Insurance Business America issue 6.07

IBAMAG.COM ISSUE 6.07 | $12.95

BROKERS ON

CARRIERS Brokers reveal the best places to find competitive rates, quick quotes and more

THE LATEST CYBER RISKS

Key exposures brokers should be aware of, from connected homes to GDPR

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INSURANCE’S NEXT BIG THING?

Parametric insurance is gaining traction – learn how it can benefit your clients

TACKLING THE TALENT CRISIS

Is it time for the industry to rethink how it’s approaching millennials?

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ISSUE 6.07

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CONTENTS

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UPFRONT 04 Editorial

The next big thing in insurance

06 Statistics

FEATURES

34

HITTING THE FESTIVAL CIRCUIT How brokers can tap into the booming business of music festivals

SPECIAL REPORT

INDUSTRY ICON

Mark Bernacki, head of Beazley’s US property team, outlines how the specialty insurer is growing its presence in this country

20

10 News analysis

What is parametric insurance – and is it the right choice for your clients?

12 Intelligence

How data-driven decision-making can benefit workers’ comp insurers

FEATURES

38

HACKERS BEWARE

Woodruff Sawyer’s Lauri Floresca discusses the latest developments in the ever-evolving cyber segment

16 Technology update

Connected homes are opening up a new avenue for cyber attacks

18 Opinion

The industry is long overdue for an image makeover

FEATURES 44 How to create a winning presentation

Three tips that will help you wow your audience every time

PEOPLE 47 Career path

TJ Krzmarzick has made his mark in excess casualty

FEATURES

40

THE LEADERS OF TOMORROW

Recruiting millennials to insurance is more crucial than ever – so where should the industry go from here?

2

Should insurers have the power to control autonomous vehicles?

14 Workers’ comp update

BROKERS ON CARRIERS

PEOPLE

08 Head to head

This month’s big movers, shakers and new products

24

Brokers told IBA which carriers are leading the pack in terms of rates, quoting, technology and more

The high and low points of businesses’ cyber resilience

48 Other life

Take the stage with Seattle broker and beauty pageant emcee Paul Edwards

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Put partners first.

We do.

Collaboration with partners to take their business to the next level.

Partnerships that span 35 years.

E&S/Specialty nationwideexcessandsurplus.com A.M. Best rating of A+ (Superior), FSC XV Fortune 100 company Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Š2018 Nationwide

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UPFRONT

EDITORIAL

Jump on the new bandwagon

I

f you’re selling cyber insurance, have a website with a chatbot to answer clients’ questions while you’re asleep, and you’re already considering how the blockchain might transform the insurance business, then you’re right to feel you have your finger on the pulse of a changing industry. However, there’s one more new trend you need to be aware of: parametric insurance.

Risk managers have been buzzing about parametric insurance for quite a while. The idea is that rather than indemnifying a pure loss, this new type of policy instead pays out automatically when a ‘trigger’ event takes place within certain parameters – for example, if an earthquake occurs within a five-mile radius of a business’s premises. It’s particularly useful for catastrophic events, but it has plenty of uses in other areas as well, such as agricultural insurance, where the trigger could be a certain amount (or lack) of rainfall that could impact a crop. Generally, parametric insurance is well suited to low-frequency, high-intensity losses.

“Buyers are now more sophisticated, and they understand some of the limitations of a conventional insurance policy” In theory, such a policy could have massive advantages for clients and insurers alike – the payouts would be predictable, making them easier to account for, while also reducing arguments over the amount of damage suffered.

Insurers could also reduce transaction costs with the way they write and administer policies. No surprise, then, that the concept is already proving popular.

“We have definitely seen more inquiries over the last year,” Steve Harry, risk finance consultant in Marsh’s Financial Solutions Group, told IBA in June. “I also think buyers are now more sophisticated, and they understand some of the limitations of a conventional insurance policy. Some people like the uncertainty that gives them, in that they can always argue about a policy contract, and other people like the certainty that an index-based product would give them.”

Of course, as with anything new, there are areas of debate: What indexes will be used? What triggers will be set, and how will they be monitored? How can it be used to incentivize best practice? While some answers remain hazy, what’s clear is that there’s massive potential in this product – so it makes sense to familiarize yourself with insurance’s hot new thing now before it’s your clients who are asking the questions.

The team at Insurance Business America

www.ibamag.com MAY 2017 EDITORIAL Managing Editor Paul Lucas Journalists Alicja Grzadkowska, Lucy Hook, Jordan Lynn, Bethan Moorcraft, Ryan Smith News Writers Lyle Adriano, Krizzel Canlas, Terry Gangcuangco, Mina Martin, Gabriel Olano Staff Writers Hannah Go, Libby MacDonald, Joe Rosengarten, Heather Turner Copy Editor Clare Alexander

CONTRIBUTORS Bri Burkhart, Emma Bannister

ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Traffic Manager Ella Dayandante

SALES & MARKETING Vice President, US Market Cathy Masek Vice President, Sales John Mackenzie Media Sales Managers Chris Anderson, Desiree McCue Mktg & Comms Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley President Tim Duce Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Editorial Inquiries paul.lucas@keymedia.com Subscription Inquiries subscriptions@keymedia.com Advertising Inquiries cathy.masek@keymedia.com, chris.anderson@keymedia.com, desiree.mccue@keymedia.com

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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 nathan.beach@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 Printed in Canada 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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UPFRONT

STATISTICS

Preparing for the inevitable

THE CHIEF TARGETS Companies in North America and the UK were the most likely to have experienced an intrusion in the last year; North American companies were also more likely to report that the attack had a serious impact and that they expected another attack within the next 12 months. Accordingly, companies in these two locations are making more significant efforts to bolster their boards of directors with cyber-savvy professionals.

When it comes to cyber risks, many companies are likely to face an attack, but not all will be victims Cyber attacks are becoming close to a sure thing: In the past year alone, one in every three companies surveyed by Willis Towers Watson weathered a cyber incident that had an effect on or threatened operations, financials and reputation. Expectations are high that there are more such events to come.

High levels of cyber resiliency mean an organization can quickly respond to an inci-

dent, address vulnerabilities and apply lessons for the future. Many executives are confident in their company’s cyber resilience; however, many conceded that they’re falling behind in attracting talent skilled in cybersecurity. Many also said they lack the ability to drive their workforce to be more cyber-savvy. The combination of these two issues indicates a need for change on the human side of cyber resilience.

Had a cybersecurity incident in the last 12 months The intrusion had a severe impact on operations, finance and reputation Likely to have a breach with a severe impact in the next 12 months Confident in restoring operations, finances and reputation in the event of a breach Have enough directors who know cyber

38%

26%

Companies where HR handles developing employee-related cyber risk policies

Companies where IT takes the leading role in developing such policies

33%

Actively recruiting directors who know cyber

73%

Companies that spend less than 1% of revenue on cyber resilience efforts

Companies that believe more should be spent on cyber resilience

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

FOLLOW THE MONEY

READY FOR ANYTHING?

On average, companies spend 1.7% of their revenue on cyber resilience efforts, but a majority of executives would like to see this number increase by at least 10%.

When asked to rate themselves on a scale of one (below average) to five (well above average) on 10 areas of cyber resilience, most companies were optimistic about their level of preparedness, particularly when it comes to assessing their risk level.

REVENUE SPENT ON CYBER RESILIENCE 11%

2%

COMPANIES’ ASSESSMENT OF THEIR CYBER CAPABILITIES Well above average

6%

4 Average

5% or more 22%

3% to 5% 2% to 3% 0.5% to 1% Less than 0.5%

32%

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

3 2

27%

1% to 2%

6

5

Below average

1

3.71

3.62

3.57

3.57

3.56

3.53

Allocate enough budget

Balance accept versus transfer

3.46

3.44

3.41

3.15

0 Assess and Assess Integrate Incident quantify cyber risk technology/ response risks culture governance post-acquisition

Incorporate Cyber- Identify and Apply cyber into savvy fill talent lessons from business workforce gaps incidents continuity

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

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UK 41% 29% 18% 30% 27% 36%

NORTH AMERICA

EUROPE

ASIA

41%

21%

21%

54%

14%

14%

36%

14%

14%

45%

27%

21%

46%

27%

17%

36%

18%

9%

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

TRAINING THE WORKFORCE Where companies’ cyber efforts generally lag is in training employees to become cyber-savvy: Fewer than half of the companies surveyed by Willis Towers Watson have implemented even basic cyber-related HR initiatives. The presence (or absence) of such policies can be an indication of the overall culture of cybersecurity governance in an organization.

PERCENTAGE OF COMPANIES THAT EMPLOY CYBER-RELATED HR INITIATIVES 50%

WHO’S RESPONSIBLE FOR OVERSIGHT? More than a third of organizations believe it’s the responsibility of the board as a whole to provide oversight for cyber efforts, rather than a specialized cyber, risk or audit committee.

WHO CURRENTLY OVERSEES CYBER RESILIENCE

40%

Specialized cyber committee 19%

30% The entire board 33%

20% 10%

44%

44%

Ongoing security awareness training

Identification of talent/skills deficits in IT/cyber

40%

40%

39%

38%

37%

32%

30%

Post-breach workforce planning

Post-breach change management

Behavioral rewards/ incentives

0% Business Identification/ Security Measurement continuity/ action of atincident of training workforce risk employees communication effectiveness planning

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

WHO SHOULD OVERSEE CYBER RESILIENCE Specialized cyber committee 24% The entire board 38%

Source: “Decode Resiliency,” The Economist Intelligence Unit and Willis Towers Watson, 2018

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UPFRONT

HEAD TO HEAD

Should insurers be able to control driverless cars?

Could autonomous vehicles that respond to the commands of an insurer be the perfect course correction?

David Williams Technical director AXA UK

“People might think insurers would jump at this opportunity, but one of the biggest lessons from our involvement in five government-backed driverless consortia is the scale of the ecosystem being created. It’s estimated that one vehicle will generate around four terabytes of data a day; multiply that across an insurer’s motor and fleet book, and you will quickly appreciate how difficult the proposal would be.

Many parties will have a stake in the data created – the passenger/driver, connected infrastructure providers and transport network operators, for example – and it’s clear that our focus needs to be on working together.”

Thom Rickert

VP and emerging risks specialist Trident Public Risk Solutions/Argo Group “The answer is no, at least for now. The insurance industry should work to develop best practices and innovative coverage, influence safety regulations, and deploy technology to reduce claims.

But directly controlling autonomous vehicles would change the carrier’s role from transferring or managing risk to assuming the risk for any vehicle hardware or software failure. This would be analogous to an insurance company controlling an airplane’s autopilot system or a utility’s supervisory control and data acquisition [SCADA] platform. I think the industry would agree that this would be problematic.”

Tom Super

Director, P&C insurance practice JD Power “Insurer intrusion is more disruptive than beneficial for partially automated [vehicles]; insurers may be better positioned to share data with consumers to improve decision-making. Fully automated options, some of which are years from becoming mainstream, allow insurers to better price all types of risk and then pass those efficiencies on to the consumer.

Ultimately, consumer preferences will determine insurer involvement.

Manufacturers and ridesharing companies will likely remain in control, while insurers’ role will evolve to empower consumers with information and tools that inform their driving choices.”

