Insurance Business America 8.04

IBAMAG.COM ISSUE 8.04 | $12.95

DIVERSITY AND INCLUSION How can the industry translate good intentions into meaningful progress?

RESPONDING TO THE PANDEMIC

How to determine whether clients are covered for COVID-19-related losses

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A NEW DAY FOR FLOOD INSURANCE

Will better modeling and more private options boost the segment’s profile?

WINNING THE WAR FOR TALENT

Inside one agency’s forward-thinking approach to hiring and training

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ISSUE 8.04

CONNECT WITH US Got a story or suggestion, or just want to find out some more information?

CONTENTS

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UPFRONT 04 Editorial

What should be celebrated on the D&I front – and what still needs to change

06 Statistics

Key data that should be on your radar this month FEATURES

WHEN IT RAINS, IT POURS

22 SPECIAL REPORT

DIVERSITY AND INCLUSION

IBA talks to leaders at four forward-thinking companies to find out how they’re helping to make insurance a more diverse and welcoming industry

PEOPLE

INDUSTRY ICON

Insurance has come a long way since AssuredPartners’ Maureen Gallagher started in the business – and so has she

18 2

Will increasingly severe weather and an enhanced private flood insurance market be enough to convince consumers to get on board?

08 Head to head

How can companies manage cyber exposure with a remote workforce?

10 News analysis

How to determine if your clients are covered for COVID-19 losses

12 Intelligence

This month’s big movers, shakers and new products

14 Workers’ comp update

A closer look at the common workers’ comp obstacles for startups

40

FEATURES

ALL IN THIS TOGETHER

Graham Company’s Karen Boyle on how the agency’s unique structure and training program set it apart

16 Technology update

What the leader of one digital MGA learned from the private equity sphere

21 Opinion

Why cybersecurity without cyber insurance is a doomed plan

FEATURES 42 How to avoid mental exhaustion

Three ways to make sure your dayto-day tasks aren’t burning you out

PEOPLE

44 FEATURES

OPTIMISTIC REALISTS: THE BEST LEADERS How to combine idealism with pragmatism for an effective leadership approach

47 Career path

Mike Hessling brought his clientfocused mentality from accounting to insurance

48 Other life

Catching a wave with broker and surfer Sam Orozco

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The number of companies calling Enterprise AI “game-changing” has quintupled.

Are you one of them?

We’re hiring. © 2020 C3.ai, Inc. All Rights Reserved. is a mark of C3.ai, Inc.

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UPFRONT

EDITORIAL

Driving D&I in insurance

G

rab your bells and whistles, folks! In these challenging and uncertain times, IBA has something to celebrate. We are delighted to present the magazine’s first-ever special report on diversity and inclusion, which begins on page 22. This feat is only made possible by the significant progress being made in the US insurance industry, where D&I has officially risen to the top of the corporate agenda. For insurance companies here and around the world, D&I has evolved from a ‘nice to have’ to a ‘need to have,’ and awareness is slowly being turned into action.

Progress in D&I is evident in many ways. First, insurance companies are talking about it. They’re incorporating D&I into their communication strategies, they’re hiring D&I officers to spearhead the movement, and they’re elevating D&I to board-level importance. Many companies across the US have set up employee groups or programs – you can read about some examples in our D&I feature – to engage the workforce and weave a more diverse and inclusive culture into corporate America.

For insurance companies around the world, D&I has evolved from a ‘nice to have’ to a ‘need to have,’ and awareness is slowly being turned into action D&I isn’t just critical in terms of keeping employees happy and supporting them to do their best work; it also has other business benefits. Diverse perspectives will enable the insurance industry to spearhead much-needed innovation and transformation. Insurance, which has long been perceived as slow to adapt to change relative to other industries, needs fresh minds to tackle some of its longstanding challenges, such as legacy infrastructure, outdated service models and its ability to handle emerging risks.

While progress is being made, companies shouldn’t fall into the trap of setting diversity targets. Hiring managers or team leaders might think, “We need X number of women, X range of ages and X number of people from different backgrounds to make this team diverse – and once those targets are hit, the job is done.” Unfortunately, that’s only half the work. Insurance companies also need to create an inclusive culture to support and nurture a diverse workforce.

Dame Inga Beale, the former CEO of Lloyd’s of London, summed it up when she said there’s “more work to do” on D&I in insurance. Luckily, the passion and the eagerness seem to be there to drive this initiative forward.

The team at Insurance Business America

www.ibamag.com MAY 2017 EDITORIAL

Managing Editor Paul Lucas Editor Bethan Moorcraft Journalists Alicja Grzadkowska, Ksenia Stepanova, Camilla Theakstone News Writers Lyle Adriano, Terry Gangcuangco, Roxanne Libatique, Gabriel Olano Staff Writers Ellen Burkhardt, Tom Goodwin, Kasi Johnston, Libby MacDonald, Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Kirsten Bay, Carson Tate, Brian de Haaff

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

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UPFRONT

STATISTICS THE RISE OF RANSOMWARE

SEATTLE, WA

SAN FRANCISCO, CA

LOS ANGELES, CA

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

775

Number of ransomware incidents reported to Beazley in 2019

131%

Increase in ransomware attack notifications against Beazley clients between 2018 and 2019

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

SALT LAKE CITY, UT

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

THE HEALTHCARE COST OF COVID-19 Hundreds of thousands of people across the world have been infected with coronavirus. Although the US government is requiring private insurance plans to waive the costs of testing, as well as the associated doctor’s visit, patients are still leaving with significant out-of-pocket costs as medical professionals test for other conditions to ensure the accuracy of a diagnosis. A recent cost analysis by Castlight Health found that these costs varied considerably, depending on location and the severity of symptoms.

Primary care average out-of-pocket cost range Urgent care average out-of-pocket cost range Emergency care average out-ofpocket cost range

MOST VULNERABLE INDUSTRIES TO RANSOMWARE ATTACKS

15.7

Average number of days need to resolve a ransomware incident

As cybercriminals become more creative and more businesses are forced to adapt to remote working during the COVID-19 crisis, ransomware attacks have greater potential to halt operations.

Healthcare organizations are particularly vulnerable, as criminals use the sensitivity of patient data and the critical impact on patient care to evoke ransom payments.

PROPORTION OF 2019 RANSOMWARE ATTACKS BY INDUSTRY RETAIL

7%

62%

EDUCATION

Proportion of ransomware attacks targeted at small and medium-sized businesses Source: Beazley Breach Briefing 2020

12%

PROFESSIONAL SERVICES

9%

HEALTHCARE

35%

FINANCIAL INSTITUTIONS

16%

Source: Beazley Breach Briefing 2020

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EXPLOSIVE GROWTH AHEAD FOR AUTONOMOUS CARS

CLEVELAND, OH

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

CHICAGO, IL

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

The autonomous vehicle service market, which has created plenty of liability questions for insurers, is expected to see major growth over the next decade, according to the latest forecast from ResearchAndMarkets.com.

BOSTON, MA

DALLAS, TX

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

WASHINGTON, DC

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

MIAMI, FL

HOUSTON, TX

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

$100 $22.41 million billion Mobility services market

TAKING CYBER RISK SERIOUSLY Cyber insurance is gradually becoming a staple for many US businesses.

Between 2016 and 2019, Marsh observed growth in the rate of cyber insurance take-up across many industries; hospitality and gaming, manufacturing, and education led the pack.

AVERAGE CYBER INSURANCE GROWTH RATE, 2016–2019 40%

Vehicle services (ondemand features, parking services)

More than 80% of professionals surveyed by Marsh said they are fairly or highly confident that their company’s cyber insurance policy will cover the cost of a cyberattack. Finance, risk management and legal/compliance professionals exhibited the highest level of confidence; C-suite/board members and those in IT or information security had the lowest.

7%

HOW CONFIDENT ARE YOU THAT YOUR ORGANIZATION’S CYBER INSURANCE WILL COVER THE COST OF A CYBER EVENT?

5%

20%

0%

34%

27%

20%

Hospitality and gaming

Manufacturing

Education

Power and utilities

19%

14%

12%

7%

7%

Retail/ Financial Healthcare Communi- Professional wholesale institutions cations, media services and technology Source: Cyber Insurance Purchasing Report, Marsh, 2019

Autonomous logistics market

COMPANIES CONFIDENT IN CYBER COVERAGE

30%

10%

$740 $34.46 million billion

$200 $35.15 million billion

Source: Research and Markets Autonomous Vehicle Market Report

Source: Castlight Health

37%

2030

NEW YORK, NY

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

2019

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

32%

57%

Highly confident Fairly confident Not at all confident Don’t know

Source: Cyber Insurance Purchasing Report, Marsh, 2019

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10/04/2020 3:24:56 AM

UPFRONT

HEAD TO HEAD

What are the cyber risk implications of remote work?

Businesses are facing heightened cyber exposure as the coronavirus pandemic forces employees to work from home

CEO ProWriters

Senior cybersecurity risk engineering consultant Zurich North America

Nikki Ingram

Joshua Motta

“As the COVID-19 pandemic grew, employers rapidly shifted to remote working for safety while trying their best to continue business operations. Doing this en masse over a short period of time can overwhelm IT department, especially where employees were given access to the corporate network from their own devices.

Simultaneously, hackers moved just as quickly to take advantage of the situation by sending phishing emails about coronavirus.

Remote employees may be more likely to click on those emails and inadvertently let malware in. This experience highlights the importance of multifactor authentication, secure email gateways, endpoint protection and employee phishing training.”

“Cyber risks multiply as more workers log on to an employer’s network remotely.

Employers should remind employees to scrutinize emails purporting to be from their IT department, which could be phishing attacks aimed at stealing credentials or introducing malicious software onto their computers.

Another cybersecurity crack can come from home WiFi networks, which should have a strong password unrelated to the work computer password. Employees having internet trouble at home may be advised by their internet service provider to lower their security settings. They should consult their company’s legitimate IT staff before ever doing that.”

“Many businesses, large and small, are being forced into the new reality of remote work. Cybercriminals are already exploiting the changes organizations are implementing to facilitate remote work, notably by exploiting the remote access points themselves, as well as by launching phishing campaigns to exploit mass uncertainty and fear.

Even prior to the pandemic, insecure remote access points accounted for over 40% of ransomware claims reported to Coalition. Organizations that fail to properly secure remote access points by using a VPN or multifactor authentication are now at far higher risk of ransomware and data breaches.”

Brian Thornton

CEO and co-founder Coalition

PREYING ON FEAR Security and tech experts have warned that hackers are now resorting to emails and apps claiming to provide information on the COVID-19 outbreak to fool victims into installing malware on their devices. Security firm Lookout identified an application that was an almost total duplicate of the legitimate coronavirus tracker maintained by Johns Hopkins University – only it has Trojan malware. Quick Heal Security Labs director Himanshu Dubey told ETtech.com that cybercriminals “have become very good at latching on to any local or global event once it gains traction.”

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Every Account We Write Is a Custom Design “We recognize it is a competitive market and we look to differentiate. That starts with understanding who our customers are and what they are looking for in terms of a relationship with a carrier. From there, we find a way to develop solutions while maintaining really strong relationships with these clients.”

– Gus Aivaliotis, Chief Underwriting Officer

Gus Aivaliotis with members of Underwriting

Proceed with Safety®

Workers’ Compensation: Excess • Large Deductible • Large Guaranteed Cost • Defense Base Act • TEXcess® Commercial Auto • Commercial General Liability • Umbrella / Excess Liability • Public Entity Liability • Cyber Risk Loss Portfolio Transfers • Self-Insurance Bonds

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UPFRONT

NEWS ANALYSIS

Pandemic pandemonium The impacts of the novel coronavirus on US businesses will spare few industries, bringing up questions around insurance coverage

ON MARCH 11, the World Health Organization publicly declared the COVID-19 outbreak a pandemic, just as the US government imposed significant travel restrictions from Europe to the US. Since the disease first originated from a live animal market in Wuhan, China, in December 2019, it has spread to at least 180 countries and caused nearly 90,000 deaths, a number that continues to rise daily. With global markets reeling from the worldwide spread of coronavirus, American businesses are likely to be impacted by the disease, if they haven’t been already.

