Insurance Business America issue 4.07

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CARRIERS Find out which carriers scored top marks from producers this year

ENVIRONMENTAL IMPACT

Do your clients have the right policy to protect them from new regulations?

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PREPARING FOR DOOMSDAY

Zurich exec John Scott outlines the top risks facing the planet

CATERING TO CONTRACTORS

Tips for winning new business in the booming construction sector

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ISSUE 4.07

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CONTENTS

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UPFRONT 04 Editorial

The keys to digital adaptation

06 Statistics

CARRIERS COVER STORY

22

30

All signs point to underinsurance when it comes to flooding

UPPING YOUR ENVIRONMENTAL GAME

Why cyber is a must for small businesses

FEATURES

New environmental regulations are cropping up all the time – here’s how to make sure your clients are covered

18

34

AGENCY INSIGHT USI Insurance Services’ Phil Larson outlines the company’s unique approach to institutional knowledge

Interest in terrorism insurance is growing after recent attacks

12 Intelligence

This month’s big movers and shakers

Auto insurance carriers respond to the threat of driverless cars

FEATURES 40 Commercial collaboration

The benefits of taking a ‘we’ (versus ‘me’) approach to leadership

42 Improve your influence

Four ways to sharpen this key skill

44 Making hiring decisions

When to rely on data and when to go with your gut

PEOPLE

FEATURES

36

CASH IN ON CONSTRUCTION

The construction sector continues to present brokers with incredible opportunities for business growth

2

10 News analysis

16 Technology update

FEATURES

John Scott, Zurich’s chief risk officer, weighs in on the biggest risks the world currently faces

09 Opinion

A new study highlights the best states for workers’ comp

Producers reveal their top carrier choices in criteria ranging from competitive rates and quick quoting to automation capabilities

INDUSTRY ICON

Is opt-out workers’ comp viable?

14 Workers’ comp update

FIVE-STAR CARRIERS

PEOPLE

08 Head to head

47 Career path

Frank Zuccarello fused his love of sports and music with his insurance career

48 Other life

Preston Schmidli embraces the art of the written word

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A trusted companion.

When you partner with Travelers, you can be confident knowing that we’ll be there for you when things go wrong. Because we know the value of strong relationships, we offer you the right combination of coverage options, service and marketing support that make it easy to drive loyalty-based growth.

Together we can help you offer the right business and personal insurance solutions based on over 150 years of experience. Make a smart choice and choose Travelers.

To learn more, call your Travelers representative or visit travelers.com today.

travelers.com Š 2016 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. Rev. 7-16

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UPFRONT

EDITORIAL

The key to thriving in the digital age

T

his may well be remembered as the year of insurance startups. Already, a record 24 seed or Series A deals for technology-based insurance companies have been completed in the US in 2016, and investors continue to express interest in startups promising to disrupt a $1 trillion industry. And the area they see most ripe for disruption? The insurance broker distribution channel.

However, the death of the insurance producer is highly unlikely anytime soon. Though direct sales technology and tech-based startups are increasing in popularity, carriers aren’t ready to abandon their traditional partners in favor of online marketplaces and robo-agents. In fact, they highly value the emotional element agents bring to the process and are concerned they will send mixed messages by investing in some new automation capabilities.

Unfortunately, agents and carriers still aren’t on the same page with how to approach technology In our conversations with both carriers and the technology partners who serve them, it has become perfectly clear that while artificial intelligence is indeed playing a larger role in insurance, human emotion and authenticity cannot be replicated. While AI is going to be a huge help in crunching numbers, analyzing big data and even answering perfunctory customer service requests, it’s not going to extend sympathy when your client has a claim or advice when policy language is dense and confusing.

For that simple reason, the broker distribution channel is safe. Unfortunately, agents and carriers still aren’t on the same page with how to approach technology. While carriers are exploring new platforms, they are perhaps guilty of not communicating their intentions to agents. Agents, meanwhile, need to do a better job of giving carriers a clear message on what they need to succeed.

A full 80% of agents responding to a Celent survey said they are still having trouble analyzing data fast enough to meet customer demand. To access that data, however, carriers need to better integrate into agency management systems. In fact, that was the number-one request of agents in a survey by the Big “I” last year. Yet carriers say they are still uncertain of their partners’ attitudes and desires, and how to best address the technology problem.

Carriers and agents must band together if they’re going to fend off the wolves at the door. Every day, a new tech-based startup promises to cut out either party in search of a piece of the $1 trillion industry. In order for both carriers and agents to save themselves, communication is absolutely vital.

The team at Insurance Business America

www.ibamag.com AUGUST 2016 EDITORIAL

News Editor Caitlin Bronson Staff Writers Tim Garratt, Libby McDonald, Joe Rosengarten, Heather Turner, Ryan Smith Journalists Callum Glennen, Penelope Graham, Maryvonne Gray, Paul Lucas, Jordan Lynn Editorial Researcher Hannah Goh Copy Editor Clare Alexander News Writers Lyle Adriano, Louie Bacani, Mina Martin, Gabriel Olano

CONTRIBUTORS Michelle Lopilato, Janine Garner, Tim Baker, Christine Khor

ART & PRODUCTION Design Manager Daniel Williams Designers Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez

SALES & MARKETING Vice President Cathy Masek Media Sales Managers Chris Wills, Chris Anderson Mktg & Comms Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

Editorial Inquiries caitlin.bronson@keymedia.com Subscription Inquiries subscriptions@keymedia.com Advertising Inquiries cathy.masek@keymedia.com, chris.wills@keymedia.com chris.anderson@keymedia.com

Key Media 78O7 E. Peakview Ave., Suite 115 Centennial, CO 80111, USA tel: +1 720 316 0151 www.keymedia.com Offices in Denver, London, Toronto, Sydney, Auckland, Manila, Singapore

Insurance Business America is part of an international family of B2B publications and websites for the insurance industry Insurance Business Canada john.mackenzie@kmimedia.ca T +1 416 644 874O Insurance Business UK jonathan.connelly@keymedia.com T +44 20 7193 0935 Insurance Business Australia peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business NZ peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business Asia peter.smith@keymedia.com.au T +61 2 8437 47OO

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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EDITORIAL Senior Journalist Caitlin Bronson Journalists Ryan Smith Tim Garratt Libby Macdonald

SALES & MARKETING Vice President Cathy Masek Media Sales Managers Chris Wills Chris Anderson

Staff Writer Heather Turner

Marketing and Communications Manager Lisa Narroway

Copy Editor Clare Alexander

CORPORATE

CONTRIBUTORS Brad Cummins Janine Garner Tim Baker Peter Baines

ART & PRODUCTION

Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

Design Manager Daniel Williams Designer Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez

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UPFRONT

STATISTICS

The perfect storm?

POLICY GROWTH GOES NEGATIVE Between October 2014 and September 2015, the majority of states saw a decline in policies under the National Flood Insurance Program, painting a clear picture of diminishing coverage.

With an end to mild weather on the horizon, are Americans underinsured for flooding?

FLOODS HAVE the dubious honor of being the number-one natural disaster in the US, according to the National Flood Insurance Program. Recent years have seen a drop in flood coverage rates, thanks to a few years of mild weather.

But that could soon change – the US National Oceanic and Atmospheric Administration reported this spring that more

100%

Percentage of states that have experienced floods in the past five years

$3.5 billion+ Yearly average of total flood insurance claims from 2005 to 2014

than a third of the land in the contiguous US is at above-average risk of flooding in 2016.

NOAA has also forecast above-average precipitation for the Gulf Coast, Midwest and much of Alaska for three months starting in July.

The organizaton also predicted that this hurricane season is likely to see at least 10 – and as many as 16 – named storms, of which four to eight are expected to become hurricanes.

16

Number of major flood disasters declared this year by the federal government, as of June 5

-4.67%

Washington

-3.33% Oregon

-2.30%

California

-5.63% Nevada

-8.08% Alaska

$42,000

0.48%

Amount of the average flood claim between 2010 and 2014

Hawaii

Sources: FloodSmart.gov; FEMA, June 2016

COVERAGE EBBS

LOSSES SEE A SIGNIFICANT DROP

Coverage levels began declining in the years following Hurricane Katrina, and the trend has picked up speed in the mild years since Superstorm Sandy in 2012..

Losses under the National Flood Insurance Program have dipped in recent years, lulling consumers into a false sense of security. The average flood claim of $29,033 in 2014 is less than half of the average ($60,488) for 2012.

$9.06 billion

$9 billion

2007

$8 billion

2008

$7 billion

2009

$6 billion

2010

$5 billion

2011

$4 billion

2012

$3 billion

2013

$2 billion

2014

$1 billion

5,000,000

5,400,000

5,800,000

Policies in force at year-end Source: FEMA, 2015

6

$10 billion

$0

$3.49 billion $2.43 billion $780 million $775 million

$614 million

2007

2008

2009

2010

$351 million

$489 million

2011

2012

2013

2014 Source: FEMA, 2015

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-4.24%

3.29%

Idaho

North Dakota

-10.80%

-2.72%

-1.45%

2.44%

Minnesota

Maine

Connecticut

New York

-14.10%

-6.31%

Montana

Vermont

-11.40%

Wyoming

Wisconsin

-6.19%

Utah

-1.18%

-1.73%

South Dakota

New Hampshire

Delaware

Michigan

-6.66%

-0.52%

West Virginia

-7.64%

-2.89%

3.50%

Illinois

-2.69%

Kentucky

-5.84%

Oklahoma

-4.76%

New Mexico

-4.64%

Arkansas

-3.15%

-4.40%

Maryland

Virginia

-0.47%

New Jersey

North Carolina

-2.10%

-3.68%

12.02%

Massachusetts

-3.96%

Missouri

Arizona

Pennsylvania

Ohio

Indiana

-5.57% Kansas

-3.36%

-3.83%

Nebraska

Colorado

Rhode Island

-5.60%

Iowa

-6.81%

-2.34%

-0.25%

8.84%

-8.19%

Tennessee

-5.22%

-3.38%

Mississippi

4.66%

-10.70% DC

South Carolina

Georgia

-2.02% Texas

-0.44%

-3.65%

Alabama

Louisiana

-6.83% Florida

Source: FEMA, 2015

WHO’S BUYING COVERAGE?

COASTS AT RISK

Not surprisingly, owners of single-family homes tend to be the most avid purchasers of flood insurance – this type of dwelling accounts for more than two-thirds of all flood insurance policies.

Flood insurance coverage is especially crucial for those living along the Atlantic and Gulf coasts, where flooding from hurricane storm surge along the coast puts almost 7 million homes at risk.

Single-family homes 68%

Atlantic Coast

Condominiums 21%

Gulf Coast

Non-residential 5% Two- to four-family unit 3%

3.9 million $953 billion 2.9 million $592 billion

Other residential 3%

Total 6.8 million $1.5 trillion Source: FEMA, 2016

Source: CoreLogic Storm Surge Report, 2016

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UPFRONT

HEAD TO HEAD

Will opt-out programs hurt or help workers’ comp?

Opinions vary on what will happen to the workers’ compensation industry if opt-out programs proliferate

Bill Minick

Jennifer Wolf Horejsh

Tom Hebson

President PartnerSource

Executive director International Association of Industrial Accident Boards and Commissions

VP of product development and government relations Safety National

“Innovative workers’ comp ‘option’ programs result in more engagement from employers and more accountability from employees and medical providers.

Employees receive a clear explanation of their rights and responsibilities, supporting [their] accountability to report injuries and follow approved medical provider direction. Medical providers must obtain a comprehensive medical history, perform an adequate physical examination, and review current and past diagnostic tests and imaging instead of relying on speculative reasoning. Accountability supports better disability benefits, faster return to work and fewer disputes. These components, and more market competition, reduce costs for the entire system.”

“The fate of alternatives to workers’ compensation remains unclear. However, workers’ compensation will be indelibly changed if alternatives are more widely adopted.

Since the first workers’ compensation laws were passed more than 100 years ago, states have largely chosen compulsory workers’ compensation coverage because of its economic and social benefits. Removing these requirements and placing them solely in the hands of employers could result in lost productivity and strained social programs.

Equity across employers and employees would be lost. However, I am confident the insurance industry will be quick to adapt and find ways to write these policies.”

“If states are looking for alternatives, then what’s wrong with the current traditional workers’ compensation system? History has shown that challenging norms, asking questions and presenting alternatives can bring forth great achievement – not unlike this very battle between workers’ compensation and an option.

Each touts delivery of care to the legitimately injured employee, but each takes a drastically different approach.

At the end of the day, it is about taking care of our injured workers in the best possible way. The option challenge can bring opportunities for improvement to the 100-year old traditional workers’ comp system – if people are willing to consider them.”

