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AGENCIES Discover what sets this year’s top 50 independent agencies apart from the rest


A closer look at the industry’s increasingly vast M&A landscape

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THE INSIDE SCOOP FROM NAPSLO Where is the excess & surplus market headed in 2017 –and beyond?


What your agency should be doing to reach tech-savvy consumers

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ISSUE 4.11

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UPFRONT 04 Editorial

Embracing uncertainty

06 Statistics






Investors are increasingly drawn to insurtech startups looking to disrupt the P&C space

10 News analysis

Are independent agencies about to become technologically irrelevant?

12 Intelligence

A rate hike in Florida has the industry up in arms



AGENCY INSIGHT The Horton Group’s Glenn Horton reveals how his agency has managed to stay the course and remain independent

Munich Re CEO Tony Kuczinski discusses how young insurance professionals can make the most of their careers


18 Opinion

Hurricane Matthew highlights some troubling flaws in wind and flood insurance coverage

FEATURES 38 Seen and heard at NAPSLO Four major players weigh in on the state of the E&S sector in 2016 – and what the future could hold

PEOPLE 47 Career path




After a bumper year for M&A in insurance in 2015, how is 2016 shaping up so far?


Lemonade is shaking up the traditional insurance industry – but is its business model viable?

14 Workers’ comp update

IBA’s annual roundup highlights 50 of the best independent agencies in the business


08 Head to head

This month’s big movers, shakers and new products



Disturbing stats on active shooter incidents underline the need for specialized insurance policies

The philosophical and mathematical foundations of Nir Kossovsky’s insurance career

48 Other life

For Suzi Frye, it’s strictly ballroom outside the office


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Exceptional Partnerships. Extraordinary Solutions. Not many companies are inspired to reach higher and take their business to the next level. Nor are they an industry leader with 35 years of experience in the E&S industry.

We are.

E&S/Specialty A.M. Best rating of A+ (Superior), FSC XV Fortune 100 company Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Š2016 Nationwide.

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28/10/2016 9:29:59 PM



An era of uncertainty


his has certainly been a year of extremes. The US saw landfall of its first major hurricane in five years with the arrival of Hurricane Matthew in October. The Pulse Nightclub shooting in Orlando shocked the nation and again drew attention to escalating mass shootings across the country, while also underscoring the ‘lone wolf ’ trend in terrorist attacks. Within the insurance industry itself, the year has also brought change. Sharp increases in incurred losses and loss adjustment expenses led to a $1.5 billion net underwriting loss in the first half of 2016 – the first such loss in more than three years. Insurtech investment reached new heights, drawing in $167 million in the third quarter alone to support companies hoping to disrupt every aspect of the value chain. And of course, the industry continued to age, increasing anxieties over whether it will be able to sustain massive anticipated increases in demand in coming years. Under the weight of so much change, it’s hardly surprising that the Property Casualty Insurers Association of America chose “An Era of Uncertainty” as

The future may look a little different – and it may be a little daunting – but we’re certain it’s bright the theme for its 2016 annual meeting. PCI president David Sampson opened the late October event by highlighting the ongoing softening of the market, increased regulatory challenges and political uncertainties, suggesting that such a level of uncertainty is “likely to remain with us for the foreseeable future.” But in the midst of so many unknowns, there are a few things we are certain of at Insurance Business America. We’re certain the industry will adapt to these new and challenging risks. Already, we’ve seen offerings for active shooter and active assailant coverages that will address events like the Pulse shooting. We’ve also seen terrorism and business interruption insurers pivot to ensure their products are responding to the bevy of terror-related claims that don’t necessarily include heavy property damage. We’ve seen private insurers take up the mantle of flood risk, lobbying Congress for the passage of legislation that would cement their place in offering affordable, appropriate coverage for those living in the path of tropical storms and elsewhere in the country. Above all else, we’re certain there is a future for the independent agent. While technology may be able to improve certain aspects of an agent’s day-to-day, it cannot replace the core value of an independent advisor. The future may look a little different – and it may be a little daunting – but we’re certain it’s bright. The team at Insurance Business America DECEMBER 2016 EDITORIAL News Editor Caitlin Bronson Managing Editor Paul Lucas Journalists Maryvonne Gray, Jordan Lynn News Writers Lyle Adriano, Louie Bacani, Mina Martin, Gabriel Olano Staff Writers Tim Garratt, Libby McDonald, Joe Rosengarten, Heather Turner, Ryan Smith Editorial Researcher Hannah Go Copy Editor Clare Alexander


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A terrifying new market

WHERE SHOOTINGS OCCUR Almost half of active shooter incidents occur in areas of commerce, including businesses open to pedestrian traffic (27.5%), those closed to pedestrian traffic (14.3%) and malls (3.8%). Educational facilities were the second most common location.

The insurance industry is helping businesses prepare for the nightmare of an active shooter situation SEVERAL INSURANCE industry players now have offerings designed to address the risks around active shooting incidents that may not be covered by existing property, general liability, workers’ comp and other policies. The launch of these active shooter insurance programs is not before its time. According to figures from the FBI, active shooter incidents occur on average once every


four weeks. The numbers have gone up markedly in recent years. The threat is real, and the fallout for businesses ranges from the obvious costs associated with medical care and property repairs to general liability exposure and business interruption. Perhaps the most crucial issue for brokers is making clients aware it can happen – and that it may not be covered by their existing insurance.


Number of active shooter incidents between 2000 and 2013


Average number of incidents per year



Casualties from incidents between 2000 and 2013


Proportion of incidents that ended before the arrival of police

Source: “A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI



In the last seven years of the FBI study, the average number of active shooter incidents per year more than doubled.

The study recorded a total of 1,043 casualties over the course of 13 years; of these, 486 were deaths, and 557 were non-fatal injuries. According to the FBI, 40% of the incidents would have fallen within the definition of “mass killing.”


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013






4 11






10 14






26 10









Source:”A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI

















Source: “A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI

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2.5% Source: “A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI



Of the 23 incidents that took place in private businesses, 22 of the shooters were or had been employed at the business (the other had a relationship with an employee of the business). In the 44 incidents at businesses open to pedestrian traffic, the shooters were less likely to have been employed at the location.

Incidents at schools tend to grab headlines, and for good reason – they have some of the highest casualty counts of all active shooter incidents.

Current employees

Employees fired the day of the shooting


Former Suspended employees employee

Not employed by the business



8 1


Current employees

Former Connection employees unknown





Virginia Tech (2007) Sandy Hook Elementary School (2012) Northern Illinois University (2008) Santana High School (2001) 0

10 killed

Source: A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI






Source: “A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” US Department of Justice/FBI

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28/10/2016 2:34:32 AM



Is the P2P business model adaptable to insurance? The new startup Lemonade certainly thinks peer-to-peer insurance is viable – but will it gain any traction in the industry?

Mark Breading

Daniel Schreiber Co-founder and CEO Lemonade

Executive director, Agents Council for Technology Independent Insurance Agents & Brokers of America

“The peer-to-peer insurance movement is bringing insurance back to its roots. In the early days, a group of local farmers or a building society would band together to pool their risks. Over time, the business got more complex and more regulated, so more insurance carriers emerged to underwrite the risk and administer the policies. Now in the digital age, everyone is connected and can exchange information instantly. Technologies like cloud computing, analytics, social media and blockchain make it easier to implement peer-to-peer schemes – extending to point-in-time risks through microinsurance.”

“At Lemonade, we’ve incorporated a model that is harmonious with the sharing economy. We like to say that Lemonade is the oldest new idea in insurance. We’re using technology to bring people together and allow them to insure in a way that is reminiscent of how it was done a couple hundred years ago. Our model gathers like-minded individuals, or peers, around a certain charity. We use the premiums of each peer group to pay their claims, and give back the leftover money to their common cause. Innovative business models and tech are bringing insurance back to its roots.”

“Peer-to-peer has been a part of insurance for some time now. In its current business model, P2P provides excellent case studies for our independent agent distribution to learn from. Upstarts such as Lemonade and others are focusing completely on the customer experience, from being able to go start-to-finish via mobile, to using machine learning to guide conversations, and using text chat, video, online payment, e-signature, guided claims processing, and payment. They are providing clear examples of how the customer is demanding to be served, and how we as a distribution channel must respond.”

Partner Strategy Meets Action

Ron Berg

THE UBER OF INSURANCE Lemonade, the game-changing startup striving to bring the peer-to-peer model to insurance, represents the newest disruption to an industry already grappling with changes enabled by tech. In addition to its peer-to-peer model, the recently launched New York-based insurer, which focuses on coverage for renters and homeowners with policies starting at $5 and $35 a month, boasts a payout system that allows policyholders donate any money remaining from their insurance policy at the end of the year to a chosen nonprofit. The company, which sells policies via an app, has already raised $13 million from such big names as XL Innovate and Sequoia and has also secured reinsurance deals at Lloyd’s and with Berkshire Hathaway.


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28/10/2016 4:18:46 AM



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Digitally irrelevant? Progress toward technological adoption has never been greater, but insurance agents are still putting in a woeful performance in comparison to their peers PEOPLE RELY on technology more than ever. More than two-thirds of Americans now own a smartphone, using it to do everything from deposit checks to regulate home heating. Thanks to ever-increasing automation, goods and services are available 24 hours a day, 365 days a year. Yet the insurance industry – and independent agencies in particular – is still failing to take advantage of these and other critical technologies. The good news is that most agencies are excelling in at least some areas, most prominently in internal automation. A new survey from Applied Systems, a US-based software developer, reported that 98% of agencies use an internal management system, and 75% have visibility across all departments, including personal and commercial property & casualty and sales.

for client self-service. Despite critical trends suggesting that today’s consumers prefer to interact with financial services companies on their own time and in their own way, only 38% of agencies surveyed offer e-signature functionality, and even fewer (25%) use a client self-service portal. Just 17% provide clients with a mobile app. Perhaps most troubling of all, just 45% of agencies surveyed by Applied Systems have adopted technology to allow staff to access their management system outside of the office using a mobile device. This is a critical oversight at a time when Americans are increasingly using their smartphones and tablets to transact business online – particularly as agencies face increased competition from tech-based startups offering alternative distribution choices.

“If agencies don’t adapt ... customers will go somewhere else, and these startups could absolutely be a threat” Michael Howe, Applied Systems Similarly high numbers of agencies are using the cloud to host their management systems. Sixty percent of agents said they leverage cloud technology, resulting in 16% higher revenue per employee compared to agencies that do not use the cloud. But things are markedly less impressive in terms of technology adoption that allows


The founder of one such startup recently noted that such issues detract from the core value of the agent. “Insurance has not kept up in the advancements seen in other parts of society in terms of technology,” says Matt Miller, CEO of Emagent. “The core job of the insurance agent is still taking information from

a customer, taking that to the carrier and taking information back to the customer. There’s not a lot of technology involved in that process, and it’s a huge pain point for customers when agents use their time on inefficient workflows.” Those inefficiencies are manifest in insurance premiums, in which only around 50 cents of every dollar spent by the customer goes toward settling claims. Miller adds that agents have historically benefited from the complex, opaque nature of commercial insurance, which prompts few small to medium-sized businesses to review their policies and consider more appropriate or better-priced coverage. As technology emerges to bridge that gap in education, however, agents may receive some pushback on the value of their service model. “I think what agents haven’t really done is empower the customer,” Miller says. “They’ve created a role where they’re absolutely critical to the customer instead of allowing them to take ownership of their own risk manage-

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A SUBPAR PERFORMANCE Independent agencies across North America are lagging behind in adopting technology in key areas related to customer service.


of agencies offer e-signature functionality, despite the fact that 68% of Americans own a smartphone


of agencies have yet to start tracking prospective sales and renewal opportunities within their management system


of agencies don’t use a business intelligence solution with their management system


of agencies use a client self-service portal


of agencies provide clients with a mobile app Source: Applied Digital Agency Survey, Applied Systems

ment through tools, resources and expertise, providing guidance where they need it.” The irony is that by refusing to adapt, agents are cheating themselves out of potential profit: Data from Applied Systems suggests that agencies using self-service applications have 9% higher revenue per

become an increasingly powerful force in the marketplace, traditional agencies may grow to regret not accommodating the group’s preferences. “I understand how powerful those relationships [with the agent] are, but if you look at how branding and trust works, you

“I think what agents haven’t really done is empower the customer … to take ownership of their own risk management” Matt Miller, Emagent employee than those that don’t. Agencies may also be risking potential connections with younger business owners, who value self-service and techbased offerings. Technology companies, for example, which trend younger on average, account for a high number of Emagent’s clients. And as millennial business owners

see that younger people often trust brands more than people,” Miller says. “We want to build that trust by being highly confident and highly efficient, and we’re attracting people who want a different model, one that’s not as reliant on their agent taking them out to lunch or dinner.” However, it’s possible that the way these

trends are discussed belies a positive shift in attitude among agencies, says Michael Howe, senior vice president of product management with Applied Systems. “Eighteen to 24 months ago, there was much more resistance to the idea of providing service in a non-personal way, but now I think we’ve gotten people over the hump, and the difference in attitude toward selfservice is night and day,” Howe says. “We’re just in the early stages of adoption – in seven to eight years, I think we’ll see 90% of agencies investing in self-service technology.” However, like Miller, Howe does foresee trouble for companies that continue to shun new technological developments. “You will always need someone to help you make smart choices in the complicated world of insurance, so the core value proposition offered by agencies will continue to exist,” he says. “If agencies don’t adapt and evolve with time, though, customers will go somewhere else, and these startups could absolutely be a threat.”