TAKE THE WHEEL In a recent interview with the MIT Technology Review, Paul Newman, the co-founder of driverless car startup Oxbotica, raised the possibility of self-driving cars being monitored by insurance companies, which could address proximate risk factors by altering vehicle behavior. He gave the example of a car noticing a sudden increase in the number of children on a sidewalk outside a school and reporting seeing more potential obstacles than normal; an insurer processing that data could either reroute vehicles or only allow them down the road at a reduced speed. “Insurers can adjust the envelope [in which a car can operate] to control the risk on the policy,” Newman said. “The autonomy system has insurance built into it that allows it to control risk over a fleet.”

AR

8

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© exc

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ARCH INSURANCE GROUP | ONE LIBERTY PLAZA, NEW YORK, NY 10006 | ARCHINSURANCE.COM © 2018 Arch Insurance Group. Insurance coverage is underwritten by a member company of Arch Insurance Group. This is only a brief description of the insurance coverage(s) available under the policy. The policy contains reductions, limitations, exclusions and termination provisions. Full details of the coverage are contained in the policy. If there are any conflicts between this document and the policy, the policy shall govern. Not all coverages are available in all jurisdictions.

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UPFRONT

NEWS ANALYSIS

The next insurance model Industry experts say parametric insurance – a specialized form of insurance or reinsurance tied to a defined trigger – could be set to take off in the commercial sector

AS AN INSURANCE model that uses predefined trigger and payout mechanisms, parametrics promises speedy, no-nonsense claims resolution that could help policyholders with cash flow and minimize insurance disputes.

According to a new report produced by risk management association Airmic in collaboration with insurance giants Marsh and Swiss Re, parametric insurance could soon become more mainstream in the commercial sector and help clients address some of the limitations of traditional insurance. But how does it work in practice, and where does the parametrics market stand today? IBA spoke to

be in terms of the trigger of the insurance, the payout or both, Harry adds: “Broadly, it’s an insurance program that is triggered and/ or paid very simply using an index rather than words.”

Under a parametric model, underwriters and buyers agree in advance that a claim will be automatically triggered by an agreedupon occurrence or a movement in an index, removing the need to investigate the precise extent or cause of damage. As a result, parametric solutions allow clients to insure risks that are difficult or even impossible to insure in the mass market. And while a complex

“The data and modeling is now so much better that it’s a real reason to be optimistic that some of these deals might take off” Steve Harry, Marsh several industry experts to find out.

“Parametric insurance works using a clearly defined parameter – i.e. a metric or an index that is easy to determine,” says Steve Harry, risk finance consultant in Marsh’s Financial Solutions Group. That can

10

insurance claim on a traditional policy can take a long time to adjust and be paid out, the clarity around parametric policies allows claims to be resolved much faster and without disagreement over exclusions and complex policy wordings.

“The way we would express it is that it improves liquidity,” Harry says. “Really what we are looking to do is mitigate the liquidity risk of a traditional insurance contract in these complex areas.”

Currently, parametrics is mostly used in catastrophe bonds, but there are moves being made to apply the concept in the travel, retail and agricultural sectors – and the insurance industry has its eyes set on a much wider application in the future. While there have been very few direct parametric policies placed by insurers, Harry says that could be about to change.

“We have definitely seen more inquiries over the last year,” he says. “The data and modeling is now so much better that it’s a real reason to be optimistic that some of these deals might take off.”

According to Airmic chair Paul Goulding, while “parametrics is still work in progress … I can see it becoming mainstream in the

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FAST FACTS: PARAMETRIC INSURANCE

Parametric insurance was developed in the catastrophe bond market in the 1980s and early ’90s

The world’s first multi-country risk pool, CCRIF SPC, was formed in 2007 to provide parametric catastrophe insurance coverage in the Caribbean

Haiti received a $20 million payout under a parametric catastrophe policy following Hurricane Matthew in 2016

future, because it offers certainty of timing and hassle-free payment.”

Airmic technical director and deputy CEO Julia Graham adds that there has already been some growth in the commercial market.

“We are starting to see some businesses begin to take this cover seriously, and we’ve

in their coverage. Those who want speedy adjustment and an easy-to-work-out scale of payment might find parametrics appealing. However, Harry points out, “Some people like the uncertainty [a traditional policy] gives them, in that they can always argue about a policy contract.”

“I can see it becoming mainstream in the future, because it offers certainty of timing and hassle-free payment” Paul Goulding, Airmic heard of some big buys in the aviation sector, for example,” she says. “Organizations have started to buy this. We think it’s bubbling.”

As for whether a client should choose a parametric policy over a traditional one, that all depends on what they’re looking for

Airmic warns that commercial insurance buyers eyeing parametric solutions face a number of challenges and may need to acquire new skills. Buyers should have a good understanding of their organization’s business model and risk landscape, and may

A single parametric policy was written to protect 22,000 Spanish olive farmers from extreme weather temperatures in 2018 Sources: CCRIF SPC, Meteo Protect

need to get early buy-in from senior colleagues such as the chief financial officer.

Ultimately, though, parametric insurance can help businesses strengthen their financial protection by reducing the uncertainties around cover and cash flow that traditional policies can cause.

“Concerns about large, complex risks directly related to business operations are on the rise – it’s about protecting revenues,” says Christian Wertli, head of innovative risk solutions at Swiss Re Corporate Solutions.

“Parametric solutions can be used as a business tool to provide certainty and speedy access to liquidity when most needed.”

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5/07/2018 10:59:42 PM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

American Traditions Insurance Company

Modern USA Insurance Company

The affiliates have merged to “allow management to better plan for future opportunities”

AXA

XL Group

The $15.3 billion deal was approved by XL Group's shareholders

Gallagher

Hesse & Partner and Hesse Consulting

Gallagher has acquired a 65% stake in the specialist Swiss broker

Gallagher

Pronto Insurance

Pronto’s primary business is the placement of personal automobile insurance

Gallagher

Thomas Costello Insurance Agency

Thomas Costello focuses on retail property & casualty and employee benefits

Integrity Marketing Group

Agent Service Connection

Agent Service Connection will continue to operate nationally under its existing brand

Tokio Marine HCC

Qdos Contractor

The purchase of the UK-based agency will expand Tokio Marine’s reach in the independent contractor and freelancer market

Worldwide Facilities

RIC Insurance General Agency

RIC specializes in personal lines and small to mediumsized commercial business

CFC launches investment management policy

Specialist insurance provider CFC Underwriting has launched its first insurance offering for financial institutions. The company’s Investment Management Insurance policy is the first in a suite of products designed to address the risks faced by investment managers. The global coverage provides protection against common risks in the industry, such as management liability, professional liability, crime and regulatory investigations, along with emerging risks like cyber and kidnap and ransom. Additional D&O limits are available for non-executive directors.

Worldwide Facilities strengthens Western presence Continuing a string of purchases in 2018, Worldwide Facilities has acquired the assets of California-based wholesale insurance broker and MGA RIC Insurance General Agency. RIC specializes in small to medium-sized commercial business, as well as personal lines business. Headquartered in Santa Rosa, California, RIC has office locations across the western US, and offers admitted and non-admitted P&C products. The firm’s offerings include commercial/excess & surplus, specialty, workers’ compensation/access state fund, and transportation/auto. As part of the deal, RIC will continue to maintain its client and market relationships and commitments as a division of Worldwide Facilities.

“We are pleased that the RIC team will be part of Worldwide Facilities,” said Worldwide Facilities CEO Davis Moore. “The combination of our complementary products, capabilities and market specialties will increase the relevance of the combined companies to the retail agent community.”

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Ryan Specialty Group launches new MGU

Ryan Specialty Group [RSG] has launched RyanRe Underwriting Managers, a new reinsurance managing general underwriter. The new MGU, which will work through reinsurance brokers, can underwrite treaty and facultative reinsurance and will focus on property, casualty and professional liability. “A reinsurance MGU is a natural evolution for RSG and expands our strategic underwriting management direction,” said Ryan Specialty Group founder, chairman and CEO Patrick Ryan. “With RyanRe, we will be able to bring new reinsurance solutions to our agents and brokers.”

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PEOPLE Startup provides coverage for live events

Insurtech startup TicketGuardian has launched FanShield and RegShield, two insurance products that give policyholders coverage for ticketed live events and registered events.

FanShield reimburses holders of tickets to live events when one of several covered perils prevents them from attending the event.

RegShield covers events that require registration, such as marathons or conferences. “Changing the way fans and registrants view the live-events space is our business, and the secret sauce to achieving that lies in our new products,” said TicketGuardian founder and CEO Bryan Derbyshire.

Chubb rolls out personal cyber product

Chubb has launched a new personal cyber insurance product, Masterpiece Cyber Protection, as a supplement to its Masterpiece homeowner’s policies. The policy offers protection against cyber attacks that could lead to extortion, ransom, financial loss, cyber bullying, disruption and breach of privacy. Chubb will offer also support to clients who can’t access their home or run their business due to an attack, and will help resolve issues arising from identity theft or unauthorized access to personal data.

State Farm expands Community Offers program

State Farm has expanded its Community Offers program with the addition of Rollick Outdoor for powersports vehicles, boats and RVs. Under the partnership, State Farm customers will receive special offers on inventory, as well as savings on accessories and service from Rollick certified dealers. “Through Community Offers, State Farm customers can connect with local, certified dealers within our platform,” said Rollick CEO Bernie Brenner. “We understand the value of affinity group selling, and our retailers join Rollick to deliver a higher level of savings and service with a personalized member experience.”

NAME

LEAVING

JOINING

NEW POSITION

Andrews Coutts

Brit Global Specialty

XL Catlin

Global practice leader, cargo

Stephen Goldman

N/A

Chubb

Executive vice president

J. Daniel Hickey

N/A

AmTrust Financial Services

Group chief underwriting officer

Rob Howard

N/A

Farmers Insurance

Chief claims officer

Jennifer Livingstone

Cyence

CNA

Senior vice president and chief marketing officer

William Malloy

Aquiline Capital Partners

Acrisure

President, specialty division

Ken Ross

Michigan Credit Union League & Affiliates

John Hancock

Vice president of government relations

Mark Selby

Liberty Special Markets

StartPoint Executive Risks

Financial institutions practice leader

Nancy Suffolk

Hiscox

Allianz Global Corporate & Specialty

Global head of product development, entertainment

Matt Waters

N/A

Liberty Mutual Insurance

Chief underwriting officer and senior vice president

Liberty Mutual names new CUO

Liberty Mutual Insurance has appointed Matt Waters as chief underwriting officer and senior vice president. Waters will lead areas of the company’s National Insurance Specialty unit that provide primary and excess products to large and mid-size construction and energy companies through brokers. Waters returns to the National Insurance Specialty unit after a stint as chief product and underwriting officer for the company’s group disability and life operation.

“Matt will play a key role as we help brokers develop programs that better control the total cost of construction and energy risks by blending effective coverages, unsurpassed risk engineering and industry-leading claims,” said David Perez, EVP of Liberty Mutual National Insurance Specialty.

Chubb taps new EVP for international insurance

Chubb has named Stephen Goldman as executive vice president of financial lines for Overseas General Insurance, the company’s international general insurance business.