“On multiple fronts, this impacts local businesses, big and small, [due to] the fact that there’s a closure of ports and supply

order and supply chains around the globe, which can hamper the ability of businesses to import products to restock their shelves or to get their products out to other markets. As a result, “it’s not going to discriminate in terms of the size of the businesses and the types of businesses it impacts,” Lane says.

That said, some businesses do stand to lose more than others. The cancellation and postponement of music and sporting events, for example, has financial repercussions for event operators, as well as the hospitality industry. And given that the tourism industry across the globe has essentially ground to a halt, airplane seats and hotel rooms have been increasingly empty. Shutdowns of regions in the US are also having

“[Coronavirus is] not going to discriminate in terms of the size and the types of businesses it impacts” Rob Lane, Alliant Insurance chains as a result of this, and that may become more prominent, depending on how bad this gets,” says Rob Lane, executive vice president at Alliant Insurance.

While initial concerns revolved around how China-connected supply chains would fare, now that the virus has reached pandemic status, it further impacts the entire world

10

severe impacts on businesses.

“You had a quarantine for 60 million people [in China’s Hubei province],” says Paul White, a partner at Wilson Elser. “By comparison, if you did that in the United States, you’re talking about freezing up almost one-sixth of the country.”

Amid the crisis, businesses and their

brokers and agents should take note of the insurance coverages that could be affected.

Chris Lang, Marsh’s global placement leader for the US and Canada, notes that “traditional property & casualty policies are likely to provide relatively limited coverage for outbreaks, epidemics and pandemics,” though some forms of coverage, from workers’ compensation to property and business interruption policies, could respond if specific conditions are met.

The question of coverage within certain policies is likely to continue as the pandemic escalates, especially considering the varied policy wording that exists.

“The challenge on a standard property policy is that there is typically going to be a requirement for a direct physical loss,” White says. “If you simply are shutting down because the government has said, ‘We want

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10/04/2020 3:26:24 AM

NOTABLE HEALTH EMERGENCIES IN HISTORY

Mid-1300s The plague killed between 75 million and 200 million people across Europe

1918 Spanish flu was the first of two pandemics involving H1N1 virus, infecting a third of the world’s population

2003 SARS spread to 26 countries and resulted in more than 8,000 cases

2009 Swine flu, the second pandemic from the H1N1 strain, caused between 151,700 and 575,400 deaths worldwide

2014 The Ebola outbreak in West Africa was the largest one since the virus was discovered in 1976 folks to be careful,’ but your business itself hasn’t been contaminated or your products haven’t been contaminated, you’re likely not

policy­holders primarily in the hospitality business or healthcare industries often purchase coverage for losses caused by a

“There are any number of issues related to other insurance product lines other than business interruption property coverage” Paul White, Wilson Elser going to find business interruption coverage because it is tied directly to the requirement that there be a direct physical loss, usually tied to a specific risk.”

At the same time, the insurance industry provides specialized extensions of coverage and policies in order to respond directly to this type of circumstance. For example,

communicable or infectious disease. That coverage will usually be in either a separate policy or an endorsement to an existing property policy, and in all likelihood, it will not have an express requirement for physical damage to the property, according to White.

“If they’re a fairly sophisticated insured and they’ve purchased property coverage

for the communicable or infectious diseases, they may be able to turn to that and say, ‘We have a business interruption arising from this disease,’” he adds.

It’s difficult to address every potential coverage outcome, considering the number of insurance products out there. Therefore, brokers and agents should look at the specific policy language and determine whether coverage is, for instance, tied to the reason for the shutdown, such as a civil authority order versus a voluntary shutdown, alongside other crucial wordings.

“It’s worth noting that there are any number of issues related to other insurance product lines other than business interruption property coverage,” White says. He points to life, E&O and D&O insurance, “all of which, in prior pandemic-related problems, have gone through their own headaches.”

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10/04/2020 3:26:28 AM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Alliant Insurance Services

The LifeBalance Program

The entire staff of well-being company LifeBalance will join Alliant and continue serving clients nationwide from its Portland headquarters

Brown & Brown of Kentucky

Northeast Dealer Consultants

NEDC will become part of Brown & Brown Dealer Services

Gallagher

CMS

CMS is a full-service wholesale insurance broker that works with agents across the US

The Hilb Group

D. F. Dwyer & Associates

Rhode Island-based DFD offers a suite of P&C insurance products and services to businesses and individuals

Hub International

Linton & Associates

Based in New Mexico, Linton & Associates provides commercial and personal insurance and employee benefits solutions

Risk Strategies

Atlas Insurance Management

Atlas specializes in the formation and management of captive insurance companies

Tokio Marine HCC

GCube

London-based MGA GCube is an expert in renewable energy risks

USI Insurance Services

Full Service Insurance Agency

Founded in 1975, Full Service specializes in commercial insurance, employee benefits and personal risk solutions

Amerisure rolls out fleet telematics program

Amerisure has partnered with telematics firm IMS to introduce a commercial fleet telematics program to customers in Michigan. IMS’ technology will allow Amerisure to collect data from fleet drivers and assign a driver behavior score, which will be used to make recommendations for driver improvement and enable credit toward insurance premiums. The telematics program joins Amerisure’s FleetAlliance offerings, which include a range of safety-focused tools and resources such as dash cams, cellphoneblocking tech, discounted motor vehicle reports, driver behavior assessments and more.

Gallagher snaps up wholesale insurance broker

Gallagher has welcomed wholesale insurance broker CMS into the fold. Based in New York, CMS specializes in placing coverage for construction, importing, wholesale/distribution, manufacturing and real estate businesses, as well as personal lines. CMS president and CEO Scott Charney, executive vice president Rich Verdi, and CFO Michael Raab will continue to operate in their current location under the direction of Steve Levin, Northeast region vice president for Gallagher subsidiary Risk Placement Services.

“CMS brings us strong market expertise in construction and real estate and expands RPS’ ability to deliver standard-market coverage solutions to smaller agents,” said Gallagher chairman, president and CEO J. Patrick Gallagher Jr.

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Zurich partners with CYE to expand cyber offering

Zurich Insurance Group has teamed up with cybersecurity company CYE to launch Zurich Cyber Security Services, an offering designed to protect businesses against cybercrime. The offering combines Zurich’s specialty cyber insurance and risk engineering with CYE’s artificial intelligencebased technology, services and expertise to help businesses define and implement effective cyber risk management programs. Zurich’s Sierra Signorelli said the collaboration “will give customers a state-ofthe-art cyber solution that combines the benefits of insurance with a boost to their cyber defenses.”

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10/04/2020 3:27:40 AM

PEOPLE Willis Towers Watson tracks COVID-19 property risk

Willis Towers Watson has introduced a new risk and analytics feature that enables risk managers to assess their COVID-19 property exposure, providing them with real-time developments of the pandemic as it relates to their property assets around the world. Part of WTW’s Global Peril diagnostic modeling tool, which evaluates clients’ property portfolios and assesses their exposure to comprehensive catastrophe risk, the new feature provides up-to-date information about confirmed global COVID-19 cases alongside clients’ total insured property values by location.

Sompo covers property replacement value

Sompo Global Risk Solutions has partnered with Fisher Harris Shapiro (FHS) to offer specialized protection against covered property perils to US commercial real estate and financial institutions.

Available through FHS, the Sompo GRS Replacement Value Protection product is designed to protect lenders and owners from a loss resulting from property damage greater than the replacement cost value of a property. It covers the gap between the outstanding loan balance and the combined value of the underlying property insurance proceeds and the land that collateralizes the loan.

IGI to write E&S business in the US

The Bermuda subsidiary of International General Insurance Holdings (IGI) has been granted provisional approval to begin writing US excess & surplus lines business. IGI Bermuda – the parent firm of which began trading on the Nasdaq Capital Market in March – intends to write short-tail US E&S business in the energy, property and political violence specialty lines. An international specialist commercial insurer and reinsurer, IGI has a worldwide portfolio that includes business in energy, property, construction and engineering, financial institutions, and other sectors.

NAME

LEAVING

JOINING

NEW POSITION

Kevin Chidwick

Openwork

Aspen Insurance Holdings

Chief financial officer

Chris Downey

N/A

Everest Re Group

CEO, Bermuda

Wes Dupont

N/A

Allied World

COO

Jon Hancock

Lloyd’s of London

AIG

CEO, international general insurance

Brian Hanuschak

N/A

Victor Insurance Holdings

CEO

Sarah Medina

N/A

The Hanover Insurance Group

President, professional liability

Al Miralles

N/A

CNA

Executive vice president and CFO

Dan Moore

N/A

QBE North America

COO

Nick Nelson

USI Insurance Services

EPIC Insurance Brokers and Consultants

Senior vice president

Edward Peña

N/A

Liberty Mutual Insurance

Senior vice president and treasurer

Victor appoints new CEO

Victor Insurance Holdings, the world’s largest MGU and a subsidiary of Marsh, has named Brian Hanuschak as its new CEO. Formerly the president of Victor North America, Hanuschak will oversee Victor’s global businesses, including Victor North America, ICAT, Dovetail and Victor International.

“Through advanced technology and an innovative approach to matching risk, distribution, and access to capital, Victor is well positioned to offer a wide range of innovative insurance products and services to our clients,” Hanuschak said. “I look forward to leading Victor’s exceptional global team as we continue to build the offering for our insurance partners and clients.”

Former Lloyd’s exec heads to AIG

Jon Hancock, who stepped down as Lloyd’s of London’s performance management director in January, has been named CEO of international general insurance at AIG. While at Lloyd’s, Hancock was responsible for resetting the performance agenda; prior that, he spent two and a half decades with RSA. “I am pleased to join AIG as the company continues its remarkable progress towards being a top-performing company,” Hancock said. “I look forward to working with AIG’s talented colleagues around the world to enhance the value we deliver to clients as we position the company for sustained profitable growth.”

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10/04/2020 3:27:51 AM

UPFRONT

WORKERS’ COMP UPDATE NEWS BRIEFS Louisiana insurer expedites annual dividend distribution

Louisiana Workers’ Compensation Corporation (LWCC) has expedited its annual dividend distribution in an effort to help boost the state’s economy amid the coronavirus pandemic.

The payments, which amounted to $86 million, went to approximately 20,000 businesses across Louisiana.

“LWCC’s ability to make this distribution is due to safety initiatives and efforts by policyholders and agents, which led to a low incident rate, as well as continued excellence in execution by the company’s employees,” said LWCC president and CEO Kristin Wall.

United Heartland adds business development specialist

National workers’ compensation insurer United Heartland has added Brett Roth to its roster in the role of senior business development specialist.

Roth, who previously founded workers’ compensation insurtech CompScout, will be in charge of United Heartland’s Mid-Atlantic region. “The addition of Brett deepens our expertise and helps solidify our presence in the local market,” said United Heartland president Steve Cooper. “Last year, our entry into Pennsylvania affirmed our assertion that there is a need for the high-touch, customer-service-focused approach to workers’ compensation that United Heartland excels at providing.”

