance issues. He also worked as a majority counsel for the House Committee on Energy and Commerce, concentrating on healthcare policy and oversight.

Symington worked in the private sector before his time on Capitol Hill, first as an associate attorney with Drew, Eckl & Farnham in Atlanta, specializing in insurance defense litigation, and then as an attorney with the firm Matricardi & Moylan in Springfield, Virginia.

Starr Insurance added Christopher Magee as vice president, international head of

Magee has more than 25 years of financial lines management experience at large U.S. multinational insurance companies in the U.S., Canada, U.K. and Switzerland. Throughout his career, he has specialized in financial and professional liability risks.

Magee recently relocated from London and is based in New York City.

Hub International Ltd., the Chicagobased global insurance brokerage and financial services firm, announced that Robert Hartman joined Hub in a newly created position, executive vice president of Strategic Client Service Operations, and the firm’s executive team.

With more than 20 years of experience in operational leadership, management consulting and business development, Hartman comes to HUB from AXIS Capital, the global specialty insurance and reinsurance firm, where he was most recently the chief operating officer and held various roles including senior vice president of business development.

Prior to that, Hartman was a partner at global management consulting firm McKinsey & Co. He began his career as a flight officer in the U.S. Navy.

Lucy Fato, executive vice president, general counsel and

Fato joined New York, New York-based AIG in 2017. She previously served as managing director, head of the Americas and general counsel at Nardello & Co., as executive vice president and general counsel at S&P Global and as deputy general counsel and corporate secretary at Marsh & McLennan Companies.

Rose Marie Glazer, executive vice president, chief human resources and diversity officer, will serve as interim general counsel and head of government affairs.

Jennifer Silane, chief of staff to the chairman and CEO of AIG, will serve as interim head of global communications.

Until Fato’s successors are named, Glazer and Silane will serve in their interim positions in addition to their current roles.

Insurance Quantified appointed Jeremy Johnson as the company’s latest strategic advisor.

Johnson is the retired CEO of Protective Insurance, where he was one of Insurance Quantified’s inaugural customers. He also held the position of president, U.S. Commercial, at AIG, where he oversaw underwriting, distribution, claims and operations across multiple regions, and served as the CEO of Lexington Insurance Company.

Insurance Quantified is an underwriting technology provider that arms commercial property and casualty

insurance carriers and MGAs with data and analytics.

The Reinsurance Association of America (RAA) said its long-time president, Frank Nutter, will retire at the end of the year and Lee Covington is president-elect.

Nutter has been president of the trade association for property/ casualty reinsurers for 32 years.

Covington is currently president and CEO of The Surety & Fidelity Association of America (SFAA), a role he has held since 2018. He will take over as RAA president on Jan. 1.

Prior to SFAA, Covington was senior vice president of government affairs and general counsel for the Insured Retirement Institute. He also has held positions at Squire Patton Boggs and PWC and served as director of the Ohio Department of Insurance, and deputy director of the Arkansas Insurance Department.

Everest Group Ltd. appointed Charlie Higham as senior vice president and head of Everest Underwriting Partners.

He succeeds Brian Drum, who retired from Everest on Sept. 1 after 16 years with the company.

Higham has 20 years of specialty insurance experience. He most recently served as Everest’s head of financial and professional lines. Before joining Everest, Higham ran the financial institutions group at Zurich North America.

Christopher Magee

Robert Hartman

Frank Nutter

Earlier in his career, he held underwriting and management positions at Arch Insurance Group and The Hartford.

East Fred C. Church Insurance, headquartered in Lowell, Massachusetts, added Damual Greaves to its education team as a client executive.

Greaves joins Fred C. Church after serving in various risk management roles at Massachusetts Institute of Technology (MIT).

Most recently, Greaves held the position of assistant director, office of insurance, overseeing many elements of MIT’s academic insurance program.

Jimcor Agency Inc., headquartered in Montvale, New Jersey, hired Cody Kinkaide as a commercial lines underwriter. Kincaide is based in Pennsylvania.

Kinkaide has worked in the insurance industry for more than 10 years, most recently as a commercial lines broker and producer at USG, and as a real estate agent at Keller Williams Inc.

Sara Mulick has been named senior vice president of sales at The IMA Group (IMA), headquartered in Tarrytown, New York.

Before joining IMA, Mulick was vice president of enterprise sales for One Call. While there, she held various management positions for more than 17 years.

Midwest

Mike Kleinhenz is retiring as senior vice president, chief financial officer and treasurer at Celina Insurance Group. Celina is headquartered in Celina, Ohio.

Suzanne Wells will succeed Kleinhenz as senior vice president, CFO and treasurer.

Kleinhenz began his career at Celina in 1987 as the corporate accounting and administration manager. He has held the roles of director of accounting, director of farm operations, director of internal audit and corporate secretary.

Wells has 31 years of finance experience. She began a career with Miami Mutual Insurance Co. in 1996. That company affiliated with Celina in 2006. She has held several leadership positions at Celina, including her most recent role as director of internal audit and corporate secretary.

UFG Insurance, headquartered in Cedar Rapids, Iowa, named Kyanna Saylor vice president of surety.

Saylor has been assistant vice president of surety marketing at UFG since 2019. She spent 15 years in surety underwriting before serving as UFG surety marketing manager.

Saylor succeeds longtime surety leader Dennis Richmann, who retired at the end of September.

JM Wilson has promoted Kristin Bolhuis to assistant property/casualty manager in its Portage, Michigan, office.

Bolhuis’ responsibilities include assisting the director of property/casualty with the day-to-day operations of the staff, underwriting a wide variety of new and renewal property and casualty risks, as well as maintaining relationships with carrier underwriters and independent insurance agents in Michigan and Texas.

Bolhuis began working for JM Wilson in 1990 as an assistant life and health underwriter before returning in 2015 as a property/casualty underwriter. Prior to her return, she worked as a P/C service representative.

Valley Insurance Agency Alliance (VIAA), headquartered in St. Louis, Missouri, named Michael Thornton as book management coach.

Thornton has worked at VIAA for six years as a foundation specialist.

Before joining the company, Thornton was an agency owner and development manager producer at Allstate.

South Central

John Caro joined Alliant Insurance Services as vice president in its Alliant Americas division.

Caro is based in Lafayette, Louisiana.

Caro has more than 30 years of executive experience in the insurance, banking and biotechnology industries. He most recently served as a corporate sales executive at Brown & Brown and an independent agent at Caro Insurance.

Alliant Insurance Services is headquartered in Irvine, California.

LUBA Workers’ Comp hired Leslie McCrary as a business development underwriter for Oklahoma and Arkansas.

Based in Tulsa, Oklahoma, McCrary joins LUBA with more than 30 years of underwriting experience. She will be responsible for maintaining and cultivating relationships with LUBA’s independent insurance agency partners throughout Oklahoma and Arkansas.

West California Insurance Commissioner Ricardo Lara named new members Colbie McRae, Gloria Mitchell, and Vinh Truong to the Curriculum Board.

Michael Golden has been assigned to the California Automobile Assigned Risk Plan (CAARP) Advisory Committee.

Rudy Espinoza and Maïté Irakoze Baur have been reappointed to the California Organized Investment Network (COIN) Advisory Board.

The Curriculum Board, CAARP and COIN are statewide, insurance-affiliated organizations.

Mercury Insurance, headquartered in Brea, California, appointed Cameron Nordholm as its head of technical product.

Before joining Mercury Insurance, Nordholm was head of product and head of strategy at AgentSync and served as a product consultant at Diegetic Media LLC.

Damual Greaves

Suzanne Wells

Kyanna Saylor

We’ll help you efficiently manage property risk to prevent losses and reduce claims. But when things happen, your insured will be covered like never before.

Enhancements We Include:

• $500M blanket limit per occurrence

• No co-insurance required

• $10M flood sublimit in non-critical flood zones

• $25M earthquake sublimit

• Sprinkler leakage (EQSL)

• Sewer and drain backup

• Malicious property attack

• Ordinance or law

• Optional equipment breakdown

• Optional terrorism coverage

When a hotel or motel doesn’t fit standard property market options, talk to the experts.

A New Way Forward

The property insurance landscape has reached the toughest point ever seen by most insurance professionals. is hard market has especially hit the hospitality industry, making it extremely hard to nd viable coverage options. With factors such as unprecedented weather patterns, in ation, inadequate reinsurance, poor management, and negligent visitors, standard market and E&S carriers alike have been quick to exit the Hotel/Motel sector. is has agents frustrated and is forcing them to either turn away business or o er property options that are less than ideal from a coverage standpoint.

ese challenges increase signi cantly with more challenging accounts. Carriers are o en unwilling to allocate their precious capacity to hotel locations with ratings below 4 stars. Risk factors such as frame construction, exterior unit access, non-sprinklered locations, and buildings constructed pre-2000 o en leave agents paralyzed. Should they submit this risk to a wholesaler? Look into shared and layered options? Take a chance with subpar coverage? Or maybe just pass altogether and leave this one to “the pros”?

Is ere a New Way Forward?

As a solution-focused organization, AIU saw the struggles experienced by agents in the Hotel/Motel space and wanted to ll the gap. ey had a goal of bringing new property capacity to the hospitality industry and were looking to help hospitality-focused agents place those less-than-perfect locations in a smart and responsible way.

AIU’s leadership team got to work. ey decided to approach their carrier partners with a request to bring new capacity to the Hotel/Motel marketplace. With AIU’s strong background in loss control and program management, the team felt that they had a great opportunity in front of them. “ ere had to be a way out of this predicament,” says Ben Goldberg, Managing Partner at AIU. “I knew there

must be a way to bene t hoteliers, agents, and carriers alike. e challenge was getting our carrier partners to take the journey with us.”

Creating a program focused on 2- and 3-star hotels and motels can be quite risky. So many programs come and go before we can blink. Why would A-rated carriers in good standing want to travel down that path?

e Solution

“It all came down to our in-house underwriting and loss-control processes,” Goldberg explains. “Everything happens in-house in a streamlined and unique way. Our underwriters are well trained and know what to look for. ey understand how to balance the risk of harder-to-place locations and how to make smart decisions. Our loss-control team then continues the process by ensuring that every location we accept into our program is up to our carriers’ required standards.”

Trust. at’s the secret sauce. When carriers see that their valuable capacity is respected and protected, they will return the favor. is is why AIU’s programs renew successfully year over year, inclusive of desirable coverage and rates.

How Do ese Processes Positively Impact Clients?

ese processes are extremely bene cial to AIU’s agency partners as well. Besides being able to provide clients with muchneeded capacity, the team has the ability to work quickly so agents can get answers fast. AIU’s in-house producers assist in making sure that all their clients’ needs are met, and are there to guide their agents through all situations that arise. is personalized approach keeps clients happy and relaxed, knowing they can rely on the AIU team to get the job done.