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28/10/2016 3:24:16 AM





Aon Risk Solutions

Stroz Friedberg

The acquisition of the New York City-based brokerage will bolster Aon's cyber capabilities

Dragoneer Investment Group

AmWINS Group

Dragoneer will own a 35% stake in the specialty brokerage, replacing New Mountain Capital as a key investor

HUB International

Mayport Insurance and Realty

The owners of the North Dakota-based brokerage will join HUB

HUB International

Norton Insurance Agency and Norton Financial Services

HUB acquired the Maine-based brokerages to expand its geographical footprint in New England

Penn Mutual Life Insurance Company

Vantis Life Insurance Company

The deal will expand Penn Mutual's presence in the life insurance industry by leveraging Vantis Life's bank-focused distribution model

Plexus Groupe

Ingensa Insurance Services

The acquisition of Ingensa is Plexus’ third for 2016


Endurance Specialty

Sompo's acquisition will allow it to explore growth avenues outside Japan

Peer-to-peer homeowner’s insurance launched

Peer-to-peer insurer Lemonade has opened for business; the startup announced in late September that it was a fully licensed carrier in New York, with plans to expand its business to the rest of the country. Lemonade offers renter’s and homeowner’s insurance that uses an online platform and a mobile app to enable policy purchases. When buying coverage, policyholders can also choose a charity to support; Lemonade pools the funds with payments from other customers and sends the unused money from the pool to the chosen charity after it pays for expenses and claims.

Japan’s Sompo eyes US market with $6.3 billion acquisition

Japanese P&C insurer Sompo Holdings plans to acquire Bermuda-based Endurance Specialty in a deal worth $6.3 billion. “Through the acquisition, Sompo will acquire a strong operating base in the US, the world’s largest insurance market, and Sompo’s overseas insurance business portfolio will become more geographically diversified,” the firm told the Wall Street Journal. Endurance offers insurance and reinsurance from offices in Bermuda, the US, UK and Switzerland, and writes around $3 billion in annual premiums. The deal values the business at a 43% premium above its three-month average share price. It will be the second-largest acquisition by a Japanese insurer, following the $7.5 billion paid by Tokio Marine last year for US firm HCC Insurance Holdings.


Digital brokerage provides business insurance platform

Embroker has launched the first business insurance platform that allows enterprises to digitize existing policies and data; analyze, compare and buy new coverages; and file and manage claims in one place. Currently, Embroker has partnerships with 25 leading commercial carriers, including seven of the 10 largest insurers. It serves companies with an annual premium spend between $5,000 and $500,000. The platform provides a comprehensive selection of policies, ranging from standard to fully customized options.

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PEOPLE Insurers unite for tech-led small business platform AIG, Two Sigma and Hamilton Insurance Group have teamed up to launch Attune, a technologyled insurance platform for small to medium-sized enterprises. The platform will benefit from the scale of AIG, the underwriting and small business knowledge of Hamilton and the tech insights of Two Sigma. “By combining our industry expertise, knowledge and capabilities ... we play a critical role in determining how these forces will shape the way we work with our brokers and agents in the SME segment,” said AIG CEO Peter Hancock.

Zurich adds coverage for mid-sized energy companies

Zurich has launched a multiline product that combines onshore property, casualty, umbrella and inland marine coverages for mid-sized energy companies. The product is available for a diverse range of energy companies, including onshore and offshore contractors; oil lease operators; electric, gas and cogeneration operators; coal and mineral mining operators; petrochemical manufacturers; power, gas and mixed utilities; biofuel operations; oil, gas, mining and utility equipment manufacturers; and alternative energy. Zurich will initially offer the new coverage in Texas, but has plans to expand across the US.

Administrator offers workers’ comp for breweries

Pak Programs has introduced new workers’ comp coverage for its insured breweries in the US under the BreweryPak program. The coverage, supported by Great American Insurance Group, will include specialized resources for catastrophic claims, nontraditional return-to-work programs and an internal special investigation unit. Based in New Jersey, Pak Programs offers coverage under the BreweryPak program specifically for breweries of different sizes, including beer production, taprooms, restaurants, storage and special events.





Allison W. Barefoot


Ames & Gough

Vice president

Amy Bowman


Berkshire Hathaway Specialty Insurance

Assistant vice president

Dovetail Insurance


Rich Drab Alex Haines

QBE Holdings

Mapfre Global Risks

Senior construction underwriter

Alex Michon


Lockton Cos.

Executive vice president

Alvaro Montenegro

Chubb Specialty Insurance


Head of international small-to-medium enterprise commercial insurance business

Mark Restrepo


XL Catlin

Underwriting director for global risk management

John Peters

Liberty Mutual


Chief underwriting officer

Adam Posner

XL Catlin

Allianz Global Corporate & Specialty

Senior underwriter

Adrian Smith

Maximum Independent Brokerage

Burns & Wilcox Brokerage

Senior vice president

Charles Weisblum


Alliant Insurance Services

First vice president

Tim Woodard


Lockton Companies

Senior vice president and director of energy and marine

Marsh hires tech exec as Dovetail CEO

Leading insurance broker and risk advisor Marsh recently announced the appointment of Rich Drab as CEO of Dovetail Insurance, which provides insurance technology services to the small commercial market. In his new position, Drab will focus on developing Dovetail’s market through customer engagement and product innovation. Chicago-based Drab has more than two decades of experience in insurance consulting and technology, most recently at IBM, where he served as a partner in the Global Business Services practice.

Startup appoints chief underwriter

Lemonade, the newly licensed peer-to-peer insurance company, has named industry veteran John Peters as its chief underwriting officer. Peters comes from Liberty Mutual, where he held pivotal positions, including executive vice president, chief underwriting officer and chief product officer. “Having a chief underwriting officer as accomplished as John is a game-changer,” said Lemonade co-founder and CEO Daniel Schreiber. “Lemonade has been rethinking the business models, behavioral sciences and technologies underpinning insurance – John has what it takes to bring this level of innovation to the core of insurance: underwriting.”

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WORKERS’ COMP UPDATE NEWS BRIEFS New opioid prescription rules take effect in Ohio

The Ohio Bureau of Workers’ Compensation has implemented new regulations governing the prescription of opioids to patients who were injured on the job, effective October 1. Under the new rules, reimbursement of opioid prescriptions will be limited to claims in which best practices are followed, such as individualized treatment plan development, risk assessment and monitoring. The Ohio BWC hopes the new rules will prevent opioid dependence by encouraging appropriate prescribing behavior by physicians certified by the bureau.

NCCI addresses workers’ comp drug cost issues According to a recent study from the National Council on Compensation Insurance [NCCI], prescription drugs accounted for 17% to 50% of the medical services paid for injured workers in 2014. The study also found that drug prices increased 11% in the same year, which was substantially higher than the 4% average of the previous 10 years. The NCCI has proposed addressing the issue of rising drug costs in workers’ compensation with the introduction of drug formularies across the US, according to the report.

Berkshire companies in hot water in California

Two Berkshire Hathaway-owned insurance units will have to stop selling certain workers’ compensation policies in California. The California Department of Insurance has approved a cease and desist order


for California Insurance Co. and Applied Underwriters Captive Risk Assurance Co. The order came in the wake of a case brought against the companies by Shasta Linen, a small company that challenged the policies’ legality. The companies agreed to stop selling EquityComp policies, which hadn’t been reviewed and approved by the department.

Kentucky approves new workers’ comp rate

The Kentucky Department of Insurance recently approved the state’s annual workers’ compensation rate, which took effect on October 1. Most carriers are expected to peg their rates on the annual filing, which marks the 11th consecutive decrease in loss costs in the state, Commissioner Brian Maynard explained. He further noted that the decreases have lowered cost by 55% on average. Loss cost figures show that rates decreased by an average of 5% across the 582 industrial classes used in Kentucky.

New laws build on California workers’ comp reforms

Two freshly minted laws in California aim to build on the state’s workers’ compensation reforms by improving service to injured workers and weeding out fraudulent claims from the system. The first, SB 1160, reduces utilization review in the first 30 days following a work-related injury and requires electronic reporting of the review data by claims administrators. The second, AB 1244, allows the Division of Workers’ Compensation administrative director to suspend medical providers and practitioners from participating in the workers’ compensation system upon conviction of fraud.

Industry reacts to massive rate hike Industry leaders are airing their misgivings about a double-digit workers’ comp rate increase in Florida Insurance carriers are pushing for reform in the wake of a sizable increase in workers’ compensation rates in Florida. In late September, the Florida Office of Insurance Regulation approved a 14.5% average premium hike on new and renewal workers’ comp policies, effective December 1. It marks a comedown from the 19.6% increase recommended by the National Council on Compensation Insurance, but both businesses and industry groups are far from satisfied. “We continue to support the 2003 reforms to Florida’s workers’ compensation system that protected employees and controlled costs for employers prior to the rulings,” said Logan McFaddin, regional manager for the Property Casualty Insurers Association of America. “We must work with Florida lawmakers on solid solutions to ensure we can return to a vibrant marketplace in Florida where injured workers can get the care they need, while at the same time, workers’ compensation costs do not hinder employers and employees. We need a workers’ compensation system in Florida that we can all rely on.” Employers in the state aren’t pleased either, maintaining that the new higher rates benefit insurance companies and trial lawyers – not workers.

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“Putting job creators and injured workers first is the right thing to do to keep Florida’s workers’ compensation system working,” said Mark Wilson, president and CEO of the Florida Chamber of Commerce. Pointing to a court decision in April that ruled against capping attorney’s fees in comp cases, he

Workers’ Advocates, struck out at insurers directly. “Insurance companies like to point blame at lawyers, but we agree with Florida’s business community that this unwarranted 14.5% increase in premiums will have a damaging impact on employers across the state,” he said.

“We must work with Florida lawmakers on solid solutions to ensure we can return to a vibrant marketplace where injured workers can get the care they need” added that “unfortunately, the Florida Supreme Court’s ruling is not about safety or protecting workers. The effect of the Castellanos decision is to raise costs for no other reason than so plaintiff lawyers can raise fees.” Mark Touby, president of Florida

Additionally, Tampa Bay Times columnist John Romano pointed out that the problem with the ruling comes from the fact that “the average worker has no hope of fighting an insurance company that wants to deny medical bills or back pay in case of injury. Why? Because, in an effort to stream-

line the process, most of your rights have been stripped when it comes to workers’ comp. The only realistic option you have is hiring an attorney to challenge an insurance company when it doesn’t want to pay its handpicked doctors.”