MedRisk expands telerehab services during pandemic

Amid the ongoing social distancing that has resulted from the fight against COVD-19, managed care firm MedRisk has expanded the scope of its telerehab services to allow injured

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workers to remotely access one-onone sessions with a telerehab physical therapist. In addition, while patients are typically treated at a clinic first prior to transitioning to online sessions, MedRisk is now allowing care to be initiated via telerehab. Patients with existing in-clinic therapists will be transferred back into their care when the pandemic subsides.

AmTrust Financial Services names new chief financial officer

Workers’ compensation specialist AmTrust Financial Services has named Daniel Pacicco as its new executive vice president and chief financial officer. A veteran of Chubb and EY, Pacicco joins AmTrust from risk management firm Assurant and replaces Adam Karkowsky, who had previously been promoted to president of AmTrust. “[Dan’s] extensive experience in the insurance industry in the areas of global financial reporting, accounting and compliance adds significant value to our organization,” Karkowsky said. “Dan will further enhance and support the transformative work we have undertaken.”

California workers’ comp commission elects 2020 chair

The California Commission on Health and Safety and Workers’ Compensation (CHSWC) has unanimously elected Mitch Steiger as its new chair. Appointed to CHSWC in 2019, Steiger is a legislative advocate for the California Labor Federation, AFL-CIO, where he advocates on behalf of workers across a variety of issue areas, including occupational health and safety and workers’ compensation. Steiger was also part of the stakeholder discussions that produced SB 863, the 2013 legislation that reformed California’s workers’ comp system.

Workers’ comp challenges for startups From long odds of success to a lack of safety history, new businesses face many obstacles when securing workers’ comp coverage The struggle to find workers’ compensation insurance is among the many challenges that startups have to deal with once they open their doors.

“One of the reasons that carriers tend to have concerns about writing new ventures is the statistics behind failure rates,” explains Matt Zender, senior vice president of workers’ compensation strategy at AmTrust Financial Services. “New-venture operations tend to fail at a higher rate than existing operations. It can be difficult to get started, so when you’re writing a new-venture operation, from the workers’ comp carrier’s perspective, you want to make sure they’ll be in existence because if they go out of business, it can lead to difficulties in terms of getting the premium paid.”

Startups also often face challenges in maintaining a safe workplace. According to Zender, these businesses typically have a higher loss ratio on average, in part because they have all new staff.

“Those employees have to familiarize themselves with the operation, and they have to familiarize themselves with how to work safely, and new employees tend to have a statistically higher incidence rate than tenured employees,” Zender says. “By nature of the fact that you’re a new venture, all of your employees are new, so it’s statistically

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more likely that you’re going to have workers’ comp claims.”

At the same time, new operations are juggling a laundry list of priorities. When a business is just getting off the ground, owners are often worried about bringing in customers and creating workflows. As a result, it’s difficult to justify spending the time to make sure that employees work safely.

“All of your employees are new, so it’s statistically more likely that you’re going to have workers’ comp claims” “It’s something that’s easier for an existing firm to find the time to dedicate towards because perhaps they have the depth of experience in seeing how impactful one of their employees being out on workers’ compensation can be,” Zender says.

But because startups tend to be smaller, they need to have best practices in place when an employee does get injured, as the impact of a worker being out for a long time will be greater than it would in a larger operation.

“It’s imperative that they think as creatively as possible about whether they can bring their injured staff member back to work and think about whether there’s something else they can do for a period of time just to get them back into the workflow,” Zender says, “because the longer they’re out of work, the less likely they’ll ever be able to return to work. Also, the longer they’re out of work, the greater the impact on the new firm because they’re missing that employee.”

Q&A

Jeff Eddinger Senior division executive NATIONAL COUNCIL ON COMPENSATION INSURANCE

Years in the industry 30+ Fast fact Due to the coronavirus pandemic, the NCCI has reconfigured its Annual Issues Symposium as a virtual event, to be held on May 12

Coping with the COVID-19 crisis What implications will the coronavirus pandemic have on the workers’ compensation industry?

I see three major implications for workers’ compensation. The first deals with compensability. While WC laws provide compensation for ‘occupational diseases’ that arise out of and in the course of employment, many state statutes exclude ‘ordinary diseases of life’ – e.g. the common cold or flu. There are occupational groups that arguably would have a higher probability for exposure, such as healthcare workers. But there is likely to be some uncertainty when it comes to compensability for coronavirus in WC. The second one is the changing economy. The current environment is causing changes to different industries in different ways.

The travel and hospitality industries have been the hardest hit so far. One area experiencing growth is online retail. Amazon recently announced that it intends to add 100,000 new workers to meet the surge in demand from people relying on its online service. These changes have created some uncertainty about future payroll and premium levels, as well as overall claim frequency for WC. Finally, there is the impact of mass telecommuting. In recent weeks, many employees have begun telecommuting for the first time. While employers arguably have significant control over the safety of their own on-site workplaces, there may be limitations on the control employers are able to exercise over the home workspace environment. It remains to be seen how this sudden telecommuting ‘experiment’ will impact overall WC claim costs.

Will the repercussions be the same across the board, or will it vary by state?

The issues impact all states, but the repercussions will vary.

Washington state is unique so far in its response to WC coverage.

Washington’s Department of Labor & Industries recently announced that it will provide benefits to healthcare workers and first responders during the time they are quarantined after being exposed to coronavirus on the job. The coverage will pay for medical testing, treatment expenses if a worker becomes ill or injured, and provide indemnity payments for those who cannot work if they are sick or quarantined.

In addition, a large insurer in Kentucky, Kentucky Employers Mutual Insurance, recently announced that it will provide wage replacement benefits for first responders and medical personnel employed by one of its policyholders while quarantined after being exposed to the virus.

In the event of coverage exclusion, what is a claimant’s last resort?

It’s possible that some coverage disputes could end up in the courts.

What are the key lessons here for the industry?

The biggest takeaway is that the WC system is well prepared to respond to this extraordinary event.

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UPFRONT

TECHNOLOGY UPDATE

An insurance innovator’s journey A former private equity investor used his know-how to bring a more tech-savvy approach to insurance

says. “I think a lot of the digital insurance products that were introduced by carriers to go directly to businesses are really intended for micro-businesses – the single consultants or two-employee firms that function more like personal lines in terms of the size of the premium and the complexity of the policies.

“Once you get to a slightly larger business segment ... the administrative costs to service those customers were pretty unprofitable for the traditional brokerage channel. As a result,

“It’s a pretty radical improvement over the status quo”

Embroker founder and CEO Matt Miller didn’t follow a conventional path into insurance. Prior to setting up an end-to-end digital insurance platform, he had a successful career as a private equity investor, where he led investments in insurance and software companies such as Hub International and Applied Systems.

What struck Miller through his dealings was that insurance was well behind other financial services industries in terms of its digital transformation. Miller decided to tackle this challenge and use some of the experience and knowledge he had gained to

NEWS BRIEFS

“catalyze a more significant transformation of the business.” In 2015, Embroker was born.

There are two core elements to Embroker.

Its technology platform streamlines and automates almost every customer touchpoint in the insurance life cycle. On top of that sits Embroker’s MGA, which builds insurance programs and places them through the digital platform, alongside external carrier products that are digitized to run through the platform.

“The first opportunities I saw were around segments of the market that were underserved by traditional channels. For us, that’s the small and medium-sized businesses,” Miller

Guy Carpenter and Charles Taylor InsureTech team up

Global risk and reinsurance specialist Guy Carpenter has tapped Charles Taylor InsureTech to create a cloud-based document management solution (DMS) to supply Guy Carpenter with a single, global document repository. The DMS will be integrated with various Guy Carpenter systems and processes. According to Guy Carpenter MD and chief information officer John Crichton, the partnership “further progresses [our] commitment to leveraging highly available, secure and flexible tools that position us to deliver value to our partners.”

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the customers had pretty poor experiences, and sometimes it was hard for them to even find a broker who wanted to work with them.

I saw Embroker as an interesting opportunity to build technology that would streamline and digitize that process.”

One area where Embroker has seen success is in its startup insurance program, which offers D&O, EPLI and technology E&O/cyber insurance. The program has been able to reduce premiums for startups by up to 20% through algorithmic risk management.

“The value proposition for the customer is extraordinarily high,” Miller says. “It’s some of the best coverage in the market, and we’ve reduced the time it usually takes to buy the coverage from two to three weeks to less than five minutes. So it’s a pretty radical improvement over the status quo.”

IronHealth advances obstetrics AI technology

IronHealth, the healthcare professional liability and stop-loss unit of Ironshore, has partnered with perinatal software provider PeriGen to offer insureds access to obstetrics artificial intelligence systems that can help clinicians identify clinical warning signs in childbirth.

IronHealth customers can apply risk management reimbursement dollars toward PeriWatch Vigilance, PeriGen’s early-warning system, which monitors fetal heart-rate patterns and can assess maternal factors that reflect health and labor progression.

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Q&A

Susan Hatten Chief operating officer BROKERTECH VENTURES

John Jackovin Accelerator executive director BROKERTECH VENTURES

Fast fact BrokerTech Ventures was launched in 2019 to provide startups with a platform to test broker-centric ideas and products

An accelerator built for brokers What drove you to form the first broker-led investor group and accelerator program?

What should the startups that are part of BTV’s cohort expect?

Susan Hatten: Top-tier brokers are interested in moving beyond sheer transactions and in gaining access to insights and the unknowns. The broker community’s unique seat in the insurance ecosystem provides a direct lens into the customer and an opportunity to lower costs and drive down comprehensive risk.

The creation of the BrokerTech Ventures (BTV) platform and coalition of leading agencies came about because of a shared view on how our firms explore, invest, collaborate and deploy technology and innovations. With BTV as the convener of broker-centric innovation, ideation, investment and communication, we believe we can move the pendulum for the insurance industry by embracing innovation.

JJ: Expect an experience you wouldn’t anticipate from other accelerators. This is not your standard 90-day, fully programmed, mentor-mad traditional accelerator.

We ensure our startups get feedback and trials from customers or potential customers. Receiving input and feedback from customers or potential customers is the most critical determinant in startup success or failure – even more so than access to capital.

Additionally, we are building out a network of nonagency mentors that we can strategically plug into startups to help where we find deficiencies. We want to ensure that wherever a startup enters the program, they leave in a significantly advanced position.

As an accelerator, what does BTV look for in a participating startup?

SH: Historically, insurance companies have been on one end of the spectrum as it relates to embracing technology and innovation, and brokers have instead approached business with a ‘finite game’ mentality – finite being there is a known winner and known loser.

In contrast, BrokerTech Ventures intends to utilize our unique business platform to convene with the technology community and approach with the infinite game in mind. We see the relationship between technology entrepreneurs and insurance brokers being strengthened by BTV, and shared learnings and increased innovation are a direct result of our brokercentric mission.

John Jackovin: First is the team. Who is coming to us with the solution? Are they the right people to solve this problem? Next, how much have they fallen in love with solving their problem? Not how much have they fallen in love with their solution – the solution isn’t important; focusing on solving the problem is what matters. Finally, how eager are they to take advice? At BTV, startups have a very unique opportunity to talk to potential customers, who also happen to be investors.

If the team isn’t open to being a sponge for feedback, they are most likely not a great fit.

At-Bay introduces auto-underwritten tech E&O policy

Tech-based insurer At-Bay has rolled out what it describes as the first automatically underwritten tech E&O policy. Part of At-Bay’s technology and cyber insurance offering, the policy includes explicit coverage for errors & omissions, breach of contract, contractual indemnity, and intellectual property infringement; clients also receive free security monitoring and risk alerts through the lifetime of their policy. Brokers can get instant tech E&O quotes using At-Bay’s online broker platform or API or via email submissions.

What do you envision for the relationship between technology and insurance brokers?