“Everything happens in-house in a streamlined and unique way. Our underwriters are well trained and know what to look for.”

Spotlight: Workers' Compensation

Understanding the Impact of Recessions on Workers’ Compensation

across industries and worker tenure.

When the economy starts recovering and companies expand hiring again, there are more new workers, and construction employment often booms. These factors put upward pressure on the frequency of claims during the period of economic recovery.

By

Workers and employers in the U.S. have endured 17 recessions during NCCI’s 100 years of operation. Recessions produce far-reaching consequences on the economy, and the extent of those impacts depends on the severity, length and nature of the economic downturn. While there are some similarities across recessions, each one has impacted the economy, workers and the workers’ compensation system in unique ways.

Employment, Industry Composition, Employee Tenure

During a recession, employment levels decline as businesses face economic challenges and reduce their workforce. The simplest impact on workers’ compensation is that with fewer workers, overall payroll decreases, leading to a reduction in workers’ comp premium.

NCCI’s research, conducted across several decades, has explored the relationship between injury frequency and fluctuations in employment. There are two main channels

by which this occurs.

First, as businesses reduce their workforces, the industry composition changes. For example, in the Great Recession, the construction and manufacturing industries suffered the largest percentage of employment losses. These industries have high injury rates per worker or per payroll.

Second, in a recession, businesses make fewer new hires and new workers on the job are typically the first to be let go. Short-tenured workers tend to have higher injury frequency than longer-tenured workers. Thus, as the proportion of short-tenured workers in the workforce diminishes, there is a reduction in overall injury frequency.

NCCI identified that the share of short-tenured workers is a crucial factor in driving injury frequency during recessions. A common misconception is that workers tend to file workers’ compensation claims at a higher rate during a recession. NCCI data indicates that the opposite is true, which can be partially explained by the changing mix of workers

These patterns have been generally observed throughout previous economic downturns; however, there is no one-size-fits-all model when understanding the impact of a recession.

Shifting Workplace and Workforce

The COVID-19 pandemic led to significant shifts in the workplace and workforce. Many of these shifts were different than changes in previous recessions and tell a different story.

The biggest shifts relate to the nature of job loss and recovery from the COVID-19 recession. Job losses were larger than any downturn since the Great Depression and occurred in a very short time frame, primarily from February to April 2020. The Great Recession’s employment losses had occurred over two years — not two months. But the recovery was also much more rapid than in the Great Recession. These changes in the workforce were unprecedented.

Another key issue is that the pandemic-related recession was primarily a “services recession.” Because of pandemic-related shutdowns and quarantines, as well as voluntary changes to behavior, the largest job losses occurred in

Patrick Coate and Cristine Pike

sectors that provide in-person services, especially leisure and hospitality.

This led to a dramatically different impact on the mix of workers in the economy and in workers’ compensation than in most downturns. The changing workforce composition led to a temporary spike in average worker wages because lost restaurant jobs averaged far lower wages than those remaining.

A Great Reshuffle began in the second half of 2020 as the economy reopened. Businesses posted record numbers of job openings, and many workers moved across jobs, occupations and sectors. This led to a spike in short-tenured workers in late 2020 and 2021, which put upward pressure on injury frequency. However, the impact was somewhat moderated because the injury differential between short-tenured and full-tenured workers is smaller for service sectors than for sectors such as construction and manufacturing.

There were other major changes to the workforce. Most notably, the pandemic led to a large-scale adoption of remote work. While there has since been a partial return to the office, there is no doubt that the share of remote work dramatically and permanently increased. This change led to a reduced number of injuries in office and clerical occupations where remote work is most prevalent. It also led to a temporary reduction in motor vehicle accidents and a rise in telemedicine.

Other changes to the workforce in the post-pandemic recovery, such as a relative decrease in labor force participation for those over age 65,

can also impact the economy and workers’ compensation.

Today’s Economic Outlook

At midyear 2023, employment and wage growth remained above pre-pandemic averages. There has been substantial slowing in labor market growth since the fast recovery period in 2021 and early 2022, but economic indicators are more consistent with continued gradual cooling off than an imminent recession.

Both residential and nonresidential construction employment and spending are robust, and the manufacturing sector’s indicators are holding steady. These sectors, which are sensitive to changes in economic demand, play a crucial role in impacting workers’ comp premiums and losses.

Small businesses played an outsized role in catch-up employment recovery. Despite concerns about cutbacks due to tightening credit conditions, small businesses continue to steadily add jobs each month through the present writing.

One potential driver of slowing growth relates to household income and consumption patterns. Real household income has fallen below pre-pandemic trend due to higher inflation, but personal consumption has remained consistent with the pre-pandemic trend. To maintain this consumption, households have been spending down surplus savings accumulated early in the pandemic. This surplus is likely to run out late in the year, which will likely cause consumption to dip below the trend.

This potential slowdown in consumer spending would contribute to a deceleration

in economic growth, but a slowdown is not necessarily indicative of a full-blown recession. Although the possibility of a contraction exists, it’s likely that employment and wage growth may level off, but without the disruption of significant job losses or payroll declines. NCCI’s recent “Quarterly Economics Briefing-Q2 2023” examines the current state of the economy in further detail.

Unique Moments in Time

Recessions have a multifaceted influence on workers’ compensation, impacting employment levels, payroll and injury frequency. Understanding the changes in workforce composition during economic downturns provides valuable insights into the dynamics at play.

During the last 100 years, we have experienced more than a dozen recessions, with each scenario impacting the economy differently.

There is one constant: There’s not one indicator or one formula that explains how an economic downturn will impact workers, employers and workers’ compensation. Each moment is unique, and while we can learn from experience, we must also remain vigilant and be prepared for the next economic challenge.

About NCCI

Executive Summary

In late July, the staff of the U.S. Federal Reserve was no longer forecasting a recession in 2023. But with talk about the prospect of a recession or soft landing still circulating, Carrier Management asked NCCI to describe how recessions typically influence workers’ compensation results.

Here, NCCI representatives focused on changes in three contributing factors: employment, industry composition and employee tenure. Beyond providing insights into how future recessions might impact the workers’ comp landscape, this look at past recessions reveals that commonly held assumptions about their impact on comp claims may not hold up under scrutiny.

Coate, PhD, is an economist for the National Council on Compensation Insurance (NCCI). He is part of the economic research focus area and his insights are frequently published in NCCI’s Quarterly Economics Briefing. He may be reached at Patrick_Coate@ ncci.com. Pike is NCCI’s director of Communications and practice lead for thought leadership. She holds the AMCOMP Workers’ Compensation Professional designation and may be reached at Cristine_Pike@ncci.com.

This article originally was published in Insurance Journal’s affiliate Carrier Management.

With 100 years of experience, NCCI serves as a comprehensive source for workers’ compensation data, insights and solutions. NCCI’s mission is to foster a healthy workers’ compensation system through its role as a licensed rating, advisory and statistical organization. NCCI’s thought leaders analyze workplace trends and deliver insights to empower informed decision-making. Its employees are proud to embrace an environment of respect, integrity, responsibility, diversity and inclusion.

Spotlight: Hospitality

Hotel, Motel Markets ‘Dropping Like Flies’ As Outlook Remains Challenging

By Allen Laman

The hospitality industry has entered a new chapter.

For those who weathered the recent near collapse of the sector, the American Hotel & Lodging Association entered 2023 with optimism that hotel room demand would surpass pre-pandemic levels and occupancy rates would continue trending upward. This confidence continued in May, when the AHLA forecasted a strong summer travel season for both business and leisure travel.

At the same time, hotels and motels across the country are grappling with worker shortages and inflationary pressures. These hospitality establishments are also facing a challenging insurance renewal cycle.

“Markets are dropping like flies in the hotel and motel world,” explained Joseph Indig,

vice president of sales and marketing at Amalgamated Insurance Underwriters (AIU). “Just about every time I talk to a client, they’re telling me, ‘Oh, another market just left the marketplace.’ Standard markets are leaving. E&S markets are leaving. Markets and programs are just disappearing day by day.”

Difficult Property Outlook

According to the latest numbers from Marsh, property insurance pricing in the U.S. increased by 19% during the second quarter of 2023, compared to 17% in the first quarter, marking the 23rd consecutive quarter in which prices rose. Marsh said the main drivers of Q2 property price hikes in the U.S. are the cost of reinsurance and capital, strong capacity demand, limited new insurers, and ongoing losses.

In June, Alera Group reported that the hospitality sector

market had shown signs of stability across most coverage lines — except for property insurance. “Hospitality property insurance buyers will experience a convergence of increased premiums, deductibles and valuations,” Alera wrote on its website. “Expect a challenged property outlook throughout 2023.”

Alera attributes the challenging trend in the hospitality property insurance market to three factors — “weather-related catastrophes in 2022, record inflation and the high costs of rebuilding. Properties in catastrophe-prone locations will see the greatest pricing increases and decreases in availability.”

AIU’s Indig said its in-house underwriters look closely at how well-managed hotels and motels are. They investigate through online reviews, photos posted on the internet, and maybe even a phone call to the establishment’s front

desk, “just to make sure that things are up to the standards of us and our carriers,” Indig said. Loss history is also a key component in determining coverage.

“As the market’s gotten harder, they’ve gotten tighter on their guidelines as far as loss history,” he said.

AIU isn’t the only company stiffening its approach. As standard market capacity shrinks, more and more locations that may have been “great fits” for standard carriers are coming over to the E&S side, Indig said, adding that the few that are left are getting a lot more submissions than they used to.

“The E&S carriers are getting a lot more locations that … a year, or for sure two years ago, would have been great standard plays,” Indig noted. “But due to, let’s say frame construction that’s built pre2000 or other factors that just make them less desirable … those are coming towards the

E&S marketplace as well now.”

Hard-to-Cover Risks

When it comes to renewals, Amy Vitarelli, senior vice president and hospitality insurance practice leader at Heffernan Insurance Brokers, said rate and premium increases and avoiding surplus lines are best-case scenarios for her policyholders. Heffernan has a national footprint and works with franchises and boutique hotels.

“It’s really hard some days — or most days — because all I feel like I do is just give my clients bad news,” Vitarelli said. “Or even terrible news. I feel like they got through this really challenging time, and business is better and, in some cases, thriving. But then, now here I come with all the challenges that are happening on the insurance program.”

Even outside of the hospitality niche, weather disasters like wildfires and hurricanes are forcing rate increases and coverage changes. As mentioned previously, underwriting guidelines are changing too — affecting older hotel buildings with wood frames and without sprinklers.

“And the standard

marketplace just says, ‘Nope,’” Vitarelli explained. “And this one in particular I’m thinking of is not in a wildfire zone. It’s actually near a major airport.” Vitarelli said, later adding that “their property premiums have quadrupled over the last couple years. And they’ve been pushed, basically, into the surplus lines marketplace.”