Member of Great American Insurance Group

Policies are underwritten by Bridgefield Casualty Insurance Company and Bridgefield Employers Insurance Company, authorized insurers in AL, AR, FL, GA, IN, KY, LA, MS, NC, SC, TN and TX; BusinessFirst Insurance Company, authorized in FL, GA, KY, NC, SC and TN. RetailFirst Insurance company, authorized in FL; Retailers Casualty Insurance Company, authorized in AR, LA, MS and TX. ©2016 Summit Consulting LLC | 2310 Commerce Point Drive, Lakeland, FL 33801

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28/10/2016 2:37:27 AM



P&C tech startups drawing investors Startups in the property & casualty sector came out on top with venture capitalists in 2016

and on-demand personal item insurance Trov cornered hundreds of millions of dollars in seed capital. However, independent agencies have been remarkably unmoved by the threat insurtech startups represent. According to a joint report from Vertafore and Hanover Research, 76% of agencies view these entrants as a small threat or not a threat at all – down notably from the 54% of agents who said they felt moderately to seriously threatened a year earlier. “Independent agents are acutely aware of the disruption facing their industry and their

“At the end of the day, competition brings out the best in everybody”

Technology-enabled property & casualty startups have piqued the interest of more investors this year, according to data from CB Insights, spurring a frenzied changing of hands of venture capital. There have been 75 deals to date in 2016, reflecting a 50% increase compared to the whole of 2015. These deals largely involve startups that distribute policies and provide software and services, or both, across the P&C value chain. The biggest deal in 2015 involved Chinese online P&C carrier Zhong An, which took in


$931 million in its investment round. That’s on top of the $496 million poured into other ventures. So far in 2016, investments in P&C startups have reached $483 million. CB Insights also reported that almost 70% of seed or angel investments and series A rounds were funneled to early stage investments, a significant increase over last year’s 60%. US firms dominated the top 10 P&C technology investments: Companies such as per-mile auto insurance MetroMile, cyber insurance risk modeling platform Cyence,

businesses, but they’re not letting it impact their spirits,” says Bruce Winterburn, VP of industry relations at Vertafore. “By doubling down on technology that bolsters customer relationships and continuing to integrate mobile technology into the whole of the business, the research shows the investment is paying off.” By attracting more money into insurance distribution, insurtech startups also could help agencies recognize technology opportunities, adds Applied Systems CEO Reid French. “At the end of the day, competition brings out the best in everybody,” he says. “It can help to spur activity in the independent channel to make sure it’s up to speed and ready to handle its customers whenever and however they want to be handled.”

Improved security to expand voiceactivated services

Industry body wants regulatory definition of Big Data

Tighter security, enabled by voice detection and other software, could result in limitless financial services delivered through virtual assistants such as Amazon’s Alexa. Liberty Mutual, for example, programmed a few tasks usually delivered by its insurance agents to Amazon’s Echo, the device that supports the virtual assistant Alexa. Liberty Mutual was able to use Echo to help users find brokers in their area, get a car insurance estimate, and find pointers on how to keep their auto and home premiums to a minimum.


The American Insurance Association says it will push for a clearer definition of the term ‘Big Data.’ “Without a common understanding of what the National Association of Insurance Commissioners views as Big Data, regulators and interested parties run the risk of not approaching the subject from the same starting point,” the AIA said in a release. “The purpose for establishing a definition is to differentiate Big Data from that which has already been considered and decided by state regulators,” added AIA senior counsel Lisa Brown.

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Riley Simmons Product manager

Agents lag on consumerfacing technology


Years in the industry 16 Fun fact Simmons received a bachelor’s degree in professional writing in 2008

Are there any aspects of the current state of technology adoption by independent agents that you find particularly surprising? With more than 60% of those surveyed [in a recent Insurance Digital Revolution report] stating they felt their websites were “poor,” it amazes me that so many agents choose to do nothing about it. Creating an outstanding, lead-generating website is relatively inexpensive, even when you add the convenience of a 24/7 customer portal or consumer rating.

Why do you think so few agencies choose to adopt quoting and comparative rating tools? We really encourage agents to see their website as more than an online advertisement. The true power in a website is in the value it brings your visitors. As an agent, you’ve really got to put yourself in the shoes of your visitors. While online consumer-facing quoting is important for some of your visitors, it’s also important to provide other quick avenues for a potential customer to submit their information to you. Maybe they don’t have time to fill out a full quote form. Do you really want to lose that lead because that was the only method available on your website? The other important thing that agents frequently fail to consider is that a larger portion of your website visitors are going to be your current customers. That should make every agent pause for a moment to consider what that means. Every interaction with a current customer is an opportunity to keep that customer or lose that customer. In other words, your

Study says US insurers are stuck in an analog world

America’s insurance industry is lacking when it comes to providing customer service on digital channels. A new study by digital customer interaction firm Eptica evaluated 100 leading US insurers and found that they were able to answer just 28% of customer queries across digital channels. The study also found that 14% of insurers failed to respond successfully to queries on email, social media or online chat. Even in the most successful channel, email (37%), it took an average of nearly two days for a customer to get a response.

website can be a powerful retention tool, or it can be a compelling reason for that customer to give up and find a new agent. At the end of the day, retention trumps lead acquisition by a mile.

Which other consumer-facing technologies do you feel make the greatest difference for agencies in terms of increasing customer satisfaction? Easy access to policy details, documents, ID cards, and the ability to submit change requests or questions online are essential to customer satisfaction. Current customers are often already having a problem if they are trying to access something related to their policy in the first place, so the last thing you want to do is make it difficult for them to find the answers they need.

In your opinion, what are the biggest factors accounting for the gap between recognizing the need for new technology and actually adopting and using that technology? Getting the staff to buy into the change is the most important factor in successfully adopting new technologies. Not many people get excited when someone ‘moves their cheese.’ They prefer slow and methodical changes that do not disrupt their daily routine. The challenge is that with some technology, like agency management system switches, it’s like replacing a jet engine on an airplane while in flight. Therefore, it’s important to show how the new technology will help improve people’s lives rather than disrupt them.

Breach monitoring becoming a doubleedged sword

Anonymous internet users are trying to shed some light on stolen databases by posting details about the attacks online, according to a recent report. Among them is the website, which archives past data breaches to warn the general public. However, other sites, including Leakbase and LeakedSource, are trying to monetize their breach monitoring activities. While they also list data breaches, the two websites also offer a paid, searchable database of all the accounts they have on file.

Startups the new cybersecurity darlings

Everyone is hackable – and startups might be better poised to provide the tech-savvy solutions businesses need to deal with emerging threats. That’s the conclusion of William Altman, a technology analyst at venture capital database CB Insights. “There will be a persistent need for better solutions as high-profile attacks continue,” Altman said in a recent report. “Startups will still be the go-to players for innovative tech in the space, but they will be more scrutinized by investors for their effectiveness.”

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Hurricane warning The damage from Hurricane Matthew could go far beyond knocked-down trees and flooded houses, writes J. Robert Hunter HURRICANE MATTHEW will likely result in about $7.5 billion in damage – slightly more than half will be from wind damage, and the balance from flood damage. The private sector will be responsible for settling the wind claims, while the National Flood Insurance Program [NFIP] will be responsible for settling flood claims, mostly through the adjusters of the Write Your Own [WYO] insurance companies. Wind insurance rates should not rise as a result of Hurricane Matthew; wind insurance claims will be well within the expected loss modeling that insurers use to set homeowner’s and commercial insurance rates. Not surprisingly, Florida suffered the bulk of Matthew’s wind damage, but years of high premiums in Florida had insurers over-prepared for this, with average returns on net worth of 29% over the last decade. Overcapitalized reinsurers will try to raise their premiums but will fail. However, consumers will be surprised at the paucity of payments for their wind claims. It is not just that insurers have built up more than enough reserves and surplus to cover the damage of a category 3 hurricane – they have so hollowed out coverage in the standard policy that a substantial portion of the damage costs has been shifted to homeowners. Many of the damaged homes face a 2% to 5% wind deductible, for example, so homes with an average replacement cost of $250,000 require up to $12,500 of damage before a penny of payment to the policyholder. This will shock consumers and increase federal disaster relief payments. The worst shock to some consumers will come when their adjuster trots out the


anti-concurrent causation clause. This is a despicable trapdoor built into many homeowner’s policies that eviscerates coverage when the home also incurs any flood damage around same time as the wind damage. These and other anti-consumer ‘innovations’ that weaken coverage (such as withdrawal of law and ordinance coverage) will result in bruised customers and yet another black eye for insurance companies.

right way by requiring WYO companies to take a small part of the risk and thus have a stake in achieving actuarially sound rates. Or they could do it the wrong way by allowing private insurers, including surplus lines insurers, to sell flood insurance on their own terms (as proposed in HR 2901). This would lead to cherry-picking, further undermining the NFIP’s financial soundness and putting consumers and taxpayers at risk. Insurers would not have to meet the coverage of NFIP, so they could sell junk coverage at lower prices, simultaneously getting a competitive edge for lower-risk customers and ensuring a greater need for disaster relief. Beyond these problems, several other serious consumer protection issues are raised by HR 2901. It removes the 45-day cancellation notice, which would allow unregulated surplus lines insurers to drop customers just ahead of the next hurricane, leaving homeowners unable to get NFIP coverage for 30 days. Because they are not backed by state guarantee funds, when a surplus lines insurer goes bankrupt, there will be no backstop for consumers. Similarly, with virtually no state

“Anti-consumer ‘innovations’ that weaken coverage will result in bruised customers and yet another black eye for insurance companies” The situation for flood insurance is different. After Matthew, the NFIP will see its deficit jump again, from $23 billion to about $26 billion. Congress, gun-shy from their infamous flip-flop of 2012/2014, will not move the program toward self-sufficiency. The public reaction against the 2012 BiggertWaters Act is too fresh in politicians’ minds, and no plan has been developed for targeted subsidies to help poorer homeowners keep their homes when flood insurance rates are made actuarially sound. Congress might (and should) take the first step toward reform and get fees paid to WYO companies more in line with costs, limiting WYOs’ excessive profits, as documented in NPR/Frontline’s “Business of Disaster.” Congress might also try to give private insurers more skin in the game. They could do that the

oversight of surplus lines, consumers will have no protection from unfair policy language and excessive (or inadequate) rates, and no help with claim problems. In order to ensure that the disaster wrought by Matthew is not amplified by its insurance after-effects, there are two key takeaways. For homeowner’s insurance, state regulators need to vigorously monitor claims practices and resist opportunistic plans for rate increases. As for flood, FEMA also needs to demand appropriate claims handling, and Congress needs the courage to get NFIP reform right. J. Robert Hunter is director of insurance for the Consumer Federation of America. He served as chief actuary and administrator of the Federal Insurance Administration under Presidents Ford and Carter and as Texas insurance commissioner.

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We know you place your best customers with carriers you can truly depend on. That’s why The Hanover works hard to retain and reward your trust, providing industryspecialized product lines, local underwriting expertise and responsiveness, and an unwavering commitment to the success of our agents. We were named one of “America’s Most Trustworthy Financial Companies” by Forbes. That is how we are able to work exclusively with people we trust: the very best independent agents across the U.S. Trust. We wouldn’t be an industry leader without it.

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28/10/2016 2:38:39 AM



WHEN THE RISK PAYS OFF Anthony J. Kuczinski, president and CEO of Munich Re America, arrived in insurance by chance – and he couldn’t be more grateful HE INITIALLY tried to avoid insurance altogether. Today, Tony Kuczinski’s time in the industry spans more than three decades, and he says he’s never looked back. A former certified public accountant, Kuczinski describes insurance as “the extreme sport of business. It’s all about taking and managing risk and solving risk problems. It’s an industry that, first of all, is good for capitalistic society, as it promotes proper risktaking. When those risks go wrong, it helps people or business to respond to financial loss or potential financial ruin, and helps them and communities to rebuild.” Kuczinski’s career is a great example of the variety of jobs that are possible in insurance. In his 27 years with Munich Re America, his diverse roles have included operations chief, marketing leader and chief financial officer. Since 2008, he’s been president and CEO of Munich Re America, and CEO of Munich Re’s US P&C operations.

Closing the talent gap Reflecting on his own progression through the ranks, Kuczinski says the industry needs to reframe how it’s presenting itself to potential employees. “I think it’s about getting to people earlier,” he says. “It’s about telling the right story; it’s about promoting all the good things this industry does and how, as a career, there are many options.”