OPTING OUT ON THE TABLE Texas and Oklahoma have already blazed the trail of allowing companies to opt out of state-mandated workers’ compensation plans in favor of their own programs, and supporters of the initiative maintain that the competition created by a free-market alternative will generate improved policies. However, critics (including, most famously, US Department of Labor Secretary Thomas Perez) assert that such plans are a detriment to employees and will transfer the burden of workplace injuries to the public purse.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email iba@keymedia.com

Cyber risks for small businesses Data is the small business owner’s greatest asset – and their biggest liability, writes Michelle Lopilato IF YOU have sensitive or protected data in your care, custody or control, you have obligations to safeguard it and can be held liable for its disclosure. Data that is crucial to a company’s success is also highly valuable and easily monetized. Calculating criminals are looking for personally identifiable information, protected healthcare information, payment card information, intellectual property, authentication credentials, insider information and more.

Disclosure of sensitive data can put a small business in serious jeopardy. In fact, the International Data Corporation found that 71% of security breaches target small businesses, and Symantec research reveals that staggering 60% of small businesses will shut their doors within six months of a cyberattack.

The single biggest oversight of most small businesses is the belief that they will not be the target of a cyberattack because of their size.

Hackers enjoy a big payout, but they are also opportunistic – they prey on the weak and are in business to make money. Hackers do not discriminate; data from a small business is just as valuable and fetches the same black-market price as the data found at large companies.

Sensational news stories covering megasized data breaches lead us to believe that only the largest of companies that been breached. This is simply not true. According to a 2015 NetDiligence report, nanoorganizations experienced the most data breach incidents (29%), followed closely by small organizations (25%). Further, extremely

large breaches occurred in nano, small and large organizations.

Do your clients still think their small business is unnoticeable and not a target?

Ask them these questions: Does the business have an online presence? Does it connect to the Internet? Does it transact credit cards?

business allows a third-party provider access to any protected data in its care, custody or control, and the third-party provider discloses this data, it’s the business that will be subject to privacy laws, compliance with data breach requirements and resulting regulatory investigations, fines and penalties.

Employees are a hacker’s best friend, and they may not be aware of this ongoing relationship. Hackers will take advantage of any opportunity, and even the best cybersecurity in the world can be breached by human negligence.

Lost or stolen laptops and mobile devices, clicking on dubious links embedded with malware, replying to a phishing email with password information, transferring money based on a compromised email address, and more have all led to large data breaches and significant costs that have had a major impact on a company’s bottom line.

A recent IBM study found that in 2015, a large proportion (25%) of all data breaches were caused by human error. Not addressing this vulnerability with employee awareness,

“Hackers do not discriminate; data from a small business is just as valuable and fetches the same black-market price as the data found at large companies” Does it email or provide an e-portal for clients or vendors? Does the business have a ‘bring your own device’ policy? If the answer to any one of these questions is yes, trust that malicious actors can identify the business as a potential target.

In addition, small business owners often delegate responsibilities to a third party, whether that be a cloud service provider, an Internet service provider, a payroll processor, a POS vendor or any number of professionals who assist with the day-to-day functionality of the business. In doing so, the small business owner needs to understand the liability of the contracted services.

The first thing to know before entering into any contract is that privacy laws hold the ‘storefront’ (not the contracted service provider) responsible for a data breach. If a

education and training will leave a business susceptible to a breach.

Small business exposures are really no different than those of their larger business counterparts, except that small businesses often do not have the resources to allocate and adequately address these exposures.

Identifying a business’s data assets and correlating them to its exposures and liability is a necessary first step in assessing vulnerabilities and proactively creating steps to prevent or mitigate potential harm.

Michelle Lopilato is a senior vice president and the director of cyber and technology solutions at HUB International. She is a licensed P&C producer and member of the Professional Liability Underwriting Society.

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UPFRONT

NEWS ANALYSIS

Insuring the unimaginable Lone wolf-style terrorist attacks are on the rise, causing more businesses to rethink their insurance portfolio – but with so many new and specific products, it’s a tough conversation ON JUNE 12, a lone gunman walked into Pulse, a gay nightclub in Orlando, Florida, and began spraying the crowd with bullets. What would ultimately become the deadliest mass shooting in US history left 49 people dead and 53 injured, as the world decried the act as one of terrorism and hate. The actions of the 29-year-old gunman, Omar Mateen, did not happen in a vacuum, however.

Just six months earlier, Syed Rizwan Farook and Tashfeen Malike went on a shooting spree and attempted bombing in a San Bernardino County Department of Public Health training event and Christmas party. That time, 14 people were killed and 22 seriously injured.

Yet despite being labeled in the mainstream press as acts of terror, these two events had one striking thing in common – they

threat from groups pledging allegiance to the Islamic State this summer – they need to be aware of the strengths and differences among a bevy of new products on the market.

The most obvious applicable coverage is a stand-alone terrorism policy, and the market has been flooded with inquiries in the wake of the events of recent years, says Jen Rubin, head of the war, terrorism & political violence practice group at Hiscox.

“We’ve gotten a lot of inquiries since Orlando, with folks wanting to know what’s available in the market, what pricing looks like and what limits look like,” Rubin says. “Most of that is coming from the smaller side of the market – those who are largely new to standalone coverage and may not be big enough to have their own security procedures in place.”

“Despite the fact that the word ‘terrorism’ is being widely used ... under TRIA, there are specific criteria that must be met” Loretta Worters, Insurance Information Institute were committed by people who had no direct support from a known terrorist group, cell or network, and the negligible property damage caused in both events came nowhere near to triggering a federal determination of terrorism.

This style of ‘lone wolf ’ attack is growing in influence. As insurance professionals prepare to meet these challenges – particularly in the wake of a CIA report anticipating a heightened

10

Unlike government-backed terrorism insurance, which includes a $120 million loss threshold, stand-alone coverage pays at the first dollar lost and operates on a much broader definition of terrorism. Standard industry policies define terrorism as an attack that is politically, religiously or ideologically motivated – a determination that is made after claims departments review details of the case, news

media reports and other evidence. Something like the Orlando shooting would likely qualify under this definition, Rubin says.

Under the Terrorism Risk Insurance Act, the US Treasury Department – which is tasked with determining whether an event is an act of terrorism – is extremely unlikely to see events like the Orlando shooting come onto their radar, even though incidents with a high cost in lives lost but low cost in property damage are becoming more common.

“Despite the fact that the word ‘terrorism’ is being widely used even at the highest levels of government, under TRIA, there are specific criteria that must be met, including a dollar threshold for insured losses for lines of insurance covered under TRIA,” says Loretta Worters of the Insurance Information Institute. “That threshold is $120 million, and it is unlikely that insured losses from the Orlando attack will exceed that amount.

The threshold was not exceeded in either the Boston Marathon or San Bernardino attacks, and neither event was certified as a terrorist

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THE COST OF TERROR The following are the top 10 most costly terrorist acts globally, measured by insured property losses.

September 11, 2001: World Trade Center and Pentagon attacks April 24, 1993: NatWest Tower bombing June 15, 1996: IRA car bomb in Manchester April 10, 1992: London Financial District bombing February 26, 1993: World Trade Center bombing July 24, 2001: Colombo, Sri Lanka, attack February 9, 1996: IRA South Key Docklands bombing June 23, 1995: Air India Bombing April 19, 1995: Oklahoma City bombing September 12, 1970: Hijacked Swissair jet explosion

0

300 600 900 1,200 1,500 $ millions

26,000

Source: Insurance Information Institute

event by the US Treasury.

“What that means,” she continues, “is that the Pulse nightclub’s standard property & casualty policies will respond to the physical damage and (if purchased) business interruption losses incurred. The club’s workers’

cation expenses needed. Businesses also can purchase endorsements for nuclear, radiological, chemical or biological attacks, which are typically not covered under the policy.

Rubin says all businesses could benefit from purchase of a stand-alone terrorism policy,

“We’ve gotten a lot of inquiries since Orlando, with folks wanting to know what’s available in the market” Jen Rubin, Hiscox compensation carrier would cover the cost of injuries, lost wages and death benefits arising from any workers who were injured or killed.”

All of which makes a stand-alone policy the more attractive choice, particularly for smaller businesses in urban centers.

Stand-alone terrorism coverage pays for property loss, including repair and replacement, as well as business income and any relo-

although those that have not previously looked at the coverage should take particular interest.

The San Bernardino and Orlando incidents had something else in common – they were both committed using firearms. Gun violence has become so prevalent in the US that several insurance companies, including major brands like Willis, have begun offering ‘active shooter’ insurance.

These policies provide coverage outside of workers’ compensation policies, including the liability companies have if they are found not to have taken needed precautions to prevent gun rampages. They also cover ‘on the scene’ costs of an attack, including property damage and any needed counseling or consulting for victims.

According to Wendy Peters, an executive vice president at Willis, the company’s active shooter product has also garnered considerable interest recently.

So which coverage choice is preferable – if either? According to Rubin, it’s up to an agent to determine that, based on the particularities of the client.

“When you’re doing your review of coverages, it’s really important to make sure perils are defined and any gray areas you’re concerned about are documented or discussed,” she says.

“A traditional policy is silent on what would happen in an active shooter event; new products are defining what is covered based on the evolution of events in the market.”

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7/07/2016 10:02:12 PM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Alliant Insurance Services

Western Carwash Insurance Programs

WCIP leader Sam Furno and his management team will continue to service clients with Alliant

AmTrust Financial Services

Total Program Management

TMP is an MGA focusing on workers’ compensation for the healthcare industry

Arthur J. Gallagher & Co.

KRW Insurance Agency

Gallagher gains a greater footprint in the construction and manufacturing industries

Confie

ExpressLink

ExpressLink serves auto dealers in the Southwest

First Protective Insurance Group

The MacNamee Group

The acquisition gives First Protective greater reach in the life insurance, annuities and long-term care markets

Risk Strategies Co.

McLaughlin Brunson Insurance Agency

The staff of the Dallas-based property & casualty and health insurance agency will continue in their positions

VALE Insurance Partners

Onyx Transportation Services

The acquisition furthers VALE’s presence in the transportation market

AIG launches new crowdfunding insurance aimed at investors

M&A expert says number of insurance agencies could shrink by a third by 2035

A combination of aging industry professionals and plentiful capital has continued to spark consolidation among insurance agencies and brokerages, says Tim Cunningham, founder of OPTIS Partners, a mergers & acquisitions consulting firm. And Cunningham expects this trend to last, potentially shrinking the agency space by 20% to 30% in the next 20 years. That may spook some industry members, but Cunningham believes consolidation may actually aid in improving the agency model.

“There are a handful of inefficiencies in the insurance distribution system that consolidation will strip out,” he says. “It’s a natural progression – part of the life cycle, not a big, terrible thing. If you have the same number of people in the industry, what difference does it make?”

The agent/broker sector grew considerably in 2015, according to data from the Bureau of Labor Statistics. The segment added 21,000 jobs over the course of the year, raising total employment among agents and brokers to 770,000 and exceeding the industry high set before the 2008 financial crisis.

12

AIG has launched a new product for the crowdfunding investment industry, the first new insurance product created specifically to protect investors from issuer fraud. The product, Crowdfunding Fidelity, is targeted toward crowdfunding platforms, protecting their users against theft of issuer assets by issuer officers, directors or general employees that causes a loss to individual investors. While there have been few cases of fraud in the crowdfunding space, AIG hopes the product will build investor trust.

Liberty Mutual offers safeguard product for children’s organizations

Liberty Mutual Insurance has partnered with children’s charity NSPCC to launch a new safeguard product. Liberty Safeguarding is designed for organizations that work with children, providing traditional insurance protection as well a variety of risk management tools and frameworks that promote safeguarding standards. The product is available to all organizations involving children, including sports and youth organizations, foster care providers, and residential children’s homes.

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PEOPLE Ironshore introduces political risk coverage for filmmakers

Ironshore International has added a new product to its lineup to protect film producers shooting in at-risk locations. The company’s political risk program is intended to protect film producers against loss or damage of equipment and property caused by acts of foreign governments while films are shooting on location. The policy covers equipment, props, wardrobe and other production materials, which are covered for loss due to abandonment, deprivation, expropriation and license cancellation.

New company plans to enter cyber insurance market

A Bermuda-based insurance company has announced the launch of a new cyber liability protection product. Freisenbruch-Meyer Insurance Services says it was prompted to launch its security & privacy insurance in light of increasing demand for more solutions in the financial services sector.

The customizable policy is targeted at a variety of industries, including financial services, healthcare, hospitality and retail. Freisenbruch-Meyer is backed by partners Arthur J. Gallagher London and DUAL Corporate Risks.

Lincoln National launches economical insurance product

Lincoln National Corporation recently launched Lincoln TermAccel Level Term insurance to allow advisors to provide more affordable insurance protection. Designed for younger clients who need insurance with lower principal amounts, the product offers an expedient, fully electronic transaction process with an automated underwriting approach.