Package policies formerly paired property and liability coverage together. Now, they must be placed separately, Vitarelli said.

Rocky Bhakta, placement leader at World Insurance Associates, said hotels — especially motels — have presented “one of the toughest” challenges since the market hardened a couple of years ago.

That trend’s continuing to go up, he said, sharing that standard carrier markets have been extremely strict on hotels lately. They don’t want to write risks in buildings without sprinklers or exterior corridors and entry, he said, adding that they want “crème de la crème-type” risks: newer construction, full sprinkler systems, fire resistant, interior corridor and franchised with good loss and risk controls.

Coastal properties and

expanding wildfire zones present renewal challenges, as well.

Indig said common risks that are especially hard to find coverage for in the hospitality space are frame construction buildings, structures more than 15 years old, and hotels and motels with exterior corridors. Other risk profile concerns include locations that allow smoking or house in-room kitchenettes.

He added that recently, standard markets have become more cautious with red flags on locations with high total

insured value that may have received passes in the past. “That’s been shrinking,” Indig said. “And a lot more of those have been needing to move to the E&S marketplace.”

Liability Insurance Hurdles

Social inflation and high-dollar liability claims are pushing claims into umbrella and excess liability layers more often, Vitarelli said. This is turning formerly inexpensive umbrella coverage into a pricier purchase. For those not required to carry a certain

continued on page 26

Spotlight: Hospitality

continued from page 25

amount, Vitarelli is seeing clients bring down their overall liability limits to save money.

Bhakta said he’s seeing tightening in both property and liability coverages. “Insurance carriers are very, very skeptical

Hospitality establishments are facing a challenging insurance renewal cycle.

when it comes to exterior entry (and) exterior corridor,” he said. “They don’t want to write (those locations) and if they’re writing, they’re excluding assault and battery, abuse and molestation, and human trafficking coverage from the general liability. Which is very critical for a hotel owner.”

Over the past decade, hotels increasingly have been hit with human trafficking lawsuits, according to the Human Trafficking Legal Center. In its report, Federal

Human Trafficking Civil Litigation: 2020 Data Update, the HTLC showed that from 2003 to 2020, 105 cases were filed by plaintiffs alleging sex trafficking. “During that period, 49 of those civil cases were filed against hotels on a third-party beneficiary theory. In 2020, plaintiffs filed 27 civil sex trafficking cases; 11 of those cases were filed against hotels on a third-party beneficiary theory. In one instance, a plaintiff filed multiple, nearly identical cases against hotels in 2020,” the HTLC reported.

Loss Control and Risk Management

Smart program managers and MGAs understand the importance of loss control. Indig believes agents writing hotel and motel policies in both the standard and E&S markets need to focus on that, as well. Continuous client education is key. If all agents advised insureds how to keep their properties up to par and

limit loss, it would “fully, potentially bring capacity back to the marketplace as carriers get more comfortable as locations are getting better,” Indig said.

Still, he doesn’t think that will happen anytime soon.

“At this point, I don’t see any light at the end of the tunnel,” Indig said. “And that goes, really, across the property market. No one sees that yet.”

Bhakta encouraged agents

and brokers to remain patient and open to new relationships. Those resistant to change and learning new markets will lose business, he said.

While insureds should be prepped for rate increases and less coverage, Indig said walking insureds through risk profile management is just as important as securing good prices and coverage. This can better position them to receive decent renewals — even in today’s marketplace.

“Talk to your clients early,” Vitarelli said. “Talk to your underwriters early. Know what is coming from the carrier.” Relay that information to clients and formulate a strategy if nonrenewal is likely or possible. “At the end of the day, our job is to bring as many options (as possible) to our clients, and then help them in the decision-making process of what all these options mean.”

News & Markets

cooperating with the California Attorney General and county district attorneys to correct the way some of its facilities were disposing of hazardous and medical waste.

“About six years ago we became aware of occasions when, contrary to our rigorous policies and procedures, some facilities’ landfill-bound dumpsters included items that should have been disposed of differently,” the company said. “Upon learning of this issue, we immediately completed an extensive auditing effort of the waste stream at our facilities and established mandatory and ongoing training to address the findings.”

Kaiser said it was not aware of any body part being found at any time during this investigation.

Kaiser to Pay $49M in California for Dumping Private Medical Records, Medical Waste

By Olga R. Rodriguez

Kaiser Permanente has agreed to pay $49 million as part of a settlement with California prosecutors who say the health care giant illegally disposed of thousands of private medical records, hazardous materials and medical waste, including blood and body parts, in dumpsters headed to local landfills, authorities said.

Prosecutors started an investigation in 2015 after undercover trash inspectors found pharmaceutical drugs, and syringes, vials, canisters and other medical devices filled with human blood and other bodily fluids, and body parts removed during surgery inside bins handled by municipal waste haulers. They also found batteries, electronic devices and other hazardous waste in trash cans and bins at 16 Kaiser medical facilities throughout the state, Attorney General Rob Bonta said.

“The items found pose a serious risk to anyone who might come into contact with them from health care providers and patients in the same room as the trash

cans to custodians and sanitation workers who directly handle the waste to workers at the landfill,” Bonta said.

Kaiser is California`s largest health care provider and has more than 700 health care facilities that treat about 8.8 million patients in the state, Bonta said.

He said the undercover inspectors also found over 10,000 paper records containing the information of over 7,700 patients, which led to an investigation by prosecutors in San Francisco, Alameda, San Bernardino, San Joaquin, San Mateo, and Yolo counties. County officials later sought the intervention of this office, Bonta said.

“As a major health care provider Kaiser has a clear responsibility to know and follow specific laws when it comes to properly disposing of waste and safeguarding patient’s medical information. Their failure to do so is unacceptable, it cannot happen again,” Bonta said.

Kaiser Permanente, based in Oakland, California, said in a statement it takes the matter extremely seriously. It said it has taken full responsibility and is

As part of the settlement, the health care provider must also retain for five years an independent third-party auditor approved by the Attorney General’s Office and the district attorneys involved in the complaint. The auditor will check Kaiser`s compliance with California`s laws related to the handling of hazardous and medical waste, and the protection of patients` health information.

“As a major corporation in Alameda County, Kaiser Permanente has a special obligation to treat its communities with the same bedside manner as its patients, ” said Alameda County District Attorney Pamela Price. “Dumping medical waste and private information are wrong, which they have acknowledged. This action will hold them accountable in such a way that we hope means it doesn’t happen again. ”

In 2021, the federal government sued Kaiser Permanente, alleging the health care giant committed Medicare fraud and pressured doctors to list incorrect diagnoses on medical records in order to receive higher reimbursements.

The California Department of Justice sued the company in 2014 after it delayed notifying its employees about an unencrypted USB drive that contained the records of over 20,000 Kaiser workers. The USB drive was discovered at a Santa Cruz thrift store.

Copyright 2023 Associated Press. All rights reserved.

California School District Paying $2.25M to Settle Suit Involving Teacher Who Had Student’s Baby

ASouthern California school district will pay $2.25 million to settle the latest lawsuit involving a teacher who became pregnant by one of at least two students she was accused of sexually

abusing.

The settlement brings to $8.25 million the amount paid by Redlands Unified School District to Laura Whitehurst’s victims since her 2013 arrest, the Southern

UNLOCK THE POWER OF OUTSOURCING WITH STAFF BOOM

California News Group reported.

In August 2016, the district agreed to pay $6 million to a former student who impregnated Whitehust while she was his teacher.

The latest lawsuit was filed in 2021 by another former student who alleged he was preyed upon and sexually abused at Redlands High School by Whitehurst in 2007 and 2008 when he was 14, according to the plaintiff’s attorney, Morgan Stewart. Whitehurst admitted to police in 2013 she had sex with the youth 10 to 15 times in her classroom and at her apartment, a police report stated.

Redlands Unified spokesperson Christine Stephens said Friday that the district was aware of the recent settlement, but could not comment due to confidentiality agreements.

In the other lawsuit, the boy who fathered Whitehurst`s child alleged that Redlands Unified officials knew of his relationship with the teacher and failed to warn his family.

Whitehurst gave birth in 2014 after having sex with the boy for a year, starting when he was 16.

Whitehurst, who taught English and was a soccer coach, pleaded guilty to unlawful sex with three former students. She served six months in jail and registered as a sex offender.

Copyright 2023 Associated Press. All rights reserved.

My New Markets

Episodic Short-Term SMB

Market Detail: Thimble invites brokers to join its broker program to easily refer customers to its episodic short term general liability insurance by Thimble (underwritten by Markel) and earn commission in perpetuity at www. thimble.com/broker. The company says it is built on a simple idea: one-size-fits-all annual insurance coverage doesn’t meet the needs of modern business. Its on-demand episodic insurance was designed to provide a more flexible and affordable alternative to expensive annual plans, with coverage by the hour, the day, or the month. You can extend all the way to a full year. With our intuitive interface, transparent pricing, and comprehensive coverage options, we aim to make purchasing insurance straightforward so that you can focus on providing the very best service to your customers. See appetite guide: thimble.com/list-of-all-included-activities. $2 million maximum premium; $1 million minimum premium.

Available Limits: Not disclosed.

Carrier: Admitted; rated A by AM Best. States: Available in most states plus District of Columbia; not available in Kentucky, New York and Washington. Contact: brokers@thimble.com; 862-5913111.

Cloud Downtime Insurance

Market Detail: Parametrix Insurance

writes business interruption insurance caused by cloud downtime. The product provides a fixed amount of coverage per hour and an easy claim. It fills in the gap left behind by current cyber and tech E&O placements. No class restrictions. Video with more details available at https:// vimeo.com/462302393. Appointment required.

Available Limits: Not disclosed.

Carrier: Lloyds; non-admitted; rated A. States: Available in all states plus District of Columbia.

Contact: Dan Miller; dan.m@parametrixinsurance.com; 818-300-2822.

Garage Package — Auto Dealers

Market Detail: K2 Specialty Dealer Insurance is an underwriting MGA focused on the garage and dealer industry. As part of K2 Insurance Services family of MGAs, we have more than 20 niche programs. We offer coverage for: franchised auto dealers; franchised truck dealers; franchised motorcycle dealers; franchised RV dealers; used auto dealers; auto repair and service centers; heavy truck repair and hundreds of other garage classes. $2 million maximum premium; $2,500 minimum premium; has pen; appointment required.

Available Limits: Not disclosed.

Carrier: Multiple carriers; admitted; non-admitted.

States: Available in Alabama, Arizona,

California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Michigan, Mississippi, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas.

Contact: Dan Marzouk; hello@k2dealerins.com; 866-271-0393.