He also advises those starting out in insurance today to think differently when it comes to their potential career trajectory. “You can’t think of a career path as being totally vertical … [where] you work in a department, you do really well, you get promoted, and you go to the next level,” he explains. “I think in today’s world, with things moving as quickly as they do, with exposures and risks being as broad as they are, people

“I spent time in multiple departments in multiple roles, many of which you might have looked at and said they didn’t necessarily look like a promotion for me, or they didn’t look like something that was going to enhance my career,” he says. “But from my perspective, everything I did broadened my skill set and my horizons, so that if that day should ever come that I’d be put to the test, I’d have more tools in my toolbox to go to when I have

“Do not shy away from the opportunity to jump on a project, the chance to do something that might not be part of your comfort zone, because those are the times when you really learn the most” have to be willing to take risks, they have to be willing to move around, and they have to be willing to take chances in their careers. And they can’t just assure themselves that because they do a good job in one job, they’re going to get promoted to the next level. Think of it [as a] journey where it’s not just about the destination, but the roads charted to get there.” Using his own career as an example, Kuczinski advises young insurance professionals to take steps that those around them may not be prepared to take.

to call on them. I tell people all the time, do not shy away from that opportunity to jump on a project, the chance to do something that might not be part of your comfort zone, because those are the times when you really learn the most.” Kuczinski stresses the importance of networking and being able to relate to people at all levels of an organization. He’s also big on mentors and champions, pointing out that “we all need them. We should always be willing to seek out advice and support.”

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PROFILE Name: Anthony J. Kuczinski Company: Munich Re America Title: President and CEO Years in the industry: 32 Fast fact: Kuczinski is the vice chairman and treasurer of the Princeton Healthcare Foundation, the fundraising organization for Princeton Hospital

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Finally, he highlights the need for “a strong team, people better than you, who support the vision. There’s an old saying: Be nice on the way up and be nice on the way down, because you never know who you’re going to meet along the way. And that holds true in business every single day.”

American presence When discussing where Munich Re’s US operations are today, Kuczinski is understandably optimistic. “We’re basically operating at virtually all parts of the risk continuum,” he says. “We are

America forward significantly. “It was a true game-changer for me,” Kuczinski says. “It gave me the perspective to really think through what I was going to be responsible for, and to not just talk about the things that had to be done, but know that once I signed on, I was going to be responsible for getting them done. And we did.” In that regard, Kuczinski and his team have greatly expanded Munich Re’s US presence. “We wanted to be a bigger, broader reinsurance enterprise in the US with a stronger commitment to the broker channel, which we are today,” he says. “We also planted the

“We wanted to be a bigger, broader reinsurance enterprise in the US with a stronger commitment to the broker channel, which we are today” specialists in some cases; we’re broad in others. We have strong core skills in risk management, underwriting, product development and engineering. We have a very large capital base, a strong parent. We have all the fundamentals you need to really operate in a world that brings more and more complicated risks.” He considers the company’s utilization of its broad skills and capabilities its chief differentiator from its competitors. “We’re in the fortunate position of being one of the largest global reinsurance companies,” he says, “but we have the true benefit of being entrepreneurial in how we think at the local level, and being able to bring solutions to any number of things to the clients we serve. On top of that, we’re always looking for ways that we can enhance our platform.” Ruminating about his own career, Kuczinski takes particular pride in the outcomes of the US strategy project he’s had the opportunity to lead in recent years. Coupled with work undertaken by Kuczinski’s predecessor in the early 2000s, the project has taken Munich Re


seeds to be a more relevant player in the niche primary space. In March of 2008, we acquired American Modern, and one year later, we acquired HSB. Today, we sit with a platform that has all the pieces that we laid out in that strategy. We are clearly viewed as a very strong and very valuable contributor to the Munich Re organization overall.” Kuczinski references the substantial value the business has delivered to the larger group. “We’ve consistently had strong financial performance from 2009 through 2015, an average combined ratio over that seven-year period of about 92%,” he says. “Our net underwriting gain over that time period was about $2.5 billion to the group. We contributed to the group in excess of $3 billion in dividends from 2011 to 2015. So, we can not only say that we were a turnaround success story, we have numbers to prove it. “We feel really good about it,” he adds. “We have a great team, and everybody has been fully focused on what we’re trying to achieve, and it continues today.”

TONY KUCZINSKI ON HOW INSURANCE COMPANIES CAN STAY RELEVANT “We’re used to insuring and reinsuring, as an industry, physical things – the building, the equipment, the furniture, the liability that goes with those things. But in a world that is [becoming] more and more technology-driven, the complexity of risk is getting more difficult, and therefore the product array that we used traditionally, as an industry, has to be reshaped and rethought if we want to remain relevant in the world that we operate in today. Big data, digitization and the Internet of Things will transform our business and our risks. We need to stay ahead of this curve find risk solutions for our clients. Economist Adam Smith used the phrase ‘the invisible hand.’ I think of the insurance industry as being the invisible hand for progress in growing, prosperous economies because nothing happens without the ability for insurance or reinsurance to help deal with the financial risk of those decisions. And in a world that is changing, the insurance industry must also change to be able to respond to those challenges.”

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That’s how we operate. Our ProExec risk professionals work tirelessly to provide cutting-edge product knowledge, innovative placement methods, and an unparalleled level of services to our retail partners and their clients. That type of nonstop work ethic means our partners win new clients, retain existing ones, and continue to grow their portfolio. Contact your RT ProExec Specialist at R-T Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC, provides wholesale brokerage and other services to agents and brokers. RT is a Delaware limited liability company based in Illinois. As a wholesale broker, RT does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: R-T Specialty Insurance Services, LLC License #0G97516. Š 2016 Ryan Specialty Group, LLC

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LOVITT & TOUCHÉ Headquarters: Tucson, AZ Years in business: 104 Leadership: Charles Touché, CEO; Steve Touché, president; Dave Wilder, EVP

AGENCIES Insurance Business America shines the spotlight on 50 independent agencies that are outperforming the rest in today’s competitive marketplace FOR THE third year in a row, IBA has searched for the best insurance agencies across the country. Our list encompasses a full range of independent commercial retail agencies, from small operations with a single office to large corporations with a global presence. But what they all have in common is that they are leaders in their communities and the industry in terms of revenue, best practices and community involvement.


To compile the following selection of 50 elite agencies, we analyzed various criteria, including growth and innovation over the last year. These are the agencies that are leading the way for others in the industry, and our feature provides a glimpse into the operations, culture and values that make each agency unique and successful. We hope that the insights shared here will help other agencies reach new heights in their own endeavors.

Having been in business for more than a century, Lovitt & Touché strives to maintain close-knit, collaborative relationships with clients despite its size, just as it has since its beginnings in 1911. With more than 200 employees across three offices, the firm currently places more than $400 million in annual written premium. Through the years, the firm has carved out specialty niches in the construction and human services industries, the latter of which has experienced growth among companies that provide aging services. For Lovitt & Touché, it’s not just about being business-minded; it’s also about being community-focused. In 2015, the company committed more than $500,000 in donations and sponsorships to local charities and professional associations, and is set to surpass that target for 2016. “Lovitt & Touché has been a breath of fresh air compared to the national broker environment,” says Sue Espinoza, VP of marketing and placement. “Here we are free to be innovative, entrepreneurial and nimble, which allows us to focus entirely on our clients. Another thing that really stands out is our ongoing commitment to the community. Our folks make charitable donations and give of their time to help organizations of all types.”

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NFP Headquarters: New York, NY Years in business: 28 Leadership: Douglas Hammond, chairman and CEO; Terrence Scali, CEO of NFP Property & Casualty

Operating ‘the NFP way’ through Nimble, Fantastic results and Personal relationships, NFP believes in building strong connections in order to deliver tailored insurance solutions to its clients. Currently, NFP has more than 3,400 employees across 150-plus offices that service clients on a global scale. Offering commercial insurance for a variety of sectors, including sports & entertainment, medical malpractice, aviation, franchises and more, NFP relies on a vast network of insurers, vendors and financial institutions to deliver results with a local touch. Keen on taking care of the communities in which its people live and work, NFP maintains an active presence in those communities through charity drives and companysponsored events aimed at raising funds to benefit charitable causes across the country.



SULLIVANCURTIS MONROE INSURANCE SERVICES Headquarters: Irvine, CA Years in business: 85 Leadership: John Monroe, chairman, president and CEO

Consistently acknowledged as one of the largest brokers and top independent P&C agencies in the country, SullivanCurtisMonroe [SCM] has been around for more than 80



years and has established itself as a premier brokerage in California, with around 200 employees and more than $300 million worth of premium transactions. The company has been recognized by the Orange County Register as a Best Company to Work For in 2015, and continues to maintain a work environment that facilitates individual growth for employees alongside business growth. SCM is dedicated to giving back to the community through local charities, and has recently donated to the LA Regional Food Bank, where its staff has volunteered for several years.



Acentria Insurance


Der Manouel Insurance


LP Insurance Services


Alliant Insurance Services


Eagan Insurance Agency, LLC


Marsh & McLennan Agency


Ansay & Associates


EPIC Insurance Brokers & Consultants


Moody Insurance Agency, Inc.




The Fedeli Group, Inc.


Moreton & Company


Arthur J. Gallagher






Ascension Insurance, Inc.


Heffernan Insurance Brokers







Professional Insurance Associates

BB&T Insurance Holdings


HUB International


Propel Insurance


Bolton & Company


IMA Financial Group


R&R Insurance Services, Inc.


Bowen, Miclette & Britt Insurance Agency


J. Smith Lanier & Co.


Shepherd Insurance


Brown & Brown Insurance


JGS Insurance




The Buckner Company, Inc.


JLT Specialty USA




The Christensen Group


John M. Glover Insurance Agency




Cobbs Allen


Leavitt Group


TWFG Insurance Services


Cook Maran & Associates


Lechner & Stauffer, Inc.


USI Insurance Services


Crystal & Company


Lockton Companies


Willis Towers Watson


Dean & Draper Insurance Agency


Lovitt & Touché


Woodruff-Sawyer & Co.


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COVER STORY: ELITE AGENCIES LOCKTON COMPANIES Headquarters: Kansas City, MO Years in business: 50 Leadership: David Lockton, chairman; John Lumelleau, president and CEO

Lockton has locked onto success, having reached its 50th anniversary this year (and the 10th for its global operations), with record revenue of $1.34 billion and organic revenue growth of 10%. It remains the largest privately owned independent insurance brokerage in the world, with 6,000 associates and more than 50,000 clients worldwide. Lockton attributes its success to keeping its value and quality of service consistent while growing its capabilities extensively and welcoming more diverse clients and their ever-evolving risks. More than looking after clients’ risk exposures, Lockton strives to teach them “how to think about risks” and to create safe workplaces, lower costs and engage employees.

GIBSON Headquarters: South Bend, IN Years in business: 83 Leadership: Tim Leman, chairman and CEO; Ron Turpin, principal and CFO; Jerry Scott, principal and COO

Gibson’s mission is to “protect what matters most” through tools, resources and services for clients that go beyond just being an insurance broker. Using its proprietary Gibson Protection System [GPS], Gibson builds tailored programs using four steps: assess, plan, implement and engage. A 100% employee-owned agency, Gibson implemented the Gibson ESOP in 2010, giving employees the opportunity to earn additional funds for their retirement based on the company’s financial performance. With four offices across Indiana, Gibson has been awarded a Best Practices designation for the last 22 consecutive years by the Independent Insurance Agents & Brokers of America.


The company’s most recent endeavors include launching a new product that addresses the risk of modern terrorism.

Lockton is also currently expanding its energy and marine operations with the addition of several key executives.



Headquarters: Denver, CO Years in business: 44 Leadership: Evan Moody, CEO

Headquarters: Carmel, IN Years in business: 39 Leadership: David Shepherd, CEO

Family-owned and -operated, Moody Insurance Agency has been dedicated to serving Colorado businesses since 1972. With commercial expertise in various industries, including oil & gas, manufacturing, architecture, charter schools and more, Moody Insurance maintains a strong focus in the construction industry. Dedicated to serving the community, Moody Insurance hosts an annual charity golf tournament to benefit Judi’s House, a nonprofit devoted to supporting grieving children and their families in the Denver area. At the conclusion of the 10th annual tournament in August, Moody Insurance had raised a total of $107,091 ($397,000 over the last five years) for the organization.

With a passion for helping the communities in which its employees live and work, Shepherd Insurance started Operation Shepherding five years ago. In 2015, the initiative raised approximately $150,000 for a variety of causes, including $15,000 to support Prevail, a nonprofit that helps victims of crime and abuse. In addition to supporting charities, Shepherd Insurance is focused on the needs of its customers within the niche areas of motorsports, restaurants, transportation and more. Now with 175 employees in 11 offices, Shepherd Insurance has experienced 15% year-over-year organic growth while managing $300 million in premiums for more than 15,000 clients.