Chaucer teams up with Artificial Labs for new platform

Specialty reinsurance firm Chaucer has partnered with insurtech Artificial Labs to launch an underwriting platform for high-volume specialty products.

By combining its underwriting expertise with Artificial Labs’ machine-learning capabilities, Chaucer will be able to provide a digitized quote, bind and issue process. Chaucer CEO John Fowle said the partnership “will help us deliver our next-generation underwriting platform with smarter data-driven risk selection and pricing, [and] leaner and more scalable processes.”

Swiss Re and Microsoft launch innovation center

As part of its strategic alliance with Microsoft, Swiss Re has rolled out a Digital Market Center to advance insurance innovation. According to Swiss Re, the Digital Market Center will help develop next-generation, large-scale tools to transform the way risks are predicted and managed. It will also focus on how the industry creates tangible products.

“By building digital markets and not just isolated products, we aim to transform the way businesses approach the risks they face,” said Swiss Re’s Thierry Léger.

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PEOPLE

INDUSTRY ICON

SEIZING OPPORTUNITY AssuredPartners’ Maureen Gallagher didn’t let any obstacle stand in her way as she made a name for herself in insurance

DIVERSITY AND inclusion is a key topic in the insurance industry today, but a flashback to an insurance office in the 1970s would reveal just how much things have changed.

Few businesses had female producers on staff, and there were almost no female underwriters, let alone female senior leaders at insurance companies in the US. That’s the environment Maureen Gallagher walked into when she began her insurance career. Today the Michigan agency president and national real estate and workers’ compensation practice leader at AssuredPartners, Gallagher’s first role was as a secretary for the boiler machinery department at Zurich. But she quickly became the default underwriter for the division when the previous underwriter left the company, kicking off a journey of saying yes as new doors opened.

“I’ve often characterized my career as the accidental career,” she says. “I don’t think I ever mapped out ‘here’s what I’m going to do and here’s what I’m going to get,’ but as opportunity came my way, I certainly seized it.”

Meeting with agents in her underwriting role at Zurich exposed Gallagher to the broker side of the business, which soon became her career goal. Within a couple of years, an agent who had just started his own business offered her a job as a CSR. Gallagher jumped at the opportunity, which gave her a taste of leadership. “It was just him and me,

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so I had to do everything – the bookkeeping, paying carriers, taking care of clients – which was great experience for me,” she says.

Gallagher then moved to a larger agency that was the predecessor of Aon, where she found that she had a natural talent for securing accounts and landed her first sales gig within six months, backed by clients who followed her from her previous agency. When the company asked her to sign a producer

My income increased tenfold in the very first year, and I never looked back.”

Learning to lead Before Gallagher became an agency president at AssuredPartners, she had a few more career pit stops along the way, including serving as president and CEO of Acordia of Michigan and starting and running her own agency, Gallagher Group, for more than a decade.

“I found that leadership starts with selfawareness – understanding your strengths and your weaknesses as a leader and as a person, and the impact you have on others” contract three years later, she decided to take stock of her options. In her early 20s at the time, Gallagher interviewed at many agencies, but none would offer her a salary, so she would have to work solely on commission.

“In retrospect, I was pretty young,” she says, highlighting the lack of female employees at most insurance companies at the time. “I don’t think they believed me that they were my accounts, so I took the agency that offered me the highest commission percentage, and I ended up taking all of my accounts with me.

At Gallagher Group, Gallagher encountered typical startup struggles, from having to find space and furniture to securing appointments with insurance companies, all while trying to keep her existing clients and write new ones. As if that weren’t enough, Gallagher was also a single mom to a 1-year-old daughter and had no family support in the area.

“The first year was a whirlwind, but I look back on my time with nostalgia,” she says. “I have fond memories of working on cardboard tables that wobbled when we had to type and

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PROFILE Name: Maureen Gallagher Title: Michigan agency president and national real estate and workers’ compensation practice leader Company: AssuredPartners Based in: Detroit Accolades: Gallagher was named to Insurance Business America’s Hot 100 and Elite Women lists in 2019

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PEOPLE

INDUSTRY ICON

worrying about making payroll, but there was also a lot of laughs and a lot of fun.”

When she was offered the CEO job at Acordia, Gallagher saw an opportunity to become the first woman in the US to run a major brokerage. She split with her partner at Gallagher Group and sold her piece of the business to Acordia, where she received more formal leadership training.

“They were fantastic about developing me and giving me training,” she says. “I found that leadership starts with self-awareness – understanding your strengths and your weaknesses as a leader and as a person, and the impact you have on others. I also learned that while

vulnerable in because I never went to college,” she says. “In many ways, this vulnerability has changed my perception and taught me empathy and compassion.”

Gallagher adds that when she finally got the opportunity to go to college, she instead chose to further her insurance education.

As she developed her career, she found that educating clients on exposures was a big part of the job, as was teaching and mentoring staff, which she channeled into IPA. The academy’s first class was Certified Workers’ Compensation Counselor (CWCC), and since that time, it has added four other certification classes and many webinars.

“We protect billions in assets, and I no longer feel like I’m selling insurance. I feel like we’re helping our clients save lives, prevent injury and illness, and avoid financial hardship” everybody likes to be liked, it’s way more important to be consistent, fair and earn your employees’ respect.”

Eventually, Gallagher Group merged with broker Neace Lukens, which later became AssuredPartners’ first acquisition. “It’s been a fantastic journey, watching AssuredPartners grow into the company it is today and getting to be a part of that success,” Gallagher says.

“Being there at acquisition number one, I’ve gotten to see it all.”

The importance of education Today, Gallagher is also the founder and director of Insurance Partners Academy (IPA), which, since 2003, has been providing practical information that insurance professionals, risk managers and insurance buyers can use from day one of classes. IPA was an important initiative for Gallagher to establish, given her own experience in the industry.

“Education is an area I always felt pretty

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Leading IPA has marked a full-circle moment in Gallagher’s career, which has been defined by learning on the job and taking on new challenges as they arose.

Along the way, she’s also found herself doing “honorable, meaningful and important work.” Gallagher’s real estate clients, for example, often have claims that stem from natural disasters, and the importance of her job is underscored when she’s one of their first calls after they’ve been hit by a hurricane, flood or wildfire.

“We protect billions in assets, and I’ve often said that I no longer feel like I’m selling insurance,” she says. “I feel like we’re helping our clients save lives, prevent injury and illness, and avoid financial hardship. That’s been a moment for me when I knew that this work was going to be way more meaningful to me, and how important it was to be a good agent and write policies correctly so the coverage was there when your clients had a loss.”

ASSUREDPARTNERS

BY THE NUMBERS

2011

Year AssuredPartners was founded

38

Number of states where AssuredPartners has offices (plus an office in London)

$1.5 billion+

Revenue AssuredPartners has earned since it was founded

12

AssuredPartners’ rank among the largest brokers of US business

55+

Combined years of experience among the AssuredPartners leadership team

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UPFRONT

OPINION

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

The missing piece Companies that invest only in technology and staff training, writes Kirsten Bay, lack a crucial piece of the cybersecurity puzzle: insurance IMAGINE IT: You’ve finally bought the car of your dreams, complete with every bell and whistle offered. And since you have an immaculate driving record, you feel comfortable increasing the deductible or narrowing the coverage on your auto insurance. Then you drive off the lot and WHAM! – you’re T-boned by a distracted driver, and your expensive new toy is totaled in an instant.

This is essentially what growing businesses do when they leverage new digital technologies but don’t buy cyber insurance – a common trend these days. In our modern, connected society, we can’t assume technology will prevent 100% of the threats facing our digital infrastructure. Business owners must start thinking about their company’s network like they would a luxury car and protect their investment with insurance.

Modern vehicles come with myriad technologies – from adaptive cruise control and lane departure assist to automatic emergency braking – to keep us safer than ever before. Drivers must also be licensed and are expected to follow applicable traffic laws.

While many states don’t require drivers to buy collision or comprehensive coverage, personal injury protection, or uninsured/ underinsured motorist coverage, many drivers do anyway because they recognize that events beyond their control can impact their wellbeing, and that to be truly protected they need technology, governance and insurance.

Unfortunately, many business owners haven’t yet come to this same realization about their network, despite the more direct, calculated threat. Instead, they focus almost

exclusively on technology when designing a cyber risk strategy. In a recent survey by Microsoft, 67% of respondents said they plan to spend more on cybersecurity technology and mitigation in the next three years, but only 34% said they expect to spend more on cyber insurance.

The cybercrime industry generated $1.5 trillion in profits in 2018, and cyberattacks are projected to cause $6 trillion in

these products are increasingly excluding or significantly limiting coverage for cyber risk.

Or business owners may not understand what truly drives a cyber loss. While they fear ransomware payments, damaged servers or legal costs after an event, business interruption and incident response costs are typically more volatile and far greater.

Cyber insurance can reimburse insureds for ransom payments and new hardware, but more importantly, it covers business interruption costs resulting from downtime after a breach. It also covers the forensics firms needed to determine the type of breach and what systems were compromised, public relations firms to manage reputational damage, and call centers and credit monitoring services to notify and protect affected stakeholders.

As cyber risks evolve, states are also passing more rigorous privacy laws. The California Consumer Privacy Act, which went into effect on January 1, allows for fines up to $750 per customer, per data breach – even if no actual loss is suffered. As a result, many supplier contracts now include cyber insur-

“In our modern, connected society, we can’t assume technology will prevent 100% of the threats facing our digital infrastructure” damages by 2021. Clearly, technology and governance are not adequately addressing this issue on their own, and for growing businesses that might lack the resources to buy advanced software or expensive IT talent, the risk is heightened.

These businesses must begin considering cyber insurance and strive to achieve what Cysurance refers to as the ‘cyber risk management trifecta’. Robust cybersecurity technology and corporate policies to raise awareness and address responsibilities are critical pieces of the trifecta, but the third aspect – a broad stand-alone cyber insurance policy – is overlooked by 91% of small businesses.

In some cases, this is due to the misconception that cyber exposures are covered in traditional insurance policies such as a property or general liability policy, when in fact

ance mandates to protect against vendor negligence in protecting consumer data.

Today, companies understand the need for firewalls and employee training to manage cyber exposures. However, as new threats develop and with employee error remaining a leading risk, business owners must apply the lessons of the auto industry and purchase cyber insurance. Just as the best technology and a clean driving record doesn’t guarantee protection from a drunk driver, cybersecurity and training can’t prevent all cyberattacks.

Kirsten Bay is CEO and co-founder of Cysurance, which protects growing businesses with affordable cyber insurance. She has more than 25 years of experience in risk intelligence, helping to develop next-generation analytics and attack detection technologies.

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SPECIAL REPORT

DIVERSITY AND INCLUSION

ALL ARE WELCOME IBA sat down with four industry leaders to discover how insurance companies are finding success by prioritizing diversity and inclusion efforts – and what else the industry must do to become truly inclusive THE PARTICIPANTS

Nidhi Verma Vice president, learning, talent management and D&I Crawford & Company Nidhi Verma has been with Crawford & Company for six years and has more than 25 years of experience in managing a broad range of learning, talent management and human resource functional areas. She has a proven track record in talent and leadership development, learning, change management, HR strategy, and policies and programs aligned with business strategy and organizational culture. Verma has served as a consultant to various Fortune 500 companies and is “passionate about giving voices to people and using our collective voice to change the narrative, especially right now around equity and diversity and inclusion.”

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Alexander Amonett Global leader of inclusion, diversity and colleague experience Marsh Alexander Amonett is a recognized global D&I leader with more than a decade of experience in the field and 15-plus years of experience in global project and program management, talent management, learning and development, employee experience, and client services. With Marsh since 2013, he seeks to drive results through a growth mindset, inclusive leadership, change management and cross-cultural competence across customer, colleague and community relationships. Committed to elevating the standing and impact of diversity and inclusion to drive business outcomes, Amonett is a spokesperson on topics ranging from unconscious bias and reverse mentoring to gender dynamics in the corporate environment.