Nonprofit and Human Service Organizations

Market Detail: Church Mutual Insurance Co., founded in 1897, offers specialized insurance for religious organizations of all denominations, public and private K-12 schools, colleges and universities, senior living facilities, camps and conference centers, and nonprofit and human service organizations throughout the United States. From the services we provide our customers, to the support we provide our communities, Church Mutual’s focus remains steadfast on serving organizations that serve others. Our Nonprofit + Human Services insurance program offers tailored coverage for commercial package — property, general liability, management liability, professional liability, sexual misconduct liability, special events coverage, cyber liability, inland marine, crime; commercial auto; umbrella; and workers’ compensation. Appointment required.

Available Limits: Not disclosed.

Carrier: Church Mutual Insurance Co.; admitted; rated A (Excellent) by AM Best.

States: Available in all states plus District of Columbia.

Contact: Nicole Jolley; director — Nonprofit + Human Services; njolley@ churchmutual.com.

Special Report: Best Agency to Work For

2023 Winners

OVERALL

Mackoul Risk Insurance Solutions

Morristown, New Jersey, and Long Beach, New York

EAST

Gold - National Church Group Insurance Agency, Leesburg, Virginia

Silver - Levitt Fuirst Associates Ltd., Tarrytown, NY

Bronze- Deland, Gibson Insurance, Wellesley Hills, Massachusetts

WEST

Gold - Beehive Insurance Agency, Salt Lake City, Utah

Silver - The Mahoney Group, Mesa, Arizona

Bronze- Crest Insurance Group, Tucson, Arizona

SOUTH CENTRAL

Gold - G&G Independent Insurance, Fayetteville, Arkansas

Silver - CoVerica, Dallas, Texas

Bronze- Higginbotham, Fort Worth, Texas

MIDWEST

Gold - The Bulow Group, Tinley Park, Illinois

Silver - Powers Insurance & Risk Management, St. Louis, Missouri Wisconsin

Bronze- Greater Insurance Services, Madison, Wisconsin

SOUTHEAST

Gold - Wiglesworth-Rindom, Stuart , Florida

Silver - Ellis Insurance Agency, Charleston, WV

Bronze- Energy Insurance Agency, Lexington, KY

The votes are in for the 2023 Best Independent Insurance Agency to Work For survey by Insurance Journal.

Employees in 2023 highlighted the importance of competitive salaries, employee benefits, training and education, resources, and other employee perks as drivers of satisfaction in the workplace. But it’s not all about compensation and benefits. Happiness in the workplace has a lot to do with people, relationships and the agency’s culture. Employees of the winning agencies cite high personal job satisfaction; rate their relationships with their immediate boss or supervisor as positive; and express a high opinion of their agency’s owner or principals and their agency’s reputation in the community. Many employees are grateful the best agency owners

support local charities and the community in which they live. Employees are grateful for the opportunities their agencies provide for them to participate in community service. Employees take pride in working for agencies that are respected and hold strong values and ethics. Employees appreciate the generosity of their agency owners in sharing revenues in the form of bonuses and trips.

The best agencies also provide ways to help their employees grow — by giving them the tools and technology they need, and supporting them with education, training, annual and performance reviews and, in some cases, mentors. The survey results clearly show employees value this support.

As expected, the winning agencies score high for

overall employee benefits including wellness programs and for working conditions including remote work options, flex-time and other alternative schedules that allow employees to embrace work-life balance.

The best agencies to work for also provide employees with a strong sense of purpose in their profession and deliver a workplace environment where employees feel supported wholeheartedly by management and their peers. Many of the employees say they feel like family in their agencies.

Insurance Journal wishes to thank the 3,000 customer service representatives, account managers, producers, managers and other agency staff who took the time to nominate their independent insurance agency in this year’s survey.

Special Report: Best Agency to Work For

Work Hard, Play Hard

By Andrea Wells

Mackoul Risk Associates with offices in both Morristown, New Jersey, and Long Beach, New York, lives and breathes the motto, “work hard and play hard.”

As one employee wrote when nominating the agency for this year’s annual Best Agencies to Work For award: “The term ‘work hard, play hard’ really applies to our company.” The agency’s incentives motivate employees to set goals, work hard to achieve those goals, and play hard year-round.

Monthly team building events, strong leadership, a family-like culture, and annual agency revenue goals that every employee in this 50-person independent agency aims to achieve led Mackoul to this year’s Overall Best Agency to Work For award from Insurance Journal. Mackoul scored highest out of thousands of nominations from agencies nationwide. The award is based on employee responses to an online survey each year.

“No agency I have ever worked for has had the leadership Mackoul does,” another employee wrote. “I am not a number here; I am a valued asset, and I am reminded of that daily.”

Edward Mackoul, CEO, works hard to keep the agency a great place to work. So, too, did his father, Robert Mackoul, who founded the independent agency in 1987.

Edward says that creating a great place to work means

recognizing the value employees bring to the organization’s success. Employees seem to notice.

One employee wrote: “I truly have never felt so appreciated at a job before. Your work is recognized, you feel empowered to do your best and people are always willing to jump in to help. The culture of this agency is truly one of a family.”

As an agency owner and leader, Mackoul says this type of recognition from employees is simply the best. “I am proud of all the awards we received but my favorite awards are the ones where employees nominate us,” he said. “This really shows what kind of culture we have.”

Edward Mackoul joined his father’s agency in 1995. “We were a small agency,” he said. “My father was a life insurance agent and sold life insurance and disability to doctors.”

Those clients began to ask for more. “They said, ‘why can’t you insure our real estate or our cars, too?’ And so we did.”

Today, the agency specializes in two primary niche markets: real estate and habitational, including co-ops and condos. While those two sectors represent about half of the agency’s revenue, the agency continues to diversify into other areas, including high-net worth personal lines and benefits.

The insurance market for habitational and condo risks is difficult today and Mackoul knows those conditions have put added pressure on agency staff. “The hard market has been difficult, so we try to do

as much as we can to help them,” he said. Sometimes that help comes in the form of added bonuses or competitive compensation, and even trips, he said. “We set goals for growth, new business, retention, etc., and if we’re doing well, then employees do well, too.”

Aside from monthly team building events, all staff participate and contribute to meeting yearly revenue goals, Mackoul says. “If the agency meets that annual goal, the prize for all is big,” he said. This past year, Mackoul staff met their annual goal and celebrated with an all-expense paid trip for every employee to Punta Cana, Dominican Republic. “It was about 60 of us … three nights, four days,” Mackoul said. Those experiences over the years have built the agency’s strong family culture, he says. “We have fun. The old work hard play hard certainly applies.”

According to Mackoul, the agency has met its annual goal about 20 times in the past 28 years. “We’ve been to Jamaica several times, we’ve done cruises, we’ve done the Bahamas, and Aruba.”

Another important factor in making a great place to work — be flexible and listen

to employees, Mackoul says. Prior to the pandemic, some employees at Mackoul began to work from home. That’s something that worked, he said. Today, the agency is 100% work from home but keeps a small office space equipped with workstations for those in need of meeting space.

“Our agency allows us to work remote full time, but sets up a fun team building event each month to get us all together,” another employee said.

Most important, Mackoul says, is to treat employees well. “Make sure you pay them well, treat them well and give them the tools they need to be successful.”

Mackoul Risk Insurance Solutions Morristown, New Jersey, and Long Beach, New York

2023 Mackoul agency trip to Punta Cana, Dominican Republic.

Special Report: Best Agency to Work For

National Church Group Insurance Agency Leesburg, Virginia

NCG: Caring for Employees and Clients Alike

By Allen Laman

The National Church Group Insurance Agency’s mission is to protect its clients’ missions.

For nearly four decades, the Leesburg, Viginia-based organization has secured commercial property and casualty insurance for churches, nonprofits, camps and schools. Greg Wigfield, the agency’s president and founder, told Insurance Journal that loving clients is in his agency’s DNA.

NCG won the 2023 Gold award for the East region in Insurance Journal’s Best Agencies to Work For competition based on employee responses to IJ’s annual Best Agency survey.

“It is like a family here,” wrote one survey respondent. “Everyone cares about everyone, and the owners are generous and thoughtful. It is (a) blessing to work for and with such wonderful, kindhearted and intelligent people.”

Wigfield founded the retail agency during a hard market in 1984 with no company contracts and no clients. His father — a pastor — became his son’s first policyholder, and NCG has since expanded its commercial property insurance footprint to more than 4,000 churches and nonprofit organizations across all 50 states.

The grind was long and slow.

“We started just selling

insurance to churches oneby-one,” Wigfield said. “I say ‘we,’ it was me by myself. I eventually had enough money to hire somebody to answer the phone, and that became ‘we.’ And it grew from there.”

NCG subsequently expanded its business into church schools and camps, as well as social service nonprofits. Today, the agency has 29 employees and offices in Virginia, West Virginia, New York City, and Tampa, Florida. In addition, NCG has a national presence online and many employees work remotely.

Hearing that they nominated his agency for this award made Wigfield feel proud and humble. “It’s a reflection on our people, really,” he said.

A big shift in NCG’s evolution was set into motion in 2017, when Wigfield reviewed Insurance Journal’s annual agency salary survey.

“We were behind in a big way,” he shared. And he decided it was time for a change.

A consulting group conducted a structural analysis of NCG to advise leadership on where they were and what needed to change. That process involved uncovering employees’ strengths and motivations and better aligning them with agency roles.

Money that was saved through the process was set aside for NCG employees.

The agency placed each employee “into a situation where they could see how they could move up in terms of their job description (and) how they could move up in income,” Wigfield explained. “We gave great value to everyone no matter what job that they did.”

In their survey responses, employees praised the agency’s management for effectively communicating performance expectations and observations.

Many respondents pointed to how NCG’s leadership prioritizes and encourages growth.

One employee wrote that they are “the envy of my friends and family because they see how great it is” to work for NCG.

“We have nice clients and good employees and that doesn’t just happen,” another survey respondent wrote. “Our

owners are quality folks and always put the best interests of the employees at heart.”

NCG has a young executive team; its members are in their late 20s through early 40s. Wigfield wants to give them everything he can to ensure the agency remains successful for the next generation — and possibly more generations after that.

His advice to agency owners?

“The advice that I would have at this point in my life is, care,” he said. “Just care as much as you can about your employees. Care about them as much as you do your clients. Because when you do that, they become part of your family.”

NCG Christmas party

NCG President Greg Wigfield

Special Report: Best Agency to Work For

Midwest

The Bulow Group’s Mission: A Great Life For Employees and Their Families

By Jahna Jacobson

The Bulow Group has the winning formula for happy employees.

In recent years, the agency won bronze, silver and gold awards as the Best Agency to Work For from Insurance Journal, and in 2023, they add another gold award to their accolades as a top agency in the Midwest. The awards are based on employee responses to IJ’s annual Best Agency survey, as well as certain other criteria such as working conditions and benefits.