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Headquarters: Daytona Beach, FL Years in business: 77 Leadership: J. Powell Brown, president and CEO

Headquarters: Valhalla, NY Years in business: 22 Leadership: Michael Sicard, chairman and CEO

Brown & Brown came in seventh on the Insurance Information Institute’s list of top global insurance brokers for 2015. The company prides itself on having the most efficient operating platform in the brokerage business, with 195 decentralized profit centers in 41 states and three foreign countries. Each office is entrepreneurially oriented and localized in a way that allows it to respond efficiently to the needs of local clients, and thus maintain a customer retention rate in the mid-90% range. The company’s meritocratic culture also empowers employees to introduce new initiatives and address clients’ concerns more effectively. B&B has a strong M&A strategy: More than 250 agencies have joined the company since 2000; in September, a B&B subsidiary acquired a provider of professional liability insurance solutions.

USI Insurance Services has come a long way since it started as a single office with just $6.5 million in revenue. Today, the agency has $1 billion in revenue and more than 4,400 professionals working across 140 offices. USI’s property & casualty team provides insurance and risk management solutions to a broad range of risk exposures across a variety of industry verticals. In 2015, the company launched the USI ONE Advantage, which offers a real-time, interactive solutions platform as well as access to local and regional technical experts, allowing sales consultants 24/7 access to all the resources the company offers. It has also expanded its training & development program for associates, experienced recruits

and those new to the industry. To give back to local communities, each USI office chooses a charity or organization to support every year. This year, the company received the IMCA Showcase Award for Corporate Social Responsibility and Employee Communications.

CRYSTAL & COMPANY Headquarters: New York, NY Years in business: 83 Leadership: James W. Crystal, chairman and CEO

Previously known as Frank Crystal & Company, the agency underwent a rebranding in 2012, highlighting its independence and continuous growth while being managed by succeeding generations for nearly 80 years. Crystal & Co. caters particularly to family offices, entrepreneurs, professional athletes and entertainers, as well as private collectors and affluent individuals. In 2004, Crystal & Co. founded Brokerslink, a global network of independent insurance brokerages, which has enabled the agency to reach clients in more than 85 countries.

HIGGINBOTHAM Headquarters: Fort Worth, TX Years in business: 68 Leadership: Rusty Reid, president and CEO

Higginbotham has been an IBA Elite Agency for three years, and for good reason. For Higginbotham, it’s not just about offering clients the best cost, coverage and cash flow, which the agency describes as ‘Day One’ work. Higginbotham takes it one step further with ‘Day Two’ services, which begin when the experts step in and help clients manage

risks and employee benefits, and when specific consultants are assigned to each process and aspect (safety, loss control, claims, contract review, compliance, technology). Higginbotham is the largest insurance brokerage in Texas, with 24 offices across the state. This year, the company has further expanded its operations with four mergers as part of a growth initiative started in 2008. It has been named one of the best agencies to work for in the South, and continues to give back through its F.O.R.C.E. initiative and community fund dedicated to charitable works throughout the state.

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LP INSURANCE SERVICES Headquarters: Reno, NV Years in business: 5 Leadership: Nick Rossi, president

The LP Insurance Services that exists today formed in 2010, but it has roots dating back to 1927, when Archie Granata launched Granata/Lucini Insurance and Real Estate

marketing officer at LP. “The distribution, manufacturing, warehousing and energy industries have been escalating in activity, too.” Focused on the producer-client relationship, LP strives to support its producers, as well as the community. “We are deeply ingrained in the fabric of the community,” Minor says. “We support more than 100 organizations throughout our footprint. In addition, we have confidence that all LP principals, producers and employees are rooted in the community as well.”




Headquarters: Fresno, CA Years in business: 33 Leadership: Michael Der Manouel Jr., president and CEO

Headquarters: San Francisco, CA Years in business: 98 Leadership: Charlie Rosson, CEO

Headquarters: Denver, CO Years in business: 42 Leadership: Robert Cohen, chairman and CEO; Bob Reiter, president of IMA, Inc.

The agency formed in 1983 as San Joaquin Valley Insurance Associates was rebranded in 2006 to Der Manouel Insurance Group [DMIG]. A family-owned full-service insurance brokerage, DMIG has grown significantly since it started more than 30 years ago. Through the years, the firm has added various offerings, including almond hulling and processing, farm and agriculture, and habitation risks. Since 2009, DMIG has experienced double-digit growth annually as it continues to expand its capabilities.


in Reno. A growing commercial and personal insurance brokerage, LP currently has more than 140 employees across six offices. The firm recently completed an acquisition, with several more on the horizon. Recently, Nevada implemented medical marijuana licensing, a sector that LP has taken advantage of. “We have seen an increase in servicing [the medical marijuana industry], as well as construction, since housing is rebounding,” says Lindsay Minor, chief

About to reach the 100-year mark, WoodruffSawyer has been recognized as one of the largest insurance brokers in the Bay Area and a 2016 IIABA Best Practices Agency. The company has expanded from the Pacific Northwest to a national presence, with 12 offices serving more than 4,000 clients. It is a leading provider of solutions for technology, life sciences, E&O/cyber and D&O liability. In November, the company will participate in the Ernst & Young Strategic Growth Forum, where SVP Priya Huskins will speak on managing D&O and transactional risk.

Appearing on this list for the third time, IMA is a powerhouse in the central US, with key offices in Dallas, Denver and Kansas City. IMA takes pride in its core values that emphasize building relationships and encouraging a balance of work, family and community. This year, the company has partnered with Waldman Bros to create subsidiary IMA | Waldman, a Dallas-based brokerage that provides commercial and personal P&C as well as employee benefits solutions to medium to large companies.

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HEFFERNAN INSURANCE BROKERS Headquarters: Walnut Creek, CA Years in business: 28 Leadership: F. Michael Heffernan III, president and CEO

Heffernan Insurance Brokers is not only a leading brokerage and employer, but also a top philanthropist, showing a consistent commitment to charity with yearly donations that average more than 10% of its profits. The company has surpassed $100 million in revenue by focusing on niche practices such as nonprofit, healthcare, hospitality and technology. As a gesture of its commitment to people, in 2006 the company created the Heffernan Foundation to support charities addressing the basic needs – shelter, food, education – of local communities. In 2014, Heffernan formed its Women of Influence group to support women professionals and business leaders and cater to their needs for networking, mentoring and growth.


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Headquarters: Lake Mary, FL Years in business: 5 Leadership: Jim Henderson, chairman and CEO; Tom Riley, president and COO

AssuredPartners may have only been in business for five years, but its leadership team already has a collective 55 years of industry experience. The company has more than 180 offices in 30 states, Canada and London, and has reached more than $640 million in annualized revenue since 2011. It has made 150-plus acquisitions since it was founded and more than 20 acquisitions so far in 2016. CEO Jim Henderson was also named as a finalist for the EY Entrepreneur of the Year Award in 2016.

STERLINGRISK Headquarters: Woodbury, NY Years in business: 84 Leadership: David Sterling, chairman and CEO

A family-run business with more than 80 years of industry experience, SterlingRisk offers regional, national and international clients a multitude of risk management and insurance solutions. Recently named an IBA Top Program Administrator, SterlingRisk has created numerous affinity programs for associations and industry sectors, such as aviation, Jewish community centers, musicians and entertainers, health and human services organizations, and others. In 2014, SterlingRisk’s staff and executives came up with a set of core values called the SterlingRisk Values Blueprint, which encompasses the values of integrity, innovation, collaboration, care and respect, and excellence. This set of values has become the foundation from which SterlingRisk makes every decision.

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COVER STORY: ELITE AGENCIES ARTHUR J. GALLAGHER Headquarters: Itasca, IL Years in business: 89 Leadership: Pat Gallagher, CEO

Operating ‘the Gallagher way’ with 25 shared values that form the foundation of Arthur J. Gallagher’s company and culture, the global corporation has remained at the forefront of the industry by sticking to these same values that were set three decades ago. Now a multinational and multibilliondollar insurance brokerage, the firm has experienced great growth in recent years. From 2010 to 2013, AJG completed 142 acquisitions; by the end of 2013, 23% of its revenues came from outside of the US. Most recently, AJG was recognized by The Ethisphere Institute as one of the world’s most ethical companies – a recognition it has maintained for the past five years.

J. SMITH LANIER & CO. Headquarters: West Point, GA Years in business: 148 Leadership: D. Gaines Lanier, chairman and CEO

Founded nearly a century and a half ago, a few years after the Civil War, J. Smith Lanier & Co. was started by two brothers who formed a small private banking and insurance agency in Georgia to help underpin the redevelopment of their communities. Fast-forward to the 21st century: J. Smith Lanier & Co. has offices throughout Alabama, Georgia, Florida, Kentucky and Tennessee that offer a vast range of risk management solutions. Dedicated to the communities it serves, J. Smith Lanier & Co. partnered with the Georgia chapter of the Pediatric Brain Tumor Foundation in 2005 and hosts an annual Charity Classic golf tournament to benefit the charity. To date, the agency and its sponsors have raised more than $2 million for the foundation.


ASCENSION INSURANCE Headquarters: Walnut Creek, CA Years in business: 9 Leadership: Joseph Tatum, CEO; Edward Page, president and COO

A second-time Elite Agency and an IBA Top Specialty Brokerage for agribusiness, Ascension is a firm believer in developing teams to target various industry niches, which, in addition to agribusiness, include education, transportation, retail, construction, nonprofits and more. The company has made more than 20 acquisitions since its start in 2007, most

BOWEN, MICLETTE & BRITT INSURANCE AGENCY Headquarters: Houston, TX Years in business: 35 Leadership: Edward Britt, president and CEO

At BMB, “it is not a question of doing things right, but of doing the right things,” and in line with this, BMB shows not only a commitment to excellence in its products and services, but also equal dedication to its community by contributing to health- and education-related causes. The company has partnered with the Houston Rockets NBA team to participate in fundraising events for breast cancer, cardiovascular disease and autism.

recently acquiring four new offices and nearly 40 employees from Greenpoint Insurance Group, including Greenpoint North Carolina and Carr & Hyde in Virginia. Additionally, last year Ascension established AARIS Insurance Company, a group captive facility created to benefit Ascension clients. “Each of our clients’ organizations are unique and face complicated challenges,” says Ascension CEO Joe Tatum. “What they need isn’t always easy. We get it. We’ve done it. We’re the team that shows up ready to work, to get our hands dirty, to understand their business from the inside out and develop creative solutions that meet their unique needs.”

MORETON & COMPANY Headquarters: Salt Lake City, UT Years in business: 106 Leadership: Bill Moreton, president

Moreton & Company has been in business for more than a century and places nearly $500 million in annual insurance premiums. Recently, the company received an award from a local business journal for its innovative medical stop-loss captive, which was designed to allow businesses to manage medical benefit plans and related risks. The company also specializes in employee benefit design as well as cost-effective programs.

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JGS INSURANCE Headquarters: Holmdel, NJ Years in business: 97 Leadership: Vincent Hager, president; Ken Hager, COO

In the last five years, JGS Insurance has grown from a company with 45 employees to employing more than 75 insurance professionals. First founded in 1919 to service clients in the New York City area, JGS now serves all 50 states. Recently, the firm added an employee benefits division to assist clients with navigating the Affordable Care Act.

JOHN M. GLOVER INSURANCE AGENCY Headquarters: Norwalk, CT Years in business: 100 Leadership: John O. Forlivio, president and CEO

Celebrating its 100th birthday this year, John M. Glover Agency was established as a real estate operation supplemented by personal lines. In 1949, Robert Woodcock, who ran the insurance side of the business, purchased the entire operation; by the 1970s, he had grown the agency to a $2.5 million operation with about 65% commercial business.

THE CHRISTENSEN GROUP Headquarters: Minnetonka, MN Years in business: 64 Leadership: Bruce Christensen, CEO

In the last four years, The Christensen Group has grown from $13.7 million in revenue to $28.7 million, a 20.2% increase on average each year. The Christensen Group prides itself on being 100% employee-owned. “Our most important assets drive home at night,” says CEO Bruce Christensen. “Our employee ownership model has allowed us to attract and retain the industry’s best talent, and that is evident in our results over the past 10 years.”