Once approved, policies can be delivered through a secure, mobile-accessible online platform that includes e-signature capabilities.

NAME

LEAVING

JOINING

NEW POSITION

Jared E. Abbey

Morgan Stanley

W.R. Berkley Corp.

Senior vice president, corporate strategy and development

Frank Arcara

Lockton Cos.

Alliant Insurance Services

Vice president, Alliant Americas division

David Harrell

Chubb

Ironshore

Vice president, casualty manager

Shawn Homand

AIG

Ironshore

Chief underwriting officer, global property

Michael Hopkins

AIG

Berkshire Hathaway Specialty Insurance

Sales and distribution leader, medical stop loss, West

Josh Ladeau

Allied World Assurance Co. Holdings

Aspen Insurance Holdings

Senior vice president, cyber risk US

Matt LoPiccolo

AIG

Axis Capital Holdings

US distribution manager, Axis Insurance

Francesca MarcAntonio

Swiss Re

JLT Re

Global head of client relationship management

Christine Martin

Myron F. Steves & Co.

LCTA Workers’ Comp

Chief financial officer

Holly Meidl

Marsh

Allied World Assurance Co. Holdings

Senior vice president, North American healthcare

Mary Beth Pittinger

N/A

Chubb

Head, regional claims organization, North America insurance

John Rex

Optum

UnitedHealth Group

Chief financial officer

Nate Stortzum

Ironshore

Alliant Insurance Services

Vice president, ProQuest division

Joseph W. Sullivan

Pan-American Life Insurance Co.

Boston Mutual Life Insurance Co.

Vice president and chief underwriting/product officer

Mike Toppi

N/A

Aspen Insurance Holdings

Global head, surety risk

Crawford & Co. names new president and CEO

Crawford & Co. has formally named Harsha V. Agadi as its president and CEO. Agadi has been serving as interim president and CEO for the Atlanta-based claims management group since September 2015, when Jeffrey Bowman stepped down after eight years in the role.

Agadi has nearly 30 years of experience in executive management positions. He has been a member of the Crawford board of directors since 2010 and will continue in that role.

Zurich exec tapped for role at The Hartford

The Hartford has appointed Mark Shults as division executive for its central division. In his new role, Shults will lead the company’s middle-market sales and underwriting operations for independent agents, brokers and their customers in the central US. Prior to joining The Hartford, Shults served as national broker relationship leader at Zurich. He also spent time as Zurich’s regional executive in Atlanta and area executive in Houston. Prior to Zurich, Shults held leadership positions at McGriff, Seibels & Williams; Willis; AIG; and Assurant Group.

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7/07/2016 10:02:41 PM

UPFRONT

WORKERS’ COMP UPDATE NEWS BRIEFS Berkshire Hathaway blamed in comp dispute

Two Berkshire Hathaway insurance units have come under fire for circumventing a state law designed to shield small businesses from unpredictable workers’ compensation costs. California insurance commissioner Dave Jones came down against the company in a complaint alleging the California Insurance Company, a Berkshire workers’ comp carrier, filed one set of rates and policies with the state department, but sold businesses different policies through Applied Underwriters, another Berkshire company. Jones’ decision ordered California Insurance to repay premium amounts paid in excess of the rates under the policies that were filed.

Annual workers’ comp survey launched The annual Workers’ Compensation Benchmarking Study has launched a new condensed survey that will probe deeper into select operational challenges and strategies. The survey will poll management and executive-level leaders who oversee workers’ compensation claims operations for organizations such as insurance carriers, employers, third-party administrators, government entities and risk pools. Claims leaders who take the survey will receive a copy of the 2016 Study Report, which will be published this fall.

Seven indicted over alleged multimillion-dollar comp fraud

A county grand jury has indicted seven Southern California residents who allegedly defrauded insurance companies for $98 million in workers’ compensation claims. According to the Riverside County

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District Attorney’s Office, chiropractor Peyman Heidary hatched a fraud ring that involved various clinics in Riverside, Orange and Los Angeles counties and defrauded 18 insurers. The fraud ring presented inflated bills to insurers, and if an insurer refused to pay, it was threatened with a lien and fines from the state.

Physical therapy said to reduce comp payer costs Two new industry white papers suggest workers’ compensation carriers may be neglecting what could be a powerful ally: physical therapy providers. In the papers, PTPN, a national network for independent rehabilitation specialists, suggests that providing physical therapy to injured workers improves the delivery of health services and delivers better outcomes for many patients for a lower cost. The group also found that bringing in physical therapy early can reduce the use of pain medicine, improve patient satisfaction, reduce readmissions, and lower medical and indemnity costs.

Eight arrested in Florida workers’ comp fraud The Florida Department of Financial Services’ Division of Insurance Fraud announced eight arrests for workers’ comp fraud as a result of a multi-agency undercover sting in Polk County. The arrested individuals advertised their ability to perform plumbing and electrical work without proper training or licenses, and without having workers’ comp coverage for their employees.

“Unlicensed contractors lack the necessary training, qualifications and insurance to complete a job in compliance with building codes and often leave consumers responsible for additional costs to repair substandard work,” said Ken Lawson of the Department of Business and Professional Regulation.

The best states for workers’ comp New studies from WCRI reveal how injured workers fared across 15 states Controlling workers’ compensation costs has been a top priority for employers and their insurance agents since state-based comp programs began operating across the country in 1911. From regulatory reform to legislative fervor, there are many things that can influence the effectiveness of worker recovery, the resulting premium and the state system as a whole.

Now, new studies from the Workers Compensation Research Institute [WCRI] shed light on these efforts and teach insurance agents how the approaches in different states compare.

The studies, released by the WCRI in late May, compared the outcomes of injured workers across 15 states, examining metrics such as recovery of physical health and functioning, return to work, earnings recovery, and access to and satisfaction with medical care.

“The goal of the studies is to provide information about injured workers’ experiences with the workers’ compensation system,” said Bogdan Savych, an economist at WCRI and one of the authors of the studies. “By examining outcomes of injured workers, policymakers and stakeholders can better understand how different state systems compare in order to identify and prioritize opportunities to improve system performance.”

The research is the product of an ongoing,

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multiyear effort by WCRI to collect and examine data on the outcomes of medical care achieved by injured workers. To date, WCRI has examined outcomes in Arkansas, Connecticut, Florida, Georgia, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania,

“By examining the outcomes of injured workers, we can better understand how different state systems compare in order to identify opportunities to improve system performance”

Tennessee, Virginia and Wisconsin. Its latest research uncovered the following key findings: • Florida: Workers reported somewhat higher rates of problems accessing desired services, higher rates of problems accessing desired providers and higher dissatisfaction with overall medical care.

• Michigan: Workers reported a somewhat lower than typical rate of not achieving substantial return to work and a somewhat lower than typical rate of problems getting desired medical services.

• Pennsylvania: Workers reported a somewhat lower than typical likelihood of experiencing “big problems” getting the

services they wanted.

• Wisconsin: Workers reported somewhat higher rates of substantial return to work, lower rates of problems accessing desired providers and services, and higher rates of satisfaction with medical care.

.®

www.summitholdings.com

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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7/07/2016 10:04:00 PM

UPFRONT

TECHNOLOGY UPDATE

Challenging driverless car assumptions Industry observers may be ready to write off auto insurers, but not so fast, say the carriers themselves

pro-social, and it’s bad for the auto insurance industry … if there are no accidents, then no need for insurance,” Buffett said.

Despite such skepticism, some insurers and industry experts have stepped forward to meet the challenge autonomous vehicles pose.

UK-based Adrian Flux Insurance Services recently launched what it touts as the first ‘driverless car policy.’ The product would cover drivers for situations out of their control, such as satellite failures or cyberattacks from hackers.

“Driverless cars won’t be too much of a problem for the simple reason that a lot of people like to drive”

With driverless cars perched on the edge of becoming a reality, the ubiquitous industry question remains: Who is at fault should a driverless car figure into an accident, and what will that mean for the auto insurance industry?

A number of well-known auto insurers have voiced their concerns over self-driving technology, admitting it would upset the industry.

In a speech last year, Allstate chairman

NEWS BRIEFS

Thomas Wilson famously said that the move to driverless cars could have “the most detrimental impact on auto insurance.”

Investor Warren Buffett – chairman, president and CEO of Berkshire Hathaway, which owns Geico – also said that “we would not be throwing a party at our insurance business” in the event that driverless cars are introduced.

“Anything that makes cars safer is very

Northeast insurer adopts Google Glass to drive efficiency

Erie Insurance is outfitting its employees with Google Glass devices, which it hopes will allow its supervisors to offer remote guidance to field employees via hands-free video streaming. Google Glass has already been used by the company’s commercial risk control group to expedite the underwriting process and aid customers in making coverage decisions. Chief underwriting officer Jayashree Ishwar said the program could create opportunities for cross-training and knowledge-sharing among employees worldwide.

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“We wanted to help provide confidence and clarity around the ongoing debate of who is liable,” said Adrian Flux general manager Gerry Bucke.

Beyond the simple matter of property, analysts agree that while liability continues to be a murky issue, consumers will still need insurance for damages outside of driving, including falling trees, hail, water damage or vandalism.

James Whittle, general counsel and chief claims counsel at the American Insurance Association, is not too worried, and believes driverless cars will not be too much of a problem for the industry for “the simple reason that a lot of people like to drive.”

Network announces upgraded online portal

Networked Insurance Agents has redesigned its myAGENCY online platform. The new portal allows agents to request a bind for new or renewal accounts, submit commercial and personal lines policy change requests using an automated form, retrieve policy documents, and upload membership documentation. Agency staff can also submit and track new applications, access carrier marketing materials, review training resources, and submit service requests for faster turnaround on quotes, endorsements and loss runs.

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Q&A

Lisa Woodley Vice president of experience design NTT DATA

Years in the industry 20 Fast fact Woodley is also an adjunct faculty member of Rutgers University’s Center for Innovation in Education, and teaches a boot camp for digital design

Why the insurance agent isn’t dead What dilemma are carriers facing in regard to potential disruptors?

Look at where carriers are being disrupted – companies like Insurify promise to quickly and easily come up with quotes without the use of an agent.

But carriers are also thinking, “If I invest in [this technology], what message am I sending my agents?

Am I telling the agent I don’t need them anymore?”

Carriers recognize that they need the agent, because they provide human interaction, but they want to figure out how to give customers what they want.

So what is the ideal blend between human touch and artificial intelligence?

I don’t think of it as either/or. What we’ve been seeing is that the right self-service tools actually serve the agent very well. You can develop self-service tools for the very transactional things, like paying bills or checking policy details, but agents need to make sure they recognize certain trigger points for where they need to reach out. If you have a client who suffers the loss of a house, for example, you probably want to talk to someone, and it would be great if it’s someone you have a relationship with. Integrating those two, we’re not building a robot – we’re building Ironman.

What do you think agents offer that artificial intelligence hasn’t yet achieved?

There’s an emotional quotient required for social interaction, and we’re not there yet with AI. We’ve

New internet domain extension now available

In June, the internet domain extension ‘.insurance’ became available for use by insurers, licensed agencies/agents, brokerages/brokers and other professionals related to the insurance industry. The suffix is being managed by fTLD Registry Services, which was also responsible for launching the domain ‘.bank’ for the banking industry last year. The Internet Corporation for Assigned Names and Numbers [ICANN], which has been allowing organizations to purchase toplevel domains since 2012, approved fTLD’s operation of the domain name.

developed things like Siri, but we haven’t gotten to the point yet where we’ve developed an AI that makes us feel cared for.

Insurance is a very serious business. Someone may have a question about a confusing policy, or they may have just been injured and lost everything – and they don’t want to navigate a phone tree in order to talk to someone. Customers want someone to look out for them, and the last thing they want to deal with is the complexities of filing a claim. That’s where an agent is crucial.

What do you recommend for ensuring agents are equipped with the right technology to achieve the ideal integration of AI into their businesses?

Before we rush off into the Star Trek future, there’s some basic stuff we have to figure out. Insurance generates a huge amount of data, for example, that could be used to enable agents to be more proactive.

You could have a scenario where an auto insurance policyholder has a teenager getting ready to go to college. In an ideal setting, AI will signal to the agent that this event is coming up, and the agent can better customize and tailor a renter’s policy recommendation for them.

However, agents aren’t really using the data analytics component yet. We need to look more closely, dig deeper on how to enable that, and part of it is getting carriers to better integrate with agency management systems.

FBI warns banks to check for cyber breaches

A private message has been sent to US banks by the Federal Bureau of Investigation, asking them to check their systems for signs of cyberattacks. The leaked report follows the electronic robbery at the Bangladesh Central Bank earlier this year, in which hackers sent electronic instructions via the SWIFT network to steal $951 million. Cybersecurity experts reported the hackers had access to the bank’s systems for several weeks before striking.