“I wanted to work somewhere where the owners were highly ethical, had fun in a workday with the employees, where my work was appreciated and meant something to someone,” wrote one nominating employee. “I wanted to work somewhere that I could be proud to represent. In this day of social divisiveness, it is a pleasure to work with staff carefully chosen to elevate comradery, efficiency, helping each other to learn and grow together in all aspects of daily work.”

Creating a foundation of happy employees was in the agency’s DNA from day one, said founder and CEO Mike Bulow.

He and his brother, Tom Bulow, started The Bulow Group 10 years ago. The company’s Tinley Park office, just 35 minutes south of Chicago, Illinois, employs 31 people.

“We made a vow to each

other that we’re going to be the best place to work in insurance,” said Mike Bulow. “And so basically every day, our number one goal when we walk through the doors is to fight for our people and make sure that they’re happy, they do a good job, and we provide them a great life for themselves and their family.

“And honestly, that’s why that’s our mission, is to work for our people to give them a great life.”

The agency has a range of ages, but overall, the employee age skews younger, which means a lot of love for technology and a lot of families with young kids who can make life unpredictable.

Fortunately, that easy adaptation to technology can make life easier in and out of the office. Over the last year, the firm has invested in resources and technology that automates many tasks and lightens the workload.

“People are not running at 110%, they’re running maybe at 80 or 90 (%) and enjoying it,” he said.

The company is also flexible when it comes to work schedules, he added.

“Maybe there’s a life event that had happened, a sickness or somebody has to take care,” he said. “We’re very, very lenient on people and their time and how we can do that, how we can make things work.”

The company also taps into tech to create informational and training videos. Company

leaders often ask employees to share their expertise with the rest of the agency through video.

“We basically have a digital roadmap with videos, examples, handouts, of how to succeed here at the Bulow Group and in the industry,” he said. “We’re constantly training, and that goes for every different job and role here at The Bulow Group. It’s all done digitally, and we have a library that is all online. It’s so robust now and so intuitive and spot on. Anyone could sit down, and as long as they have the thirst to learn and work hard, they will succeed here.”

Employees are incentivized to complete training sessions through the system.

One nominating employee emphasized the value of ongoing enrichment: “Not only are they willing to talk the talk but walk the walk. They will get in the trenches with us

and provide help immediately on things we need help with. There are numerous resources they have built to educate us and keep educating us to encourage learning every day.”

It’s all part of the big picture that creates a successful, award-winning workplace.

“We believe in paying our people and paying them well, but all of the other things that come along with that are just as much if not more important: work-life balance, education, helping them better themselves in their career, advancing themselves,” Bulow said. “And that’s just always been our model. And we try to prepare every team member to be the best version of themselves that they can be.”

The Bulow Group Tinley Park, Illinois

A happy team at The Bulow Group lunches at Happy Times.

Special Report: Best Agency to Work For

South Central

G&G Independent Insurance Fayetteville, Arkansas

G&G Independent Insurance: Creating a Culture Of Collaboration and Exceptional Experiences

By Erza Amacher

At G&G Independent Insurance, the mission of delivering exceptional experiences extends to both clients and employees. A culture of collaboration, respect and support makes the Fayetteville, Arkansas-based agency a place where employees feel comfortable sharing their ideas, concerns and feedback, knowing that their voices will be heard.

G&G has earned Insurance Journal’s 2023 Best Insurance Agency to Work For Gold award for the South Central region, an honor that co-founder and CEO Jordan Greer calls truly humbling. The award is based on employee responses to IJ’s annual Best Agency survey, as well as certain other criteria.

“This nomination reaffirms our commitment to creating a great workplace environment at G&G,” said Greer.

Founded in 2014, G&G offers auto, home, commercial, life, flood and motorcycle insurance.

“As an entrepreneur and leader, you often start with a vision of what you want to achieve, a dream of the impact you want to make,” Greer said. “It’s a journey filled with challenges and uncertainties, but it’s also one brimming with excitement and the promise of what could be.”

G&G’s 43 employees have bought into the promise, motivated by a positive culture that recognizes workers’ achievements on a daily and weekly basis. G&G has weekly company and department meetings, as well as weekly one-on-one meetings, which employees say fosters a strong level of communication.

“Management is always asking for input on how we can improve individually and as a company,” an employee said.

One way G&G makes its team feel recognized is through its Exceptional Experience Program, which rewards employees for providing exemplary customer service.

Employees go above and beyond by mailing handwritten cards to customers, sending gifts and trinkets to surprise and delight clients, and working outside business hours to accommodate customers.

With every experience submitted, employees are eligible for quarterly prizes such as winning a night out on the town.

One employee wrote that they like how the agency benchmarks salaries annually and makes sure that the company is in the 50th percentile or better for all positions. G&G regularly gives salary and performance reviews, which one employee finds valuable “because they offer a transparent way to understand how my contributions align with the company’s goals and how I’m rewarded for my efforts.”

G&G’s training program is one more area in which the agency excels, employees said. G&G nurtures a learning-oriented atmosphere by investing

in training, workshops and mentorship to enhance skill sets and career trajectories.

“It’s about more than just providing training or mentoring; it’s about nurturing potential, fostering confidence, and empowering individuals to reach their full capabilities,” said Greer. “It’s immensely rewarding to see team members flourish, take on new responsibilities, and achieve their career aspirations.”

G&G offers the option to work remotely, which one employee said “means the world” by allowing her to be at home with her small children.

The agency holds a quarterly company meeting at its Fayetteville office, giving employees the opportunity to bond with one another in and outside of work. Past team building activities include bowling, attending a haunted house, and even learning how to curl. “It’s just a great time to get everyone together outside of work and foster that kind of community and culture,” said Maggie Hill, marketing/ technology manager at G&G.

“We firmly believe that fostering positive experiences within our team ripples out to benefit our clients and partners,” Greer said, “resulting in their own enhanced experiences.”

The team at G&G Independent Insurance.

Special Report: Best Agency to Work For

Wiglesworth-Rindom Insurance Agency Stuart, Florida

Education Is Key to Success for Wiglesworth-Rindom Insurance Agency

By William Rabb

Florida insurance agents have been through the wringer in the last five years, with repeated rate increases for properties across the board, carriers pulling out of the market, and continual complaints from insureds about premiums.

But that hasn’t stopped Wiglesworth-Rindom Insurance Agency, based in Stuart, Florida, from staying laser-focused on its 28 employees and executives. If anything, the challenges of the turbulent market have reinforced leadership’s commitment to the team.

Education, not sales, is the watchword at the 19-year-old agency, which was named the 2023 Gold award winner for the Southeast region in Insurance Journal’s Best Agencies to Work For survey. The company received multiple, favorable comments from staff members and scored highly in the categories of working conditions and benefits.

“Your team is everything,” agency President Lee Wiglesworth said when asked what advice he might give to other agencies. “Our customers will not receive the education and assistance they’ve come to expect from us without our team. We take care of our team first.”

A little history of the company is in order: Lee Wiglesworth is from Kansas City. His father-in-law, Mike Rindom, was a Farmers Insurance

Agent there for 25 years. When Wiglesworth was 23 years old, Rindom asked if he would move to south Florida and start an independent agency.

“I knew nothing about insurance,” Wiglesworth said. “I never saw myself as someone who would excel in sales — I wanted to be a teacher. Instead of my father-in-law trying to make me a salesperson, he trained me to approach insurance as an educator and that has always worked for our agency.”

Besides educating homeowners on how to protect their assets, Wiglesworth said building a good atmosphere with agency employees has been key to the firm’s success.

“We believe that mistakes are learning opportunities and the only mistake that someone should be nervous to make is a repeated one. Sometimes I hear other agencies talk about how important their staff is, and then later in the conversation they start complaining about them, or the generation coming into the work force. I believe it takes consistency from

leadership and time to build trust. Actions over time that reinforce your message will gain trust.”

The firm’s success is well known in South Florida. It has been voted Best Agency for Florida’s Treasure Coast twice in the last few years and was named one of the best agencies in the state this year by Florida Trend magazine.

Employees had plenty to say about it in comments sent to Insurance Journal.

Although one worker argued that starting pay seems low, another pointed out that team building at the agency includes strong financial incentives.

“Agents are provided an opportunity to earn large six-figure salaries while working from home and are provided base salaries to build a career from the start, without the month-to-month worry about commissions,” the staffer said.

Said another: “What I like about our agency is that they’re always looking to improve or better themselves in whatever way is needed; no one’s perfect and seeing the agency always strive to be better makes me proud.”

“I have never left a review scared that my job is on the line or that I cannot improve,” one worker said. “It’s always the opposite. The reviews done are always truly to help stay on track and to look for ways to keep moving up.”

Wiglesworth-Rindom Insurance President Lee Wiglesworth

Wiglesworth-Rindom has won many "best of" awards in South Florida.

Special Report: Best Agency to Work For

Beehive Insurance Agency Salt Lake City, Utah

Beehive: They Come for the Employees, Stay for the Leaders

By Don Jergler

When asked what they like about the business they work for, employees may mention the leadership or their fellow employees — but it’s not often both. However, it appears the employees at Beehive Insurance Agency in Salt Lake City, Utah, have the best of both worlds.

They successfully nominated their firm as the 2023 Gold winner for the West region in Insurance Journal’s annual Best Agency to Work For survey.

The people are great to work with, and the leaders listen to employees, making them feel engaged in growing the firm. That was the bottom line in many comments in the survey on Beehive, a firm with 75 employees that reports roughly $25 million in annual revenue.

Beehive, also a nickname for Utah, focuses on property/ casualty, benefits and personal lines, with a strong presence in construction, trucking, manufacturing and nonprofit.

“My agency is a delight to work for,” one employee wrote in their nomination.

“Our staff is full of wonderful people and we have some of the best executives leading us to success. It’s incredible to see how much kindness and desire there is to continually make things better in the office.”

Adam Snow, vice president of Beehive Insurance, who started with the firm in 2011, was gratified by the comments. He sees them as solid evidence that the work they put into building the culture has worked.

“We've made a lot of strides in the last few years to really give employees the opportunity to have input,” he said. “I think our culture is one where people are pretty open with each other and comfortable with each other, and they’re willing to

help each other out.”

Work-life balance, a good review process, and free time to be involved in serving the community were other attributes that employees listed. Yet, it was rare to find a single employee comment in the survey without the good people and good leadership observations.

“Beehive is such a fantastic place to work, from the people who are fantastic to the management and the employee benefits,” one employee wrote. “There is a constant attitude of improvement here from the executives who really are constantly making efforts to make it an even better place to be.”

Several employees said those two elements contribute to another attribute that has developed at the firm: a perpetual effort to improve the operation and the people working for it.

“There is a constant attitude of improvement here from the executives who really are constantly making efforts to make it an even better place to be,” one employee wrote.

Another wrote of an annual employee engagement survey that has led to steps to improve the agency, which was followed by agency leaders meeting with each account

manager and asking what they can do to make Beehive a great place to work.