COBBS ALLEN Headquarters: Birmingham, AL Years in business: 129 Leadership: Grantland Rice III, CEO; Bruce Denson Jr., president and COO

Cobbs Allen started in 1887 as a mortgage and insurance business; in the 1970s, the firm sold its mortgage practice and began to focus on its insurance division. In 1992, the current shareholders acquired the firm, and in 2000, the agency shifted away from the traditional insurance model to complement its clients’ existing operations. As the largest privately held insurance firm in Alabama, Cobbs Allen continues to grow by pushing further into reinsurance and convergence concepts, such as the development of two insurance-wrapped

financial products, and the launch of CommodityCap, an insurance product that allows clients to limit their exposure to the impact of volatile commodity prices. Last year, president and COO Bruce Denson also introduced the Guideline Process to assist clients with their risk management needs. “We are fortunate that our industry allows people to set their goals as they see fit and work to accomplish them,” says CEO Grantland Rice. “There are no geographic or industry restrictions, and people can call on businesses of all sizes. This is an industry that allows flexibility and a great platform for unlimited success. Our industry needs to communicate this to young people and make sure the next generation understands what we do and how they can be a part of an industry that is vibrant and necessary.”

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COVER STORY: ELITE AGENCIES PROPEL INSURANCE Headquarters: Tacoma, WA Years in business: 93 Leadership: Kurt Carlson, president and CEO

TROXELL Headquarters: Springfield, IL Years in business: 130 Leadership: Michael Aiello, president

Founded in 1887 as W.S. Troxell, Troxell is today one of the largest independent insurance agencies in Illinois. Just this year, Troxell rebranded after a century of being named R.W. Troxell after the founder’s son,

WILLIS TOWERS WATSON Years in business: 175 Leadership: John Haley, CEO

With roots dating back almost two centuries, Willis Towers Watson delivers insurance and risk management solutions to clients on a global scale. “Powered by market analytics and behavioral insights,” Willis Towers Watson employs more than 39,000 professionals spread across 120-plus countries; 36% of its workforce is located in the US.

who purchased the agency in 1905. Currently serving more than 4,300 commercial clients, Troxell offers a variety of insurance solutions, including industry specialties in nine different sectors such as education, hospitality and nonprofits. The firm places more than $200 million in premium annually and boasts a 90% client retention rate. Most recently, Troxell opened a new division, Insurance Risk Managers, which launched in October 2016.

BB&T INSURANCE HOLDINGS Headquarters: Raleigh, NC Years in business: 94 Leadership: Wes Dasher, president

BB&T has been around since 1922, catering to small businesses and Fortune 1000 companies alike; it’s the fifth largest insurance broker in the US and sixth largest internationally. This year, BB&T acquired Swett & Crawford, a renowned wholesale insurance broker with more than 100 years of experience in commercial insurance.

EPIC INSURANCE BROKERS & CONSULTANTS Headquarters: San Francisco, CA Leadership: John Hahn, CEO

With a focus on upper-middle-market accounts, EPIC provides brokerage and consulting services through four primary business units: property & casualty, employee benefits, specialty practice and programs, and private client services. With more than 800 team members in 30 locations across 13 states, EPIC has grown tremendously


Propel is one of the largest independently owned agencies in the country and a top P&C agency. The company takes pride in its innovations that address needs related to workers’ comp, healthcare and cyber liability. The company has established its position in the Northwest and continues to expand its operations with an acquisition earlier this year of an Oregon-based independent agency. Propel continues to give back to the community – it was one of the sponsors of Relay For Life, the world’s largest fundraising event for cancer research, treatment and prevention.

BOLTON & COMPANY Headquarters: Pasadena, CA Years in business: 85 Leadership: Steve Brockmeyer, president and CEO

Founded in 1931, Bolton & Company prides itself on being “a business resource clients across the globe can count on for expert perspective in risk management and employee benefits resources and solutions.” Through various industry partnerships, Bolton & Company has developed expertise in areas such as construction, real estate, and dietary supplements and nutraceuticals.

in recent years. From 2012 to 2014 alone, the firm increased total premium from $415 million to $1.3 billion – an astounding 331% increase in two years’ time. The firm expects to reach $250 million in year-end revenue for 2016 – a huge leap from $12 million in revenue in 2007. Most recently, EPIC’s financial risk solutions team launched a proprietary cyber risk and insurance portal for small to mid-sized businesses, in addition to the ongoing development of the firm’s national construction specialty group and the growing market opportunities of its specialty programs division.

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THE FEDELI GROUP Headquarters: Independence, OH Years in business: 32 Leadership: Umberto P. Fedeli, president and CEO

The Fedeli Group is one of the largest privately held risk management and insurance firms in the state of Ohio. Specializing

in P&C, employee benefits consulting, workers’ compensation, environmental risk management and surety, The Fedeli Group relies on a client service model that includes a stewardship process built around teamwork, documented communication, client workflows and accountability. Because the firm is independently held, producers are able to focus on building



Leadership: Jim Pierce, chairman; Michael Rice, CEO; Patrick Donnelly, president and deputy CEO

Headquarters: East Hampton, NY Leadership: Leonard Scioscia, president and CEO

The US platform for Jardine Lloyd Thompson Group, JLT Specialty focuses on offering industry and product specialties. Within the key focus areas of energy, technology, construction, financial lines, credit, political and security, and aerospace, JLT Specialty aims to be “creative, collaborative and analytical, while challenging conventions, redefining problems, creating new analytical insights and exploring new boundaries to deliver solutions for each client’s unique business and risks.”

Cook Maran & Associates holds a strategic position as a strong insurance brokerage in the Northeast region. The company was established as a result of a 2012 merger between Maran Corporate Risk Associates and Cook, Hall & Hyde. In the words of CEO Len Scioscia, Cook Maran is “in the advice business,” which means helping clients with both insurance and risk management needs by building thorough knowledge of the local market and maintaining established relationships with leading insurers.

relationships and are not beholden to public shareholders or a corporate bureaucracy. “Most of my successes, challenges and joys are a direct result of one three-letter word: ‘who,’” says CEO Umberto Fedeli. “That small word has made the greatest impact on who I am today and how I approach family, business and life. I’ve learned that the people you choose to surround yourself with will ultimately shape who you become.”

AON Headquarters: Chicago, IL Leadership: Gregory C. Case, president and CEO

Present in more than 120 countries, Aon is a globally recognized name in insurance. Aon’s growth began in the early 1980s when Ryan Insurance Group merged with Combined International Corporation and was introduced as Aon in 1987. Companies under its name include Aon Affinity, which offers a specialized and customized insurance program and specialty market solutions for a wide range of affinity organizations. Crediting its success to its client-first mentality, Aon ensures a consistent client experience through five promises, a comprehensive training curriculum and a robust methodology.

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Headquarters: Pennsburg, PA Years in business: 60 Leadership: John Kauffman, agency principal

Headquarters: Salt Lake City, UT Years in business: 80 Leadership: Terry Buckner, CEO

Founded in 1936, The Buckner Company is a third-generation family-owned organization. Due to the firm’s concentrated efforts on a positive customer experience, The Buckner Company has experienced strong growth in its specialties of construction, trucking, agriculture, petroleum, bonding and homeowners’ associations. Last year, The Buckner Company purchased an agency in Denver, which was the largest acquisition in the company’s history and increased its size by 20%. “Ensuring our clients have a top customer experience is an emphasis that drives us to be the best and to continually get better,” says CEO Terry Buckner. “Everything we do is to place the focus on the client.”

DEAN & DRAPER INSURANCE AGENCY Headquarters: Houston, TX Years in business: 36 Leadership: Kyle Dean, president and CEO

With 500-plus years of combined experience under its roof, Dean & Draper Insurance Agency is one of the largest agencies in Texas. Utilizing its strong relationships with more than 200 insurance companies, Dean & Draper services more than 15,000 clients. Recently, the firm increased the number of new producers on its team as it continues to grow with a sales velocity of 15%.


ALLIANT INSURANCE SERVICES Headquarters: Newport Beach, CA Years in business: 91 Leadership: Thomas Corbett, CEO

A repeat on IBA’s Elite Agencies list, Alliant is among the 15 largest insurance brokerages in the country. The company is still working to expand operations and grow its business, having made several acquisitions and added a number of industry veterans to its team this year. This October, Alliant acquired Hecht Group to add to its employee benefits portfolio and gain more clients in Portland, Oregon. The company also offers risk, industry and co-brokered solutions, as well as consulting services for property valuation, HR and risk control.

TWFG INSURANCE SERVICES Headquarters: The Woodlands, TX Years in business: 15 Leadership: Richard “Gordy” Bunch, president and CEO

Texas-based TWFG Insurance Services has experienced consistent growth over the past several years, expanding at an average rate of 20% per year. First founded by Richard Bunch with just $10,000 in capital, TWFG now has 300-plus retail branches in 22 states and places more than $250 million in premium volume. Serving as a one-stop shop for clients, TWFG offers a wide range of products and services.

Family-owned Lechner & Stauffer has succeeded by going against the trend and remaining a generalist agency since its creation in 1956. As a generalist agency, Lechner & Stauffer is able to entertain many markets and accept new clients regardless of their business type. The agency is passionate about education: “Everyone is on their way to educational degrees, including CISRs and CICs,” says vice president Dave Kauffman. “We are big on education, and as a result, it makes us attractive to both our clients and carriers.” As Lechner & Stauffer continues to grow with the addition of college graduates to the team, the agency is able to hone in on the books and knowledge of its growing staff by expanding to new markets while also building on existing ones.

ACENTRIA INSURANCE Headquarters: Destin, FL Years in business: 6 Leadership: Kendall McEachern, CEO

Despite being in the insurance industry for less than a decade, Acentria has already differentiated itself from others in the market. With 20 offices throughout Florida and the Southeast, Acentria offers a vast range of services, from industry niche expertise to employee benefits and workers’ compensation. Acentria’s in-house claims department acts as a liaison between clients and carrier partners, and its in-house marketing department works with larger clients to co-brand master insurance programs and educational training. Most recently, the firm acquired Destin-based Inner Harbour Insurance of Florida, further expanding its resources and capabilities.

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EAGAN INSURANCE AGENCY Headquarters: Metairie, LA Years in business: 62 Leadership: Marc F. Eagan, president

Despite the hardships of Hurricane Katrina and the Gulf oil spill, Eagan Insurance Agency has grown steadily over the past six decades. Now in its third generation of family-owned leadership, Eagan dominates the condominium and banking industry markets in its area while also serving other industries, including restaurants and hotels. During the rebuilding of New Orleans after Hurricane Katrina, Eagan capitalized on the opportunity to provide builder’s risk coverage and viable property markets to the area by giving companies that were

reluctant to offer affordable property insurance the opportunity to witness the upgrades and enhancements made in the city. As a result, insurers were willing to continue writing property insurance through the agency at reasonable costs.

Frequently named as a top place to work by regional and national publications, Eagan remains in “a constant state of self-improvement” by focusing on internal upgrades and maintaining strong customer communication and community involvement.


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LEAVITT GROUP Headquarters: Cedar City, UT Years in business: 64 Leadership: Eric Leavitt, CEO

Leavitt Group started out in 1952 with a single agency in Utah. The Leavitt brothers, Dixie and Bert, then incorporated Leavitt Insurance Agency of Las Vegas in 1959, after which they proceeded to open agencies in Arizona and Nevada, establishing Leavitt Group Enterprises in 1962. Today, the company is one of the largest privately owned insurance brokerages in the country, with more than 125 offices across 18 states. It provides employee benefits solutions and property & casualty insurance, as well as risk management and other services.

HUB INTERNATIONAL Headquarters: Chicago, IL Years in business: 18 Leadership: Martin Hughes, CEO

Formed from a small group of agencies in 1998, HUB is now one of the largest insurance brokerages in the world with more than 350 acquisitions to date and dozens of industry specialties and programs in sectors such as real estate, healthcare, education and more. HUB’s entertainment practice in particular has experienced great growth in the last two years. In addition, HUB has actively expanded its employee benefits offerings through new communication campaigns, lead generation and thought leadership promotion.


