NA EXE TU CU RA TIV LC EI ATA NSI ST GHT RO S S PH ERI ES ES 20 21
IBAMAG.COM ISSUE 9.09 | $12.95
2021 PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS IBA spotlights the companies that are setting the standard for program business HOW TO INSURE DIGITAL ART
What’s the best approach to underwriting blockchainenabled artwork?
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A SOLUTION FOR THE NEXT PANDEMIC
Why industry heavyweights are pushing for the government to step in on pandemic insurance
THE E&S MARKET OUTLOOK
All signs point to another banner year – but can that momentum continue?
27/08/2021 3:21:39 am
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ISSUE 9.09
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CONTENTS
twitter.com/InsuranceBizUS facebook.com/InsuranceBusinessUS
32
UPFRONT 02 Editorial
The industry’s next big challenge: how to insure non-fungible tokens
04 Statistics
Key data that should be on your radar this month
06 News analysis
FEATURES
THE STATE OF THE E&S MARKET
SPECIAL REPORT
19
5-STAR PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
Who are the superstars of program business? IBA names 28 administrators and 12 carriers that are raising the bar
PEOPLE
INDUSTRY ICON
DUAL group CEO Richard Clapham lifts the lid on a major acquisition that’s set to increase the MGA’s footprint in the US
14
IBA talks to the experts to find out what challenges and opportunities the excess & surplus market holds
The recent rise of digital art is putting pressure on insurers to innovate
08 Intelligence
This month’s big movers, shakers and new products
10 Workers’ comp update
COVID-19 isn’t the only risk in bringing workers back to the office
12 Technology update
FEATURES
38
PREPARING FOR THE NEXT PANDEMIC
Marsh’s Martin South on why the solution to pandemic risk lies in a public-private partnership
How to capitalize on increasing interest in usage-based insurance
18 Opinion
Why now’s the time to step up automated marketing efforts
FEATURES 40 Making programs stand out
At Great American Insurance Group, building solid programs starts with exclusivity and claims expertise
PEOPLE 48 Other life
In the driver’s seat with classic car insurance specialist and restorer Rick Drewry
44 FEATURES
THE BIG DATA DIFFERENTIATOR How a cutting-edge data strategy is giving Nationwide a leg up in the E&S space
SPECIAL SECTION
EXECUTIVE INSIGHTS SERIES
NATURAL CATASTROPHES IBAMAG.COM CHECK IT OUT ONLINE www.ibamag.com
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UPFRONT
EDITORIAL
A problem worth pondering
B
ack in March, auction house Christie’s made headlines when it sold a piece of digital artwork via non-fungible token (NFT) for an astounding $69 million. The groundbreaking piece, called “Everydays: The First 5,000 Days,” is a collage of digital pictures taken every single day for 13 and a half years by a digital artist known as Beeple. NFTs are a bit like one-of-a-kind trading cards on the blockchain. Every NFT is a unique token, and in the case of digital art, they’re designed to assign exclusive ownership of the work. What’s tricky to understand is how unique ownership of an NFT artwork could be worth $69 million. And given the distinct lack of insurance options available for NFT art, it seems underwriters are also struggling to wrap their heads around the value of these crypto assets and the best ways to manage NFT risks.