The FBI communication blamed a “malicious cyber group” for gaining access to the bank.

Insurer off the hook in restaurant data breach

A federal court ruled that Chubb does not have to reimburse P.F. Chang’s for costs the restaurant chain was charged by its credit card processor. In June, hackers accessed 60,000 customer credit card numbers. Federal compensated P.F. Chang’s more than $1.7 million under its cyber policy but refused to cover the $1.9 million reimbursement demanded by credit card processor Bank of America. A federal court agreed that Bank of America did not suffer from the breach, particularly a “privacy injury” the policy would cover.

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7/07/2016 10:04:37 PM

PEOPLE

INDUSTRY ICON

DOCTOR DOOM’S WORLD OF RISK John Scott, chief risk officer for Zurich Global Corporate, spends a lot of time thinking about the end of the world. It is, after all, his job

AS ONE of 750 experts worldwide who have the somewhat dubious honor of contributing to the World Economic Forum’s annual Global Risk Report, you might expect John Scott, chief risk officer for Zurich Global Corporate, to be full of doom and gloom.

If he is, it doesn’t come across in his upbeat, affable demeanor. But Scott does spend a lot of time thinking about incidents that might spell the end of humanity.

We are only several minutes into conversation when he says, “Clearly a major pandemic of some sort could be the thing that wipes out the human race at some point.” While that seems a distant possibility – indeed, the spread of infectious disease didn’t make it into the Global Risks Report’s top 10 in terms of likelihood this year – Scott follows up with a reminder not to be complacent.

“It is a fact that we’ve had pandemics – the last major one being swine flu. But fortunately, and this is difficult to say, it wasn’t as virulent as it could have been,” he says. “Many, many people died, but it wasn’t as virulent or as fatal as Ebola, and Ebola really caught people’s attention because the chance of dying is quite high. However, you do have to be very close to someone to catch it, which raises issues around urbanization.

If outbreaks occur in the countryside, when

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they get to cities it will be very, very easy for them to spread. So global disease outbreak has been at the forefront of people’s minds because of Ebola.”

Societal risks on the rise The interesting thing about the Global Risks Report is that the survey is based on perception. So while the global risks and trends

“In recent years, there has been more focus on geopolitical and societal risks and their links with social instability, leading to the concept of the disempowered citizen,” Scott says. “Think about the migration happening in Europe, and look around globally at the rise of nationalist and more extremist politicians who appeal to people who are disenfranchised, or disconnected with polit-

“It’s pretty clear that people don’t trust even the companies they work for, let alone politicians or governments. The disempowered citizen and social instability, leading to mass migration, is a big challenge” don’t change all that much from year to year, people’s perceptions are very much influenced by recent events.

As a result, the top risk in terms of likelihood, and also the fourth in terms of impact, was large-scale involuntary migration. Significantly, societal risks (of which the spread of infectious diseases is also one) were four of the top risks in terms of impact and two in terms of likelihood in the 2016 report.

ical and other elites.

“In the case of migration,” he continues, “some people look around and say, ‘No, I don’t want that in my street,’ calling into question the broader values of human rights, free trade and globalization. The trust between electorates and politicians is under severe strain.”

Scott references the annual Trust Barometer published by marketing and branding agency Edelman, concluding:

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PROFILE Name: John Scott Company: Zurich Global Corporate Title: Chief risk officer Years in the industry: 15 Fast fact: Before coming to Zurich, Scott worked in the oil & gas industry as a geologist for BP

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PEOPLE

INDUSTRY ICON

“It’s pretty clear that people don’t trust even the companies they work for, let alone politicians or governments. The disempowered citizen and social instability, driven by issues like geopolitical instability and leading to mass migration, is a big challenge.”

The importance of risk management By their very nature, the truly global challenges that Scott considers are unwieldy and tested by a lack of effective global governance, with many elements regulated on a national level.

through all of these risks when looking at managing business models.”

And for Scott, this is where the insurance industry has great value to bring to society, because it knows how to price risk and also holds a lot of data about risks. “So that means we can not only offer people the ability to transfer risks from their balance sheets to someone else’s, sharing the risks of the few among the many, but also support and influence better management of risks.

This is a very valuable social construct.”

Risk management expertise might

“We can not only offer people the ability to transfer risks from their balance sheets to someone else’s, sharing the risks of the few among the many, but also support and influence better management of risks” But one thing the Global Risks Report does is create a framework in which all stakeholders can build a dialogue, and which brings companies, politicians and decisionmakers together in discussion.

“How can you think about this in a strategic sense? How do the big issues about climate, cyber risk and geopolitics impact the business model? It might impact it many different ways,” Scott says. “Your customers’ needs may be changing, or your global footprint might change, or your product, if it’s created in different parts of the world, might be affected in terms of supply chain interruption, so we use tools like scenario planning to see how things play out. With supply chain resilience, we look at how you might be impacted. Or what do you do if all your assets in a country are expropriated due to political change? Companies need to think

extend to disaster mitigation, or building community resilience, or helping people in emerging economies who don’t buy insurance protect themselves by building flood protection or having an evacuation plan, he points out.

But it might also involve thinking about space weather or space debris, which is typically something brokers and their clients don’t consider. “If something crashes into a GPS satellite,” Scott explains, “it makes a difference to our world, because we rely on GPS not only for geolocation, but for the accurate time synchronization of computers.”

In that sense, having the knowledge that someone, somewhere is thinking through the most obvious and obscure doomsday scenarios that threaten mankind makes the world somehow feel like a more comfortable place.

BY THE NUMBERS Top 10 risks in terms of likelihood

Large-scale involuntary migration Extreme weather events Failure of climate change mitigation and adaptation Interstate conflict Natural catastrophes Failure of national governance Unemployment or underemployment Data fraud or theft Water crises Illicit trade Top 10 risks in terms of impact

Failure of climate change mitigation and adaptation Weapons of mass destruction Water crises Large scale involuntary migration Energy price shock Biodiversity loss and ecosystem collapse Fiscal crises Spread of infectious disease Asset bubble Profound social instability Source: World Economic Forum Global Risks Report 2016

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IBAmeri

Which wholesalers are leading the growth in excess & surplus?

Chances are you’re doing business with them.

As commercial and E & S risks drive more opportunities for the independent broker; having strong relationships with your wholesale partner is vital to your success.

Insurance Business America recognizes top E & S experts who are handling your hard-to-place risks. If you don’t know their names yet, it’s time we introduce you.

COMING SEPTEMBER 2016 ibamag.com IBAmerica_Top E&S Wholesale Brokers.indd 8 18-21_Industry Icon-SUBBED.indd 21

7/07/201610:05:29 1:46:13 7/07/2016 PMAM

FEATURES

COVER STORY: FIVE-STAR CARRIERS

CARRIERS IBA unveils the carriers that producers feel stand out above the rest

A HEALTHY producer and carrier relationship is essential for the success of both businesses, and given the rapid changes happening within today’s marketplace, the producer-carrier bond is more crucial than ever.

Last month, Insurance Business America surveyed hundreds of producers, asking them to rate the importance of the following criteria for selecting a carrier on a scale of 1 (not important at all) to 7 (extremely important): • Carrier reputation and financial stability • Claims processing • Competitive rates • Underwriting expertise • Commitment to the broker distribution channel • Technology and automation capabilities • Quick quotes

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• Range of products offered • Marketing support • Education and training We then asked producers to rate how their primary carrier performed in each aspect on a scale of 1 (poor) to 7 (excellent) and provide details about how carriers could improve in each category.

Out of the hundreds of responses we received, only 18 carriers scored a 5 or higher in at least one category. We awarded these companies our five-star rating for their excellent service to producers.

Overall, carriers fared very well, improving from last year in nearly every category. However, they did fall short in a few categories, such as marketing support, where no carrier earned a five-star rating. So which carriers stood out with impressive marks from their producers?

WHAT ASPECTS OF CARRIER PERFORMANCE ARE MOST IMPORTANT TO PRODUCERS?

HOW WELL DID CARRIERS PERFORM ON AVERAGE IN EACH CATEGORY?

Carrier reputation and financial stability

Carrier reputation and financial stability

6.31

6.01

Claims processing

Claims processing

6.31

5.70

Competitive rates

Competitive rates

6.27

5.34

Underwriting expertise

Underwriting expertise

6.19

5.51

Commitment to the broker distribution channel

Commitment to the broker distribution channel

6.16

5.61

Technology and automation capabilities

Technology and automation capabilities

6.09

5.37

Quick quotes

Quick quotes

6.00

5.64

Range of products offered

Range of products offered

5.84

5.24

Marketing support

Marketing support

5.14

4.90

Education and training

Education and training

4.96

4.97

HOW HAS CARRIER PERFORMANCE CHANGED? Across most of the categories, respondents rated overall carrier performance higher than they did in 2015. There were a few notable exceptions: Technology and automation capabilities and marketing support experienced no change, whereas range of products displayed a 1% decrease in performance compared to last year.

100% 90% 80% 70% 60%

Carrier reputation and financial stability

Claims processing

Competitive rates

Underwriting expertise

Commitment to the broker distribution channel 2015

Technology and automation capabilities

Quick quotes Range of products offered

Marketing support

Education and training

2016

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FEATURES

COVER STORY: FIVE-STAR CARRIERS CARRIER REPUTATION AND FINANCIAL STABILITY FIVE-STAR CARRIERS

CLAIMS PROCESSING FIVE-STAR CARRIERS

Arch Insurance Chubb Group of Insurance Companies Markel Insurance Nationwide Insurance QBE Insurance Selective Insurance Group Texas Mutual Insurance Company The Hartford Travelers United Fire Group Zurich Insurance Group Rising up the ranks of importance from last year, carrier reputation and financial stability came in first (tied with claims processing) in terms of importance to producers, up from the third position last year. That’s good news for carriers, who notched their best performance overall in this area, scoring an average of 6.01 out of 7, a 1% bump up in performance from 2015.

PRODUCER FEEDBACK

Auto-Owners Insurance Chubb Group of Insurance Companies Liberty Mutual Nationwide Insurance QBE Insurance Texas Mutual Insurance Company The Hanover Insurance Group United Fire Group XL Catlin Tied with reputation and financial stability, a carrier’s claims processing ability also topped the list of producers’ priorities. Fortunately, carriers also performed well in this category, scoring an average of 5.7 out of 7 – the second-highest average across all categories.

While some respondents were happy with their carrier’s claims processing, others expressed disappointment. “They can be very hard to deal with on claim settlements,” one producer commented. “They need to improve on claims and pricing. We are starting to move business away from them.”

“It’s important to the clients PRODUCER FEEDBACK we represent that their “With technology, there insurer be a stable partner” is no excuse for a basic One reason financial stability is so vital to producers claim to take 45 to 60 is that it demonstrates a carrier’s ability to pay claims.

“It’s important to the clients we represent that their days to settle” insurer be a stable partner,” said one producer. “[Financial] stability is very important – reputation, not as much,” said another.

Consistent among respondents, however, was a preference for highly rated carriers. “We only select carriers that have top ratings,” said one respondent.

“A-rated is what we want,” echoed another.

Importance to producers Overall carrier performance

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1ST (tie)

1ST

“With technology, there is no excuse for a basic claim to take 45 to 60 days to settle,” chimed in another respondent.

Despite some negative comments, claims processing improved overall compared to last year – the average carrier performance rating moved up 2% in the category.

Importance to producers Overall carrier performance

1ST (tie)

2ND

WHICH CARRIERS EARNED FIVE-STAR STATUS? Carrier reputation and financial stability

COMPANY

Claims processing

Competitive rates

Underwriting expertise

Commitment to the broker distribution channel

Technology and automation capabilities

Quick quotes

Range of products

Marketing support

Education and training

AIG Arch Insurance Auto-Owners Insurance Chubb Group of Insurance Companies CNA Liberty Mutual Markel Insurance Nationwide Insurance QBE Insurance Selective Insurance Group Texas Mutual Insurance Company The Cincinnati Insurance Companies The Hanover Insurance Group The Hartford Travelers United Fire Group XL Catlin Zurich Insurance Group

OVER ARCHING

SOLUTIONS Lender Products Blanket Lenders Single Interest Insurance Auto Collateral Protection Insurance Mortgage Hazard Collateral Protection Insurance Flood Collateral Protection Insurance Guaranteed Asset Protection

THE STRENGTH OF ARCH

www.archinsurance.com

®

A.M. Best: “A+” Standard & Poor’s: “A+”

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 $3.56 billion, total liabilities of $2.73 billion and surplus to policyholders of $825.14 million, (2) Arch Specialty Insurance Company (a Nebraska corporation, NAIC #21199) with admitted assets of $497.16 million, total liabilities of $190.04 million and surplus to policyholders of $307.13 million, (3) Arch Excess & Surplus Insurance Company (a Nebraska corporation, NAIC # 10946) with admitted assets of $61.96 million, total liabilities of $279,154 and surplus to policyholders of $61.68 million and (4) Arch Indemnity Insurance Company (a Nebraska corporation, NAIC# 30830) with admitted assets of $53.66 million, total liabilities of $29.27 million and surplus to policyholders of $24.39 million. All figures are as shown in each entity’s respective Quarterly Statement for the quarter ended September 30, 2015. 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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FEATURES

COVER STORY: FIVE-STAR CARRIERS COMPETITIVE RATES

UNDERWRITING EXPERTISE

FIVE-STAR CARRIERS

FIVE-STAR CARRIERS

AIG Arch Insurance Liberty Mutual Markel Insurance Nationwide Insurance QBE Insurance Texas Mutual Insurance Company The Cincinnati Insurance Companies The Hanover Insurance Group The Hartford Travelers Zurich insurance Group PRODUCER FEEDBACK

“No matter how good a carrier is, if the price is too high, it’s impossible to sell it”

Competitive rates racked up the most five-star carriers (12) than any other category. Though it’s no longer the most important aspect for producers when choosing a carrier as it was last year, producers rated the importance at 6.27 out of 7, just four points shy of their top priorities.