R&R INSURANCE SERVICES Headquarters: Waukesha, WI Years in business: 40 Leadership: Ken Riesch, president and CEO

As the largest single family-owned agency in the state of Wisconsin, R&R Insurance Services is also the only Wisconsin-based

PROFESSIONAL INSURANCE ASSOCIATES Headquarters: San Carlos, CA Years in business: 60 Leadership: Paula Hammack, CEO; Paul Hammack, president

When Sterling L. Hammack founded Professional Insurance Associates [PIA], he instilled the principle that “each

Assurex Global partner. Led by CEO Ken Riesch and his three children, Jack, Stephanie and Byron, R&R has grown its footprint across southeastern Wisconsin by relying on a clientfocused service model. Invested in its local communities, R&R is actively involved in local sports and charities, including the United Way – R&R has been a Waukesha County United Way pacesetter since 2001.

customer is entitled to the highest standards of industry expertise and hands-on service.” That legacy carries on today. PIA currently places more than $250 million in annual premiums and has access to upwards of 200 products and programs. Committed to giving back to the community, PIA raises awareness and funds for various causes and maintains the Sterling L. Hammack Foundation to assist in protecting endangered species and providing resources to people in underprivileged areas.

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MARSH & MCLENNAN AGENCY Headquarters: White Plains, NY Years in business: 8 Leadership: David Eslick, chairman and CEO

Marsh & McLennan Agency [MMA] was set up by Marsh in 2008 to extend commercial property & casualty lines and employee benefits to the middle market in North America. At present, MMA is the 12th largest insurance broker in the country, with annualized revenues of around $900 million. The company’s key strategy is to harness the resources of its parent company to support privately held agencies/brokers who have the expertise and skills needed by mid-sized businesses.

ANSAY & ASSOCIATES Headquarters: Port Washington, WI Years in business: 70 Leadership: Michael Ansay, chairman and CEO

Ansay & Associates takes pride in its four-step approach to all of its product lines, emphasizing that the Ansay way is “relationship-driven and solutions-oriented ... driven by the individual needs [of the client].” The company was established in 1946 in Port Washington, Wisconsin, and now has 13 offices across the state. Ansay has been recognized as one of Wisconsin’s top 10 insurance agencies, and is part of the top 5% of agencies in the country.


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Insurance coverage is underwritten by one or more member companies of Arch Insurance Group in North America, which consists of (1) Arch Insurance Company (a Missouri corporation, NAIC # 11150) with admitted assets of $3.62 billion, total liabilities of $2.74 billion and surplus to policyholders of $875.31 million, (2) Arch Specialty Insurance Company (a Missouri corporation, NAIC #21199) with admitted assets of $515.45 million, total liabilities of $215.49 million and surplus to policyholders of $299.96 million, (3) Arch Excess & Surplus Insurance Company (a Missouri corporation, NAIC # 10946) with admitted assets of $65.14 million, total liabilities of $328,448 and surplus to policyholders of $64.82 million and (4) Arch Indemnity Insurance Company (a Missouri corporation, NAIC# 30830) with admitted assets of $62.28 million, total liabilities of $35.63 million and surplus to policyholders of $27.05 million. All figures are as shown in each entity’s respective Quarterly Statement for the quarter ended June 30, 2016. Executive offices are located at One Liberty Plaza, New York, NY 10006. Not all insurance coverages or products are available in all jurisdictions. Coverage is subject to actual policy language. This information is intended for use by licensed insurance producers. © Arch Insurance Group 2016

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28/10/2016 3:53:39 AM



Seen and heard at NAPSLO At the recent NAPSLO Annual Convention in Atlanta, Insurance Business America caught up with some industry leaders to ask them about current trends in E&S, carrier appetite and predictions for 2017

Patrick Ryan, chairman and CEO, Ryan Specialty Group IBA: You’ve really been on the acquisition trail this year. Are you still on the lookout for new businesses, and if so, what type of business? Patrick Ryan: Well, our strategy over the last six years has been to grow organically and through acquisitions. So, we are active right now, and the first nine months of 2016 we’ve been quite active. We have a good pipeline. We’re looking for specialty expertise – it could be in wholesale broking; it could be in managing underwriting. So, for example, we


are now the third-largest wholesale broker in the US, and we have 18 underwriting facilities. Half of those underwriting facilities we started de novo; half we acquired.

ment with. In one case today, we have a letter of intent; in another case yesterday – two yesterday, actually – we are getting close to a letter of intent.

IBA: Do events like NAPSLO create a good environment to have constructive conversations with others in the industry?

IBA: There seems to be a lot of talk about millennials and how they want different things than previous generations. Is this what you’ve noticed?

PR: The business that I personally do is very much targeted toward acquisitions. My teammates are meeting with the markets;

PR: I do think they are just like generations of old. I think that they are certainly more technologically capable, and so they really

“I think that millennials are certainly more technologically capable, and so they really want to understand what role technology is playing, but they are looking for a career” Patrick Ryan, Ryan Specialty Group I’m really not going to add that much to those meetings. So when I come to NAPSLO, it’s to see all of our people, but also to meet with people that we are in some stage of develop-

want to understand what role technology is playing, but they are looking for a career. We find people who are really willing to work, to learn and to roll up their sleeves.

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Jude DiBattista, senior vice president of E&S, QBE IBA: At QBE, you have spoken about a targeted growth strategy for the excess & surplus lines division. Which risks or markets are you looking to target in the coming year? Jude DiBattista: We are really open to targeting all different types of risks. Since we are an E&S carrier, we’re flexible – we could get in and out of markets based on what the market condition is. So we’re not really going to limit ourselves to what type of risks we want to be in. We’re going to have strict guidelines based on those types of risks, but we’re going to be wide open to try to entertain whatever is possible and to try to entertain in a really methodical manner.

IBA: How have you seen the appetite among standard carriers begin to shift in recent years? JD: I think it’s an age-old battle between E&S and standard lines. Accounts shift in and out of standard lines and back to the E&S world, based on the unique characteristics and loss activity. But I think the standard lines carriers are doing a really good job in tight underwriting guidelines, not opening up with very competitive terms, conditions and pricing. So I do see them holding the line and moving things back into the E&S market.

Chris Moulder, vice president, Worldwide Facilities

has really changed dramatically lately, both broadening and becoming more restrictive for certain classes. From the broadening standpoint, products in manufacturing continue to go back into the standard lines space, while two years ago they may have been an E&S placement. We’re seeing the appetite in that space dramatically shift. But, in terms of tightening, commercial auto continues to be tough, and we see a lot of standard lines markets tightening up in that space, which is driving that business back to the wholesale brokerage world.

IBA: To what extent do you feel the traditional lines between standard and E&S markets are beginning to blur?

IBA: How has the increase in auto losses affected your commercial auto E&S business?

Chris Moulder: We do have standard markets entering into classes of business that may have traditionally been E&S-driven, but on the other hand, we have traditional

CM: The increase in auto losses has certainly contributed to more submission activity on our end, and segment results are tough across the board for that class of business.

“Our ability to adapt to changing classes of business, changes in the claims climate – that’s really what defines E&S brokers. If we’re not able to adapt, then we’re not going to be in the business very long, unfortunately” Chris Moulder, Worldwide Facilities wholesale markets that may be expanding their distribution into the retail space. So we’ve got continued blurring of lines in that regard. We also have standard lines carriers that were traditionally all retail exploring wholesale distribution in an effort to really expand their appetite and their capabilities.

IBA: Have you noticed a shift in the appetite among standard carriers? CM: The appetite among standard carriers

IBA: It seems the E&S space really steps in to fill gaps – do you feel that you have the ability to be a bit more flexible than other organizations? CM: Yes, E&S professionals and brokers are all about flexibility. Our ability to adapt to changing classes of business, changes in the claims climate – that’s really what defines us. If we’re not able to adapt, then we’re not going to be in the business very long, unfortunately.

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FAST FACTS: THE 2016 NAPSLO ANNUAL CONVENTION WHEN September 25–28 WHERE Atlanta Marriott Marquis and the Hyatt Regency Atlanta HOW MANY The 2015 Annual Convention was attended by 4,179 surplus lines professionals from the US and Great Britain; equal numbers were expected at this year’s event

“I think the reason the E&S market continues to grow is that there are many new exposures that are coming into the world, things like cyber liability, genomics, automated automobiles, legalized cannabis – there are many different areas that are new to the insurance world” Ron Abram, Abram Interstate Insurance Services IBA: Have you seen appetite among standard carriers start to shift to E&S?

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Ron Abram, president and CEO, Abram Interstate Insurance Services IBA: Despite some wider softening and competitive pricing in the industry, the E&S marketplace really continues to grow. What are some of the reasons behind this growth? Ron Abram: I think the reason the E&S market continues to grow is there are many new exposures that are coming into the world, things like cyber liability, genomics, automated automobiles, legalized cannabis – there are many different areas that are new to the insurance world. That, coupled with the simple fact that the economy continues to slowly rebound, and more and more dollars are being spent on entertainment, which means more restaurants, bars and taverns, which are traditional lines of coverage usually placed in the excess & surplus markets.


RA: Well, there were very distinct differences between the standard markets and the otherthan-standard markets, including Lloyd’s of London, which would be included in the non-admitted part of that distribution. They were very distinct, the contracts were different, and the language of the products was different. We are seeing more blending of that today, and the result is that the appetite of standard and admitted carriers bleeds more into some of the surplus lines arenas than it has in the past. That business does ebb and flow, so we find that we can be competitive with the E&S products in light of the fact that standard companies are encroaching in some of those areas.

IBA: As cyber risks continue to evolve and get more expensive, do you feel that the surplus lines industry will become more involved in cyber? RA: Absolutely. As new products evolve, standard companies are slow to embrace them. There is fear around having the right pricing and/or forms in place. Many of us in the surplus lines industry are experts at particular technologies and, particularly in the cyber liability area, we know the underlying businesses quite well. That gives us the ability to craft and tailor policy language, as well as form usage and pricing.

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IBA 4.11

Insurance Business America recognizes 100 insurance pros who met the challenges this year and left their businesses, communities and industry better off.

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The Horton Group Glenn Horton, CEO of The Horton Group, tells IBA how his brokerage outperforms the competition to help clients achieve new heights in their businesses

IBA: How did The Horton Group get its start? Glenn Horton: My father and uncle both had small personal lines agencies, and they merged together in the early ’80s, and that was the start of when the current partners of Horton came into the business. Today, we are an insurance, employee benefits and risk advisory brokerage with about 350 employees. We are headquartered in Chicago, and our business is about 65% property & casualty and 35% employee benefits.

IBA: How are you bridging the age gap in the industry? GH: Our focus has tended to be on interns, who we transition into permanent roles that bring them on a career path at Horton. We have done a great job with millennials, and about 35% of our staff consists of millennials now.

IBA: What is The Horton Group doing to help grow talent? GH: One of the biggest things we have going on is that we’ve developed a new producer training program. Over the years, we’ve gotten better at developing producers, to the point where now we have built a process to bring in new producers. Typically, producer development is not very structured or scalable. A lot of programs kind of just assign producers to a mentor and throw them a phone book. Our program is built around a number of steps


that are very in-department. The program is not only training – it is essentially an apprenticeship, and we are hoping to bring in 20 to 25 new producers per year through that program. We don’t just throw the phone book at them, so to speak. We give them a very structured training, and almost all of them specialize in something. We then develop a lot of resources and expertise around those specialties that our producers focus on to create differentiation in that market.

IBA: Can you give us an example of one of your specializations? GH: One example is our municipal practice, which has been growing very rapidly. We accumulated the accounts one at a time until all of a sudden we opened our eyes and realized that we had 500 municipal accounts. Recently, we hired a specialist in police department crisis management to join that team. He’s a 20-year veteran of managing crisis situations for police departments, and to my knowledge, none of our competitors in

that marketplace have a resource like that. We already have a great deal of demand for his services.

IBA: What makes The Horton Group stand out? GH: Our specializations, our commitment to long-term perpetuation and our longterm view. We have a very deep commitment to internal perpetuation and internal succession. Many of our competitors have sold out to public or private equity brokers. There are very few large independent brokers around anymore. We work hard to manage the company well and position ourselves for the future so we don’t have to sell to an external buyer.