“Then they implemented those changes,” the employee wrote. “One of the changes was a change in the management structure, which has been an adjustment but is already improving our department and the outcomes.”

Those things, taken together, may be an explanation for the firm’s success at employee retention.

“I have been working with Beehive Insurance Agency for 28 Years and they have given me the opportunity to grow my work experience and working relationships with the Best!” an employee wrote. “Most of my colleagues have been here just as long as me and we do not have a high turnover. Everyone who begins their career here at Beehive Stays Here!”

Doug Snow, president of Beehive Insurance, may be the best example of that long-lasting loyalty. Snow began his insurance career at Fireman’s Fund in the commercial lines department. While there, he met Dick Walton, Beehive’s president at the time. In 1979, Snow moved to Beehive Insurance, working for Walton. He became president and CEO of the agency in 1992.

“When I started, I think there were four employees, and now there are 75,” Snow said.

A group of Beehive Insurance employees gathered at the inaugural producer summit in Orem, Utah, in 2022. These summits are designed to engage employees by providing training and space to engage with every member of their department.

Adam Snow is vice president of Beehive Insurance. He started with the firm in 2011 out of college and following an internship with a local workers’ compensation carrier.

Spotlight: Builders Risk

3 Construction Innovations Changing Builders Risk Insurance Exposures Here’s What Informed Agents Need to Know

Construction is like insurance. The basics don’t change much, but when there are new developments, they can alter the trajectory of the industry.

respond to their various risks, which includes reading the carrier’s coverage form to understand their scope of eligibility.

3D Construction

By Rachele Holden

Building innovations — namely 3D construction, solar panels and cross-laminated timber — are changing builders risk insurance exposures, leaving a gap in knowledge for agents. As these construction techniques grow in consumer interest, it’s important for agents to know how course of construction policies will

In 2018, the U.S. Army “printed” out of concrete a barracks hut suitable for housing in just 22 hours. That’s less than one day to build their structure!

The global 3D printing construction market reached $1.4 billion in 2021 and is estimated to reach $751 billion by 2031, according to Allied Market Research — a compound annual growth rate of 87%. Rather than pouring concrete into traditional molds, 3D concrete printing lays materials in

layers through a computerized process. This process creates walls, floors, roofs and other components, and promises greater speed of completion and lower costs than typical construction methods.

From an insurance underwriting perspective, because 3D is new it lacks the government regulations and industry standards that apply to other construction methods. Likewise, 3D design and production skill levels and quality control are in development.

Fundamental to builders risk policies is coverage for the integrity of the structure under construction. Builders risk carriers typically include collapse as a covered peril. In the event of a collapse due to a

3D component, the carrier may cover the collapse, but likely will not cover the component that caused that collapse.

Builders risk coverage typically does not cover faulty craftsmanship (the defective design, manufacture and installation of faulty building materials), unless it results from a covered cause of loss, and the insurer may then pay only for the loss or damage caused. The same is true for EDCP components.

Agents also should be aware that a 3D process may present risk of damaging already-completed construction work at the same site.

One big positive advantage of 3D is time. It now could take only days for a contractor

to frame a building using 3D-printed materials. With the builder then completing interior finish work, a project might be done in as little as three months or less — less than half the time to build a conventional home.

But even as 3D printing can reduce the time frame, the value of the project is still the same. So that element of the exposure hasn’t changed.

Solar Panels

Solar power, while not new, brings promise of lower electricity bills, environmental benefits, higher home values and less maintenance. The use of solar panels in residential and commercial buildings is projected to proceed apace.

Residential solar power installations increased 34% from 2.9 gigawatts in 2020 to 3.9 gigawatts in 2021, as reported by Pew Research Center. To put it in perspective, one gigawatt is enough energy to power about 750,000 homes. Influenced by the Inflation Reduction Act (IRA) of 2022, solar capacity will spike from 73 gigawatts in 2011 to 617 gigawatts in 2032, as forecasted by McKinsey.

Underwriting concerns include natural catastrophe damage to solar panels. Hurricane, tornado, flood, earthquake, hail, wildfire and heavy snow bring added exposure to accounts with solar panel construction.

“Micro-cracking,” a form of solar cell degradation due to expansion and contraction of silicon from thermal cycling, might be covered by some carriers, but others attach an endorsement to remove that coverage. Even carriers that insure for micro-cracking

might limit coverage.

Builders risk underwriters will want to know if solar storage batteries are part of a solar panel system, and they likely will prefer that a licensed electrician complete the installation of a battery energy storage system. Carriers also want to know the experience of the contractors installing these systems. They also will consider the installation location (roof or ground), whether they will be connected to the power grid, layout of the panels, costs and power output of the system.

As usual, agents need to read the policy conditions when quoting builders risk policies covering solar projects.

Mass Timber Construction

Mass timber construction is an umbrella term referring to several manufactured wood products, including:

• cross-laminated timber

• glue-laminated timber

• dowel-laminated timber

• nail-laminated timber

• structural composite lumber.

Mass timber is made from

multiple solid wood panels nailed, doweled or glued together to provide a strong, stable low-carbon alternative to concrete and steel, according to ThinkWood.com.

One of the benefits (and underwriting considerations) of mass timber construction is that it might be more resistant to fire compared with conventional lumber. Like 3D, mass timber components might allow for faster construction timelines, as well as improved site safety and less construction debris. It’s like a built-in fire safety system. You won’t know the difference in quality until it matters.

Carriers will likely want to consider the experience of the building contractor with mass timber construction, and agents need to discern which building components are mass timber. Not all materials used in a building project are likely to be mass timber, so the risk profile of a project could be hybrid. With a hybrid of building materials, insureds may get a break on rate compared with traditional frame lumber

premium pricing. Even though mass timber components might be expensive, they don’t necessarily decrease the rating because the premiums are still based on the total completed project value.

Lastly, mass timber can be more sensitive to weather and moisture, potentially leading to warping; agents might see higher water deductibles being applied due to this increased exposure.

3D construction, solar panels and cross-laminated timber all seem to be here to stay. By familiarizing themselves with underwriting considerations for these construction types, agents can continue to play a key role in helping builders risk customers find a market and contribute to a smooth submission process.

Holden is SVP, head of product underwriting for US Assure, where she is responsible for product development, loss analysis, and rating and guidelines. US Assure exclusively distributes, underwrites and services Zurich’s builders risk insurance program across the U.S.

Spotlight: Architects & Engineers

A&E Risks: Quality Control Must Advance with Technology

Technology has revolutionized the architecture and engineering (A&E) design space over the past 40 to 50 years, allowing for improved efficiency and faster architectural design and output.

However, these technological advances can also increase the chance for error — or in insurance terms, exposure to loss. In addition to compressing the work schedule, the quality of the data generated may also be reduced. The cumulative effect can be even more project errors. We all know the saying: Garbage in, garbage out.

In the early 1980s, AutoCAD digitized architectural drawing. More recent uber-sophisticated tools such as building information modeling (BIM) or integrated project delivery (IPD) have provided efficiencies and opportunities in the

architecture and engineering fields that were unavailable even a few decades ago.

While these powerful software programs have transformed the design space, there are fewer than a half-dozen providers of that software, with just two who dominate the market. Those entering the field with architecture or engineering degrees are quite familiar with those two tools, sometimes relying on them almost exclusively.

For insurers, that’s a problem.

Increasing A&E Claims

Today’s A&E designers are skilled at using advanced technology but often don’t understand how a structure comes together as well as they should. They are computer-savvy, but the pencil-to-paper calculations employed by

yesterday’s designers are not their forte. It’s not how they were trained. Instead, their designs often originate from templates on a computer rather than real-world design, where the architects and engineers actually see the brick-and-mortar realities of construction.

As a result, insurers are seeing a lot more claims related to quality control than in the past. The plan-checking oversight that was standard during the days when pencils, rulers, protractors — and mathematically trained brains — were their primary tools has been deemphasized since technology has become the primary design mechanism.

Insurers and brokers face a similar challenge as they try to stay on top of professional liability exposures from the A&E industry.

Whereas insurers once had

By Anthony Andersen and Larry Moonan

a pretty good handle on the safety net that architects and engineers needed, technology and tools such as AI are now developing so quickly that it’s not always clear how that A&E risk safety net should be constructed.

A recent case example demonstrates the issue: During the design phase, a designer decided to change one type of fastener for joints in a building’s plans. The substituted fastener was one-half millimeter different in length than the original. When the number of fasteners needed was multiplied by one-half millimeter throughout the 30,000-square-foot warehouse, the building envelope could no longer close properly.

A simple switch to a discrete piece of data in a software program caused a substantial impact to the physical space, which no one caught until on-site construction was underway. It was a basic error that required a very expensive fix.

More Risk Complications

The emergence of AI as a technological tool and an increasing use of drones on work sites have only added to the challenges insurers and their clients face in the A&E space.

and catch any problems. But they also can cause architects and engineers to be legally responsible for identifying safety and privacy issues that in the past they would not have been — nor should be — responsible for.

It’s a delicate balance, and one insurers examine daily. We must properly document what A&E designers are or are not responsible for. And we must work with A&E designers to ensure they understand and mitigate their exposures.

Even when sophisticated 3D models are used, changes can be made on the fly without fully measuring their impact. For example, on another project a designer needed to tighten the space between floors, but without the appropriate degree of quality control, they did not realize the HVAC venting would no longer fit in the

condensed area. This resulted in an insurance claim.

These situations follow a similar pattern, and they underline the challenge of implementing technology to expedite and improve a project and its quality while still insuring it properly.

We’re still in the early stages of integrating generative AI applications such as ChatGPT, but the expectation is it will allow that flow of information and requisite analyses to be done at much higher speeds than ever before, which is a concern.

We know the use of advanced technology can get a project from A to Z quicker, but not always with the context necessary to avoid risk and, ultimately, claims.

Quality Control Is Imperative

It’s easy to click a button to

substitute one part for another throughout a design. But how can the designer determine that it’s the right substitution? Will a seemingly inconsequential change end up being a big and costly problem?

In order to improve underwriting loss ratios, insurers must study the A&E industry’s rapid changes and develop best practices for risk management, which is an obvious challenge.

Imagine designing a safety net for a trapeze artist act. Everything works fine; however, just before the performance, the act is updated, and now the performers are operating from a moving rail car. That safety net must be redesigned to assure the safety of the artist.

The bottom line is that advancing technology requires advances in quality control, and more technology requires more, not less, quality control. Architects and designers must dedicate enough resources — and appropriately trained experts — to control the quality of their design and in doing so, help their insurers protect them.

And insurers, for their part, must be willing and able to keep up with this ever-changing field so we can adequately respond to the needs of our insureds.