Unfortunately, carriers came in seventh in terms of performance on rates, with an average score of 5.34 out of 7, despite a decent 5% improvement over last year.

Some respondents voiced general frustration over their carriers’ rates. “Never have been competitive,” said one.

“They don’t get it,” said another. Other producers complained about increases in pricing. “Right now they’ve been filing one or two rate increases a year for the past few years. We get it that they are needed, but the rates are getting out of control, and they are losing business,” commented one producer. “[Stop] insisting on getting rate increases on accounts that don’t warrant an increase in double digits,” demanded another respondent.

The consensus among most respondents was that carriers should improve on their rates and remain consistent.

Some requested more competitive rates for small markets, while others simply asked for better rates across the board.

“No matter how good a carrier is,” one producer wrote, “if price is too high, it’s impossible to sell it.”

Importance to producers

3RD

Overall carrier performance

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7TH

AIG Arch Insurance Markel Insurance Nationwide Insurance Selective Insurance Group The Hanover Insurance Group The Hartford United Fire Group XL Catlin Consistent with last year, producers understandably rated underwriting importance fairly high – third in overall in importance. Though carriers improved in the category – a 1% increase in the average rating, and nine five-star carriers this year compared to six last year – they still seem to miss the mark on producers’ expectations.

Scoring their carriers a middling 5.51 out of 7, many producers expressed frustration about the level of underwriting expertise they encounter.

“Agents want help; they don’t want to educate the underwriter,” wrote one. “I am finding more underwriters are not knowledgeable,” wrote another.

Several producers pointed to an industry-wide lack of underwriter proficiency, and many blamed a priority on quick personnel turnaround for the inconsistent service.

“Keep the same underwriter for a longer period of time.

[Carriers] seem to change underwriters frequently,” said a respondent. “Better underwriting stability,” commented another on how his carrier could improve.

Similar to responses from last year’s survey, producers continue to believe that carriers are holding back the underwriter’s capability to service clients. “Empower the underwriter to think and use common sense,” was one producer’s advice to his carrier.

PRODUCER FEEDBACK

“Empower the underwriter to use common sense” Importance to producers

4TH

Overall carrier performance

5TH

COMMITMENT TO THE BROKER DISTRIBUTION CHANNEL FIVE-STAR CARRIERS

FIVE-STAR CARRIERS

Auto-Owners Insurance Chubb Group of Insurance Companies Nationwide Insurance The Hanover Insurance Group The Hartford Vital for a successful business relationship, carriers’ commitment to the broker distribution channel is a primary concern for producers. Despite ranking fourth in importance, many producers commented in their individual feedback that this is their most important criteria when choosing a carrier, and many ranked it highest out of all the categories.

This category did see improvement this year – five carriers earned five-star status, up from the zero who made the cut last year. So is this an indication that carriers are prioritizing and listening to their producers?

Perhaps not. Several survey respondents complained about carrier betrayal and declining partnerships. “We have dropped carriers this year who no longer support brokers with commissions and push direct sales,” wrote one producer.

The chief complaint among our survey respondents?

The lack of carrier support for brokers and the emerging practice of carriers selling products directly to customers.

“I don’t want to compete against my carrier,” wrote another producer. “It’s already competitive enough out there!”

PRODUCER FEEDBACK

“I don’t want to compete against my carrier. It’s already competitive enough out there!”

Importance to producers

5TH

Overall carrier performance

TECHNOLOGY AND AUTOMATION CAPABILITIES

4TH

AIG Arch Insurance Markel Insurance Nationwide Insurance Selective Insurance Group The Hanover Insurance Group The Hartford United Fire Group XL Catlin Producers were not as concerned with technology and automation capabilities as they were with other criteria, but they still felt it was a priority, rating the category at 6.09 out of 7 in terms of importance.

Some producers were happy with the systems provided by their carriers. Two producers commended the technology at one five-star carrier for its “easy interface” and “speed and ease of finding information and quoting.”

PRODUCER FEEDBACK

“We only select carriers that provide full technical support” Although carrier performance in this category neither increased nor decreased from last year, many producers feel that it’s time for many carriers to update and improve their systems. Some complained that their carriers’ systems are slow, redundant, inadequate and unsupportive, and numerous producers mentioned that technical capabilities determined their decision to partner with a carrier.

“We only select carriers that provide full technical support,” wrote one respondent.

Importance to producers

6TH

Overall carrier performance

6TH

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FEATURES

COVER STORY: FIVE-STAR CARRIERS PRODUCER FEEDBACK

QUICK QUOTES FIVE-STAR CARRIERS

Selective Insurance Group The Hartford Generally, carriers performed well in returning quotes quickly to producers; however, only two carriers earned five-star status – seven fewer than last year.

In the age of immediate digital gratification, carriers’ speed often falls behind the threshold of producer expectations – and one thing all producers agree on is that faster quotes are better. One even considered the speed of quote delivery to be the most important quality in a carrier.

“Speed of obtaining quotes and ease of doing business – these trump all else, including rates,” he wrote.

Importance to producers

7TH

Overall carrier performance

3RD

RANGE OF PRODUCTS FIVE-STAR CARRIERS

AIG Arch Insurance CNA Markel Insurance Nationwide Insurance United Fire Group Zurich Insurance Group Surprisingly, producers were less concerned about carriers’ range of products this year than they were in 2015. Receiving a 5.84 out of 7 this year and coming in near the bottom of the priority list is a significant downhill slide from last year’s fifth position.

Producers had pretty polar views on how range of products influences their opinion of their carrier. “Product

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“Product range isn’t necessary, but is helpful” range isn’t necessary, but is helpful,” wrote one. “Generally meets our needs,” said another.

A few producers pointed out that they prefer carriers who write a few products excellently over having a vast range of products to choose from.

On the other hand, several producers were fed up with limitations in carrier products. “Limited with strict underwriting,” said one producer. “They are starting to fall behind other companies,” commented a second respondent.

Even with some satisfied producers, range of products was the one category where carrier performance as a whole decreased, falling by 1% compared to last year.

Importance to producers

8TH

Overall carrier performance

8TH

MARKETING SUPPORT Marketing support took a downward turn this year – zero carriers earning five-star status in the category, a steep drop from last year’s six. Average carrier performance came in at 4.90 out of 7. “Marketing is hit or miss,” said one producer about his carrier.

But producers didn’t feel that a carrier’s marketing support was a vital component compared to other categories. This may be due to carriers’ decreasing participation in agency marketing as third-party vendor involvement increases. “It’s primarily on us, not the carrier, to get business,” commented one producer.

Importance to producers

9TH

Overall carrier performance 10TH

PRODUCERS SPEAK OUT

EDUCATION AND TRAINING The least important consideration for producers – education and training – also had zero five-star carriers this year, compared to the five that made the list in 2015. Rating it as their lowest priority, many producers commented that education and training from carriers is unnecessary due to the simple nature of many systems, and that they rely mostly on industry sources for continuing education.

On the flip side, many producers felt left in the dark by carriers who failed to inform them of internal changes.

Others complained about a lack of initial system training.

“Helping us out with learning your system helps you get more business,” pointed out one respondent.

“Maintain an experienced underwriting staff in all areas and industry sectors” “Though they say they are committed to the agents, management could spend less time pandering to the shareholders” “[Carriers] need to get into the 21st century with e-app technology and make it mandatory for all producers/agencies to use it” “Better and faster underwriters” “Be more open with internal changes that affect our clients” “Underwriting should consider each risk individually, not cookie-cutter underwriting”

Importance to producers 10TH Overall carrier performance

What can carriers do to improve their service? We asked producers to offer their advice, and here’s what some had to say:

“Better commitment in supporting the independent agent with better commissions, education and marketing support”

9

TH

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MEET MICHAEL. Michael Culbreth has been a Loss Control Services Consultant with PLM/ILM for over 13 years. Over these years he has visited thousands of lumberyards, sawmills and wood products manufacturing operations. He lives and breathes the lumber and building material industries. Michael’s specific knowledge allows him to provide your clients with relevant and practical recommendations to protect their businesses. He aims to prevent risks that are avoidable and makes sure your clients are adequately prepared for what may come.

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FEATURES

ENVIRONMENTAL INSURANCE

Upping your environmental game Tightened laws around environmental liability are forcing organizations of all sizes to reassess their environmental coverage AS AWARENESS around the impacts of pollution and environmental damage seeps deeper into the public consciousness, businesses are doing more than ever to adopt green practices. But accidents do happen, and if your clients are in a certain industry, these accidents can lead to significant environmental and financial damage.

This increased awareness has led to a tightening of environmental regulations, and business owners across all industries may face a plethora of negative impacts if they’re found to be at fault. While doing everything

to prevent an environmental event from occurring should be the number-one priority, having comprehensive environmental insurance in place could be the thing that keeps your client’s business alive.

“People are realizing that environmental liabilities are not exclusive to big oil or some smokestack industry,” explains Marsh Duncan, SVP of underwriting at Colony Specialty. “It’s the shop owner putting a new roof on his old warehouse; it’s the contractor remodeling your bathroom. It’s fires and bad weather. More than ever, people realize

FEATURES OF AN ENVIRONMENTAL POLICY Designed to respond to broad and changing environmental law

Emergency costs, where the insured must respond to a pollution incident

Pollution can be of a sudden or gradual nature

Third-party claims resulting from transportation activities

Third-party claims for • Bodily injury • Property damage • Cleanup costs

Claims expenses covered under all sections, including investigation and legal defense

Cleanup and restoration costs, where the insured’s property is damaged responding to an incident

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Liability for damage to natural resources/ biodiversity

that environmental liabilities and expenses can have a big impact on everyday businesses.”

In response to the increased scrutiny around environmental issues, brokers have a growing responsibility to provide their clients with protection from loss of income or other costs associated with an unexpected environmental situation. “The way that federal legislation is currently written, it casts a net that is so wide that insurers and property owners can easily be pulled into environmental litigation,” say Gina Jones, associate VP of environmental programs at Burns & Wilcox. “Because the net is so wide, even if your client is not held responsible, they’re going incur defense costs, which a good environmental policy will cover.”

Since 2008, the number of carriers offering environmental policies has tripled.

The terms are now generally broader, and the products are decidedly more comprehensive.

One of the most significant characteristics of the environmental risk space is how rapidly it changes; it’s a segment of the market that refuses to stand still. “What’s brilliant about current environmental policies is that they’re written in a very broad manner, and they have the ability to adapt to the changing environmental legislation,” Jones says. “If something is not considered an environmental condition today, but tomorrow it is because of a legislation change, our policies will always pick that up.”

An effective environmental policy gives business owners peace of mind that any environmental or pollution issue will not lead to significant financial harm. Comprehensive environmental policies can cover clients for both sudden and gradual pollution events and third-party claims, including injury, property damage and cleanup costs. An environmental policy should also cover emergency costs and claims expenses, including investigation and legal defense fees, which can escalate rapidly.

“New legislation is leading to more clients than ever before having problems with the mandates and jurisdictions, which then opens

up clients for liability,” says Michael J. Bernay, CEO and managing director of PERse. “Environmental coverage is definitely getting more important, and for most clients, the fear is the uncertainty – although most insureds that we deal with in the renewable space have a good handle on what they’re getting into and can either transfer the risk internally or correct a situation while they’re getting involved.”

The broker’s role The modern reality is that every client is likely to have some sort of environmental exposure, even if they’re not aware of it. “It isn’t just

“A client may say they’ve never had a loss ... but the reality is that absence of loss doesn’t mean absence of risk” Gina Jones, Burns & Wilcox hazardous waste that is a problem, so you need a good environmental policy to make sure you’re covered properly,” Jones says. “A client may say they’ve never had a loss and therefore don’t need environmental coverage, but the reality is that absence of loss doesn’t mean absence of risk.”