Goldman will be responsible for Chubb’s international financial lines division, including the directors & officers liability, financial institutions, errors & omissions, transactional risk and cyber risk businesses.

“Steve is a highly experienced financial lines executive,” said Chubb Group VP Timothy O’Donnell. “He has excellent technical underwriting and leadership skills, and I am very much looking forward to working with him as we grow Chubb’s international financial lines presence and capability.”

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UPFRONT

WORKERS’ COMP UPDATE NEWS BRIEFS Texas Mutual announces executive promotions

Workers’ comp provider Texas Mutual Insurance Company has appointed Jeanette Ward as COO, responsible for overseeing the company’s policyholder services, underwriting, information technology, digital innovation and solutions, and marketing and customer engagement. Ward’s current role as senior vice president of policyholder services will be filled by Kim Haugaard, who will be responsible for claims operations, network operations, safety services and the company’s information services center. “Jeanette’s and Kim’s promotions ensure the continuation of excellent leadership for our staff, policyholders and their agents,” said Texas Mutual president and CEO Rich Gergasko.

San Diego community bands together to fight fraud

California is well known for its spiraling workers’ compensation costs – and San Diego County has had enough.

In June, San Diego law enforcement, local employers and other stakeholders held an event to address the causes of workers’ compensation fraud. According to local news outlet KUSI, San Diego’s chief deputy district attorney called for lawyers to work with law enforcement to fight insurance fraud. He also provided an update on Operation Backlash, a program launched to thwart a major workers’ compensation kickback scheme that was uncovered in San Diego County.

Texas gets new workers’ compensation commissioner

The Texas Department of Insurance has appointed Cassie Brown as commissioner of workers’ compensation.

She is replacing Ryan Brannan, who

14

vacated the position in May. Brown, who formerly served as a policy advisor to Governor Rick Perry and moves into the role from the position of deputy commissioner for regulatory policy, will effectively govern the workers’ compensation system in Texas, ensuring that rates and costs are kept at a reasonable level. She will hold the commissioner position until 2019.

Maine Supreme Court makes medical marijuana call

The Maine Supreme Court has ruled that employers don’t have to pay for medical marijuana under the state workers’ comp system. In a 5-2 decision, the court said federal law takes precedence in a conflict between the federal Controlled Substances Act and state medical marijuana law. The case in question focused on whether Twin Rivers paper mill must pay for medical marijuana for employee who hurt his back on the job; the court sided with the company, which argued that private health insurers shouldn’t be required to cover the cost of medical marijuana because doing so puts them in violation of federal law.

Rams ordered to pay Reggie Bush $12.5 million for 2015 injury

The Los Angeles Rams have been ordered to pay former 49ers running back Reggie Bush $12.5 million to cover a knee injury he suffered in 2015 while playing against the team at its previous home in St. Louis’ Edward Jones Dome.

The St. Louis Post-Dispatch reported that a Missouri jury found the Rams fully liable for the football star’s injury, sustained when he slipped on the stadium’s concrete surface after being pushed out of bounds. The Rams were ordered to pay $4.95 million in compensatory damages and $7.5 million in punitive damages. Rams attorneys are expected to file a motion for a new trial.

Riding the data wave Data-driven decisionmaking is reducing loss ratios and boosting premiums in the workers’ comp space Data-driven workers’ compensation insurers significantly outperform the market, according to Valen Analytics’ third annual ROI study. Customers of the company, which provides proprietary data, analytics and predictive modeling for property & casualty insurers, collectively saw loss-ratio improvement of three to nine points above the industry average between 2012 and 2017.

Valen’s customers also achieved 53% direct written premium growth, compared to 18% growth for the total market.

“The results of our studies have repeatedly quantified the unparalleled top- and bottomline results for data-driven insurers,” says Valen Analytics president Kirstin Marr. “This year, we’ve taken the data further to display how our customers consistently grab profitable market share and beat the competition by more accurately aligning price to the risk exposure.”

Valen Analytics added a new element to this year’s ROI study by identifying carriers with significant loss-ratio concerns and looking at the transformative nature of analytics. Within a year of combining human expertise with data-driven decision-making, Valen customers with loss ratios of 60% or more dramatically improved their loss ratio to mirror the market average or even outperform it. At the same time, they also showed growth in direct written premium.

“Data-driven decision-making isn’t about cutting out bad business and shrinking a book of business to improve the loss ratio,” Marr says. “Rather, it’s about quickly and accurately identifying good and bad business in order

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to make decisions that will drive profitable market share.”

Generally speaking, there are two camps among workers’ compensation insurers. The first is embracing technology, innovation and data-driven decision-making. They’re investing

is holding onto a more traditional outlook that workers’ compensation is a truly cyclical industry that won’t be impacted significantly by new technology. These insurers are focusing instead on investment income, underwriting performance and riding the market waves.

“Insurers that are winning market share are using technology to bring products to market faster, they’re more relevant for consumers, and they’re more disciplined in their pricing approach” in data analytic capabilities to improve underwriting performance, become more digitally enabled, reduce friction and increase speed in their claims process, and generally improve customer satisfaction and loyalty.

The second camp, according to Marr,

However, Marr says, “market cycles in workers’ compensation are not behaving like they used to. As the world changes, the markets are becoming much more volatile. Insurers holding onto the more traditional mindset are losing out to those riding the innovative data

analytics wave – and our numbers prove it.

“Data analytics has the power to change the traditional market cycle in workers’ compensation insurance,” she adds. “Insurers that are winning market share are using technology to bring products to market faster, they’re more relevant for consumers, and they’re more disciplined in their pricing approach.”

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UPFRONT

TECHNOLOGY UPDATE

When cyber attacks get personal Today’s connected homes are increasingly becoming gateways for cyber criminals

something like a smart cooker to the internet also potentially opens the device up to unauthorized access, giving hackers the ability to cause a house fire at the click of a button.

“While it’s perhaps not such a big deal if a hacker turns your home refrigerator off and your food spoils,” Motta says, “imagine the catastrophic consequences if that device was being used to refrigerate chemicals or human embryos.”

These IoT devices have created a new inter-

“[Homeowners are] ignoring the potential risk exposures that come with IoT devices”

As technology continues to make waves in the connected home space, more and more household items are collecting and sharing data about our everyday habits. The problem: These Internet of Things-connected devices are also potential targets for cyber criminals.

“The benefits of technology are so enormous and immediate that people are adopting it in all areas of life,” says Joshua Motta, founder and CEO of Coalition, a technology-enabled cyber insurance solution.

“The problem is, they’re ignoring the poten-

NEWS BRIEFS

tial consequences of risk exposures that come along with IoT devices.

“Personal cyber risk is often perceived as something way off into the future,” Motta adds. “People buy a smart kettle and keep its password at 00000 because they think, ‘A hacker won’t ever target me; they’re only after huge companies like Home Depot or Equifax.’

While they might be less attractive targets, it’s still vitally important for homeowners to practice good cyber and IoT security.”

It’s not just data that’s at stake. Connecting

QBE invests in artificial intelligence startup

Through its investment arm, QBE Ventures, QBE Insurance Group has forged a partnership with machine-learning startup HyperScience. The company automates office work and will allow QBE to glean useful data from documents that often just get filed away, never to see the light of day again. By transforming paper files or PDFs into machine-readable files, HyperScience will help the insurer respond to customers faster, facilitate straightthrough processing and access data that’s been hidden in unsearchable documents.

16

section between operational technology [OT] and information technology [IT]. Coalition’s cyber insurance products are aimed at trying to cover this increasingly risky relationship.

“One of our core differentiations is that we’ve built a signals intelligence platform to facilitate the underwriting of cyber risk, which extends to OT that’s talking over the Internet,” Motta says. “We routinely detect refrigeration systems, thermostats, and we’ve even detected a water kettle. We perform an IoT assessment on clients and prospective clients during our underwriting process. That helps us to better underwrite the risk and also provide our clients with tangible risk management measures to reduce their threat surface for a physical cyber attack.”

Zurich acquires stake in CoverWallet

Zurich has purchased a minority stake in insurtech startup CoverWallet. The investment follows a commercial partnership between the two companies for a platform where Zurich’s small-business customers can learn policy types, get quotes, purchase insurance and manage their coverage. “This investment is a testament to the value Zurich sees in CoverWallet and the work we’re doing to make insurance easy and convenient for small businesses,” said CoverWallet founder and CEO Inaki Berenguer.

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Q&A

Willy Fox Vice president, solutions DUCK CREEK TECHNOLOGIES

Years in the tech industry 20 Fast fact Duck Creek recently relocated its global headquarters to a 30,000-square-foot office in South Boston’s Innovation District

Clearing up the cloud confusion How important is cloud delivery for the insurance company of tomorrow?

Will cloud delivery reduce internal control of critical systems?

Cloud delivery is key to any business that intends to thrive in the future. For the successful insurance firm of tomorrow, the question of cloud delivery is no longer if, but when – and, more importantly, how – to implement such a radical departure from on-premises legacy systems. There are actually several differentiated models of cloud delivery available today, each with its own sets of advantages and drawbacks. Choosing the right architecture and service model now might mean the difference between setting your company up for long-term success or simply kicking the can of expensive, time-consuming system upgrades down the line a few short years.

The simplest way to look at basic cloud hosting is the movement of systems infrastructure from one location to another. Other benefits include the option to outsource the maintenance, upgrades and other ongoing management functions related to your company’s core systems. This gives your organization greater flexibility than ever before to focus on innovation in areas like user experience improvement, targeted upselling and product innovation, while reducing the time to market of your new ideas by months or even years.

Does the cloud expose IT network systems to new security risks?

Software as a service is the least resource-intensive cloud delivery solution on the carrier side, as server maintenance, platform management, system updates and issue triage are handled directly by the vendor. SaaS products fully outsource the most challenging aspects of maintaining core systems to specialized firms, like Duck Creek, that dedicate their own resources to keeping the software running smoothly and providing regular updates, while top-tier cloud hosting firms take over responsibility for security and server maintenance.

The key to selecting the right evolution for your company’s legacy systems comes down to knowing what questions to ask. At Duck Creek, we focus on ensuring you get the solutions you need to win in the future.

Hosting enterprise-grade software platforms like the ones employed by P&C insurance carriers requires a large-scale cloud environment, which means the pool of viable partners in this space is limited to the biggest and strongest names in the business, such as Microsoft’s Azure and Amazon’s AWS. These vendors offer levels of security that are far superior to what most corporations maintain in their own server rooms or data centers.

When you provide cloud hosting to 90% of the Fortune 500, as Microsoft Azure does, the stakes are simply too high not to. Maintaining a similar level of IT security on-premises would cost an insurance company a small fortune – not just once, but as a recurring expense.

German startup gets a venture capital boost

Insurtech startup Coya has gotten a stamp of approval from one of the best in the business. The Germanybased startup received $30 million in Series A funding led by tech luminary Peter Thiel’s Valar Ventures. Valar partner James Fitzgerald praised Coya’s efforts to build a fully licensed and integrated insurance offering from the ground up, instead of relying on third parties. Coya’s business model offers consumers a digital platform to obtain insurance coverage without going through a broker or agent.

What are the benefits of software as a service [SaaS] solutions?