Drones are a mixed blessing with obvious privacy issues. As an extra set of eyes, so to speak, they make it much quicker to survey project sites

Moonan is COO of Berkley Alliance Managers, a Berkley Company. He previously served as EVP and COO of Berkley Design Professional, which specializes in reducing risk for the design professional industry. He can be reached at lmoonan@berkleyalliance. com. Andersen is SVP, professional liability claims manager for Berkley Design Professional. He can be reached at aandersen@berkleyalliance.com.

[I]nsurers are seeing a lot more claims related to quality control than in the past.

Idea Exchange: High Net Worth

Coming of Age: Mapping Risk Around Multi-Generational Wealth And Life Milestones

Family enterprises that thrive play an outsized role in the economy, and, of course, in the lives of the family members, including the rising generation. In that vein, managing risk effectively on both a business and family level is imperative.

By Linda Bourn

While the recent Family Enterprise Risk Index by Alliant Private Client found that many family enterprises — which are comprised of families, their businesses (such as single operating companies, holding companies/multiple family-controlled companies, and private trust companies), as well as their family offices — excel at managing business risk, many face blind spots when it comes to family risk. In fact, the research found that 63% of respondents do not have a process in place to educate rising generations about the unique risks associated with being part of a prominent family.

Most (76%) of the enterprises on the 2023 Enst & Young and University of St. Gallen Family Business Index are more than five decades old. As family enterprises grow and evolve, so do the complexities of their risk, especially within the family. As rising generations of these successful families come of age, new risk exposures emerge. As such, so should practices to identify and mitigate risk.

The following are examples of common family member life milestones that may seem matterof-course but could impact the enterprise and the family itself. They should be viewed with a risk management lens to better protect the family enterprise.

• Getting a first phone. While a pre-teen receiving their first phone may not seem significant, it’s something to be mindful of. A recent study by Pew Research Center indicates that the majority (95%) of teens report having access to smartphones, and use of smartphones and social media naturally go hand-in-hand. Even if a 12-yearold is not part of the family business, young members of the family may have access to information that should not be shared beyond the household, such as private conversations or travel plans. Such information could naively or mistakenly be shared externally via social media. Actions as simple as a social media gaffe or unintentional cross-posting from a private TikTok or Instagram account to a public profile on another platform could have a ripple effect on the family’s safety or reputation.

• Obtaining a driver’s license. There is risk involved when any driver gets behind the wheel. But when that driver is inexperienced and part of a successful family, the potential for negative outcomes may be magnified. For example, when driving a family-owned vehicle, potential exposures likely have been planned for as part of the family’s insurance policy. But what if that new driver borrows a friend’s vehicle or rents a car while away at school and gets into an accident that unfortunately causes damage or even injury to others? An inadequately insured road trip or a simple spin around the block gone wrong could have an extreme effect beyond the individual or family — and to the business itself.

• Moving out of the family home. Like driving, having one’s own residence creates new possible liabilities. When a member of the family moves away to school or gets their own apartment or house, that newfound independence comes with additional responsibilities and risks, including additional liability. For instance, if the individual hosts a party where an

injury occurs or alcohol is served to a guest who ends up driving under the influence and is involved in an accident, they can be held responsible — which again, can also impact the family enterprise.

Regardless of milestone, it’s important to keep in mind that anyone can be sued for alleged negligent actions, whether the claim is valid or not. Often when the person being sued is part of an ultra-high net worth or well-known family, the damages sought may be outsized, and any unexpected expenses — or reputational issues — could be troublesome.

Planning Ahead

To safeguard against these potential risks and more, effective communication and education at the family-level are vital. But, according to the Alliant Private Client Family Enterprise Risk Index, only 24% of multi-generational family enterprises undertake annual family risk reviews.

Ultra-high net worth families should

conduct a family meeting to discuss risk and mitigation best practices at least once a year — as well as when new exposures arise, i.e., when the rising generation reach different life milestones.

All family members should receive risk education, in a manner appropriate for their age, that helps them understand how their actions may affect others and how being part of a wealthy family positions them for unique risks.

Also on the agenda for discussion should be the family’s code of conduct and how every member of the family has a role to play in adhering to it to better protect the family and its enterprise. The same study found that communicating a family code of conduct is often overlooked — only 35% said they take that action.

It’s best if communication around these issues is more dialogue than lecture so that members of the rising generation feel free to ask questions and share perspectives on the risks they face.

There is no silver bullet to managing risk for multigenerational family enterprises; the risks to consider and the priorities of each are as unique as the family and business itself.

As family dynamics and risk evolve, working with a trusted insurance professional can help identify, plan for, and put in place risk mitigation measures to safeguard against exposures, including formalized codes of conduct and education for the next generation — all of which will help position both the family and business for long-term success.

[O]nly 24% of multi-generational family enterprises undertake annual family risk reviews.

Bourn is senior vice president and Family Enterprise Risk Practice leader at Alliant Private Client.

Idea Exchange: The Marketing Connection

Should the Insurance Industry Care About SEO?

Search Engine Optimization (SEO) can feel like a moving target and is often misunderstood throughout the insurance industry. Many businesses do not fully understand the importance of SEO or how it works, which leads to an underestimation of its value.

of attracting organic traffic and generating leads.

Attracting the Right Audience

By Erin Dwyer

Insurance SEO is the process of improving the visibility and ranking of an insurance company’s website. This is done through a range of strategies that make a website more attractive to search engines — such as keyword research, on-page optimization, content strategy, analytics and more. The end result? More website traffic from the people you want to talk to.

Complex technical aspects, constantly changing algorithms and a lack of education all contribute to the widespread misunderstanding of insurance SEO, yet it remains a crucial component of improving online visibility, attracting targeted traffic, and staying competitive online.

By implementing effective SEO strategies, insurance companies can effectively connect with potential customers and drive business growth. Here are just a few reasons why the industry should care about insurance SEO.

Increased Visibility

Insurance SEO helps companies to rank higher in search engine results pages (SERPs), making it easier for your target client to find you online. When potential customers search for insurance-related keywords or queries, a well-optimized website has a higher chance of appearing at the top of the search results, increasing the chances

Implementing an insurance SEO plan includes using specific keywords and phrases that are relevant to your services and target audience. By optimizing website content, meta tags and other elements, you can attract highly relevant organic traffic from people actively seeking insurance-related information, quotes or services.

Brand Awareness and Credibility

Ranking well in search results establishes credibility and trustworthiness in the eyes of consumers. When potential customers see an insurance company consistently appearing in top search results, it builds brand awareness and confidence. SEO helps insurance companies create a strong online presence, enhance their reputation, and differentiate themselves from competitors.

Boosted Visibility for Social Media Posts

While social media platforms like LinkedIn operate differently from search engines, insurance SEO principles can still be applied to enhance the visibility of your social media posts! Just as you use keywords on a website, you can use rele-

vant keywords and hashtags in your social media posts to help your posts appear in relevant searches within the social media platform’s search bar. LinkedIn Newsletters, for example, often show up on Google when the copy is formatted with strong SEO in mind.

Improved User Experience

Insurance SEO is not only about optimizing for search engines, but also about enhancing the user experience across a website. SEO best practices, such as optimizing page speed, improving site navigation, and creating high-quality, relevant content, all contribute to a better user experience. This, in turn, can lead to increased user engagement, longer website visits, and higher conversion rates.

Mobile Performance

Your target clients use mobile devices to search for insurance products and services. Having a mobile-friendly website that ranks well in mobile search results is crucial!

A proper SEO strategy should always include mobile responsiveness — which enhances the user experience and increases the chances of converting leads to clients.

Your company website is the only salesperson who works 24/7. In today’s digital age, the insurance industry is becoming increasingly competitive. Companies that invest in SEO gain a strong advantage over those that don’t nurture it. By staying up to date with insurance SEO best practices, insurance companies can remain competitive, attract more website visitors, and capture better market share.

Dwyer is a senior account manager at Direct Connection Advertising & Marketing. Website: directconnectionusa.com

Idea Exchange: Minding Your Business

10 Basic Tenants for Successful Family Owned Agencies

The presence of family run businesses continues to play a major role in the U.S. economy. From rural mom and popyshops to international conglomerates, family businesses are at the foundation of our economy. Ford Motor Company, Walmart, Berkshire Hathaway, and Dell Technologies are just a few of the many U.S. family-run companies that have proven their ability to thrive and adapt to changing markets while maintaining their core values.

There are reportedly 5.5 million family-owned businesses in the U.S. who employ nearly 60% of the country’s labor force and contribute $8.3 trillion to the U.S. GDP, according to Family Enterprise USA (FEUSA), which advocates on behalf of family owned businesses. Family businesses are also responsible for 78% of all new job creation. (Astrachan. J.H. & Shanker, M.C.) This means family run companies employ over 98 million Americans!

Additionally, 35% of Fortune 500 companies are family controlled, according to Women & Wealth Magazine. Roughly 86% of U.S. family businesses expect to see growth for the next two years, the PwC 2023 US Family Business Survey found. These raw statistics exemplify the massive power that family businesses have in our local, state and global economies.

Women’s leadership roles in family business have evolved significantly over the last decade, as well. A 2019 study conducted by Successful Transgenerational Entrepreneurship Practices (STEP) revealed that 7% of North American family firms surveyed were led by women and 34% had women on their board. While those numbers may seem low, it is a step

in the right direction for more growth and female-led businesses. According to Mass Mutual American Family Business Survey, “31.3% of family businesses indicate that their next successor is a female.”

This statistic shows promise for future generations of females who are looking to run a business. Although there is much more to accomplish, women continue to play a vital role in fueling economic growth in America via family businesses.

Family Business Basics

The secret to a successful family business is to treat it like a business, not as an extension of the family. There are many family run insurance agencies. The successful ones tend to incorporate the following 10 basic tenants.

1. Have a clear, concise mission statement. Establishing a mission statement provides clarity about the company’s purpose and the values that guide its

operations. This clarity can help family members align their efforts and make decisions that are in line with the company’s overarching goals. A well-crafted mission statement reminds family members why they are with the company and what they are working towards together. It serves as a key to preserving the family legacy for future generations.

2. Do not create a job for a family member. Either you have a job opening for

Recommended Articles

On Family Businesses

• 2023 Survey of US Family Owned Business: PwC

• 6 Traits of Strong Family Businesses (hbr.org)

• How to Prepare the Next Generation to Run the Family Business (hbr.org)

• Family Business Women in North America Struggle At the Top (familybusinessmagazine.com)

Jules Turney

By Catherine Oak and

which they qualify, or you do not. Do not create a new position just so you can bring your family member into the firm. If there is no suitable opening, wait until there is the need to hire someone and/or they have the appropriate qualifications. Having the family member work somewhere else first is a great strategy to understanding their work ethic. The family member must prove to themselves, to the owners, and to the other employees that they can succeed on their own. It is far healthier for the business to have them come in with some outside experience, fresh ideas and training. It is not necessary that the experience be in an insurance company or agency, although this would be helpful.