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FOR THE BETTER part of the 21st century, diversity and inclusion (D&I) has been a prominent topic of discussion within the insurance industry. Not only have studies demonstrated that a greater sense of inclusion leads to an increase in collaboration, quality decision-making and team performance, but McKinsey found that companies in the top quarter in terms of racial and ethnic diversity at the leadership level are 32% more likely to outperform their peers on profitability. In addition, Boston Consulting Group found that innovation revenue (defined as revenue from new products or services) is 19% higher in companies with above-average diversity on their leadership teams, compared to those with below-average diversity at the leadership level.

Dawn Frazier-Bohnert Global chief diversity, inclusion and equity officer Liberty Mutual Insurance Dawn Frazier-Bohnert joined Liberty Mutual Insurance in 2013 to shape its then-new D&I office.

She is responsible for leading the design, development and implementation of Liberty Mutual’s D&I strategy and programs, including enhancing employees’ D&I capability and skills, internal and external communications, metrics and measurements, external partnerships, and the development of employee resource groups.

Prior to joining Liberty Mutual, Frazier-Bohnert was chief administrative officer and partner at Global Novations and held leadership positions at Gillette, Lotus/IBM, Fidelity Investments and Millennium Pharmaceuticals.

Even so, many insurance organizations still haven’t made D&I initiatives a priority until recently. Whether due to an old-school mentality; a lack of direction from the top; or time, money and other resource constraints, it seems that D&I is often discussed at insurance companies, but true changes – real action and outcomes – are rare.

Some companies, however, are leading the charge, putting D&I efforts front and center through programs, leadership positions, initiatives and internal shifts. IBA spoke to executives and employees at four companies that are championing D&I to hear what they’re doing, the impact it’s having, and how and why other companies in the industry should follow their lead.

Ngozi Nnaji Principal AKO Brokerage Services

Ngozi Nnaji started AKO Brokerage Services in 2017 after recognizing a growing desire among insureds to better understand the insurance programs they were managing. Before founding AKO, Nnaji’s 20-year career in the insurance industry included serving as the Northeast healthcare zone leader for CNA and holding leadership positions at Willis, where she led the placement services for the healthcare practice in Hartford, Connecticut. Nnaji is the inaugural president of the Greater Hartford chapter of the National African American Insurance Association (NAAIA) and was recently elected to the NAAIA national board.

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SPECIAL REPORT

DIVERSITY AND INCLUSION What progress has been made in the industry so far toward diversity and inclusion, and where is more improvement needed?

Nidhi Verma: Broadly, I think companies have to really take this seriously and move the focus away from shareholder value to sustainability to diversity and change and inclusion.

I think in the insurance industry, there is a sentiment that equal opportunity does not exist when it comes to recruiting or promotion. There is a reluctance of women to work in the insurance industry because they feel like they aren’t going to get the same career opportunities or promotions as men would.

So, it’s kind of just a rebranding of the insurance industry and organizations to look more like how our customer segments are going to look – that will be critical for us.

Alexander Amonett: Issues with pay equity, work flexibility or a lack of diversity at executive levels are still prevalent, as are systematic culture biases toward homogeny. With that said, the industry is moving at a faster pace than in the past to not only address these issues and rally in approach, but also collaborating to create solutions that will drive at all levels within organizations. Most insurance organizations have committed to setting diversity targets and building stronger development and sponsorship programs for diverse talent. The industry is doing more to know its talent and is starting earlier and deeper in developing its succession pipelines for diverse colleagues. D&I training is becoming more critical and expansive in its rollout and offerings.

However, to continue this momentum and create sustainable change, we have to resist the temptation for flash-in-the pan programs that look good on social media, and double down on being deliberate about the day-to-day decisions. Hiring managers need to require diverse slates; performance evaluations and leadership nomination processes need to have de-biasing job aids; bad behaviors need to be called out and transparent actions taken.

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“We have to resist the temptation for flashin-the-pan programs that look good on social media, and double down on being deliberate about the day-to-day decisions” Alexander Amonett, Marsh Dawn Frazier-Bohnert: Diversity and inclusion is part of every aspect of how Liberty Mutual does business. Our strategic framework includes development [capability building], customer and community engagement, talent, and workplace environment and communication. We have made progress in each of these areas.

In terms of where more progress can be made, D&I foundational learning like unconscious bias awareness is not a check-the-box, one-time learning. It is ongoing work. You always have to be doing things to disrupt your bias and keep it top of mind. Some of the biggest challenges we face are the pace of

change and the information overload this creates for our leaders and employees.

Involving more people across the enterprise in D&I work continues to be an opportunity.

We are all multidimensional people. We must continue to highlight different dimensions of our diversity to reinforce this reality with employees. We’ll know we’re successful in achieving this awareness when all employees recognize how diversity is indeed about all of us.

Ngozi Nnaji: As a whole, I think over the last decade or two, there has been incremental progress. There has been progress as far as getting women into certain positions,

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Be Yourself.

Be Different.

In times of uncertainty, we draw strength, inspiration and perseverance from our diverse teams across the globe. Collectively, we strive for one thing – to exceed our clients’ expectations. That’s why we depend on the wide range of skills, views, and abilities made possible through our inclusive global team. We’re expanding and empowering our international network, celebrating diversity, and enhancing our expertise so we can continue to provide essential services to our clients better than ever.

Diversity & Inclusion.

World-class service.

Great place to work.

That’s our commitment to our clients, partners and employees.

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SPECIAL REPORT

DIVERSITY AND INCLUSION CASE STUDY: MARSH In 2018, Marsh saw an opportunity to build a more diverse pipeline of future senior leaders within the firm. A review of internal market labor data identified two key findings: that a glass ceiling for diverse talent existed at the vice president level, and that Marsh was more likely to acquire talent from outside the firm than to promote from within at the senior vice president level.

Armed with this information, Marsh created and launched a Global Diversity Leadership Development Program. The 12-month program, which had the full support of Marsh’s CEO and executive team, identifies top-performing diverse talent within the firm and strategically pairs them with executive sponsors and peer coaches. The sponsors and coaches work with each individual on their development goals while also identifying critical experiences and opportunities that would promote leadership readiness.

Marsh’s inaugural class consisted of 50 diverse future Marsh leaders from around the world and from all aspects of the business, from human resources to insurance brokers to IT. Of the first class, 86% were women, 62% were of racial or ethnic origin, and 10% identified as LGBT. The program included one-on-one professional assessments with organizational psychologists to identify each candidate’s goals and to assess their leadership styles, stress management techniques and communication preferences. This allowed the company to set a professional development guide for candidates to follow during their program. All 50 candidates were then flown to New York for a two-day program learning intensive, where they learned effective communication styles, how to influence stakeholders and how to manage complex organizational matrixes. They also met with Marsh CEO John Doyle, who set expectations for the class and program and provided personal leadership development advice.

Participants meet with their executive sponsors and coaches monthly and are provided the opportunity to take on reverse mentoring exercises and think-tank challenges for the business. They also have the opportunity to participate in specialized leadership training classes, including inclusive leadership and bias training. The inaugural class had a 65% promotion rate to senior vice president and a 15% rate of lateral promotions for participating colleagues.

Marsh is now scaling the program to be run regionally, not just globally, and across Marsh & McLennan businesses (Guy Carpenter, Mercer, Oliver Wyman) to create more expansive and targeted opportunities.

Alexander Amonett Global leader of inclusion, diversity and colleague experience

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even minorities into certain positions, and increasing representation, whether it’s at executive levels, mid-management levels or in the industry period. I think awareness and inclusion have definitely improved over the years, but I do say that with a little bit of hesitation, because I think that even though that progress has been made, there is a lot more work to be done.

The issue that we’re running into as an industry is that we are talking a lot about the topic, but the efforts we’re putting in to be intentional and deliberate about making changes that are truly effective – that’s where we have not done a great job. I think it’s nice to talk, but it’s better to do, and it’s better to see the impact in real time. I think more than just action, it’s about the results.

What are the business benefits of successful D&I? NV: There’s a tremendous amount of what I call ‘diversity dividends’ from these initiatives; the more diverse companies are better able to win the top talent and improve their customer orientation, employee satisfaction and decision-making. I think it leads to a virtuous cycle of increasing shareholder value and increasing returns.

Typically what I see from a business benefit perspective is that companies that embrace diversity or create a culture of diversity are more likely to meet their financial targets, perform and be innovative.

DFB: We know the research shows that a diverse team can challenge itself and avoid groupthink. As a result, these teams often come up with new solutions, products and services. Also, diverse teams are more likely to see their ideas make it through to the marketplace, and positive experiences of inclusion benefit both employees and employers in areas such as problem-solving, work engagement, intent to stay and innovation.

NN: The consumer base as we know it is changing – the demographics are changing, and if we don’t change with those demographics, we lose our client base. You have to be able to accept and be aware that there is diversity amongst your client base and your

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CASE STUDY: THE NATIONAL AFRICAN AMERICAN INSURANCE ASSOCIATION The National African American Insurance Association (NAAIA) was founded more than 20 years ago by Jerald Tillman, an independent agent in Columbus, Ohio, who was looking for the opportunity to create a network of black independent agents who looked like him. It was more of a social interaction thing – knowing there was someone else out there he could call and talk to who might have similar challenges and plights and successes. Twenty years later, we are a very different organization. We have more than 650 members and 18 chapters in various states across the US. Our focus is on increasing and enhancing diversity within the insurance industry, and we do that on a variety of different platforms, including professional development, talent acquisition, retention and development, community outreach, networking, and focusing on the membership aspect of our organization.

There are a lot of different initiatives that we have embarked upon at a national level and at a local level. We support insurance companies by serving as the external employee resource group for their field offices and working with those companies to create relationships with our local chapters. We’re also doing some efforts on a more local level around talent acquisition, retention and development. If you talk to a lot of HR professionals in the insurance industry, they often tell you that they can’t find diverse talent. There’s an opportunity to educate HR teams about the benefits of recruiting from historically black colleges and universities (HBCUs), Hispanic-serving institutions and tribal colleges.

What NAAIA has done, specifically with HBCUs, is create programs on those campuses, setting up insurance programs, identifying diverse talent for insurance companies and bringing that diverse talent to them – meaning that they no longer have to search for it. We recognize that if we don’t do that, then they’re not going to recruit there.

The insurance industry is one of the few industries that is going to take everyone. We don’t care what your degree is; we don’t care what your background is – we have a job for you. So when colleges and universities look at that, especially black colleges and universities, it’s a win-win. We’ve had a lot of success recruiting students in the insurance industry, but the flipside of that is that we have to have jobs for them. That’s where it really becomes a collaboration with employers to say, “We’ve got the diverse talent, we’re bringing it to you; now you have to make a commitment to hire them, recruit them, interview them, bring them into internships and therefore increase the number of black students who go into full-time positions.”

The demographics of our community and consumer base are changing. It’s browning. So if you start to think about doing business, and how people like to do business with people who look like them, then we need to create an agency base that’s browning as well. We’re really making the concerted effort of identifying and recruiting African American students and African American people, because when you think about it, if we don’t have students coming into the field, then we have to look at different demographics. We have to look at that generational gap. Again, we’re looking at those different demographics and then bringing them into the insurance industry and telling them that from day one, you can have a career as an independent agent, and what that means and what that looks like. We’re really trying to be deliberate about bringing people into the fold that way.