Jones stresses the importance of educating clients and guiding them toward the right type of policy. Offering comprehensive options doesn’t just safeguard the client – it protects the broker, too. “Brokers have to present environmental insurance opportunities to avoid professional E&O against themselves,” Jones

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US/CAN AD LED TEMPLATE NO AD

IBA JULY

FEATURES

ENVIRONMENTAL INSURANCE

TOP 10 HUMAN-CAUSED ENVIRONMENTAL ACCIDENTS 1

Union Carbide gas leak at Bhopal (1984)

2

Russian nuclear power plant explosion at Chernobyl (1986)

3

Italian dioxin crisis at Seveso (1976)

4

London smog disaster (1952)

5

Major oil spills of the 20th and 21st century

6

Love Canal chemical waste dump (1920)

7

Baia Mare cyanide spill (2000)

8

European Bovine Spongiform Encephalopathy crisis (1990-2001)

9

Spanish wastewater spill (1998)

10

Three Mile Island partial nuclear meltdown (1979)

says. “It’s the broker’s responsibility to protect themselves by offering the right options, but a lot of the time, they don’t want to talk about environmental coverage because they feel they’re not an expert.”

Brokers with expertise in this area should consider each one of their clients and the possible situations that could lead to them becoming embroiled in an environmental or pollution event. Brokers unfamiliar with the environmental space can contact an environmental insurance specialist or speak to one of their carriers, who will walk them through the environmental policy. “Once you’ve spoken to [clients] about their exposures and the coverage and cost available, they’re going to be making an informed decision,” Jones says.

Bernay adds that, to understand a client’s position as thoroughly as possible, both brokers and underwriters need to get as

32

close to the client as possible. “We’re more successful when we get into a discussion with not only the broker but the client too, because often times the insured can speak best to what he’s facing,” he says. “A broker may have built-in biases as to why things should be done in a certain way. Staying close and understanding the client’s problems is a key for us.”

In order to offer clients better, more customized service, underwriters and brokers need to open a clearer line of communication between themselves. “That’s the ideal situation, because the more info we’re able to collect from the insured, the more we learn,” Bernay says. “Having the opportunity to have a dialogue with the client is meaningful and can make a big difference on the type of

“Environmental products are not like standard admitted policies where a commercial property form is going to be pretty much the same coverage regardless of the carrier offering it,” he says. “No two environmental policies are the same, and there are very wide differences in the scope of coverage being offered. This is not to say new carriers have bad coverage, but it does speak to the need for the broker to really understand the product being offered by that carrier, not just the cost.”

Pritchard also highlights the importance of reviewing a carrier’s ability to support the policy they’re offering. “How experienced are they? Are they committed to environmental insurance or just testing the waters? Do they handle their claims in-house or farm them

“There’s a good opportunity for brokers to become specialized in this area. Don’t try to be all things to all people” Michael J. Bernay, PERse coverage, cost of coverage and the coverage you can offer.”

Product knowledge Bernay also advises agents to take the time to get fully informed about the products available – and he says underwriters can help brokers understand and differentiate the vast array of policies and tools on the market. “We look for brokers who not only have a good understanding of the risks, but also spend time developing their knowledge and getting to know the business they’re serving,” he says. “There’s a good opportunity for brokers to become specialized in this area. Don’t try to be all things to all people.”

Bill Pritchard, president and CEO of Beacon Hill Associates, says the proliferation of new markets entering the environmental space is creating a challenge for brokers.

out?” he says. “All of these factors have a huge amount to do with the long-term value of the product being offered.”

In order to handle the increased opportunities in this space, agents should prioritize finding a fixed product they can offer to all clients. “You have to have a base product, but at the same time, that product has to be flexible enough so that your larger clients and clients with diverse appetites and exposures can still fit it into their model,” Bernay says. “The difficult part is making sure you get a product that can meet all of your clients’ needs, because the marketplace is competitive.”

Brokers have an integral role to play in analyzing their clients’ environmental risk – even if a client perceives it to be minimal.

Brokers should consider all of the potential impacts and provide a strong product that covers a client for all eventualities.

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IBA JULY 2016c.qxp_Layout 1 6/7/16 11:48 AM Page 1

Freberg Environmental The “go-to” environmental market

For over 25 years, we have provided rock-solid service and a range of environmental coverages. With environmental underwriters who have real-world experience combined with the security of A+ rated carriers, Freberg Environmental is the “go-to” market for knowledgeable, fast and friendly service.

• Hazmat Auto & Excess Auto • Consultants & Contractors • Products Pollution • Site-Specific Pollution • Storage Tank Liability • Excess • Inland Marine

We’re here to help.

Give us a call or check us out at www.feiinsurance.com

Fast, friendly, and knowledgeable service

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2000 South Colorado Boulevard • Tower II Suite 800 • Denver, CO 80222 800/377-4152 • 303/534-1171 • Fax: 303/623-8101 FEIinsurance.com In CA dba: FEI, Insurance Services 33 www.ibamag.com

7/07/2016 10:09:36 PM

FEATURES

AGENCY INSIGHT

USI Insurance Services Phil Larson, president and COO of one of the largest brokerage firms in the nation, talks to IBA about what makes USI Insurance Services unique in the middle-market insurance industry IBA: Tell us a little bit about USI. Phil Larson: USI was started in 1994 with about $6.5 million in revenue and 40 employees in California. USI is now over $1 billion in revenue, and we have over 4,200 employees in about 140 offices across the country. We’re focused on four core lines of business: commercial property & casualty, employee benefits, personal risk and retirement consulting.

we spend a lot of time developing industrybased solutions. We harness the collective knowledge of our associates from around the country and document and build out those solutions in what we call the Omni Knowledge Engine. We also have a large number of technical resources who are located in our field offices around the country, and they help to apply and deliver on those solutions that we have in Omni.

IBA: What does USI stand for?

IBA: What is the USI ONE Advantage?

PL: It’s what we refer to as Understand, Service and Innovate. Understand refers to really understanding the specific needs of our clients based on their industry vertical, their size and their specific risk issues.

Service refers to our very strong local client service model that is networked nationally.

Innovate refers to our innovation of bestin-class solutions. You will hear us talk a lot about the USI ONE Advantage. That’s a significant endeavor we’ve been working on for a while now to innovate the insurance brokerage industry.

PL: It’s something we are really proud of, and it has been under development for a long time. When we say the USI ONE Advantage, ONE is actually an acronym. The first part of it is really the heart – the Omni Knowledge Engine. Many years ago, we spent a lot of time with experts from around the country in all the various industry verticals and all the different lines of business, and tried to pull out all of the best ideas and solutions they had

IBA: How has USI been able to build its various P&C solutions?

PL: We’ve been building our verticals for many years. The industry vertical strategy is actually very much tied to our USI ONE Advantage strategy. Part of the USI ONE Advantage is that

34

to reduce cost and expand coverage for our clients in P&C. We also did the same thing for our other lines of business. Over time, we were able to develop that into an online tool with helpful automation.

The Omni is also connected to an online library, which contains support material for every solution, including online training, case studies, sample work products and explanations of how the financial impact is derived. So if you are a producer at USI and you are working on an opportunity or an existing client, you can enter client information into Omni, and it will give you access to hundreds of solutions and ideas. You can even look at financial impact, which is a very important part to help pick the solutions.

We do about 30,000 of these a year, and there is also functionality within Omni that lets you see the most popular solutions or national expert recommendations for clients in that vertical.

A NEW TWIST ON COMMUNITY SERVICE To celebrate USI’s 20th anniversary in 2014, the company launched 20 for 20, a nationwide event where employees participated in community service during 20 weekdays throughout the month of August. After much positive feedback, the company decided to make it an annual event. Every year, each office chooses a charity or organization to support. Since the start of the program, more than 4,200 USI employees have worked with food banks, animal rescue shelters and senior centers and have donated to organizations such as Habitat for Humanity, the Salvation Army and the United Way, just to name a few.

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USI FAST FACTS

Top commercial sectors Industrial Construction Real estate Healthcare Transportation Professional services Retail Year founded: 1994 Number of employees: 4,200

“We harness the collective knowledge of our associates from around the country and document and build out those solutions” The ‘N’ is the network. That is the hundreds and hundreds of technical resources that we have added to the firm. They are not sales consultants or account managers; rather, their role is to help sales consultants and account managers select, explain and implement the solutions for clients.

The last part, the ‘E,’ is the enterprise planning process, and that’s the approach where we bring it all together. So there are regularly scheduled meetings that leverage the Omni analytics with our networks of resources across the country.

IBA: What is the importance of USI ONE Advantage?

PL: Really, it is the only way that you can capture the collective knowledge of 4,200 professionals and make it readily available 24/7 to 1,000 sales consultants sitting in 140 offices around the country. The reason no one else does it is because it is really hard to pull off. We think it gives us a true differentiation in the middle market, and to our knowledge, no one else is even trying this approach. It has taken us years and years to build, and we are continuously innovating the solutions.

Headquarters: Valhalla, NY Territory: 140+ offices serving all 50 states and international Corporate management: Michael J. Sicard, chairman and CEO; Philip E. Larson III, president and COO; Edward J. Bowler, CFO and SVP, corporate development; Ernest J. Newborn II, SVP, general counsel and secretary; Robert Meyers, SVP, property & casualty; Arthur Hall, SVP, employee benefits; James Kane, SVP, personal risk; Sandra Usleman, SVP and chief sales officer; Kim Van Orman, SVP and chief human resources officer; Stew Gibson, SVP and chief information officer Recent awards: 2016 IMCA Showcase Awards for Corporate Social Responsibility and Employee Communications

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FEATURES

CONTRACTOR’S INSURANCE

Cash in on construction Brokers with skills and expertise in the construction industry have a good chance to improve their bottom line by taking advantage of the ongoing boom GROWTH IN the US construction sector is comfortably outpacing the country’s gross domestic product, and spending in construction is currently at its highest level since 2008, at a massive $1.7 trillion. Growth isn’t expected to slow anytime soon, which means the rebounding sector represents an attractive opportunity for those insurance

and certain trends are beginning to define the segment, contractor’s policies are often unique and vary between carriers. Agents must thoroughly analyze the terms and conditions of any policy to ensure it meets the specific needs of their client. This analysis should include thoroughly reviewing a client’s construction contracts, which will play a big

“It’s certainly a technical segment of the industry and is very rewarding, but it’s also very challenging for agents” Jeanette Dostal, United Fire Group professionals who have the know-how to take advantage of the sector’s performance.

“The booming construction industry creates a great opportunity for agents to provide contractor’s policies; however, contractors can be very highly service-oriented,” explains Jeanette Dostal, assistant vice president and underwriting manager at United Fire Group.

“They have a lot of insurance requirements, sign a lot of contracts and need to know how those contracts, which vary from job to job, affect their insurance policy.”

Although standardization is increasing

36

part in deciding what the minimum requirements should be. If an agent refrains from taking this important step, there is a strong chance that the policy won’t fully conform to the business requirements.

When a construction client signs a new contract, their policy may require new obligations to be implemented. In some cases, clients will approach their agents to discuss the impact that any new contract will have on their insurance coverage. “Agents have to work out if those new obligations can be met by endorsing their policy,” Dostal says. “Every

insurance company has different options available, and agents have to know what those options are. It’s certainly a technical segment of the industry and is very rewarding, but it’s also very challenging for agents.”

Complex coverage Local economies across the country are feeling the benefits of the current construction boom. Contractors are being hired for a wide variety of mixed-use and multi-family projects in all regions, and are also seeing significant growth in commercial building, lodging and manufacturing. In a recent Future One Agency Universe Study, insurance agents identified the construction sector as the one with the most revenue opportunity.

But construction is a complex market for agents to navigate; it’s not as simple as offering an off-the-shelf policy. In fact, the myriad risks and potential for massive losses associated with the industry have made many insurance firms reluctant to offer coverage to general contractors and subcontractors. In many cases, agents find that excess & surplus lines carriers are the only viable markets available to them.

“Coverage in the construction liability field is complicated, and brokers really have to fully understand all of the different coverages available, which can be difficult,” says Douglas Holmes, president of Shield Commercial Insurance Services. “It’s not an easy task for the broker because the coverage is complex, the language is complex, and the endorsements are also complex. In each case, a broker should explain any policy restrictions to the client and then be sure to get a signed disclosure from the policyholder, which states that they fully understand the restrictions that are in place.”

The volatility of the construction industry adds more complexity for agents operating in the space. Any agent who’s serious about becoming a specialist in contractor’s insurance has to invest a significant amount of

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time and energy – and even then, they may experience periods of low growth if the wider economy starts to slow. (When national unemployment hit 9.7% at the beginning of 2010, for example, unemployment in the construction sector reached a startling 24.7%.)