3. Treat family members the same as any other employee. Avoid the two extremes — either cutting them too much slack or riding them harder than other employees. Family members might try harder or they might not try at all. They need motivation from the owner or their

manager, just like any other employee. Apply all agency rules to family members and adhere strictly to performance evaluations and salary administration.

Give family members responsibility and authority as they become ready for it. Don’t second guess their decisions within the parameters of authority you have granted. This is difficult to do with any employee and much more troublesome with family members, especially children.

4 . If possible, have family members report to non-family employees. Just because someone has the same last name as the owner does not mean they have the same level of authority. Keep in mind, treat them like any other employee. See rule 3.

5. Keep family and business issues separate. Do everything that you can to de-emphasize the family relationship when around other employees. Never discuss family matters in front of other people in the agency. Use the family member’s first name and try not to call each other dad, mom or son during business hours. Likewise, don’t discuss business at the dinner table as this can put a strain on family relationships and blur the lines between work and family time. Essentially, keep work at work and home at home.

6. Be clear about the business succession plan. Family members should be aware of the company’s perpetuation plan, so they know what is expected from them long before any ownership changes occur. In a 2021 Family Business Survey conducted by PwC, in the U.S., “only one-third [of family run firms] have a robust, documented, and communicated succession plan in place…” (Harvard

continued on page 46

The secret to a successful family business is to treat it like a business, not as an extension of the family.

Idea Exchange: Minding Your Business

continued from page 45

Business Review). In the 2023 PwC US Family Business Survey, reportedly 75% of family run companies have a shareholder agreement, 64% have a last will and testament, and 51% have a dividend policy in place. You would expect these numbers to be 100% across the board, but family dynamics are complex and sometimes hard to navigate. The parental generation may be too controlling, overbearing, or closed-minded that even if their children have functional roles in the company, they are never offered the opportunity to participate in decision-making or leadership roles. Children in the company can be coddled by their parents, not allowing them to take risks or learn from failure.

Additionally, it is important to pay attention to any child that might resent all the time their parents spent with the agency instead of them. Aggressive behavior by a jilted child can be very destructive to the business. Rivalries between siblings can wreak havoc on an otherwise successful business. It is recommended that children who are not associated with the agency should not be owners.

Additionally, non-active owners might not appreciate what it takes to run the business or the day-to-day necessities. Assuming that there will always be someone else to handle business matters can become highly stressful when it ultimately proves unfounded.

7. Have one clear successor. It usually is never a good idea to leave a business to two people (family members or not) based on 50/50 ownership. The buck always has to stop somewhere. Two siblings can already have some built-in differences of opinion that make decisions more difficult to handle effectively. It can work in some cases, but these are the exceptions. At a minimum put one outside person on the board of directors as a deciding vote. See rule 6.

8. Create a board of directors that includes non-family members. When advice is needed on dealing with sticky issues, it’s important to have someone involved without familial emotional attachments. Use outside professionals, such as CPAs, attorneys or consultants. If

there often seems to be impasses, it might be a good idea to give voting rights to the non-family board member.

9. Sell the business, don’t gift it. Most people do not appreciate something they got for free. The concept is that if they pay for it, or must sacrifice something for it, they will value it more and do a better job of running the agency. Keep the IRS in mind. You must properly value the ownership you turn over to family members either through gifts or cash transactions.

10. Make sure all participating family members agree to these guidelines. There is no sense in having guidelines or rules if no one agrees to them or if the

rules are sporadically implemented. All family members must adopt these “rules” for the business, or they cannot be a part of it. This is where tough love comes into play. Children do best when the rules are clearly spelled out and consistently followed.

The new motto needs to be “it’s nothing personal, it’s just business.”

Oak is the founder of Oak & Associates, an international insurance agency consultant specializing in mergers & acquisitions, valuations, and other general consulting. Turney is a financial analyst for the firm. Oak can be reached at 707-935-6565 or by email at catoak@gmail.com.

Idea Exchange: Ask the Insurance Recruiter

Write Job Advertisements That Attract Top Insurance Talent

What’s the best billboard you’ve ever seen? Why did it stand out? Think of job advertisements like billboards. It’s something everyone can see, and the best ones are creative, memorable and lead to business opportunities.

Millions of people, insurance professionals included, find jobs by driving down the job search “interstate,” better known as the internet. As Zippia.com cited, “80% of all job searches were done online as of 2022 and 50% of job applications came from job boards.”

When it comes to recruiting, the tool that has the best chance of helping you source top talent are job ads. That’s why how they are written is so important to your recruiting success.

• Use jargon to connect with insurance candidates. Insurance is a unique industry. Your audience of claims, underwriting, sales, client service professionals, and more want lingo they understand weaved into the write up. The more specifically you write the job ads the more highly qual-

ified applicants are going to be interested and apply.

• Write ads that translate to social media to maximize your opening’s visibility and give candidates multiple ways to apply Think about how a LinkedIn or Facebook post appears. You only see the top one-third of the post, but many times it’s enough to make you want to read more. Use attention grabbing headers, titles and intros about your job or company so potential candidates want to keep reading.

• Rely on bullet points rather than paragraphs. Too often I see job ads written as full sentences and complete paragraphs. Job seekers consume information in small bits. forget how you were taught to write in high school English classes. Informal sentence structure works. Format your advertisement with numerical lists and percentages to highlight the most critical information hiring managers want to convey.

• Have a library of job templates. It’s time consuming to write every job ad

from scratch. With templates, you streamline the creation process, making the inception of the opening to posting live on multiple sites very efficient. My previous Insurance Journal article — Your Template To Write an Awesome Insurance Job Advertisement (https://www.insurancejournal.com/magazines/mag-features/2020/05/18/568793. htm) — shows you how to build sample templates.

By Mary Newgard

• Insert as much “what candidates want” information as possible. Eliminate fluffy language like mission statements and company stats. Speak to what motivates insurance professionals to make a job change. Hot button issues right now are remote work, compensation, training and career advancement. Sprinkle this information throughout the job advertisement or create a separate section with fun headers like, “Why You Want to Work Here” or “Perks of the Job Our Employees Love.”

Do you love Insurance?

October 2, 2023

Republic Fire and Casualty Insurance Company 4455 LBJ Freeway, Suite 700 Dallas, TX 75244

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.

October 2, 2023

Transverse Insurance Company 1999 Bryan Street, Suite 900 Dallas, TX 75201

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.

October 2, 2023

Fidelity Security Assurance Company

3130 Broadway Blvd Kansas City, MO 64111

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.

October 2, 2023

Obsidian Pacific Insurance Company 1330 Avenue of the Americas, Suite 23A New York, NY 10019

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.

October 2, 2023

GEICO Marine Insurance Company 5323 Port Royal Road Springfield, VA 22151

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.

October 2, 2023

Accredited Surety and Casualty Company, Inc 4798 New Broad Street, Suite 200 Orlando, FL 32814

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.

October 2, 2023

Lyndon Southern Insurance Company 10751 Deerwood Park Blvd, Suite 200 Jacksonville, FL 32256

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.

Closing Quote

Solving Systemic Risk Is the Cyber Market’s Number One Priority

in payouts. Cyber insurers worry about similarly systemic scenarios.

By James Burns

Cyber insurers can sometimes feel like systemic risk is unique to them. It isn’t. The COVID-19 pandemic was about as systemic as it gets. Business interruption (BI) insurers faced an avalanche of claims following the first lockdowns. And the industry failed in the eyes of thousands of small business owners. The reason was a failure to address the perennial problem of systemic risk. The cyber market mustn’t repeat the same mistakes.

Insurers have always fretted about systemic risk: exposure to a single event that triggers an enormous number of claims and a colossal, accumulated financial loss. The 1906 San Francisco earthquake spawned over 100,000 claims, costing insurers over $5 billion in today’s money. Nearly a century later, the 9/11 terror attacks triggered nearly $50 billion

In 2017, a self-propagating malware named NotPetya targeted Ukraine, but quickly spread. It infected hundreds of thousands of computers in more than 60 countries. The virus paralyzed banks and hospitals, and crippled global shipping companies. With an estimated economic impact of $10 billion NotPetya is the costliest cyber event to-date.

But COVID was a biological virus, rather than a digital one, which showed how potent systemic risk can be. The human cost of Covid was devastating with nearly 800 million recorded infections and close to 7 million deaths. It was economically unparalleled, too. The International Monetary Fund estimates the economic impact at $12.5 trillion.

As lockdowns set in around the world, nations of small business owners looked to their BI policies to plug financial holes. Mass legal action ensued. In the U.S., policyholders have filed roughly 2,500 lawsuits against insurers. Insurers also faced suits in Australia, Canada,

across Europe and in the UK. Details of the legal actions are numerous and complex but they boil down to the same thing: Customers thought they had cover for an event which, according to their insurers, they didn’t. The core problem was a lack of clarity.

Cyber insurers need to be careful not to fall into the same trap. The list of systemic risk exclusions in cyber policies is long and growing. They tend to be scenario-specific, which creates gaps. Technical language is being used to address complex issues like digital infrastructure failure and mass vulnerability exploitation. Brokers and underwriters — let alone policyholders — can struggle to pinpoint where cover starts and stops. The market must agree on where the lines get drawn. This means agreement on how to define systemic risk.

The U.S. property market could help on that front.

Weather events vary from the small-scale to the extreme. The wind in Florida can blow a light breeze one day or a category 5 hurricane the next. Property insurers need to be able to delineate between the two. They’re able to do so because everyone agrees on what a hurricane is.

A group of weather experts at the National Hurricane Center in Miami identify and classify extreme weather events. They decide when a storm becomes a hurricane and assign it a severity rating of 1 through 5. Insurers use this designation to delineate between regular and extreme weather events in policies. And

they’re able to buy reinsurance for the most extreme events because there is a clear and unambiguous trigger.

The digital world is in desperate need of a comparable system. We need to be able to identify and classify “cyber hurricanes” so that we can manage the risk they pose. An independent body set up to do this would bring many benefits. It would foster a shared understanding of what a systemic cyber event is. Existing definitions are unclear and inconsistent, and breed uncertainty around what they cover. A transparent classification system defined by an independent body fixes this problem. Events would be easier to reinsure. Clear definitions mean objective policy triggers, reducing ambiguity. Systemic exposure would become more certain and easier to model. This would attract more reinsurance and third-party capital, creating a true cyber catastrophe market.

More accurate modeling would bring better calibrated reinsurance pricing. Insurance premiums would be reduced, bringing more customers to market. They’d buy a simpler product because the existing systemic exclusions could be scrapped. They’d be replaced with a single catastrophe exclusion tied to a declaration made by the body.

Most important of all, the market would be aligned on how cyber insurance responds to major events.

Burns is head of Cyber Strategy at CFC Underwriting, a specialty insurer.