Ngozi Nnaji Principal, AKO Brokerage Services

consumer base, and getting yourself educated on what those different demographics are is part of the job.

I can’t recruit clients who are millennials without understanding their needs and their wants and their focus and objectives, so it’s a very critical part of what I do. If there is an independent agent who is not doing that, then they’re eventually going to lose sight of their book and lose sight of their business and be in a very difficult place.

How might strong D&I initiatives help with talent recruitment, retention and development?

NV: By having diversity and inclusion as your prime initiative, you’re helping look at different talent pools and talent segments. It also helps us from an insurance perspective to attract a different pool of talent – it makes

the company more attractive to millennials, for example, who find D&I a really decisive factor when they’re choosing a new job.

I think it also helps in sharpening and strengthening innovation and creativity, because the insurance sector can be seen as conservative, and it’s facing a tremendous amount of disruption. And when we promote diversity, we bring in new ideas and new perspectives, and we can certainly bring in some enriched solutions to manage the

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DIVERSITY AND INCLUSION disruption the industry is facing right now.

DFB: The workforce of the future wants to work differently. They want to work on diverse teams. So the bottom line is, you cannot attract talent if you don’t have a workforce with different backgrounds and cultures.

How can large, mediumsized and small insurance companies incorporate D&I into their cultural fabric?

DFB: D&I change happens on four different levels: personal, interpersonal, institutional and cultural. We suggest starting with the personal – focus on individual responsibility; invite people to really understand themselves, what may be outside their own awareness and where they can grow. To address interpersonal changes, work on using inclusive, interpersonal communication across differences.

You also need to look at your talent management process in order to see systemic/ institutional change and look for equity in all those practices. And you want to make a culture change so that your company values are true for everyone. When you’re inclusive, you demonstrate how your values apply to everyone. Most important, you need to communicate that everyone is a part of D&I – get everyone on the same page on why this is important.

NN: There’s more to the insurance industry than just insurance companies, so I do want to highlight that. When we talk about insurance companies, I think collaborating with trade organizations that focus on minority subgroups is key. But also recognizing that most insurance companies have resources on the ground through their agents and brokers, who can definitely provide insight as to what the consumers are looking for, what the demographics are and how they’re changing, what the needs are, and if there’s an opportunity to hear them out from that perspective.

I think having those open conversations, listening and hearing, is very key.

I also think that, as an independent agent, as an entrepreneur, it starts with me. My employees won’t appreciate cultural diversity

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CASE STUDY: CRAWFORD & COMPANY I participated in Crawford’s initial Women League Series, a diversity and inclusion initiative that focused on an opportunity for 30 women (today, it’s up to 95 women per session) working at Crawford from all over the globe to come together. I saw it as an opportunity to grow, to network and to really engage within the company.

Regarding the networking, it enabled meaningful networking among other professional women who were working at the same company. Because it was a global program, it was cross-functional: I was able to meet women who were right here in the US who did things in other areas, and we were able to share. The other thing was the personal and professional development within the company – I really loved the convenience of that. And it enabled me to feel welcomed into the leadership training types of programs that Crawford has.

The program was structured to cover key areas that enable a woman to be successful professionally, and also some areas that help with self-care, with balancing the demands of work-life balance. The curriculum included key management skills: managing teams, understanding personalities, understanding work behavior types. There was a series on opportunities and methods – new technologies available to help with work-life balance, depending on whether professionals commuted, whether they had a combination of work from home arrangements, etc. I loved this particular part of the series because it focused on the pros and cons of various work arrangements, but also introduced a variety of technologies and methods that corporations use today to make work-life balance easier

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Another series was on how the brain functions. Many women are cerebral, but we think of fatigue as physical. What this part of the series did is focus on helping us understand how the brain works – what are some of those things we can do and be aware of so that we don’t have brain or thought fatigue. Another part involved joint projects, where we worked together in small groups and put together a presentation on a topic to present together. And then we had tremendous speakers.

I absolutely think the program benefits Crawford as a whole. The workforce is composed of so many different people at different points in their career, and this creates a sense of connection that leads to higher retention of talent. For me, I feel like it gave me the opportunity to lean into Crawford. It gave me an opportunity to feel engaged and to have a sense of belonging among other professionals. And it allowed for women to communicate globally and cross-functionally. I felt like it provided a great web of networking among us.

To share one another’s thoughts, to share in creating or implementing solutions in our lives both at work and personally – it just created a sense of community that is good for Crawford’s workforce.

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SPECIAL REPORT

DIVERSITY AND INCLUSION

or even diversity at any level if I don’t do it first – if I’m not leading that charge.

What are some common challenges relating to D&I implementation?

NV: I think resources can be a big issue – both financially and with time; focusing on D&I is another thing people have to do when they’re strapped for time. So how do we incorporate these things that we already do and offer solutions in a more inclusive way?

That’s what the companies have to look at – look at affordable, low-cost solutions that can deliver big results and resonate well with other people.

It should not just be a passion project – it should be a paid position in the sense that people should be held accountable for [D&I];

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“The consumer base as we know it is changing – the demographics are changing, and if we don’t change with those demographics, we lose our client base” Ngozi Nnaji, AKO Brokerage Services there should be performance metrics around it. And there has to be a strong business case and tone from the top around this.

AA: The biggest challenges with D&I implementation revolve around leadership and manager capabilities, as well as siloed initiatives and programs that are not integrated into the overall business priorities.

Organizations need to devote more resources to supporting the creation and sponsorship of development plans for diverse talent,

specifically at senior leadership levels. This requires larger organizations to know their talent, to evolve their definition of readiness and potential, and to identify experiences and opportunities that are critical for leadership success.

Additionally, executive leadership needs to be transparent in prioritization around its commitment to D&I, which requires them to evolve their own fluency and ability to be proactive drivers in helping to implement

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CASE STUDY: LIBERTY MUTUAL INSURANCE Our focus started with building awareness, defining D&I at Liberty Mutual and helping people understand how they can build D&I skills. The next stage was to turn that awareness into action. That was the impetus for us creating the Inclusion in Action e-learning video series.

We wanted to connect with people’s hearts, not just their minds, with content that’s relatable and used real-life scenarios and featured our guidelines for inclusion. The e-learning teaches nine skills in bite-size ways for communicating and collaborating across differences.

The series was overwhelmingly well-received by Liberty’s 36,000-plus US employees, all of whom watched it. We’ve seen shifts in the hallways and meeting rooms; people are more comfortable using language maybe they hadn’t before. We’ve made the series available externally to give other organizations the same opportunity to build more inclusive workplaces and are donating all proceeds from the sale of the videos to More Than Words, a Boston nonprofit that empowers youth who are in the foster care system, court-involved, homeless or out of school to take charge of their lives by taking charge of a business.

Dawn Frazier-Bohnert Global chief diversity, inclusion and equity officer

I participated in the Inclusion in Action video series because I wanted to learn how to better apply inclusion skills, both as a manager and as co-chair of the Leading & Empowering Asian and Ally Professionals employee resource group (LEAAP@ Liberty). The benefits of these skills range from more quickly developing better business solutions by getting a wider range of perspectives to attracting and retaining employees and strengthening an open, compassionate work environment where all people can bring their full selves to work.

The videos helped me to better understand not only the benefits of inclusion, but also the path for implementing it throughout my teams. The nine skills summarized tips for fostering inclusion in ourselves and our teams. Two of those skills had an immediate impact on my management style: ‘Try On,’ which is defined as considering another’s thoughts, feelings or actions in order to understand why they think, feel or behave differently from you. This helped me look at challenges and opportunities from the perspectives of others.

‘Step Up/Step Back,’ defined as including all voices. If you tend to speak often, make room for other voices and invite others in; if you tend to speak less, practice stepping up to participate more fully. It reminded me to actively make sure all voices involved in a meeting were heard, not just the loudest or most passionate ones.

I feel that the video series benefited the company by helping all employees understand how to create an open, compassionate environment that lets everyone be their authentic self and contribute their full talent and perspective. Fully engaging employees in this way results in better solutions for our customers, business partners and workforce.

D&I is key to get the full contributions of each individual employee in solving the challenges we face as a company in a competitive global industry. It also helps attract and retain employees who value an open, compassionate environment where people are free to be their full selves, and it is important to customers that our employees reflect the broader community.

Alice Lin Director II, advanced analytics

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DIVERSITY AND INCLUSION sions that each of us bring to a situation.

NN: From what I hear, resources are always a challenge. You have so many different priorities as an organization – how do you extend those priorities to those efforts and initiatives that are impactful and make a difference? I think companies struggle with making sure the resources go where they need to go.

I also think it’s a matter of understanding.

A number of companies get on the D&I bandwagon without fully understanding what that is and what that means – and what it means to the people they’re trying to incorporate into their diversity platforms. I think that’s a challenge because they want to do right, but I don’t think they fully understand what it’ll take.

When I think about diversity and inclusion, it might mean something totally different to someone of a different background or culture or race. I think it’s very prudent for organizations, as they look to create successful D&I platforms, to really recognize that you don’t know what you don’t know – you’ve got to incorporate and include the experts in those various diverse categories to create that awareness and understanding of what needs to be done.

What are some examples of successful D&I initiatives you’ve undertaken or have witnessed in the industry?

change. Finally, organizations need to realize that D&I is not a ‘one size fits all’ approach – that it is constantly evolving, and it takes time. Likewise, changing cultural behaviors and building psychological safety does not happen overnight – it requires consistent follow-ups, elevated dialogue and programming, and the ability to pivot when external impacts create new challenges for diverse communities inside an organization.

DFB: The biggest challenge is helping

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employees understand that we all have bias.

If you have a brain, you have bias – but that doesn’t make you a bad person. We share with employees to not blame, shame or attack ourselves or others for not being perfect.

When we understand and accept that we have bias, then we can become aware of intent and impact – we can reflect on why we react or feel a certain way in response to another’s actions. And we can better understand and appreciate the multiple dimen-

NV: Crawford & Company’s Women League Series is the one that I really want to focus on.

It’s been running for four years, and it is a very high-impact program. It has evolved since the first batch and has become a high-velocity development experience; our whole goal was to accelerate readiness, offer sponsorship and mentorship – which is so critical, especially with diversity and inclusion, and especially with women’s empowerment and mobility – and it helps with networking and offering that opportunity, that community, to women at Crawford.

The goal is to create a collaborative,

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“Focusing on D&I is another thing people have to do when they’re strapped for time. So how do we incorporate these things that we already do and offer solutions in a more inclusive way?”

Nidhi Verma, Crawford & Company supportive community so that women can learn from each other, they can lean on each other, and they can lift each other up. Our journey is virtual, it’s online, and it goes from seven to eight months, and it includes a series of instructor-led virtual sessions on topics that are relevant and important to women.

The biggest benefits of the program are

that it has accelerated readiness for a lot of women and allowed them to move forward. It has allowed them to gain some confidence. It has allowed us to build a very collaborative community. One of our core values in our value set is ‘One Crawford,’ and this is a great testament to living that particular value because it brings in women across different

levels, different geographies, different functions, different business units. We’ve really seen that collaborative community coming together; it has really empowered women [and] helped them get connected with some of the senior-level female role models in the organization. These role models have become much more accessible to them.

DFB: There are several D&I initiatives we have implemented at Liberty Mutual that have met with great success, including our Men as Allies initiative and the summit we held, both of which boost awareness that Liberty men have a crucial role as allies in our D&I work across gender and other differences.

We created the Race & Ethnicity Collaboration initiative, designed to help strengthen inclusion at Liberty by helping employees

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DIVERSITY AND INCLUSION

“The biggest challenge is helping employees understand that we all have bias. If you have a brain, you have bias – but that doesn’t make you a bad person. When we understand and accept that we have bias, then we can become aware of intent and impact” Dawn Frazier-Bohnert, Liberty Mutual Insurance build their skills in working across differences in race and ethnicity.