Allstate partners with driving safety service

Driving safety service Life360 has announced a partnership with Allstate and its affiliate companies Arity and Answer Financial. The partnership will combine Life360’s sensor data with Arity’s advanced driver behavior models to provide Life360’s users insights into their driving habits and connect them with personalized insurance offers. “Working with Life360 expands our platform’s reach by connecting us to millions more drivers to empower them with a better understanding of how they drive,” said Arity president Gary Hallgren.

Amazon solidifies investment in India’s Acko

After months of speculation, Amazon has officially made waves in the insurance space by leading a $12 million funding round for Indian digital insurer Acko General Insurance. “Acko is a young and nimble startup bringing technology and data-led innovation to the insurance sector to deliver a better insurance experience for customers,” Amazon’s Amit Agarwal told The Economic Times. “We are excited to back companies that are focused on using technology for enhanced customer experience.”

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UPFRONT

OPINION

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

Insurance: the new kale Rebranding the industry to appeal to fresh talent requires rethinking the human factor, writes Bri Burkhart REMEMBER WHEN kale sat untouched beside your meal at a restaurant, eventually ending up in the trash? In those days, kale wasn’t exciting or noticeable, and it definitely wasn’t the star of a single social media photo. Now, people brag about eating kale and have dubbed it a ‘super food.’ Smoothies, chips, you name it – if someone is delving into green goodness, kale is the star of the show, and you’re going to hear about it.

Right now, the insurance industry is stuck in the same place kale once was. Insurance careers can become something young professionals aspire to and brag about at mixers, but for that to happen, the industry needs an attitude adjustment.

Recent graduates look upon the insurance industry as old-fashioned. Before applying to an open position in your company, you can bet they’ll be scrolling through your website and examining your social media pages.

If the impression they get is boring, bland and unappetizing, they’re probably not even going to apply.

And it’s not just new talent that is put off by the industry’s apparent resistance to change and a fear of new technology; such attitudes keep the best established talent looking elsewhere. Just as kale had to reveal its superpowers to become popular, the insurance industry needs to reveal its hidden greatness.

So what’s holding the insurance industry back? It’s simple: the human factor. We’re afraid. Some people fear failure. Some people fear the unknown. But, more than that, some

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people fear that their business’s mission will get lost in change. Although change and innovation can be frightening, they’re vital to keeping an aging industry alive.

We don’t just need to adjust our attitudes about change; we need to adjust our mindset about what’s important. Beyond attracting new talent or being ‘trendy,’ advancement doesn’t just keep us relevant – it makes us better.

case that. Instead of getting lost in applications, submissions and policies, try getting lost in the situations that create claims. Those moments can be life-changing. Whether it’s an accident, a natural disaster or even something small, it’s our job to be at our best for clients in their time of need.

As counterintuitive as it might seem, at the heart of this move to cultivate the human element is technology. We need to continue to evolve to meet the world’s everchanging needs, because part of being there for our clients means meeting them where they currently are. If the client is our priority, changing with them should be, too.

You can no longer hand a potential client a business card and assume that they’re going to call you. You can no longer be silent online and expect your competitors to do the same.

You can no longer talk to your clients in insurance lingo and assume they aren’t going to look elsewhere for a partner who can explain those concepts in understandable terms. You simply can’t afford to stay in the past.

This means finding a way to talk about products that connect with your clients

“Just as kale had to reveal its superpowers to become popular, the insurance industry needs to reveal its hidden greatness” The good news is that the very thing holding the insurance industry back is the thing that can move it forward. Rebranding and updating requires us to prioritize the human factor.

To most people, insurance is a necessary evil or a small piece of financial planning.

We need to constantly remind our clients – and ourselves – that insurance is more than a piece of paper. It’s about supporting people through some of their most challenging moments. In fact, we’re at an advantage because our products have a truly emotional purpose: protection and peace of mind.

This is powerful now, because people want to see businesses taking on the initiatives that our industry is naturally a part of.

We’re already making a difference, but we need to adapt our mentality to better show-

on a human level, such as social media or e-marketing. This means embracing digital processes that give your clients the fast responses they now expect. This means talking about your job in a way that isn’t purely transactional.

Insurance truly has the ability to become a ‘super industry’ that people hanker to be part of. What we need is buy-in. I don’t know who changed the conversation about kale, but I do know who can change an outsider’s view of insurance. It starts with us.

Bri Burkhart is an integrated marketing specialist at Glatfelter Insurance Group who uses content marketing across channels to build relationships and promote the success of niche insurance programs.

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PEOPLE

INDUSTRY ICON

FROM THE GROUND UP Beazley Group’s Mark Bernacki joined the company during a critical moment in its worldwide expansion. He tells IBA how growing the company’s US property team and gaining global experience helped shape his career

DESPITE HIS 20-plus years of experience as a property underwriter, Mark Bernacki has only two companies listed on his résumé.

Bernacki kicked off his insurance career in 1993 as a property special risk underwriter for Wausau Insurance; in 2005, after eight months of pursuit by a headhunter, he joined Beazley, where he’s been ever since. In that time, Bernacki has racked up a variety of experiences that have given him the expertise and skill set needed for his current role as head of Beazley’s property team.

“One could actually argue that either I’m an extremely dedicated employee or just a horrible interviewer who only got it right two times,” he jokes.

Bernacki’s initial push to enter the world of insurance came from his father, who oversaw commercial lines for Sentry Insurance in Wisconsin. Bernacki had a degree in finance and management, but the thought of spending all day working on spreadsheets in a cubicle wasn’t exactly enticing. “[Insurance] was a great way to balance both analytical skills and engaging with people,” he says.

Bernacki got a handle on the property underwriting business while working for Wausau in Los Angeles, and then moved across the country to become the regional manager for the mid-Atlantic region of Wausau’s property operation. His roles and responsibilities expanded as he helped drive business production in New York

20

and Philadelphia. Finally, after crisscrossing the US for years, Bernacki relocated to London, becoming Wausau’s only international employee.

“I was managing director of a company called Wausau UK Limited, which was a wholly owned subsidiary of Wausau,” he says.

“In that role, I was essentially responsible

the global insurance market.

“The turning point in my career that unleashed greater opportunities was that first stint in London in 1999,” he says. “I think the fact that it gave me an understanding of different ways that insurance worked within and outside the US, and it gave me additional international experience

“When you look at insurance outside of the US and western Europe ... there’s just much greater developmental opportunity that everybody can win because the size of the pie is growing, and insurance saturation in some of those areas is so insignificant compared to what we have here in North America” for writing our US clients that were moving offshore and garnering their policies in the EU, and also writing all of their cover outside the US through fronting arrangements and through affiliate companies that I had aligned and created.”

Planting the seeds In London, Bernacki was also exposed for the first time to Lloyd’s, which he credits with giving him a better understanding of

and Lloyd’s experience – that was probably the pivotal turning point that opened up new and future opportunities for me.”

The call from Beazley came when the company was in the midst of expanding its Lloyd’s presence in the US. “After eight months of solicitation,” Bernacki says, “I finally said yes to Beazley because I saw an opportunity to put my own fingerprints on an operation, rather than just driving a ship that somebody else had built for me.”

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PROFILE Name: Mark Bernacki Title: Head of property Company: Beazley Based in: Chicago Years in the industry: 25 Career highlight: Working in London for Wausau and gaining Lloyd’s experience

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PEOPLE

INDUSTRY ICON

When Bernacki moved over to Beazley, the company’s US outpost had less than 25 people and a blank book of business.

“We had a dream and a vision for what our US operation could become,” he says. “I spent the first four years at Beazley here in Chicago helping to build and develop our US property operations both from an admitted and a non-admitted perspective, and also from a commercial lines and a personal lines perspective.”

A move back to London in 2010 led Bernacki to his current position. Today, he

can win because the size of the pie is growing, and insurance saturation in some of those areas is so insignificant compared to what we have here in North America.”

Only the beginning Despite being at Beazley for 13 years now, Bernacki insists he’s just getting started.

“That’s not [to say] that we haven’t accomplished a lot,” he says. “We’re a fastgrowing and developing specialist insurer, and there’s always something to do. I’ve been quite lucky at Beazley that I keep getting new

“I’m a big believer that ultimately every client or broker takes the path of least resistance to get to the same means, and I believe that if we’ve got more access points and more specialist insurance hubs, we’re easier to do business with” runs global property and sits on Beazley’s UK managing agency board, executive committee and all of Beazley’s legal entity boards in the US. He also had the opportunity to lead Beazley’s Asia Pacific strategic initiative. Accordingly, his advice for up-andcoming insurance professionals looking for new opportunities is to mirror his own experiences working around the world.

“Every day, the insurance space becomes smaller as the globe becomes smaller,” he says. “Most of the large insurance entities are all global in nature. When you look at insurance in developed markets, the only way that you can win is to steal business from others.

When you look at insurance outside of the US and western Europe – when you look at insurance in Southeast Asia or Africa or Latin America – there’s just much greater developmental opportunity that everybody

22

BEAZLEY GROUP BY THE NUMBERS

opportunities and new roles.”

The progress the company has made in expanding its global footprint stands out to Bernacki, who jumped on the Beazley bandwagon during a critical moment in its history.

“As I sit here today and I look at my team now, we operate out of five specialist hubs,” he says. “We can access business all around the globe and truly have a multinational specialist insurance business.”

And, he adds, Beazley’s worldwide reach has benefits for all of its partners, no matter what side of the globe – or the transaction – they’re on.

“I’m a big believer that ultimately every client or broker takes the path of least resistance to get to the same means,” he says, “and I believe that if we’ve got more access points and more specialist insurance hubs, we’re easier to do business with.”

1986

Year the company was founded as Beazley, Furlonge & Hiscox before being bought out by Andrew Beazley and Nicholas Furlonge in 1992

1,327

Number of Beazley employees globally as of December 2017

65+

Number of territories worldwide where Beazley is licensed to trade surplus lines insurance and reinsurance

$2.34 billion

Gross written premium reported

by Beazley in 2017

35

Number of industry awards Beazley has won since 2011

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5/07/2018 11:03:09 9:58:23 PM 5/07/2018

SPECIAL REPORT

BROKERS ON CARRIERS

BROKERS ON Which carriers are among the industry’s best?

IBA asked brokers to share the areas where carriers are excelling – and where they can improve FOR IBA’S fifth annual report on the best carriers the insurance industry has to offer, brokers came together to assess their carriers’ performance in 10 different aspects of the broker-carrier relationship.

Focusing on key areas such as claims processing, marketing support, competitive rates and more, brokers rated their carriers’ performance on a scale of 1 (poor) to 10 (excellent) to uncover the carriers who are shining above the competition. They also shared details on key strengths and areas for improvement.

Compared to last year’s results, carrier performance this year took a slight dip in a number of categories. Competitive rates took the biggest

hit, dropping by 8% compared to last year’s score, possibly due to hardening markets following several catastrophic events in 2017.

However, carriers were still able to boost their performance in terms of reputation and financial stability and claims processing, which suggests that they’re doing their best to make up for the lackluster rates.

Despite the overall decline, 24 carriers still managed to receive a five-star rating, having scored an average of 8 or higher in at least one category. Out of the 24, 12 companies earned five-star ratings for at least eight categories, and two received five-star ratings in all 10 categories.