In today’s uncertain times, any agent who wants to maximize commissions has to be a specialist in not just one area, but many.

“Agents need to diversify their portfolios and not be totally dependent on contractors, even if that might seem tough or impractical,” Holmes says. “They have to be flexible and have backup lines of business – inland marine

and commercial auto and trucking are good fits for specialists in the contractor space.”

Any agent who spends the time to properly educate themselves on the various intricacies of contractor’s policies will undoubtedly be in a stronger position to provide their clients with top-level service. It’s an industry that relies on reputation and referrals, so any agent who can stand out from the crowd has a good opportunity to grow their business – not just today, but for the long-term. And despite the complexity of the construction space, all of the economic data points to favorable market conditions for insurance agents.

Adding value There’s no doubt that insurance professionals will have the opportunity to grow their business in the construction space in 2016, but how can they go about maximizing that potential? Holly Beers, vice president and underwriting manager at RSI International, advises agents to implement an online rating tool.

“Contractors are very difficult to get a hold of,” she says, “and if a retail agent can offer them a quote quickly, they have a better opportunity to write the business. The MGA that can provide a platform that gives the retail agent a tool that is easy to use to provide

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FEATURES

CONTRACTOR’S INSURANCE

OPPORTUNITY IN THE CONSTRUCTION INDUSTRY

$1.73 trillion

Annual revenue of the US construction industry

729,345

Number of construction companies in the US

7,316,240 Number of construction industry employees

$45,200

Average construction company employee salary

quotes on contracting risks is a win-win for both the agent and the MGA in this segment of the business.

“Everyone wants everything instantly these days,” she continues, “and many prefer not to talk to anybody, so if you can provide an online rating tool that can qualify the risk quickly within the underwriting criteria you are willing to write, it will give you an advantage in our industry today.”

Another way an agent can add value to client relationships in the construction industry is by making sure clients are aware of any possible coverage gaps in their controlled insurance programs. In some cases, general contractors or project owners are encouraged to sponsor controlled insurance programs in

Likewise, a contractor needs to know they have they have adequate liability coverage in place so that if they are found responsible for injuries suffered by another party or property or environmental damage, it won’t cause a financial meltdown. Agents should work with their clients to discern whether they require a general liability aspect to their policy, which will cover the cost of defending the insured against the charges alleged in a lawsuit, including attorney fees, investigation costs and other legal expenses.

Agents should also educate themselves on stricter indemnity laws that could leave their contractor clients exposed. Certain states are reducing the scope of indemnity that can be inserted into contractor’s policies. In California,

Source: US Census Bureau

TOP 5 STATES FOR CONSTRUCTION California (72,173 companies)

“Contractors are very difficult to get a hold of, and if a retail agent can offer them a quote quickly, they have a better opportunity to write the business”

F

Holly Beers, RSI International Florida (51,143 companies)

New York (43,409 companies)

Texas (37,200 companies)

Illinois (30,236 companies) Source: US Census Bureau

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an attempt to ensure that all subcontractors on the project are properly covered.

When offering this type of policy, an agent should work closely with the client to ensure that they’re fully aware of the policy’s coverage and limits, because if the client selects a program that shares limits, a loss suffered by another party on a project could reduce their coverage.

Giving contractor clients the peace of mind that comes with a comprehensive insurance policy will also allow any agent to stand out.

Contractors need tools to get the job done – tools that are often expensive and extremely appealing to thieves. Contractors need to know that, should their tools or equipment be stolen, their policy will enable them to quickly get the new tools that will enable them to continue their daily operations.

contractors are prohibited from using Type 1 indemnity agreements, which offer protection for everything but sole negligence. Although these new regulations were introduced to mitigate against low-quality construction outcomes, they also leave contractors vulnerable to litigation.

In an industry like construction, where reputation is paramount to future potential earnings and growth, it’s essential for contractors to know that their coverage protects them in any such unfortunate event. For brokers, this segment of the market represents a good opportunity to build an affluent client base that’s in significant need of up-to-date, all-encompassing products. Every construction project is unique, so meeting demand for policies that cover a breadth of risk factors is essential.

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CHANG ING WORLD

about to and brokers is ates rance agents stig The world of insurm. Insurance Business inve ld g wor radically transfoto do to thrive in a changin d and Casualty nee ion of Property what you Future: The Evolut

saying of the ution. the Agency are g today is not Insurance Distrib WHA Insurance agents are playin Producers at ago, specifically “The role that comfort zones. ding , 20 to 30 years goodbye to their e, Ore., is expan ob Hartman role they played cing,” says R based in Eugen and developing in risk selection and pri The agency, ercial lines . lines: cus on comm ffocus its fo hor of the report be on the front f ont line of fr n within those co-aut lizatio r o f fo specia , buses used to new areas of y had undery, or taxis and ffo “The agent of a policy, n insurance transportatio riting and pricing tions of homes, knew very underw y, did inspec ity, ityy, rit example. gents who were ys Hartman. had agents riting authorrity ss,” s ” says writin have busine we , stayed the “Historically given that lization and they logy the customer, knew for that today, areas of specia techno used to their ’s a lot less need singly in small information y 50 “There Vince Ada, lines—and increa to more of a there,” says ys approximatel all personal g which emplo s are movin in what in task is director at WHA, ercial—carrier sit comfortably , where the You comm you can’t just r riting model or eight years. people. “But ation and answe black-box underw in the last five fill out an applic you have done or 10 to 20 to accurately le industries.” the business yees multip about emplo learn ons nal have to additio how you drive to 60 questi ly hired eight and the car and help the 50 WHA recent ons about you logies that will questi techno ers. enting are and is implem that’s it.” vely with custom by carriers t more effecti efforts it—and hannel or direct sales interac ting ny which marke compa up its Multic insurance, also stepping ercial y, and auto ing al and comm The agency is increasing steadil of premiums, is becom sales in person for 70% s are also in order to grow measures to boost efficiency. says. Carrier is accounts ry d, Hartman matic of what lines, and is taking with the indust commoditize ence is emble insurance aggressively, ising.

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7/07/2016 PMAM 21/07/201510:11:13 4:13:08

FEATURES

LEADERSHIP

Commercial collaboration: the operating system of the future A new methodology of collaboration is necessary to keep pace with the speed of today’s business environment, according to Janine Garner THE PHENOMENAL speed of change that got us to the 21st century’s technological frenzy is not going to slow down any time soon – and it is creating an uncertain future on a global business level. There is an ongoing war between the need for stability and the need for growth. It is up to each of us to actively listen to the demands of this society and evolve how we operate accordingly so that what we do aligns with – and leads – the new paradigm.

We live in a highly connected world. The constant transformations happening on both domestic and global levels are affecting us as we try to maintain balance in our personal lives while striving for our dreams. Business is under pressure – evolution within society demands constant innovation and invention in product design, delivery, communication, marketing and customer service, as well as in business itself, from office layouts to organizational structures, from leadership styles and culture to working hours and communication platforms.

Societal evolution is driving a feeling of uncertainty about what the future will hold – especially for Gen X and the Baby Boomers, who have had both financial and philosophical certainties stripped away over the last decade. For these two generations in particular, who make up the majority of the

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leadership pool at present, this feeling of the unknown is resulting in business methodology regression.

Regression to what? To the comfort of the known, of protecting ‘me,’ when what is actually needed is the courage, confidence and bravery to move to the new operating system of ‘we’ – one that will enable leaders to create the solutions needed to futureproof personal, business and team successes.

Those who are willing to be a part of a collaborative working environment are doing so because they want to be challenged. They want the opportunity to constantly learn from others, and to share what they’ve learned. To engage on an intellectually challenging level with like-

minded thinkers. To see their own business benefit from the knowledge of specialists. To be happy knowing that they are on the edge of technological advancement, constantly pushing the ‘what if’ button – because as a team, they feel secure enough to take risks.

Moving from ‘me’ to ‘we’ The concept of commercial collaboration, and the move from the ‘me’ space to the ‘we’ space, is not for the faint-hearted. It’s for those who can see the far-reaching benefits of what the ‘we’ space is about — and yes, it is a gradual move, one that involves challenging thinking. But it is not something one has to contemplate in solitude.

THE BENEFITS OF ‘WE’ Leaders who are already operating in the ‘we’ space: Are able to think big

Promote based on merit, irrespective of gender or age

Recognize the need to act as a team

Are innovative

Embrace fears and vulnerabilities

Disrupt the status quo

See the value in helping others see their worth

Lead with a questioning spirit

Actively engage with others

See what commercial collaboration brings to an entrepreneurial mind

Act with bravery

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A COLLABORATIVE ENVIRONMENT This new operating system is one where: Networks of connected individuals, communities and businesses work together to drive success We can bring our skills, strengths and talents to the table, and together amplify and share expertise to create progressive, results-oriented solutions Collective intelligence means we work smarter and quicker together Diversity and difference of opinion is actually the new competitive advantage Commercial collaboration: Creates momentum Drives new thinking Builds resilience and determination to succeed Enables individuals and businesses to explore possibilities and develop strategies to future-proof success

Every part of the ‘we’ space has the backing of others. Overcoming fear and facing up to vulnerability are done with full disclosure and honesty, with the knowledge that by sharing your fears, you are empowering not just yourself, but those who work with and for you.

You are giving the team the opportunity for empowerment and trust.

When you disrupt the status quo, when you disturb the accepted and the everyday, you are forging a new strength and getting rid of the weak and humdrum, which bog down business decisions and keep processes stale and stagnant. In the spirit of openness and full disclosure, you are not moving secretively, but so that those in your team or circle of excellence are aware of your thought processes and why you are taking the actions you are. In this way, you have backup – and trust in your actions.

Understanding the power of your network and using its potential is intrinsic to the ‘we’ mentality. To care about the well-being of those who are connected to you through business similarities or ethical focus or a desire to advance the same cause – while expecting nothing in return – creates a fantastic opportunity for collaborative relationships, and also for a true value exchange, where ‘what’s in it for me’ turns into ‘what can I do for you.’

The ‘we’ space is not a pipe dream. There are businesses and leaders who are clearly succeeding by operating within this framework. It is the center of discussion among academics, thought leaders and consulting groups. Those corporations and entrepreneurs who are using the space well, and understand the shift in thinking needed to get there, are seeing procedures streamlined,

the bottom line coming up, and employees happier and more engaged. Their ‘communities’ are becoming actual communities.

It is not enough, in the words of Sheryl Sandberg, to ‘lean in’ to future-proof our success, our businesses and our careers. For leaders who are taking teams into an uncertain future, it’s now about leaning out and collaborating with others. Because to lean out means to embrace and engage on an unforeseen aggregated level – where thinking bigger than ever before will bring rewards to a collective commercial mind.

Janine Garner is a businesswoman and entrepreneur, and is the author of From Me To We: Why Commercial Collaboration Will Future-proof Business, Leaders and Personal Success. She is also the founder and CEO of LBDGroup.

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FEATURES

INFLUENCE

Four ways to improve your influence We are all in the business of influence – but instead of seeing it as manipulation, Dr. Tim Baker outlines how influence, when used ethically, can be an essential business tool

INFLUENCE IS the lifeblood of business, especially for insurance brokers, who must influence the many stakeholders they deal with on a daily basis. However, the word influence means many things to many people.

To some, it means being cunning, manipula­ tive and tricky. Others see influence as ethical and open.

In my view, influence is the power to make other people agree with your opinions or get them to do what you want willingly and ethi­ cally. The key words here are ‘willingly’ and ‘ethically.’ Sustainable influence is not an exer­ cise in manipulation and trickery.

In the context of sales, marketing and professional advice – areas that brokers regu­ larly work in – influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances. People make up their own minds, but they do so on the basis of how they are influenced. This is why influencing must be done from an ethical standpoint.

My new model of influencing, the Influ­ encing Capabilities Framework, illustrated on the opposite page, identifies four primary ways that leaders can and do influence others.

You will notice two styles – push and pull.

The push style is more assertive, direct and upfront, while the pull style is more collabo­ rative, indirect and subtle. Both are effective

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INFLUENCING CAPABILITIES FRAMEWORK PUSH STYLE

PULL STYLE

APPROACH

Investigation

Calculation

Logical

Motivation

Collaboration

Emotional

in the right place, at the right time, with the right people. The two approaches are logical and emotional. The logical approach is based on fact, rationale, structure and clarity, whereas the emotional approach is based on inspiration, possibility and the ‘big picture.’

Again, both approaches work in the right circumstances.

So we end up with four distinct strategies: investigation, calculation, collaboration and motivation. Which one do you favor?

Investigation As a strategy of influence, investigation basically means gathering the facts and presenting them in a logical and convincing manner. The presentation of a coherent and assertive argument based on well-founded research is a powerful form of persuasion in the right set of circumstances.