Is the industry keeping pace with the evolution of blockchain technology and cryptocurrencies, or has it already fallen behind? Technically, the owner of an NFT is the only person with the private encryption key for the asset, and as the blockchain is well known for its strong security, really the only foreseeable threat would be a very sophisticated cyber incident in which a criminal somehow gains access to the encryption key and monetizes the NFT for their own gain. While there are potential coverage options for NFTs on cyber policies today, there are many questions that need answering, including how and where collectors, galleries, and auction houses are placing custody of their NFT art, as well as multiple gray areas for third-party liability. The NFT art trend raises interesting questions for the insurance industry. What other insurable assets will suddenly find their way onto the blockchain? Is the industry keeping pace with the evolution of blockchain technology and cryptocurrencies, or has it already fallen behind? What other intangible assets will need to be covered next? And who is going to take on insuring these assets? Those questions, although challenging, provide an exciting opportunity for the insurance industry to stay relevant, exercise innovation and thought leadership, and shore up what’s looking like the next big thing in the digital asset landscape. The sale of a piece of blockchain-based artwork for $69 million has placed NFTs firmly on the public’s radar. Now the race is on for insurers to deliver solutions that will respond to the digital asset wave. The team at Insurance Business America
www.ibamag.com MAY 2017 EDITORIAL Managing Editor Paul Lucas Senior Editor Bethan Moorcraft Journalists Surina Nath, Ksenia Stepanova, Mia Wallace, Danny Wood News Writers Lyle Adriano, Terry Gangcuangco, Roxanne Libatique, Gabriel Olano Staff Writers Pete Miller, Jonathan Russell, Ryan Smith Copy Editor Clare Alexander
CONTRIBUTORS David Greenberg
ART & PRODUCTION Designer Joenel Salvador Production Coordinators Loiza Razon, Kat Guzman Customer Success Coordinator Bernz Jalandoni
SALES & MARKETING Head of Insurance – Sales & Marketing Cathy Masek Vice President, Sales John Mackenzie Senior Business Development Manager Desiree McCue
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley President Tim Duce Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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Q4 2
UPFRONT
STATISTICS SHIPPING LOSSES SINK TO HISTORIC LOWS
GLOBAL PROPERTY RATE MOVEMENTS
Pro rata commission Risk (loss-free) Risk (loss-hit) Catastrophe (loss-free) Catastrophe (loss-hit)
Caribbean 30% 20% 10%
REINSURANCE MARKET SHIFTS TO EQUILIBRIUM
49
Large ships lost worldwide in 2020
By the mid-year renewal periods, the global reinsurance market was experiencing a boost from improved results in the first quarter of 2021, including premium growth courtesy of continued rate increases. According to Willis Re, reinsurers sought to maintain pricing momentum renewals earlier in the year, although signs pointed to capacity supply outweighing demand. While property market capacity was sufficient across major global markets, certain casualty lines – most notably cyber – have seen reduced capacity and increased demand, driving up pricing. Overall, however, Willis Re observed that the global reinsurance market is trending toward equilibrium thanks to improving terms and conditions.
50%
Decrease in total shipping losses over the past decade
0% -10%
United States 30% 20% 10% 0% -10%
Latin America 30% 20% 10% 0% -10%
2,703
Number of shipping incidents worldwide in 2020
ABOVE-AVERAGE PREMIUM GROWTH PROJECTED POST-PANDEMIC The insurance industry can expect a swift recovery in the aftermath of the COVID-19 pandemic, according to the latest forecast from Swiss Re. In 2021 and 2022, written premiums are expected to exceed the 3.5% global average growth rate for the previous decade. Swiss Re noted that rapid economic recovery and hardening non-life markets should fuel demand for cover.
GROWTH IN PREMIUMS WRITTEN
4%
Year-over-year decrease in the number of shipping incidents Source: AGCS Safety & Shipping Review 2021
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8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2%
Advanced markets
2020
Emerging markets
2021*
World
2022*
*Forecast
Source: Sigma 3/2021, Swiss Re
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Q4 2020
Q1 2021
80%
Middle East 30%
60%
20%
40%
10%
20%
0%
0%
-10%
-20%
China
WHO BEARS RESPONSIBILITY FOR CYBERATTACKS? Only around a quarter of C-suite executives believe that all employees are responsible for preventing cyberattacks, according to a study by Munich Re. Nearly half believe the burden of cybersecurity lies with the IT department – despite the fact that most cybercriminals gain entry by targeting an individual employee.
WHO IS RESPONSIBLE FOR AVOIDING CYBERATTACKS?
United Kingdom
50%
30% 20%
40%
10% 0% 30%
-10%
Australia
20%
30% 20% 10%
10%
0% -10% 0%
Source: Willis Re 1st View, July 2021
IT department
All employees
Senior management
Source: Global Cyber Risk and Insurance Survey, Munich Re
COMMERCIAL INSURANCE PRICES UP YET MODERATING
P&C INSURERS STRUGGLING TO INCORPORATE AUTOMATION
Global commercial insurance prices rose again in the second quarter of 2021, shooting up by an average of 15% and marking the 15th consecutive quarter of increases. However, Marsh reports that the increases are gradually slowing, driven by moderating prices in key lines like property and D&O.
Insurers are facing pressure to integrate automation into their operations. However, in Willis Towers Watson’s recent survey of global insurers’ current automation capabilities, the P&C industry scored just 21.7% overall, suggesting difficulty or reluctance in adopting new technologies.