Read on to find out who made it to the top.

HOW HAS CARRIER PERFORMANCE CHANGED OVER THE YEARS? Compared to 2017, brokers gave their carriers lower scores this year in six categories. Performance on competitive rate offerings saw an 8% drop, while underwriting expertise had a 2% decrease. Four other categories – range of products, marketing support, commitment to the broker channel and quick quotes – also dipped.

However, carriers did manage to boost their performance in two areas. Scores in reputation and financial stability have steadily increased since 2016; on average, carriers scored 3% higher this year compared to last year. The average score for claims processing also saw a minuscule increase.

10.0 2016

2017

2018

9.0 8.0 7.0 6.0

24

Carrier reputation Claims processing and financial stability

Competitive rates Underwriting expertise Commitment to the broker distribution channel

Technology and automation capabilities

Quick quotes

Range of products

Marketing support

Education and training

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S BROKERS ON CARRIERS

8 201

FIVE -S

R CARRIE R TA

CARRIERS WHAT QUALITIES ARE BROKERS LOOKING FOR IN A CARRIER? Brokers were asked to select the three most important things they look for in a carrier partner. Their answers revealed a slight shift in priorities from last year.

While the top three criteria – competitive rates, underwriting expertise and claims processing – have remained the same, both rates and claims processing are less important to brokers than they were last year. Meanwhile, technology and automation have moved up significantly on the priority list.

Competitive rates 2018: 77% 2017: 86%

HOW WELL DID CARRIERS PERFORM ON AVERAGE IN EACH CATEGORY? Reputation and financial stability 8.85

Claims processing 8.32

Underwriting expertise 7.96

Underwriting expertise 2018: 53% 2017: 52%

Commitment to the broker channel 7.95

Claims processing 2018: 39% 2017: 48%

Technology and automation 7.60

Reputation and financial stability 2018: 35% 2017: 40%

Quick quotes 7.60

Range of products offered 2018: 28% 2017: 32%

Competitive rates 7.51

Technology and automation 2018: 24% 2017: 17%

Quick quotes

Range of products offered 7.51

2018: 13% 2017: 14%

Marketing support

Marketing support 7.50

2018: 5% 2017: 8%

Education and training

Education and training 7.25

2018: 0% 2017: 2%

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SPECIAL REPORT

BROKERS ON CARRIERS WHICH CARRIERS EARNED FIVE-STAR RATINGS? CARRIER

Reputation and financial stability

Claims processing

Competitive rates

Underwriting expertise

Technology and automation

Quick quotes

Range of products

Marketing support

Education and training

Commitment to the broker channel

Affiliated FM Insurance Company AmTrust Financial Auto-Owners Insurance Berkshire Hathaway Central Mutual Insurance Company Chubb EMC Insurance Erie Insurance Everest Frankenmuth Insurance GUARD Insurance Company Liberty Mutual Markel Corp.

National General Insurance Nationwide, E&S/Specialty Sompo International State Auto Insurance Company The Cincinnati Insurance Companies The Hanover Insurance Group The Hartford The Main Street America Group Travelers United Fire Group Insurance Zurich Denotes All-Star Carrier 26

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S BROKERS ON CARRIERS

REPUTATION AND FINANCIAL STABILITY

CLAIMS PROCESSING

Carrier performance 8.85

Carrier performance 8.32

FIVE-STAR CARRIERS Affiliated FM Insurance Company

8 201

FIVE -S

R CARRIE R TA

FIVE-STAR CARRIERS Nationwide, E&S/Specialty

AmTrust Financial Services

Sompo International

Sompo International

Auto-Owners Insurance Berkshire Hathaway

State Auto Insurance Company

Berkshire Hathaway

State Auto Insurance Company

Central Mutual Insurance Company

The Cincinnati Insurance Companies

Central Mutual Insurance Company

The Cincinnati Insurance Companies

Chubb

Chubb

The Hanover Insurance Group

EMC Insurance

The Hanover Insurance Group

Erie Insurance

The Hartford

Erie Insurance

Everest

The Main Street America Group

Everest

The Main Street America Group

Frankenmuth Insurance

Travelers

Travelers

GUARD Insurance Company

United Fire Group Insurance

Markel

Zurich

Auto-Owners Insurance

Frankenmuth Insurance GUARD Insurance Company Liberty Mutual Markel

United Fire Group Insurance Zurich

EMC Insurance

The Hartford

National General Insurance

National General Insurance

Carriers’ reputation and financial stability showed slight improvement in 2018; the average score increased from 8.66 in 2017 to 8.85 this year.

Almost all of this year’s five-star carriers earned high marks in this category: 23 out of 24 carriers scored an 8 or greater.

For most brokers, financial stability has never been an issue – reputation, however, is another story. “If [my carrier was] a little more well known, the business would be easier,” one respondent wrote. Others wanted their carriers to “improve brand recognition,” cultivate “a better

While a few brokers did recognize that their carrier’s financial standing was not top-tier, maintaining stability appeared to be more important than stellar financial ratings public presence” and work to “get back their A-rating.”

For mid-size carriers, brokers generally felt that greater broker representation at the local level is needed to continue pushing the brand forward. While a few brokers did recognize that their carrier’s financial standing was not top-tier, maintaining stability appeared to be more important than stellar financial ratings: One broker gave a carrier high marks with the comment “B rating but stable.”

Brokers’ views on claims processing haven’t changed much – as in previous years, it remains one of their top priorities. Carriers’ performance increased slightly compared to 2017, making claims processing now the second best-performing category.

Because client satisfaction is often solely dependent on how smoothly a claim is processed, it’s understandable that brokers would consider a carrier’s claims processing ability critical. However, after a string of natural disasters in 2017, including hurricanes Harvey and Irma, some brokers are noticing a slowdown in their carriers’ claims handling. “They need additional help because of Harvey,” said one respondent.

After a string of natural disasters in 2017, including hurricanes Harvey and Irma, some brokers are noticing a slowdown in their carriers’ claims handling Yet despite this, most brokers remain satisfied with how their carriers process claims. “Fairly fast,” “good in-house claims team” and “excellent” were a few of the comments from satisfied brokers.

However, as one broker pointed out, while his carrier has a decent claims team, there’s always room for improvement. Several commented on the outdated claims technology offered by carriers, while others offered suggestions such as “incorporate more client involvement,” “localize claims handling” and “streamline claims to have fewer handlers rather than department switches for each claim item.”

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SPECIAL REPORT

BROKERS ON CARRIERS

FIVE-STAR CARRIER NATIONWIDE, E&S/SPECIALTY Headquarters: Scottsdale, Arizona Year founded: 1982 Number of businesses: E&S/Specialty at Nationwide is composed of five business groups: E&S Brokerage, E&S Contract, Management Liability and Specialty [MLS], Nationwide Private Client and Programs Leadership: Tom Clark, CEO Founded in 1982 and based in Scottsdale, Arizona, E&S/ Specialty at Nationwide is a $3 billion organization that offers property, casualty, personal lines, commercial auto, management lines, programs, and specialty insurance coverages and services. As a leader in the excess & surplus and specialty lines marketplace, Nationwide is continually evolving to deliver the best combination of people, products, technology and partnerships. The relationships E&S/Specialty builds with its distribution partners, along with its deep underwriting expertise and exceptional claim service, set the organization apart from competitors.

The result is differentiated value that is greater than the sum of its parts, underpinned by the rock-solid financial foundation of a Fortune 100 company with A+ ratings from A.M. Best and Standard & Poor’s.

Nationwide associates make a difference by investing their time, money and expertise in local communities and charitable organizations. It’s one reason why Nationwide was named to Fortune’s 100 Best Companies to Work For list for the fourth consecutive year in 2018.

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FIVE -S

BROKERS ON CARRIERS

8 201

8 201

BROKERS ON CARRIERS

R CARRIE R TA S

S

FIVE -S

R CARRIE R TA

UNDERWRITING EXPERTISE Carrier performance 7.96

FIVE-STAR CARRIERS Affiliated FM Insurance Company AmTrust Financial Auto-Owners Insurance Berkshire Hathaway Central Mutual Insurance Company Chubb Erie Insurance

PROFITABLE BUSINESS GROWTH IS OFTEN HIDING IN PLAIN VIEW

Everest Frankenmuth Insurance The Hanover Insurance Group Liberty Mutual Markel National General Insurance Sompo International The Hartford Financial Services Group Zurich

Underwriting expertise remained a top priority for brokers – 53% named it an essential quality they look for in a carrier. In terms of overall performance, this was carriers’ third bestperforming area; 16 companies earned a five-star rating.

Responses, however, revealed rather mixed reviews of carriers’ underwriting performance.

A few brokers pointed out hurdles in the underwriting process, citing “restriction by upper and mid-management” and “too many layers” as reasons for their discontent with the underwriting capabilities at their carrier.

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Many of the brokers who did rate their carriers highly in this area mentioned that most of their underwriting is done online. Brokers who didn’t use online underwriting had more criticisms to offer. “They need to get rid of the ‘team underwriting’ concept and go back to one-on-one,” said one respondent, echoing the view shared by many brokers that working with a single underwriter helps to build relationships and expertise. Another broker complained, “Sometimes I get told something can be done, only to find out there is no market for it.”

But there were some positive reviews. “My underwriter is excellent; I have 15 years of experience working with her” and “very easy to work with and knowledgeable in their fields” were a few of the glowing responses.

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5/07/2018 11:04:28 PM

SPECIAL REPORT

BROKERS ON CARRIERS COMMITMENT TO THE BROKER CHANNEL

QUICK QUOTES

Carrier performance 7.95

Carrier performance 7.60

FIVE-STAR CARRIERS Affiliated FM Insurance Company

FIVE-STAR CARRIERS National General Insurance

Affiliated FM Insurance Company

Sompo International

AmTrust Financial

Auto-Owners Insurance

State Auto Insurance Company

Auto-Owners Insurance

Central Mutual Insurance Company

The Cincinnati Insurance Companies

Erie Insurance

Chubb

The Hanover Insurance Group

AmTrust Financial

EMC Insurance Erie Insurance

The Hartford

Everest

United Fire Group Insurance

Frankenmuth Insurance

Zurich

Everest Frankenmuth Insurance Liberty Mutual Markel National General Insurance

Liberty Mutual

Sompo International

Markel

Zurich

Insurance is a relationship business, but it’s not just about relationships with clients. The broker-carrier relationship is key to fostering a long, successful partnership. This year, brokers found their carriers’ commitment to the broker channel to be less evident than in 2017.

Carriers scored an average of 7.95 in 2018, down from 8.19 in 2017, and just 19 carriers earned a five-star rating in the category, a marked decrease from the 36 that made the grade last year.

That dip in performance is no surprise in light of the comments this year. While one broker commended his carrier’s “great relationship and partnership with their agents,” he was in the minority. Most brokers pointed to the growing trend of carriers’ direct-to-consumer models

While one broker commended his carrier’s “great relationship and partnership with their agents” ... most brokers pointed to the growing trend of carriers’ directto-consumer models as evidence of their waning commitment to their broker partners as evidence of their waning commitment to their broker partners.

“They are becoming more enamored with retail distribution,” one broker opined, while another said, “I feel that they have completely abandoned the wholesale distribution model.”