IBA: What are your long-term goals? GH: We have a long-term plan that we call Vision 2020, and it is essentially our plan to position the business toward certain goals in the year 2020. Those goals fall into three categories: financial goals, employee and customer goals, and long-term perpet-

COMMITMENT TO THE NONPROFIT COMMUNITY As one of their areas of industry expertise, The Horton Group works with more than 160 nonprofits to cater to their risk management needs. Horton’s nonprofit team has more than 25 years of experience serving the nonprofit community – but their service to the sector goes farther than simply placing an insurance policy. “We contribute about 10% of our net income to charitable causes, and many of our employees, about 25, serve on boards for various nonprofits,” Glenn Horton says. “We have a regular monthly company-sanctioned charitable activity to support various causes, and we support whatever individual activities people what to be involved in, both financially and with the time they want to devote.”

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“Many of our competitors have sold out to public or private equity brokers. We work hard to manage the company well and position ourselves for the future so we don’t have to sell to an external buyer” uation goals. We own the buildings that we are in, and we are willing to make investments in new niches and areas while developing our staff. When your whole personnel development process is focused around interns and bringing in people out of college, it implies that you are going to be at it for a while. If you were just concerned with short-term views, you wouldn’t do that. Also, compared to our peers, we take a very small percentage of our revenue home with the owners of the business. Around 90% of our profits after taxes are reinvested into our business.

IBA: What’s your advice to brokers entering the industry today? GH: Our industry has evolved to the point where not many brokers can really be different. If you ask most brokers what they do differently, many will say either that they get good quotes or give good service, but pretty much everyone says that. If that’s all you have that differentiates you from everyone else, then you are not going to sound very different or be different. My advice would be to figure out something that makes you different and better than everyone else to really stand out in today’s industry.

Top specializations Construction and real estate Education Healthcare Manufacturing Moving and storage Municipal and public entities Nonprofits Welding supply and gas distribution

Year founded: 1971 Number of employees: 350+ Headquarters: Chicago Number of offices: 11 in five states Executive leadership: Glenn Horton, CEO and chairman of the board; George Daly, COO; Kelly Kehoe, chief client officer; Tim Scott, CFO

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The growth perspective IBA spoke to executives from two leading insurance companies to get the inside scoop on M&A activity in the industry

MERGERS AND ACQUISITIONS play an important role in how the country’s insurance industry functions. As well as helping organizations pursue their strategic aims, M&A enables ambitious firms to increase efficiency, enter new markets and push up profits. Last year set a new record for M&A activity in the insurance industry. Much of

the activity came under the cross-border umbrella and was driven by the need for insurers to improve operational efficiencies, enhance service capabilities and adhere to changes in regulation, including the DOL and CFPB rules on retirement asset management, inversion regulations and capital requirements. The increased activity also has been


























$98.6M 2004























A perfect match








120 Source: SNL Financial


linked to widespread economic factors, including competitive pricing, low interest rates, new technology and fresh entrants into the space. And the growth in activity has not slowed down in 2016. “The volume as it relates to total number of deals this year should be in a similar range to 2015,” says Phil Trem, senior vice president at MarshBerry. “We are not quite on pace for where we were last year, when there were 456 announced transactions in the US. We are trending to a point where we think it’ll be between 425 and 450 this year.”

The attraction of private equity to the industry has been a key driver in M&A activity. As a result, demand has increased, and valuations have been raised – it is, without doubt, a seller’s market. “Private equity likes the fact that insurance is highly fragmented, has a recurring revenue model, and that the model continues to provide strong returns over a three- to seven-year period,” Trem says. “In a low-interest-rate environment, where leverage is easy to find, interest continues to rise. As the world looks to find return on capital, the insurance distribution space seems to be a safe play.”

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in the next generation of your organization and for technology. Growth is absolutely essential, however that comes – whether it’s organic or through acquisitions.” Mid-sized brokers need to be aware of two important considerations in the current landscape. First, if your competitors sell to a national broker, they’re still going to operate in the same space and location, but with significantly more resources. “Brokers need to figure out how to grow and reinvest to stave off the competition when they join up with a new partner,” Trem says. Some mid-size brokers have an opportunity to make acquisitions themselves. In those cases, the priority should be trying to figure out how to assess new opportunities presented by firms that don’t want to sell to typical brokers. “Acquiring isn’t as easy as it looks,” Trem says. “Firms need to be careful not to make the wrong investment just because it’s an easy one. Mid-sized brokers need to be careful to find a safe balance. Take advantage of the market when it’s available or when opportunities arise, but focus on how to grow internally. That should be a primary focus for those firms.”

Creating growth Trem is quick to point out that ‘safe’ is, of course, a relative term, but when the average agency has 90% of its revenue return every year on a renewal basis, and those that cannot grow organically typically acquire their way to growth, it’s easy to see why this is an attractive market for private equity to deploy capital. “This is not fad,” Trem says. “Private equity has found a real liking for the space, and we think they will be a long-stay part of the industry for years and years to come.” For a mid-sized broker, the current M&A climate does present some interesting and important opportunities. Most people within the industry recognize that growth

is essential – if you’re staying flat, you’re shrinking relative to your competition. Even if your competition is not growing organi-

For Arthur J. Gallagher & Co., making acquisitions is a key component of its growth strategy. The company completed 60 acqui-

“Acquiring isn’t as easy as it looks. Firms need to be careful not to make the wrong investment just because it’s an easy one” Phil Trem, MarshBerry cally, they are acquiring to grow. “You have to grow to remain competitive and relevant to your carrier partners,” Trem says. “You also need the money to reinvest

sitions in 2012 and again in 2014, 31 in 2013 and 44 in 2015. Traditionally, these have been smaller acquisitions, typically in the range of $1 million to $15 million in annual

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revenues, but over the last five years, the firm has also completed some much more significant acquisitions – particularly internationally in the UK, Australia, Canada and New Zealand. “We’re always on the lookout for new opportunities – I’m a full-time M&A sourcer, and we’re going to add people in this role in six regions throughout the US,” explains Bill Bohstedt, corporate VP of mergers and acquisitions at Arthur J. Gallagher & Co. “Those people will be responsible for researching and contacting independent insurance agencies and trying to get into a dialogue about possibly joining us and selling


2004 19 2005 52 2006 58 2007 66 2008 70 2009 62 2010 79 2011 72 2012 68 2013 63 2014 65 2015 51 0






$32.4M 2004

$95.1M $78.3M














Source: SNL Financial


“It can be a little harder to continue to find opportunities right now, so we have to work a little harder. We’re bolstering our M&A resources to try to get in front of more people” Bill Bohstedt, Arthur J. Gallagher & Co.

$323.5M $196.9M 2009 $199.4M 2008 2014


provided more competition for experienced players like Gallagher. The firm is often forced to compete for a particular acquisition – and, predictably, that drives up the price. Bohstedt, though, is philosophical about the new players in the space. “We continue to look for the firms that are attracted to the resources that we can bring to the table,” he says. “If the firm is looking for the things that are in our fabric, then they will fit with us, and we’ll go hard to get them to join us. If they just want to get a high price, or if they don’t want to change anything, they are probably better going to a private equity rollup.”

their company. We also ask our local management in branch offices across the country to constantly look to develop relationships with firms that would be good acquisition options for us. We’re all tasked with looking for good potential merger partners.” When identifying potential acquisition opportunities, Bohstedt considers a few important factors. The first is culture: He aims to find firms with a good reputation and clients, and a business and sales culture that aligns with Gallagher’s. “We also try to find firms that are very good at what they do in the various business niches in which we operate, like construction, public entity, healthcare, real estate, etc.,” Bohstedt says. “I do a lot of data and internet searches and then contact the owner of the agency to arrange a meeting.” The increasing numbers of new entrants appearing in the insurance M&A space has

Although competition may be rife, there are more than 20,000 insurance agencies in the US, so it makes sense to work patiently and sensibly to find the right fit. “It can be a little harder to continue to find those opportunities right now, so we have to work a little harder,” Bohstedt says. “We’re bolstering our M&A resources to try to get in front of more people.” What about the future – will the current trend of prolific M&A activity continue in 2017? “We believe that 2017 is going to have higher activity than both 2015 and 2016,” Trem says. “More private equity should enter the space, so the buyer field will likely grow. And with the new president coming in appearing to be Hilary Clinton, there is some concern about increased taxes. Even just a perceived threat of a capital gains hike will likely lead to more sellers coming to the table.”

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DETERMINING THE UNCERTAIN Nir Kossovsky has long been fascinated by uncertainty, and it’s a passion that’s brought him a long way After setting a goal to experience the best his university had to offer, Kossovsky immersed himself in the philosophy of science, an interest driven by his passion for epistemology, the study of how we know what we know. The notion of grappling with uncertainty became an emergent theme for Kossovsky “When one asks, ‘How do we know what we know?’, there’s an implied level of uncertainty in one’s knowledge”




BEGINS MBA PROGRAM His success in securing funding exposed Kossovsky to a non-academic mindset, so he undertook an MBA to strengthen his knowledge base in hopes of leveraging his medical know-how

“My first class, the professor was discussing basic concepts of marketing. I was taking lots of notes, and one of my classmates leaned over and asked, ‘What are you writing? You’re really clueless! You are definitely going to get your money’s worth out of this program!’” 2005 MEETS BUSINESS PARTNER At a social club known as The Intangible Asset Finance Society, Kossovsky met his future business partner, insurance industry veteran Peter Gerken. Gerken’s interest in developing novel insurance solutions dovetailed with Kossovsky’s skill set “He was looking for ways to insure intellectual property rights and other intangibles; I had a mathematical model for pricing intangibles and other forms of uncertainty. That became a foundation for conversations”

2012 WINS BACKING FROM LLOYD’S Approached by a Lloyd’s syndicate, Steel City Re was able to enter the insurance space “It was evidence that we were no longer working at the fringes, but rather were focused on a mainstream market need and could attract the attention of the leading thinkers in the industry”


BECOMES PROFESSOR; RAISES $1 MILLION An MD from the University of Chicago, followed by a residency at Cornell, culminated in an associate professorship at UCLA, a tenured position Kossovsky held for a decade. Ever the innovator, Kossovsky was issued 20 patents while at UCLA. Having raised his first million for research in 1987, he became accustomed to sourcing commercial backing “Private equity-funded research for the purpose of creating commercial opportunities – that aligned with my passion for finding ways to leverage my medical experience for a multiplier effect”

1998 BECOMES CEO OF THE PATENT & LICENSE EXCHANGE Armed with his MBA, Kossovsky brought new understanding to the deficiencies in the patent and licensing process, applying the Black-Scholes financial model to address the gap between sellers and buyers “The university priced their intellectual property highly, while investors priced it low; that gap was usually extremely difficult to close. [The Black-Scholes model] turned out to be an attractive solution. Many found it an exceedingly useful tool for pricing intellectual property”


OPENS DOORS TO STEEL CITY RE Together, Kossovsky and Gerken founded Steel City Re, a financial services intermediary that provides businesses with quantitative solutions for measuring, controlling and assuring the value of reputation “Ultimately we bought to bear [Gerken’s] concepts of actuarial modeling for insurance products and our concepts of mathematical modeling of human behavior, and that gave rise to the math that underpins Steel City Re”

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DANCING UP A STORM When she trips the light fantastic, Suzi Frye owns the dance floor


The approximate number of hours Frye has spent ballroom dancing in the last four years


The number of beats before a move is repeated in an advanced line-dancing class


The average cost (including lessons, costuming, etc.) for a showcase performance


A RELATIVE newcomer to the world of dance, Suzi Frye, an underwriter at The Cincinnati Insurance Companies, had long harbored dreams of performing for an audience. As a 9-year-old, she roller-skated around the basement of her family home while imitating the professional ice skaters on TV. So when Frye was searching for a new fitness regimen, the dance floor called. First came a flirtation with nontraditional line dancing that lasted two years before Frye felt the need to elevate her dancing and sought out the ballroom. There, she seems to have found her métier – spectators often assume she’s been taking lessons since childhood. “They tell me I’m a natural – it’s a gift, and it’s a talent that’s innate,” Frye says. Frye has even choreographed her own piece, called “Suzi Quew,” which she teaches often at her studio. “I love performing for a crowd; I love learning a whole routine to a whole song,” she says. “I like to tell stories – every time I dance, I’m telling a story from my heart.”

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Insurance Business America issue 4.11  

The magazine for America’s insurance broking and advice community.

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