Another milestone was creating our D&I lexicon and marketing communications toolkit, because language is key. That’s why we made sure to build tools to help people choose the most inclusive terminology. Now we’re seeing these tools becoming a part of our organizational environment. We continue

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to build and strengthen the foundations we’ve created. We’re not finished. There will always be new employees, new generations, new customers to serve.

NN: I’m a fan of Susan Johnson at The Hartford and what she’s done to implement D&I within The Hartford. I love how she engages external organizations as resources for the internal initiatives that The Hartford

is trying to execute, and that it’s not just an HQ/home office type of initiative, but that she’s really tried to incorporate field offices and regional offices and employees who are not based in Hartford, Connecticut. I think that’s very key, because when you talk about global organizations and how to extend your reach from a D&I perspective, you have to make sure that you’re incorporating your field employees.

I also love that [Johnson] is personally involved in various D&I initiatives outside of The Hartford – that tells me that it’s very much a passion of hers and not just a career.

So I would say based on that, and based on what I’ve seen at other insurance companies and other organizations, I think she does a great job of really encouraging courageous conversations within the organization and making D&I not just something to talk about, but definitely looking at where are those actionable items that can be taken, and also looking for those results.

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FEATURES

SECTOR FOCUS: FLOOD

When it rains, it pours Flooding is the most common and costly natural disaster in the US, yet property owners across the country remain severely underinsured

RISING SEA levels, intense weather events and other effects of climate change are driving home the importance of appropriate flood insurance. In 2019, there were 14 weather and climate disaster events in the United States – including three flood events and eight severe storms – where losses exceeded $1 billion, according to the National Oceanic and Atmospheric Administration.

In addition, 2019 was the fifth year in a row with 10 or more billion-dollar weather and climate disasters in the US. “People need to be prepared for higherseverity events in the future,” says Eric Weber, executive vice president of The Flood Insurance Agency (TFIA). “Frequency and severity of storms are going to continue to drive claim costs up, and not just in high-risk areas. We are going to see more properties affected in so-called low-risk areas as well.”

There’s no shortage of examples of the monumental damages flooding can cause.

Between hurricanes Harvey, Irma and Maria, insurers paid $105 billion in disaster-related claims in 2017, largely to properties on the Texas, Puerto Rico and Florida coasts. Aside from Hurricane Katrina, these have been the costliest catastrophes in the US to date.

The growing private market For both residential and commercial properties, many mortgage companies require flood insurance coverage, especially if the property is near the coast. Historically, most people have opted to get their coverage from the

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National Flood Insurance Program (NFIP), which is managed by FEMA. Previously, mortgage companies could require property owners to buy flood insurance from the NFIP specifically, but that recently changed.

In July 2019, Congress passed the BiggertWaters Act, which requires lenders to accept private flood insurance once it satisfies certain criteria.

“The government has been the 800-pound gorilla of providing flood insurance to the US for 50 years,” says Ralph Blust, CEO of National Flood Services (NFS). “They’ve had

market improve underwriting, modeling and pricing for flood exposures.

While private flood insurance makes up a small part of the market, there has been significant growth in recent years. Flood insurance premiums were up 71% from 2016 to 2018, and 15 states experienced more than 100% growth in premiums over that span, according to a recent study by the National Association of Insurance Commissioners.

“Premiums are moving rapidly into the excess & surplus market,” says Bryan Schofield, senior vice president of Orchid

“Frequency and severity of storms are going to continue to drive claim costs up, and not just in high-risk areas” Eric Weber, The Flood Insurance Agency the goal of providing adequate coverage and an affordable option so both lenders and homeowners were secure, and structures built in high-risk areas could seek coverage.”

In recent years, Blust says he’s seen a big trend of the government encouraging the evolution of the private sector by allowing Write Your Own programs, where insurers can issue policies and adjust flood claims on behalf of the government under their own names. The NFIP also made its claims data public last year, which will help the private

Underwriters. “I wouldn’t call it a hard market, because there is still available capacity to be had, but the market is firming up as carriers look to return to profitability.”

Because the government has historically been the main provider of flood insurance, many private carriers are on a mission to educate developers, lenders and investors on where there might be gaps in coverage. Most property insurance policies do not automatically cover flood, so it’s often necessary to purchase flood insurance. Weber says almost

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half of US property owners are unaware of this and end up being underinsured without even realizing it.

“There needs to be better understanding of what the true risk of flood is,” he says. “If there is broader coverage, it could end up reducing premiums long-term for those in high-risk areas as well. The more you spread the risk, the lower the rates can be.”

Inland properties are increasingly vulnerable to damage from weather events as well.

In the case of Hurricane Harvey, more than three-quarters of flood-damaged properties were located outside of designated high-risk

flood areas. There is a profound need for flood insurance in areas away from the coast, Blust says, but due to the lack of agent and consumer awareness and the challenge of underwriting for flood risk, a gap remains.

“We need to focus on a broader geographic footprint and create products that are more sellable by agents and more comfortable for homeowners to purchase,” he says.

Brighter skies Technology is certainly playing a rapidly increasing role in helping insurers make better predictions. Flood underwriting and

determination of structure have generally been based on antiquated maps and flood plains that were determined on broad and generic bases. But with technology, it’s now possible for underwriters to access topographic information down to the structural level. Insurtechs and third-party data providers are giving carriers access to more accurate data that can be used in the underwriting and modeling processes.

“Technology is enabling us to do things prospectively, as opposed to retrospectively,” Schofield says. “The biggest difference is we can now validate an application before

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FEATURES

SECTOR FOCUS: FLOOD

THE SPRING FLOOD OUTLOOK The map below, issued by the National Oceanic and Atmospheric Association’s Climate Prediction Center on March 19, shows locations where flooding is likely in the US between March and May 2020.

Major

Moderate

Minor

Source: NOAA

“We need to focus on a broader geographic footprint and create products that are more sellable by agents and more comfortable for homeowners to purchase” Ralph Blust, National Flood Services sending a quote and can be confident that we are charging enough premium to cover the exposure.”

The NFIP continues to play an important role in applying resources to the research and development of more accurate modeling

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and mapping. With increased mapping data, Weber says it will be easier to understand the effects of certain flood events and to use that information to make future predictions. And modern technology, along with innovation in private products, means diversity in pricing

will become more commonplace, too.

“Underwriting is always a challenge; it’s about developing a balance of what’s happened in the past and the likelihood it will happen again,” Weber says. “We are thrilled the market is coming around and there’s more technology to better predict these events.”

Information and resources are also more broadly available online. NFS has launched an online library with videos and publications to educate agents and help them expand their expertise in the flood insurance space.

“We’ve created a more simplistic way to secure insurance, a more simplistic way to service the way businesses can file claims, and then a much more simplistic and individualized way to learn,” Blust says.

Because carriers are relying on modeling to predict losses and are using those results to develop rates, “construction quality matters,” Schofield adds. Orchid Underwriters has been advocating for building codes across the country to heighten their standards and encourage stronger structures to decrease vulnerability to flood and other weatherrelated risk.

Particularly for commercial properties, risk mitigation is a crucial factor. Having a disaster recovery plan shows providers there is a plan in place should a catastrophe hit.

“Businesses that can mitigate large losses are much more attractive to carriers, and we’re able to offer much better terms and conditions and pricing,” Schofield says.

Better buildings, improved mapping, increased education and innovation in private products are all integral elements that will propel flood insurance forward and help keep exorbitant flood-related claims at bay. Blust predicts technology will continue to be a driving force as well.

“Agents have become more dependent on technology to simplify their processes and create a better client experience,” he says. “If flood insurance providers don’t deliver in a modern way, they will look elsewhere.”

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Industry

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FEATURES

AGENCY INSIGHT

All in this together From employee ownership to hiring talent from outside insurance, Karen Boyle, Graham Company’s director of human resources, sheds light on the agency’s unique approach to its workforce

IBA: Why did Graham Company make the decision to become employeeowned in 2017?

Karen Boyle: We wanted to stay privately held, and we were fiercely committed to our independence, so we knew that becoming employee-owned was a way to make sure this was able to happen. We were also really committed to making sure we kept our unique culture, so the employee ownership component helped us stay independent and also stay dedicated to strengthening and perpetuating our unique culture.

IBA: How have you and your clients benefited from this decision?

KB: We’ve always had really low turnover, but with employee ownership, employees’ skin is in the game, and there’s a lot of loyalty. One of the things that’s nice for clients is they’re dealing with the same person, and rarely do they have to acclimate someone to their account or their way of doing things.

One of the other ways [they’ve benefited] is that they truly get high-end client service.

The employees understand that the work they do leads to the success of our clients.

I’m confident that was always there before the employee stock ownership plan [ESOP], but I’ve really seen a difference in it since we became an ESOP – people asking more ques-

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tions like, “How can we go above and beyond for the client?”

IBA: Why does Graham Company look to attract employees from outside of the insurance industry?

KB: Our philosophy has been to hire really good, kind people with a high level of business acumen, and then we teach them our way of doing insurance. One of the biggest things is that when we hire people from outside of the industry, they’re bringing an outside perspective. They’re truly bringing subject-matter expertise in some other industry other than insurance, so they’re able to really understand their clients’ businesses, and they’re able to bring a different level of business acumen to their clients and how they approach setting up programs and truly being a risk consultant for

their clients, versus when you hire someone who may have been in insurance for their entire career, that’s all they know.

IBA: How does your training and development program ensure success for new professionals coming into the agency?

KB: Our training program is top-notch. We have 185 employees and 10 full-time people in our training department, so that really shows you the investment that we make in our people and making sure they have all the resources they need to be successful.

The training is also unique in that it’s all different things. There’s classroom training where people are going back into a classroom – working on group projects, sitting through school, learning on PowerPoint and having

A BRIEF HISTORY OF GRAHAM COMPANY William A. Graham III founded his namesake agency in 1950 and incorporated it in 1960, with a team of just six employees. In 1962, Graham’s son, Bill, joined Graham Company as a sales representative.

By the time the agency was billing $520,000 worth of premium in 1968, Bill Graham started purchasing company stock from his father. In 1972, he became the sole owner of Graham Company.

Over four decades, Graham grew the agency to become one of the largest in the US by revenue size.

Graham Company now has nearly 200 employees and occupies eight floors in The Graham Building in Philadelphia, with additional offices in New York City and Washington, DC. The agency became 100% employee-owned through an employee stock ownership plan in 2017.

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FAST FACTS: GRAHAM COMPANY AREAS OF EXPERTISE

Property & casualty

Employee benefits

Surety

Personal lines

Specialized products

Year founded: 1950 Headquarters: Philadelphia Number of offices: 3

“Our philosophy has been to hire really good, kind people with a high level of business acumen, and then we teach them our way of doing insurance” teachers teach them insurance. Then there’s on-the-job training, where they’re put in a unit to learn the processes and procedures that we go through.

We do a lot with continuing education, and we pride ourselves on making that convenient for our employees. Instead of telling our people, “You need to go get a certain amount of credits every year to main-

tain your license,” we make sure that we have a lot of different sessions on-site throughout the year so it’s easy for our people to learn and continue to develop their skills, but also for them to maintain their license and their development in that area.

IBA: How does Graham Company’s broader talent recruitment approach

Number of employees: 185

help it stand out as the demographics of the industry shift and a talent gap looms?

KB: We have been able to cast a wider net.