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The quoting process is crucial when it comes to securing new business, but brokers weren’t that pleased with their carriers’ quoting capabilities.

Brokers provided mixed to negative reviews, so it’s hardly a shock that only 12 carriers earned a five-star rating in this category.

Failure to meet time constraints was the top reason why brokers rated their carriers poorly. “Any referral quote is going to be a lost opportunity due to delays in response time, particularly with the auto line,” one broker said. Another dissatisfied broker commented that there “always seems to be something in the process that holds up release of their quotes, even if a submission is made 60 to 90 days ahead.”

WHAT BROKERS WANT

“Advise agents on the status of quotes” “Give us the ability to do more quotes online versus paper ” Even brokers who rated their carriers highly for providing quick quotes mentioned room for improvement, such as offering more flexibility and simplifying the process.

A few brokers believed investing in technology and giving brokers more autonomy in the quote process were the answers to this problem, but others pointed out that online capabilities and technological advancements don’t always improve the speed and efficiency of obtaining quotes.

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5/07/2018 11:04:33 PM

FIVE -S

TECHNOLOGY AND AUTOMATION

BROKERS ON CARRIERS

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BROKERS ON CARRIERS

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Carrier performance 7.60

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The technology and automation category saw the fewest carriers earn a five-star rating – just 10 companies got an average score of 8 or greater. Carriers’ subpar performance in technology could also explain their sagging performance in other tech-reliant areas such as quotes.

Brokers have noticed some carriers’ moves to improve technology. “They’ve made significant improvement in the past 15 months – I’m very pleased with their efforts,” said one broker.

Another broker applauded his carrier for “making strides in their automation.”

Having the ability to make endorsement changes or submit quotes online were the top two tech capabilities requested by brokers. Those who dinged their carriers in this category often found the technology too difficult to navigate: “[Technology] needs to be easier and faster across all components, including quoting, issuing a policy, billing and claims,” one broker said.

“Just finding the information you need is difficult. The technology is a patchwork of old systems, and it shows in the amount of time it takes to do anything.”

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The competitive rates category experienced the most significant decline from last year in terms of carrier performance – down from an average score of 8.30 in 2017 to 7.51 this year and falling from second to seventh place in terms of performance. Yet 77% of brokers told IBA this is the most important criteria for them when choosing a carrier.

To some degree, carriers’ performance in this area is out of their hands: Following recordbreaking catastrophic events in 2017, commercial insurance rates rose across most lines. Yet brokers have definitely noticed a discrepancy in the swings in insurance rates: “[My carrier] has taken on rate increases while other have not,” said one broker. “They need to look at the markets and correct their stance on some coverages,” said another.

But it wasn’t all bad news. Comments like “the market is tough sometimes” and “rates are not always the lowest, but their coverage is stellar” suggest that brokers understand the ebbs and flows of the market and appreciate when and where their carriers can be competitive.

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5/07/2018 11:04:40 PM

SPECIAL REPORT

BROKERS ON CARRIERS RANGE OF PRODUCTS

MARKETING SUPPORT

Carrier performance 7.51

Carrier performance 7.50

FIVE-STAR CARRIERS

FIVE-STAR CARRIERS

AmTrust Financial

AmTrust Financial

Sompo International

Auto-Owners Insurance

Auto-Owners Insurance

EMC Insurance

Central Mutual Insurance Company

The Cincinnati Insurance Companies

Erie Insurance Everest Frankenmuth Insurance Liberty Mutual Markel National General Insurance Sompo International The Hanover Insurance Group

Chubb Erie Insurance

The Hanover Insurance Group The Hartford

Everest

The Main Street America Group

Frankenmuth Insurance

Zurich

Liberty Mutual Markel National General Insurance

The Hartford Travelers Zurich When it comes to product offerings, the consensus from brokers still seems to be that more is better. This year, the number of carriers receiving a five-star rating for this category has gone down from 26 to just 14, while the overall performance score dropped by 1%.

Although many brokers chimed in to say they need broader offerings, the additional products they wanted varied from state to state. One broker asked for “more than just contractor and auto,” while others wanted specific coverage for work sites and manufacturing facilities.

Not everyone was in the ‘more is more’ camp, however. One broker

Not everyone was in the ‘more is more’ camp ... One broker urged his carrier to “do what you do, and do it well” and “don’t try to be all things to all people” urged his carrier to “do what you do, and do it well” and “don’t try to be all things to all people.”

Ultimately, it’s a matter of understanding and responding to local needs and changing times. One respondent commended his carrier for having coverage enhancements for specialized industries, but noted that “they don’t seem to be addressing current trends and making changes to address clients’ concerns.” Another broker remarked that his carrier has not expanded much in years, which could give brokers the impression that the company isn’t growing and innovating.

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As in previous years, marketing support isn’t high on brokers’ list of priorities, but if carriers happen to be doing well in this area, it’s an appreciated bonus. Although carriers had their second worst average score in this category this year at 7.50 out of 10, 16 carriers earned five-star ratings for their marketing efforts.

Brokers’ observations on carriers’ marketing efforts revolved around the need for more presence and better online support. “Carriers are more interested in sales than in improving the process,” remarked one respondent, who suggested that carriers need to better align their

“Carriers are more interested in sales than in improving the process,” remarked one respondent, who suggested that carriers need to better align their marketing efforts with improvements in offerings and operations marketing efforts with improvements in offerings and operations in order to deliver what is promised. Another respondent confirmed this idea, saying that “marketing reps need to understand products and systems; the job should be more than buying lunch and visiting the office.”

Meanwhile, other brokers wanted carriers to offer “more brand marketing,” as well as co-op dollars to “make co-op advertising easier for agents.”

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5/07/2018 11:04:48 PM

R CARRIE R TA

FIVE -S

BROKERS ON CARRIERS

8 201

8 201

BROKERS ON CARRIERS

R CARRIE R TA

S

S

FIVE -S

ORDINARY PEOPLE GETTING THE EXTRAORDINARY DONE

EDUCATION AND TRAINING Carrier performance 7.25

FIVE-STAR CARRIERS Affiliated FM Insurance Company AmTrust Financial Services Auto-Owners Insurance Central Mutual Insurance Company Chubb Erie Insurance Frankenmuth Insurance Liberty Mutual Markel Sompo International The Cincinnati Insurance Companies The Hanover Insurance Group The Hartford The Main Street America Group While education and training from carriers is also more of a bonus than a must-have, brokers generally agree on the necessity of receiving relevant information on a regular basis from the usual channels – website and newsletters. They also agree that carriers could put in more effort in this area, giving them an overall average score of 7.25 – down just slightly from last year’s 7.31 – and awarding five-star ratings to only 14 carriers. “They try, but as with all companies, they do not go far enough,” said one broker of his carrier, while another said it seems to be a WHAT BROKERS WANT

Industry-Leading Wholesale Broker & Program Manager

“Newer producers and employees could use some training on carrier-specific issues”

Let us go to work for you today.

“We rarely get any education from [our carrier]. They should have farm training on the ILS site” given that his carrier provides little training, and it’s a matter of “learn[ing] as you go.”

Yet there are carriers that do provide quality training, whether it’s for new account managers or through short/online training courses. One respondent commended his carrier for having good online training and lots of information available, but added that “in-person training [is] very much lacking.” On the other hand, many brokers lamented their carriers’ lack of online training and “interactive data” on their websites. In the end, it seems what brokers really want is for carriers to use all the means and resources available to equip brokers the best they can.

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5/07/2018 11:04:52 PM

FEATURES

SECTOR FOCUS: FESTIVALS

Hitting the festival circuit

IBA finds out how brokers and agents can take advantage of the rapidly growing festivals market FESTIVAL SEASON is in full swing, and thousands of people from across the US are packing their suitcases and tents and preparing to hit the road. Whether it’s a heavy metal festival or something a little gentler, the burgeoning festival scene is being embraced by people from all walks of life.

Festivals are all about fun and relaxation, but when any large group of people gathers together, there are numerous hazards to consider. Although festival promoters work

hard to ensure that their patrons have a positive experience and return the following year, their primary concern is to ensure the safety and security of those in attendance.

“Hazards that exist that can result in insurance claims range from a simple trip and fall – the most common festival claim – over something placed on the ground by the event producer or vendor, like a power cable, tent pole or uneven walkway,” says Marcus Paxton, vice president at MGA

HIGHEST-GROSSING FESTIVALS WORLDWIDE Coachella Valley Music & Arts Festival: $114.6 million

Classic East: $16.0 million

Outside Lands Music & Arts Festival: $27.9 million

Lollapalooza Brazil: $13.2 million

Sao Paulo Trip: $17.8 million

Pinkpop: $13.2 million

Classic West: $17.1 million

Hurricane Festival: $12.7 million

Life Is Beautiful Festival: $16.9 million Source: Statista.com

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Take1 Insurance. “The failure of staging or rigging equipment can also lead to the injury of others. In addition, many outdoor events have to deal with issues created by the weather, access to local services – power, water, emergency services – and the movement of lots of equipment as the show takes place.”

Most comprehensive festival and concert policies will include some common features, including general liability, equipment coverage (both owned and rented), and auto coverage for rented vehicles to transport people and equipment. Event producers are advised to secure higher limits of liability, which can create the need for umbrella coverage. “Specialized coverage for events such as terrorism, active assailant and contingency are often put in place to protect against perils specific for outdoor events or large gatherings of people,” Paxton adds.

A growing need The number of live concerts and new festivals being launched is rising each year. The nature of the music industry means that many artists can now earn more from ticket and merchandise sales at festivals than from selling their music. However, Paxton notes that despite the increasing number of events, the expertise to insure them remains limited, on both the insurance agency side and the underwriting side.

“There remains only a handful of insurance companies willing to write these events and a limited number of agents focused on the business,” he says. “It’s uncommon to find an agency like Take1 that has the expertise to write these events and remains licensed to conduct business in all 50 states.”

The price of festival and concert coverage has also been steadily on the rise in recent years. The increase can be attributed to the growing number, size and complexity of festivals in the US. Carriers also have to acknowledge and prepare for large losses, such as

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5/07/2018 11:05:14 PM

Photo by Andrew Jorgensen; courtesy of Coachella

the Indiana State Fair stage collapse in 2011, which killed seven people, injured 50 others and resulted in a $50 million settlement.

Terrorist attacks can also be blamed for the rising prices. It’s estimated that the 2017 mass shooting at a country music festival in Las Vegas, which took the lives of nearly 60 people and injured hundreds of others, will cost the insurance industry upwards of $1 billion.

Paxton believes communities that host festivals are in “desperate need of local insurance experts” to help in the placement of coverage. “While most agents will not have

“There remains only a handful of insurance companies willing to write these events and a limited number of agents focused on the business” Marcus Paxton, Take1 Insurance access to the carriers that specifically focus on the entertainment business, it’s easy to reach out to a wholesale broker that does have access and can assist in placing this

business for the local agent,” he says. “The benefit to providing coverage for these events in your community is that they are often a focus for local businesses and can often spin

www.ibamag.com

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5/07/2018 11:05:19 PM

FEATURES

SECTOR FOCUS: FESTIVALS

KEY COMPONENTS OF A LIVE EVENT POLICY Auto Crime General liability Inland marine Terrorism, threat of malicious acts and active assailants International Property Umbrella Workers’ compensation off additional customers that are vendors for the events, like equipment rental firms, stage companies, event promoters, touring entertainers and so on.”