People usually are not convinced by someone who does not have a sound grasp of the facts, nor are they influenced by someone with wavering conviction or an incoherent presentation of his or her ideas. Then again, even if you are logical, coherent, assertive and well-researched, that doesn’t necessarily guarantee that you will be persuasive. But these attributes are at least a good starting point.

Brokers who have a preference for investigating like to search for supporting evidence and, from this data, generate hypotheses or ideas based on a logical, rational argument. Once investigators have prepared a well-founded case, they assert their ideas to others.

Being well-prepared, investigators are typically on solid ground to oppose others’ arguments. In other words, an investigator’s influencing ability is reliant on a carefully researched and assertively communicated case. Climate change campaigner and former

US vice president Al Gore is an example of an investigator.

question motivators answer. Former civil rights activist Martin Luther King, Jr. was a motivator.

Calculation Calculation means to influence by clearly articulating the pitfalls of the status quo and demonstrating how those pitfalls can be overcome with a new proposal.

Psychologists tell us that we are all moti-

Collaboration The strategy of collaboration fundamentally involves influencing through trust-building and sharing ownership of the leader’s proposal.

Clients are more likely to be persuaded by an

Influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances vated by pain and pleasure: We try to avoid painful situations as much as we can, such as being late for an important meeting we are chairing. Conversely, we gravitate to pleasurable experiences, such as pleasing our boss by finding the right information in a timely manner.

While this should appear obvious, we each have different ideas of what pain and pleasure are, so we interpret the significance of situations in our own way. A potentially painful situation for one person could be viewed as enjoyment by another.

Brokers who are calculators are likely to talk up both the advantages and disadvantages of an approach. Former UK prime minister Margaret Thatcher was a calculator.

Motivation The motivation strategy, in essence, means to influence by associating an idea, change or proposal with a clear, compelling and common vision of the future. Brokers who can paint a convincing picture of the future and motivate people with that vision are generally inspirational and influential. Most great leaders have this aptitude.

Unfortunately, from my observations, too many people get caught up in the minutiae of what they are doing. Consequently, they often forget to articulate the link between the proposal and the big picture. People in sales don’t always explain the why – why we are recommending this approach or portfolio. “How does what we are currently doing contribute to the big picture?” is the type of

broker’s suggestion if they feel they have been genuinely consulted about it.

By collaborating with others, the influencer is inviting the people he or she is influencing to be emotionally engaged and involved in the proposal. Clients feel they have a stake in the change and are subsequently more receptive to its merits. Through authentic collaboration, trust builds and influence increases.

Collaborators create positive emotional energy. They are concerned with developing a sense of trust and engagement. Collaborators are consultative in their approach to problem-solving; they actively listen to others and are willing to share ownership of the outcomes through open communication. The influence of collaborators permeates from encouraging input and building higher than normal levels of confidence in colleagues. The late activist Mother Teresa was a collaborator.

We each favor one of these strategies over the other three. The problem is that, from time to time, we will doubtlessly use the wrong strategy, either for the person we are trying to influence or the situation we are in.

Outstanding persuaders and influencers use all four strategies in the right place and at the right time.

Dr. Tim Baker is a thought leader in organizational and leadership development, an international consultant and bestselling author of the book The New Influencing Toolkit: Capabilities for Communicating with Influence.

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FEATURES

RECRUITMENT

Balancing data and gut instincts in hiring decisions When it comes to making decisions on a new hire, many experts will say that gut instinct should be left out of recruitment. But Christine Khor explains that balancing that innate instinct with cold, hard facts has many benefits

GUT INSTINCT, or intuition, is thought

The role of the gut

of as dangerous ground as it can – and often has – lead to a discriminatory selection process. Using intuition by itself may lead to situations where we only hire people who we know or like, people who we don’t feel threatened by, who remind us of ourselves, who are exactly the same as the other people on our team, etc. In other words, your gut instinct, if not combined with more scientific data, is likely to result in hiring the person you can see yourself having a drink with or inviting to a barbecue – not necessarily the person who is the best for the job.

Though these experts are correct, it is important to note that the role of gut instinct and intuition should not be completely ignored. Instinct plays a vital role in how we make decisions and prevents us from falling into the dangerous territory of groupthink and overanalysis.

Instinct is a biological function that helps us to determine danger. It is a natural subconscious response. Think of a time when you’ve met someone you just didn’t feel comfortable around, and then you later found out that person had a shady past. Your intuition was confirmed by evidence. Think of a time when you felt a little off in someone’s house, only to find out later that your host had just had a heated argument with their partner before you arrived.

This is your brain taking the temperature of a room, feeling the underlying tension and responding to it by eliciting your fightor-flight instinct. When it comes to business decisions, it is usually our expertise, experience and knowledge that allow us to read a situation and respond to it instinctually.

So, why are we ignoring our instincts in business today?

Analysis paralysis When it comes to business decisions, the fear-of-failure mindset has permeated organizations at all levels and in all industries as a not-so-surprising side effect of having gone through a global financial crisis. It makes sense that after a period of economic instability, businesses will be cautious in their strategy, and business leaders will be apprehensive when making decisions.

However, we all know that this kind of fearbased thinking is the major obstacle to innovation and can have a big impact on the hiring decisions of a business. Because of this fear, businesses are relying heavily on groupthink and committees. Management will call meetings, send group emails, request more research and stall for more time, rather than taking the perceived risk of making a decision. Many executives don’t want to be the one to make the final call in case things go pear-shaped. We like to call this ‘analysis paralysis,’ and it has become rampant in hiring decisions.

Increasingly, recruitment within businesses is being stalled by elongated processes that include numerous rounds of interviews, background checks, psychometric assess-

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a high intellect but won’t get bored easily, will work for a salary lower than market rate, and will be satisfied doing a job they have already done before –basically, a unicorn.

Of course, unicorns don’t exist. But people with the potential to grow and learn do. Your best candidate may not tick all the boxes – and in fact, they shouldn’t. If they did, they would have nothing to learn or gain from working at your company and would therefore be a flight risk.

In other words, decision is risk, but in some stage of the recruitment process, a decision has to be made.

The balancing act

When it comes to business decisions, the fear-of-failure mindset has permeated organizations at all levels and in all industries as a not-so-surprising side effect of having gone through a global financial crisis ments, case studies, an increasing amount of reference checks and then a long waiting game where all the data is analyzed but a final decision is still not made. While this is happening, the talented prospects who went through this arduous process have gone on to find other opportunities.

While it is absolutely necessary to gather evidence-based data on the skills, experience and cultural fit of a prospective employee, this process has to be as streamlined as possible and not become excessive. Three references are the standard to get a general consensus on how well a person did their prior jobs; however, we’ve been asked at times to do six.

While it is often necessary to do a secondround interview or have the person meet

additional people within the team, a process of four interviews is excessive. If a manager cannot make a decision based on two rounds of interviews, three reference checks and perhaps one psychometric test, then it is usually their gut instinct telling them that the candidate is not the right person for the job. If instinct were listened to at this point, then a lot of time and money would be saved.

The key to making a good hire is to combine data-based evidence with instinctual responses. What it comes down to is that gut instinct should never trump evidence in the making of a decision, but it shouldn’t be ignored if it is sounding alarm bells. My advice is to pay attention to your instinct when it is telling you not to hire someone, but disregard your instinct if it is telling you to hire someone in spite of the evidence gleaned from interviews and reference checks. It is most likely personal preference at work here.

Second, make sure you qualify your gut instinct with objective reasoning. Are you an expert in the area in question? Have you had a similar experience before, and was your instinct correct at that time? Do other people agree with your instinct? Are you sure that you are not engaging in any form of bias or discrimination?

By removing the fear of risk mentality that may have taken residence in your management team, you give them permission to use their expertise, experience and wealth of knowledge to navigate decision-making.

Provided data-based evidence is not ignored, the instincts of your management team can be a valuable asset to your organization.

Searching for a unicorn The heavy reliance on group consensus and box-ticking not only takes the humanity out of the hiring process, but it also supports the fallacy that there is a perfect person for the job in question – someone who has all the experience, all the skills, does not require training, has

Christine Khor is the managing director of Chorus Executive, a talent management company focusing on the recruitment, coaching and personal branding of executives. Her book, Hire Love: How to Hire Passionate People to Make Greater Profit, is now available through Amazon.

www.ibamag.com

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Your favorite insurance magazine

Your news, how you want it: award winning monthly-magazine, daily e-newsletter and breaking news, award winning web-site and content viewed on your desktop or mobile device.

The #1 source for the commercial insurance industry 46-47_Career Path-SUBBED.indd 46

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PEOPLE

CAREER PATH

A DREAM COME TRUE

What started as a love of sports and music has led Frank Zuccarello to what he calls his “insurance dream job”

1980s

Growing up close to New York City, Zuccarello’s weekends involved many trips to Yankees, Giants, Knicks and Rangers games. As a high school student, he also played guitar and sang in a rock band, sometimes in bars where he was too young to even be on the premises “Music is a real passion. I’ve been able to keep that passion and put it toward my work life. My career has mirrored my life”

DEVELOPS EARLY PASSION FOR MUSIC

1999

MOONLIGHTS AS A WEEKEND WEDDING SINGER While working in insurance during the week, Zuccarello generated a second income as a wedding singer on weekends “I still play a few gigs a year. It keeps me connected to my business – I have to learn songs from new artists, and sometimes those are the artists we’re insuring”

2006 FOUNDS EXCEPTIONAL RISK ADVISORS Ten years ago, Zuccarello launched Exceptional Risk Advisors, which specializes in developing, underwriting and distributing specialty insurance products for entertainment professionals, athletes and other high-profile clients. The current client list includes Oscar and Grammy winners and elite pro athletes

“Nothing is guaranteed when you start a new business. But it’s a risk very much worth taking” 2015 DOUBLES GROSS PREMIUM Over the next five years, the company experienced spiraling increases in gross premiums and focused on recruiting talent and adding new products, including multi-life business coverage for high-level executives. They also became one of largest contingency facilities in the market to cover for non-appearance “We insure the rock stars of their industries. It’s been a dream come true”

1989

GOES TO COLLEGE As a communications major at William Paterson University, Zuccarello acquired production and recording skills in hopes of landing a gig writing jingles. He also polished his business communications skills, which served him well during a seven-year stint in the marketing department of disability insurer UNUM, where he found his niche “Eventually, I realized I was a good salesman”

2000 STARTS AT HANLEIGH Zuccarello eventually moved to Hanleigh, where he met Edward Tafaro, the company’s owner, who would eventually become his business partner.

Zuccarello worked at Hanleigh for seven years, during which he started underwriting for Lloyd’s of London, ultimately becoming one of the few people in the US with binding authority from Lloyd’s exceeding $70 million in accident & health “I did the grunt work. It’s the best way to learn”

2010

EXPERIENCES AMAZING GROWTH With a three-year growth record of 4,931%, Exceptional Risk Advisors was ranked in the top 50 of Inc. magazine’s list of America’s fastestgrowing private companies. During that time, the staff also grew from seven to 23. The company partners with Lloyd’s of London syndicates to underwrite highlimit specialty life and disability insurance, not only for high-visibility entertainment and sports clients, but also for C-suite and other key personnel “After a few years, you look back and think, wow!”

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NAPSLO

PEOPLE

MESSAGE IN A BOTTLE For Preston Schmidli, poetry provides creativity and connection THE MOMENT that clarified Preston Schmidli’s dedication to writing poetry stems from the poem in a bottle he threw into the ocean a few years ago, which was found and read by a teenager who had been contemplating suicide.

“He said that piece of work kept his head in the game,” Schmidli says. “I felt like if my writing can

48

TELL US ABOUT YOUR OTHER LIFE E-mail iba@keymedia.com

do that for another person, it’s worth continuing.”

The Tacoma native, who has worked as a Farmers agent for seven years, gravitates toward writing on a typewriter “for that vintage vibe” – and, finding much inspiration in the natural beauty of the Pacific Northwest, he’s no stranger to hauling his typewriter up nearby Mount Rainier.

“The hike itself is not fun,” he says. “The typewriter is heavy, but it’s worth it to get the serenity but still have the tech to do what I do.”

Schmidli’s book, Spiritual Arsonist: Paths Lit with the Bridges We Burn, is due for release this fall, and is reflection on life as a twentysomething.

“It’s about learning from the people we hurt and using those lessons to light our way forward. The book encompasses a decade of who I have been and who I have become.”

105

Pieces of poetry Schmidli has published online to date

4,110

Number of followers on the Instagram account that features his work

2

Number of pens Schmidli has on him at all times

Photo: Lacey Johnson

OTHER LIFE

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Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide.

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Insurance plans protected U.S. Patent No. 7,908,157.

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