If we interview someone who is a smart, talented and kind person who has high emotional intelligence, we’re equipped to train them in insurance. And a lot of companies can’t say that – they need to hire someone with the skill set or with the knowledge base already. We’re fortunate in that we don’t have to do that, so if we meet the right person, we can hire them and get them to where they need to be from an insurance knowledge perspective.

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FEATURES

TIME MANAGEMENT

How to avoid mental exhaustion When your mental bandwidth is depleted, it leaves little room for big ideas to flourish.

Carson Tate offers three ideas for replenishing your mental reserves

IN A HIGHLY competitive global economy, innovation, creativity and your business’s ability to differentiate itself through its ideas and products are essential for continued growth and profitability. As a worker today, information overload, 24/7 connectivity, constant interruptions from wherever you’re working, and email and text communication can lead to overwhelming anxiety.

All of this anxiety hijacks your time and mental resources, resulting in scarcity. And when you experience scarcity of any kind – time or mental – you become absorbed by it.

Your mind orients automatically toward an unfilled need.

The problem with mental scarcity is that it creates its own trap. It further perpetuates scarcity and reduces all components of our

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mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea, all of which are essential components of innovation.

If you want to support and nurture innovation in your work, it’s time to start thinking about how to reduce mental scarcity and increase your mental bandwidth. Here are three simple yet powerful ways to start.

Develop routines for regular tasks Develop a routine for common tasks so that your brain can automatically repeat them with minimal input by you.

Once the routine is established, it’s interpreted by your brain as a pattern. These

patterns, through frequent use, become hardwired into your brain. And the more you use a pattern, the less attention you’ll need to pay to doing this task, thus freeing up mental bandwidth for ideation. Consider developing routines for phone calls, opening documents, filing and saving documents, sorting and processing mail, and making travel arrangements.

Automate email processing A lot of the work you do is virtual – over email, text or perhaps a project management app. Email processing consumes significant amounts of time and mental capacity. Reduce the time and mental drain by automating frequent email responses, by automating email follow-up, by automating the prioritization of incoming messages and by automatically filing reference materials.

Automate frequent email responses. Use a free text expander software app like FastFox for PC or Text Expander for Mac, or a more robust program like Wittyparrot. These will work in any program, including your email platform, and allow you to insert commonly used text with just a keyboard shortcut or by dragging and dropping text. No longer will you waste your mental energy thinking about what to say, nor precious time typing out a response; you can reply automatically within seconds.

Automate your email followup. Automate your follow-up by setting up and using the ‘waiting for’ rule. Here’s how it works: When you send an email where you need a response from the recipient, cc yourself on the email. That email will then be automatically saved in a folder you have designated for all of your follow-ups. As new messages are automatically added to this

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folder, the numeral indicating how many messages are in the folder will become bold.

No longer will you spend time searching through sent messages or trying to remember if you’ve followed up on your open requests.

Automate the prioritization of incoming messages. The most important mental processes, such as prioritizing, often take the most effort and are energy-intensive.

Let your email program automatically prioritize incoming messages. Color-code your incoming message by sender priority. For example, you might color-code your manager in red, your top clients in green and turn the messages where you are cc-ed to light gray. So when you open your inbox, you can quickly scan them for the most urgent messages, such as those from your manager or key clients.

Automate the filing of reference

Mental scarcity reduces all components of our mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea materials. Automatically file all of your reference materials, trade publications and industry news by writing a rule. For example, you might write a rule to file all of your trade publications in a folder named Trade Publication Reading. Now, when you open your inbox, it will only contain email messages that require action by you, and you won’t waste precious time or mental energy sorting through messages you can read at a later date.

Cultivate joy Great insights occur more frequently the more relaxed and happy you are. Take time during the workday to do something totally unrelated to work that brings you joy, makes you laugh or just makes you smile. Spend some time on YouTube watching funny videos, call a friend, take a walk or read for pure pleasure. It doesn’t matter what it is as long as it brings you delight.

Don’t let mental scarcity rob you of your next big, bold, breakthrough idea. Support and nurture your creativity and impact by increasing your mental bandwidth, developing routines for regular tasks, automating email processing and cultivating joy.

What’s possible if you shifted your thinking to “What impact can I make today?” instead of “How much can I get done today?”

Remember, you’re in the driver’s seat of your time, energy, attention, mental capacity – and impact.

Carson Tate serves as a consultant and coach to executives at Fortune 500 companies, including AbbVie, Deloitte, EY, FedEx and Wells Fargo. The author of Work Simply: Embracing the Power of Your Personal Productivity Style, her views have been included several publications, including Fast Company, Forbes, the Harvard Business Review blog, The New York Times and more. For more information, visit workingsimply.com.

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FEATURES

LEADERSHIP

Why optimistic realists make the best leaders Brian de Haaff explains why effective leadership is all about finding a balance between idealism and practicality

I ONCE worked for a guy who always had a smile on this face. He was a friend to everyone and always thought it was a beautiful day. But he wasn’t fully respected by his peers because he never prioritized work that had the best chance of being successful. Instead, he wasted a lot of time and money by blindly assuming everything would work out. A lot of times he was wrong. He only looked ahead at sunshine.

I also once worked for a woman who was so mired in the dysfunction of the organizational reality that she never pressed for what was ambitious and right. What was new and exciting could never be pursued because it had never been done before. The weight of the organization and its plodding pace crushed her. She had no hope. So she only looked behind at clouds.

Both leaders had meaningful skills and were well intentioned, but both were limited in their success by their single-focus worldview.

The most successful leaders function

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with a healthy dose of forward-thinking optimism and down-to-earth realism. They look forward and behind. In fact, one study found that people with an optimistic realist personality type are often happier and more successful. That’s because these pragmatic minds know how to combine the positive outlook of an optimist with the sharp-eyed

and finding a way forward. In fact, I believe being an optimistic realist will do more than help you move forward – it will make you a great leader. Here are four reasons why.

You know the power of a plan Leaders are the ones setting the course and adjusting the sails.

Optimistic realists know that you can be transparent about the issues at hand while also being the encouraging force that gets your team back on track view of a realist.

Although the two leaders I worked with were uniquely single-minded, most of us are capable of seeing both sides of a situation

When your team hits rough waters, you don’t expect that they’ll magically turn things around. And you don’t waste time grumbling about what they did wrong. Instead, you

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identify clear action steps to tackle the problem and move forward together.

You’re transparent with your team One of the biggest mistakes you can make is to shelter your team from looming problems. Optimistic realists know that you can be transparent about the issues at hand while also being the encouraging force that gets your team back on track. That’s because transparency leads to trust. Your honesty builds a better work environment.

You understand your limitations Optimistic realists know that they

can’t do it all, but they also know that the team around them can help them accomplish so much more. Your greatest resources as a leader are the people you work with every day. Be honest with them that you need help and remain positive that they will help you come up with the solution.

You sense when it’s time to reset Times of crisis are opportunities to reflect on the big picture. But as a leader, it’s on you to make the final call when it’s time to push the ‘reset’ button. Always go back to your goals and ask yourself the tough questions: Are we still on track? Have we lost sight of our vision?

Great teams build great organizations. So the next time a crisis hits, reflect on your own strengths and weaknesses – then rally and pull from the people around you. When your team sees you as an optimistic realist, they will likely adopt the attitude for themselves. You will encourage a workplace of critical thinkers who know there’s a solution to every problem and who will work tirelessly until they find it.

Brian de Haaff is the co-founder and CEO of Aha! and the author of Lovability. His two previous companies were acquired by well-known public corporations. De Haaff writes and speaks about product and company growth and the adventure of living a meaningful life. For more information, visit aha.io.

Author photo by Chris Yeh

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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

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PEOPLE

CAREER PATH

ADDING VALUE From his days as an accounting intern to leading Gallagher Bassett, Mike Hessling has always enjoyed solving clients’ problems A strong aptitude for math, a desire to go into business and his rules-driven nature drew Hessling to an accounting degree. During his junior year, an auditing internship with Ernst & Young clarified his future path.

“I wanted to apply accounting to customers in a way that would help them; I get a charge out of interacting with people, hearing their business problems and helping solve them.”

2001 LEARNS LESSONS FROM ENRON When Arthur Andersen became embroiled in the Enron scandal, Hessling took away two key lessons from his time in the litigation practice.

“I learned the importance of details – every detail matters. Also, I saw the rapid deterioration of a proud organization and brand due to the actions of a few – every day I would see the firm losing clients, and I realized that a reputation can be lost in a matter of minutes.”

2007 MOTIVATES A TEAM When a partner defected to Bain & Company, Hessling followed.

“For one project, I managed a team in Alaska – I spent six and a half hours in the air every week for a year. I loved the challenge of keeping a team of twentysomethings motivated and excited. We held ice-carving competitions, went to the Iditarod, went moose-spotting – we had the highest team scores in the office because of those efforts.”

2020 BECOMES CEO Appointed CEO of Gallagher Bassett’s North American operations in February, Hessling says his new role is about commitment.

“Our clients are betting their reputations on our ability to deliver.

I want clients to say, ‘You can put your trust in Gallagher Bassett.’ I also have a commitment to our team: leading with integrity, creating opportunity for career growth, driving a performance-based culture and giving people not just a job, but a career and a place they can call home.”

/

9:19 PM

1997

CHOOSES ACCOUNTING

1999

FIGURES OUT WHAT HE WANTS Having fallen in love with Chicago during his summer internship, Hessling moved to the city to take a consultant position with Arthur Andersen.

“I thought Chicago had phenomenal opportunities for me to consider where I might take my career; joining Arthur Andersen enabled me to narrow in on what I wanted to do with my career. Opportunities find you when you’re clear on what you want to do.”

2003 GETS A TASTE OF INSURANCE While getting his MBA at Northwestern University’s Kellogg School of Management, Hessling became the first on-campus hire by Bridge Strategy Group, which facilitated his introduction to insurance.

“It gave me my first taste of this great industry. Working with bright people who are driven and motivated, and the level of energy you bring to the table, are far more important than the industry you work in” 2012 MOVES TO GALLAGHER BASSET Seeing the chance to bring his varied experience together, Hessling made the move to Gallagher Bassett to take on the role of chief client officer.

“It was the culmination of all the things I had lived through in my career in one position. It was about client service and engagement, leadership, and adding value with a company that had a phenomenal reputation. The stars aligned in a way that was a no-brainer.”

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PEOPLE

OTHER LIFE

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

Surfing has taken Orozco arou nd the world to competitions in Australia, Indonesia, Nicaragua, El Salvador a nd Peru

1,000+

Number of surfboards Orozco has owned in his life

500

Estimated number of surf competitions Orozco took part in from ages 6 to 16

30'

Height of the largest wave Orozco has ever surfed

HANGING TEN When he’s not working with clients, Sam Orozco can usually be found pursuing the next big wave SAM OROZCO has been riding surfboards since the age of 3, when his father would put him in a life jacket and push him into the waves. Today, Orozco, a broker at California-based Venture Pacific Insurance Services, looks back fondly on a childhood spent surfing.

“I’ve always been competitive; the next

48

step once I started getting good was competing, so I was doing that from age 6,” he says. “I was always the youngest one in the surfing contests. My whole life revolved around surfing and the ocean.”

It’s a passion that has stayed with Orozco since, and these days it even helps him with work. “I’ve met many people for

business through surfing,” he says.

“Everyone surfs, and it’s an easy conversation starter.”

But the real reason the waves keep calling Orozco back has little to do with business. “It’s fun and relaxing,” he says.

“It’s a good workout, and I love pushing myself on to bigger waves.”

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13/07/2018 3:40:00 1:55:41 AM 10/04/2020

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. Follow us at bigdoghq.com.

©2020 Applied Underwriters, Inc. Rated A (Excellent) by AM Best. Insurance plans protected U.S. Patent No. 7,908,157.

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