Developing a specialty For agents who want to grow and expand their business in the concert and festival events space, Paxton recommends reaching out to an underwriter or broker who specializes in the sector. “Discuss what exposures are common and what coverage is provided to meet the need,” he suggests.

“Often, a review of supplemental forms specifically designed for concerts and festivals will give you a good idea of what underwriters are looking for and what information is needed from the insured for placement.”

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www.ibamag.com

There can be some complexity to insuring a concert or festival, and agents should do their research on the exact type of entertainment the organizer is planning to put on. Leigh Ann Rossi, COO of NFP subsidiary BWD Sports and Entertainment, advises brokers and agents to be aware of liability policy exclusions for things like “inflatables, pyrotechnics and events involving rap, hip-hop, alternative or techno music, just to name a few.”

Festival organizers and promoters also need to be reminded to obtain certificates of insurance from all vendors and contractors who are hired in connection with the event. Those certificates should clearly name the organizer as an additional insured.

or talent, or be forced to charter planes to get their event staff to the venue if airports are closed.

“For a sporting event or a concert, there could be a non-appearance claim due to injury or illness of the athlete or performing artist, as well as claims involving bodily injury, such as patron slips and falls, and claims of property damage to rented equipment,” Rossi says.

It’s no surprise that summer is the busiest time of year for sports and recreation facilities. For brokers and agents, the larger sports and leisure space represents a strong opportunity to diversify and expand a book of business. According to Ron Norton, SVP in the leisure division at K&K Insurance Group, agents who specialize in

“Agents should offer to evaluate and point out coverage deficiencies within the client’s current program – most customers don’t realize they have uninsured exposures or underinsured property until a loss occurs” Ron Norton, K&K Insurance “Organizers who are named as additional insureds will have the protection of the vendor’s or contractor’s policy if brought into a lawsuit due to the vendor’s or contractor’s negligence,” Rossi says.

“Festival organizers should provide these certificates to their insurance broker for review and recommendations.”

Cancellation claims related to postponement due to weather or travel delays are not uncommon. In many cases, these types of claims are for extra expenses incurred in an effort to mitigate a complete loss.

For example, a promoter might have to book additional nights in a hotel for staff

this space can identify exposures that inexperienced agents might miss or ignore. He advises agents to get to know the types of problems clients in the space are facing by attending industry trade shows and joining relevant associations.

“Agents should also offer to evaluate and point out coverage deficiencies within the client’s current program – most customers don’t realize they have uninsured exposures or underinsured property until a loss occurs,” Norton says. “It’s also a good idea to visit multiple facilities within the given industry, both as a consumer and an insurance professional.”

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5/07/2018 11:05:30 PM

FEATURES

AGENCY INSIGHT

Hackers beware Woodruff Sawyer’s head of cyber liability, Lauri Floresca, shares her perspective on the risks and trends in this evolving coverage

IBA: How has cyber coverage changed over the years?

Lauri Floresca: The product continues to evolve, and the risk continues to evolve. With some risks, such as fire, once you figure out how to control it, you can figure out how to insure it. In cyber, the risk keeps changing, so the product has to evolve. For example, data breach wasn’t the original focus of cyber policies; the early products addressed exposures such as virus transmission.

Today, I think when people think about cyber insurance, they assume it’s just about covering a data breach, but a new area of focus is business interruption, and the risk for companies in having their networks shut down as a result of a cyber attack and not being able to operate their business.

Last year, Merck, Maersk and FedEx made headlines because of network outages from the NotPetya virus cyber attack. These types of companies weren’t common buyers of cyber insurance because they didn’t hold a lot of customer data and didn’t think of the data breach exposure. We are seeing more of our clients focused on cyber insurance for the first time because of the reliance on networks to operate the business. Thankfully, the market has been evolving to more proactively cover cyber business interruption and improve coverage around that.

IBA: Is there a risk that’s not covered by cyber insurance?

LF: The area of coverage that companies

38

continually ask about but doesn’t really exist is for the loss of your own intellectual property. People are very worried about foreign hackers stealing company secrets or patent applications. The challenge is that cyber policies will cover the intrusion aspect of the hack and potentially the cost to figure out what was stolen, but not the lost value of intellectual property, partly because it’s so difficult to value.

IBA: How does Woodruff Sawyer help clients manage cyber risks?

LF: First, we help clients identify what those cyber risks are and which ones are most critical to them, whether it is a data breach or a vulnerability to business interruption. Then it’s about helping them pull together their story to explain to underwriters what their risk profile is and how they are managing cyber risks.

We also partner with outside firms that offer external security reports to measure the health of a company’s risk. We provide that to

the company so they know how they scored and can potentially make improvements in the areas where they scored poorly. Also, because many underwriters are using those services as an initial underwriting check, if there is anything that is either wrong or needs to be explained, we want to be able to explain to the underwriters and make sure the client isn’t getting penalized when they shouldn’t be.

IBA: What are some of the other challenges in insuring cyber risks?

LF: One challenging area is that there are so many vendors and service providers in this space trying to help companies with their cyber risk that it’s very overwhelming to companies. In many cases, insurance comes bundled with access to vendors and services, but we find that companies are not taking advantage of those. One of the things we are working on is building out our own panel of vendors for clients to access that provide cyber

THE CYBER EXPERT Most people fall into insurance, but Lauri Floresca had been planning for an insurance career since college. After graduating, Floresca landed her first job at Chubb as an underwriter for executive protection insurance. She later joined Carpenter Moore, and then in 2009, she and her team moved to Woodruff Sawyer.

“When we joined Woodruff, I had a number of clients that were consumer-facing, and cyber risk was starting to become a high-profile area for them,” Floresca says. “I identified that in order to advise my clients, I had to dig into this area. It’s an emerging product that requires a lot of specialty expertise, and there’s a ton of opportunity in it.”

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5/07/2018 11:05:53 PM

FAST FACTS: WOODRUFF SAWYER

Key industry expertise Technology Life sciences Private equity and venture capital Financial services Construction Real estate Manufacturing

“We are seeing more of our clients focused on cyber insurance for the first time because of the reliance on networks to operate the business. Thankfully, the market has been evolving” risk assessments, breach response preparedness, penetration tests and more to improve a company’s risk profile.

IBA: How is the new GDPR legislation in the EU impacting cyber insurance?

LF: GDPR, the European data protection regulations that went into effect in May, has been a huge buildup for the cyber insurance industry because, one, everyone is focused on

compliance and whether companies are ready, and two, everyone wants to know if there is insurance available for GDPR. Cyber insurance is unique in that it overtly covers fines and penalties associated with privacy breaches, which is fairly unusual in insurance. With GDPR, the question is if insurance coverage will extend to that.

There are legal opinions suggesting that fines and penalties are not insurable in many

Healthcare

Headquarters: San Francisco Year founded: 1918 Number of offices: 16, including a location in London jurisdictions in Europe. There are a lot of questions as to whether that assessment is relevant and appropriate for companies that are domiciled in the US, buying insurance from a US insurer. That’s a huge issue because the potential fines and penalties under GDPR are significant and much higher than what we have seen in the US. Companies are very concerned about the potential penalties and whether their insurance will be able to respond.

www.ibamag.com

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5/07/2018 11:05:58 PM

FEATURES

SECTOR FOCUS: RECRUITMENT

The leaders of tomorrow As insurance executives continue to retire in record numbers, it’s time for the insurance industry to step up its game in recruiting the next generation

WHY MAKE RISK RISKIER?

AS THE EXODUS of baby boomers from the insurance industry continues to pick up pace, attracting the next generation of talent is becoming increasingly important. With each year that passes, the industry loses decades of experience. Insurance traditionally hasn’t been perceived as the most attractive industry among younger generations, but that perception is slowly starting to change.

There’s a growing awareness among insurance leaders that attracting the next generation is one of the industry’s most significant challenges today.

If insurance has any hope of meeting changing consumer expectations, insurers and agencies need to take action now rather than in five or 10 years.

“Over the past few years, the conversations about how the industry is going to address its talent issue have been occurring with increased regularity,” says 33-year-old Josh Ammons, a senior vice president at AmWINS Group and vice president of the WSIA’s U40 group for young insurance professionals. “There are concerns about how to perpetuate not only the responsibilities but, more importantly, the expertise that these veterans are going to take with them in retirement.”

Getting the word out The current transition within the industry should be seen as an opportunity rather than an obstacle.

While many young people don’t consider insurance as exciting as other financial services fields such as

40

40-43_Sector focus Next Gen-SUBBED.indd 40

banking or investments, by creating an ongoing and structured dialogue with younger people, insurance leaders have a chance to slowly shift those outdated views.

“We are focused on speaking to college students and educating them on the incredible opportunities in our industry,” Ammons says. “It’s a people business, and I don’t think enough people know that. The retirements in the next five to 10 years are going to create so many opportunities, both for people who are already in the industry and fall into the under-40 segment, and for people in their early 20s who don’t know much about the business at all.”

A major part of Ammons’ role with the WSIA’s U40 group is to engage younger generations and tell them all they need to know – and probably haven’t heard – about the industry. These efforts include a well received quarterly webinar and educational events across the country at industry conferences like the WSIA Annual Marketplace.

Connecting with college students on their home turf is another central component of U40’s strategy.

“Last year we were proud to hit 19 universities, which represented great progress for us,” Ammons says. “We are doing a solid job, but there is definitely room for us to grow and do more.

We touched over 2,500 students last year, but think about how many students are in the US. We have laid a solid foundation, but now it’s about us

www.ibamag.com

6/07/2018 2:26:43 AM

CHANGING OF THE GUARD

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getting people currently in the industry engaged and fired up about passing on some of the knowledge they have.”

Ammons is particularly excited about the inaugural U40 Annual Meeting, which will take place in late October in Lake Tahoe. Unlike other conferences where the U40 group has been a small component, there will be no baby boomer executives in Lake Tahoe. The conference will feature technical and leadership sessions, as well as some

valuable networking opportunities.

“The event is geared toward younger leaders at insurance firms – not just the people who have been in the business for a couple of years,” Ammons says. “Attendees will hear from colleagues, peers, competitors and underwriting partners about what’s going well and what’s not working so well.

Having that peer-to-peer sharing is so important. I hope everyone leaves fired up with some key points to take back to their organizations.”

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solution. Risk averted.

Find a WSIA member Find a WSIA member at at wsia.org wsia.org 6/07/2018 2:26:50 AM

FEATURES

SECTOR FOCUS: RECRUITMENT

GETTING TO KNOW MILLENNIALS What’s important to them when considering a new job 80% 60% 40% 20% 0%

63%

52%

50%

Pay

Culture

Flexibility

Skills they believe are essential for long-term success 40% 30% 20% 10% 0%

36%

35%

33%

Interpersonal skills

Confidence and motivation

Ethics and integrity Source: 2018 Deloitte Millennial Survey

Breaking through the stereotypes For insurance companies to attract the next generation of leaders, they need to know what makes them tick – but they should avoid being influenced by stereotypes about millennials.

Having an inflated sense of entitlement and being obsessed with work-life balance are two things millennials are often derided for, but Ammons describes these as “lazy perceptions” and urges insurance leaders to drop the beliefs as easily as they picked them up.

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“What I have found with millennials is that they want to work somewhere with a strong culture and they want to be challenged,” he says. “If they feel like they’re sitting still and not making progress, that’s when people will start to plan moves. It’s up to us as leaders to create a culture where millennials feel part of a team and are held accountable. We need to give them a career path, direction, and some mentorship and opportunities for development along the way.”

H.W. Kaufman Group chairman, president and CEO Alan Jay Kaufman sees the current talent shortage as the most pressing issue facing the insurance industry. As such, he’s determined to get young people interested in insurance while they’re still in college.

“The shortage of talent is becoming more pronounced, and being active with universities, to me, is a bolt of lightning,” Kaufman says. “The majority of the business schools [in the US] do not offer insurance as a major, or

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even as course offerings.”

In 2015, Kaufman and his wife established a major endowment for a professorship in insurance and risk management at the Eli Broad College of Business at Michigan State University. “I did that because the school didn’t have one insurance offering,” Kaufman says. “Now they have four insurance classes, and they’ll have more. Hopefully, more insurance companies or individuals will step up and do the same, either at Michigan State or

other places.”

A career in the insurance industry has much to offer, from competitive remuneration to flexible work schedules and the ability to quickly move up the ranks. But outsiders often buy into the old stereotypes of the industry being slow and boring. Just as millennials know, shaking off stereotypes can be difficult, no matter how off the mark they might be.

“I think one has to examine the success stories of many people in the insurance world

to see that there are great opportunities there,” Kaufman says. “The insurance world has not done a great job of public relations to demonstrate that. That’s one of the shortcomings.

“We’re not attracting the best and brightest in a big enough [way] in the insurance industry,” he adds. “Insurance companies need to be involved with the education during college years because that’s where the best recruiting comes. Recruiting afterwards is good, but it’s not enough.”

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FEATURES

PRESENTATIONS

How to create a winning presentation The key to an effective presentation is to make your message simple and genuine, writes professional communicator Emma Bannister

EVERY TIME I go to speak or train at a different company, I get the same response: “You make presentations sound so simple.

I get it, but I don’t get how I get buy-in from everyone else.”

The goal of any presentation is to influence your audience to act. Maybe you want your employees to get on board with your new vision or idea, or to motivate your client toward a new outcome. You want to make them feel excited, inspired or raring to go.

Yet nine out of 10 times, at the completion of a presentation, you’re probably met with chirruping crickets, blank faces or stifled yawns (if your audience hasn’t fled the room).

So what gives?

Make a point You can only claim that you have a ‘winning presentation’ if your presentation achieves what you wanted it to achieve. If your audience does what you want them to do and they respond in the way you want them to respond, that’s how you measure the success of your presentation.

The problem most of us trip up on is that you need to think about the behavior of your audience long before you start talking.

All too often, when I ask a speaker what their objective is, they don’t know. They can’t tell me why they are presenting (other than because they’ve been told to), or what they want the audience to feel, act or do after they have seen the presentation. You have to be 100% clear on the purpose of your presentation.

Be human The key challenge we all face, regardless of industry, is that the world is more and more competitive every day. It’s harder than ever to stand out and be noticed, and to communicate your point of view with the right people in the right way.

One thing that’s not going to help is using business or corporate jargon as a crutch. All

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this does is create unnatural, overcomplicated messages that people can’t engage with.

What the world needs today – what your customers, clients, stakeholders and team members are crying out for – is natural, human-to-human connection through compelling visuals and emotional stories.

In business, we’ve been taught to stick to the facts and leave out any hint of emotion, yet research proves that our decisions – whether we buy or buy into something – are influenced by our emotions.

Remember, people buy from people they like. So you need to make your audience feel something toward you other than the urge to flee the room. The best presenters are those who can use a combination of facts and emotions to explain a future place that everyone wants to work toward.

Use images and video to create excitement, inspiration or action, if it’s appropriate to your cause. Pair these with infographics and diagrams that sum up your main points and data. I’ve also seen people use videos to successfully create something that tugs at the heartstrings and lingers for a long time in everyone’s memory.

When you share your vision and goals through compelling stories and slides, you reduce fear and instill confidence in your audience. That’s when they will connect to a future they want to be a part of.

Own up and own it Many of us believe that sharing everything and anything and blinding our audience with numbers is the best way to be transparent and open when it comes to a presentation, but that couldn’t be further from the truth. This will only put off the people you are trying to engage and make them lose interest faster.

It’s more important than ever to cut out all the clutter from your presentation. A powerful presentation has content that is clear, easy to understand, and uses simple

IDENTIFY YOUR PRESENTATION’S PURPOSE What’s your main message?

You should have only one. Less than 10% of a presentation is remembered, so if you start jamming in too many messages, you will lose your audience.

What’s your objective?

Are you trying to educate your audience, share results or sell something?

Again, you should only be doing one of these.

What are your audience’s needs?

Do you have a clear understanding of who you’re presenting to? What do you want them to think, act or feel after you present? You must assess their beliefs, values and motivations. What makes them tick? Get into their shoes at the start, listen to them as you walk through the presentation and gather feedback at the end.

The best presenters are those who can use a combination of facts and emotions to explain a future that everyone wants to work toward language and images to connect with and engage your audience through a balance of emotion and analytics. Your audience will leave the presentation feeling different – inspired or excited to act on what you want them to do.

A poor presentation, on the other hand, has content that is overloaded with facts, stats, numbers, corporate jargon and dense text. It leaves the audience feeling confused, turned off and disengaged. They will leave the room with no idea of what to do next – except never attend one of your presentations again.

You must be clear and honest in your presentation. It’s also important not to try to hide or cover up negative information or numbers. Nothing turns clients or customers off more than when you lie about your financial position.

You need to be future-focused and take ownership of any problems. Explain the steps

you’re implementing to turn things around to minimize loss, and get your team involved to help with this, too.

Be open and honest about where you are right now and what’s involved in the journey to get where you’re going – together. Leave your audience inspired, not deflated like it’s their fault or you’re looking for an out.

Bad slides and presentations are used like a security blanket to hide things under.

So start with small changes to your content and attitude, and stop hiding and hoping for the best. Your customers, clients and team members will respect you for that.

Emma Bannister is passionate about presenting big, bold and beautiful ideas. She is the founder and CEO of Presentation Studio and the author of Visual Thinking: How to Transform the Way You Think, Communicate and Influence with Presentations. Find out more at presentationstudio.com.

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MAGAZINE The country’s leading business magazine for today’s sophisticated commercial insurance broker/agent.

WEBSITE Breaking news, in-depth profiles, features, online forum and Insurance Business TV

ENEWSLETTER Daily news service delivered straight to your inbox every morning

Find out more and subscribe at insurancebusinessmag.com/us/ IBA subs ad2 2018.indd 1 46-47_Career Path-SUBBED.indd 46

14/03/2018 5/07/2018 10:49:19 11:07:51 PM PM

9 PM

PEOPLE

CAREER PATH

DRIVEN TO EXCESS

An early interest in insurance led TJ Krzmarzick to a passion for the excess casualty space A part-time job at a golf course – where many of the members worked in insurance – was responsible for directing Krzmarzick toward the industry. Later, as a student at Illinois State University, he switched his major from finance and ultimately graduated with a double major in insurance and marketing “I got into the insurance major and I didn’t look back”

2002 DISCOVERS INSURANCE

2006 LEARNS THE BUSINESS His early years at AIG saw Krzmarzick working as an underwriter and then a senior underwriter “I didn’t just learn how to underwrite accounts; I also learned how to grow and manage my own book of business, to develop the marketing skills I needed, to cultivate the right business contacts, and to establish a rapport with internal and external peers”

2005 GETS CHOSEN His sights set on working for a large carrier, Krzmarzick interviewed with AIG – an intense process that took five hours and involved meeting eight members of management. He was selected as one of only six candidates for the company’s professional associate program, which he credits with giving him a thorough grounding in the industry “We had exposure to high-level executives; the intention was to give us real-life insurance experience”

2009 2013

MOVES UP … AND OUT Promoted to manager of the excess casualty department, Krzmarzick thrived until additional responsibilities (for corporate accounts primary) were rolled into his remit, which made his love for excess casualty apparent

“It really taught me where my passions lay.

I wanted to focus on excess casualty. Excess is about decision-making based upon risk profile; you have more skin in the game” 2018 EMERGES AS A LEADER His underwriting results and the level of new business coming in led to a series of promotions for Krzmarzick: first to vice president and then to regional manager. He marked another milestone when he was named a 2018 Emerging Leader by the Insurance Brokers Association of the State of New York “Our book has grown to almost five times its original size since we started four years ago”

LEADS A TEAM After AIG rebranded to Chartis in the wake of the financial crisis, Krzmarzick stepped into the position of assistant regional manager of excess casualty and, for the first time, was charged with managing people “I had three people reporting to me; we were like a team within a team. It was a growth role – I knew it would be challenging. I wanted to get into the management side at that time, and the opportunity presented itself”

2014 STARTS FROM SCRATCH The dedicated excess practice at Aspen Insurance drew Krzmarzick to the company.

He started as the sole excess underwriter in the Chicago office with a plan to grow the book of business and expand the department “I went from an office of 435 to being one of seven [in Chicago]. The plan was to grow the practice aggressively each year; it was a challenge, but one I knew I could achieve – and I wanted to start something from scratch”

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email iba@keymedia.com

“It’s like hosting the Oscars,” Edwards says.

“It’s a thrill ride.”

5

Number of pageants Edwards has hosted

$3,500

Scholarship amount available to those who win or place

3

Months a contestant typically takes to prep for competition

LIFE’S RICH PAGEANT Paul Edwards jokes he’s not going to win any beauty contests – so he decided to host them instead A REQUEST from a contact who knew how much he enjoyed public speaking was the catalyst for Seattle-based insurance broker Paul Edwards to become an emcee for county-level pageants for the Miss America Organization. “I had never had anything to do with pageants, but I said sure. I love public speaking – I’m the one

48

out of a hundred who does.”

While the chance to be up on stage himself might have been the initial lure, what keeps Edwards donning the tux every year is the pageant’s effect on the contestants, who are typically in their late teens or early 20s.

“These girls are stepping out of their

comfort zone and going through a process to become a civic emblem,” Edwards says.

“They go through a remarkable transformation; I see tremendous growth and maturity acquired at a young age every time I host. Miss America is about forging a new level of life for the title holders – it dovetails perfectly with how I do business.”

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IBA 6.

IS YOUR AGENCY AMONG THE ELITE? Insurance Business America is looking for the nation’s leading retail agencies. If your agency experienced notable growth in 2017, adopted innovative strategies, or for other reasons deserves to be recognized, let us know!

NOMINATIONS OPEN IN JULY! Enter online at www.insurancebusinessmag.com/us/ or email Heather Turner at heather.turner@keymedia.com

ENTER NOW!

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5/07/2018 30/06/2018 11:08:39 4:11:16 PM AM

Expect big things in workers’ compensation. Most classes approved, nationwide. It pays to get a quote from Applied.® For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com. ©2018 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best.

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

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