GLOBAL INSURANCE COMPOSITE PRICING CHANGE
CURRENT AUTOMATION SCORE FOR AREAS OF THE P&C RESERVING PROCESS Data 31.9%
25%
Results production 22.1%
20%
Loss calculations 22.0%
15%
Assumptions 14.6%
10%
Audit trail 13.8%
5% 0
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Source: Global Insurance Market Index – 2021 Q2, Marsh
Senior management engagement 10.8% Source: 2020/2021 Global Automation in Insurance Report, Willis Towers Watson
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27/08/2021 3:23:38 am
UPFRONT
NEWS ANALYSIS
The meteoric rise of NFTs In the aftermath of the $69 million sale of a digital artwork via non-fungible token, NFTs are poised to continue shaking up the fine art space, presenting new challenges for insurers
THE HIGH-PROFILE SALE of the digital artwork “Everydays: The First 5,000 Days” by the artist Beeple for $69 million in March revealed the staggering possibilities that lie within the rapidly growing non-fungible token (NFT) marketplace. NFTs are rapidly proving to be the hottest new trend in the crypto world – artists, celebrities and companies have all jumped on the bandwagon of this digital asset craze. According to Will Turvey, divisional director of Gallagher’s fine art, jewelry and specie team, while NFTs are still the fresh-
So what’s behind crypto art’s spike in popularity? Due to the rise of screen time over the past year, Reid says, people have become more comfortable with performing transactions online. This behavioral change, coupled with the splash of NFTs in the art market, has resulted in increased interest in this space. And with the growth in the value of cryptocurrencies, items that hold digital scarcity are in demand – and that’s exactly what an NFT offers. “The global pandemic coincided with a 600% year-over-year price increase in the
“The core NFT digital art community continues to grow at a rapid pace. The market shows a lot of speculative trading” Adrienne Reid, Aon Huntington T. Block Insurance Agency faced new entrant to the collectibles market, they are showing signs of rapid growth – during the first quarter of 2021, NFT sales exceeded $2 billion. “As the traditional art market works to find ways to enter this space, the core NFT digital art community continues to grow at a rapid pace,” says Adrienne Reid, vice president at Aon Huntington T. Block Insurance Agency. “The market shows lots of speculative trading occurring now, along with high volumes being sold on online gaming and sports platforms.”
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crypto asset, Ethereum, which serves as the most common instrument for buying NFTs,” says Dennis Lawrence, an intelligence analyst at Aon Cyber Solutions. “As a result, newly wealthy crypto asset owners have discovered NFT artwork as a method to both enjoy their recent windfalls while hoping their artwork appreciates in value over time as a speculative investment.” While NFTs have only recently exploded into public consciousness, they’ve been around the digital art world for several years,
which means insurers and brokers in the fine art space have been mulling how the development of the NFT market will impact insurance services for some time now. Turvey points out that insuring NFTs is very different than insuring physical artwork. “Typical fine art insurance covers physical loss or damage to the artwork,” he explains. “An NFT doesn’t give the owner exclusive access to the artwork associated with it, given the artwork has been digitized. We can all view digital art in the same way the owner of the NFT can – but we don’t all have a time and date stamp to prove that we own the authentic original. As such, what we are insuring for NFTs in the fine art insurance space is not the artwork itself, but the private key that proves ownership, which is stored offline and usually with a third-party custodian that specializes in the storage of these keys.” Because the insurance market for NFTs and cryptocurrency is currently in its infancy, Turvey says, there isn’t as much capacity as there is for typical fine art. This means available limits will not be vast, regardless of the value of the NFT. However, he says, that should change as insurers look for new
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WHERE NFTs STAND NOW
$2.5 billion Approximate amount of NFT sales recorded globally in the first half of 2021
10,000–20,000 Average number of weekly NFT buyers since March 2021
$69.3 million Price of the most expensive NFT ever sold growth opportunities. Honor Palmer-Tomkinson of Howden’s fine art and specie division notes that there’s a huge opportunity for underwriters and brokers to understand the crypto world and the new risks this evolving industry creates.
artwork. As an asset with a high value, an NFT attaching to a tweet or meme could potentially be insured in exactly the same way. This is a constantly evolving space, and we are enjoying the challenge of evolving along with it.”
“This is a constantly evolving space, and we are enjoying the challenge of evolving along with it” Honor Palmer-Tomkinson, Howden With a wealth of experience in insuring items of high value, the fine art and specie insurance market is best positioned to do this, Palmer-Tomkinson says. “Howden has been working on a solution that tailors the already solidified crypto currency insurance products to cover NFTs,” she says. “The product that we can currently offer our clients is limited to NFTs being held in cold storage [offline] by third-party custodians and can be insured on an agreed value basis. NFTs don’t have to attach to an
Reid points out that the risks associated with NFTs primary revolve around a need for technology-related solutions and due diligence. Important key points for collectors include settling up multi-key verification for wallet recovery keys, having secure storage for digital asset backups, pinning the underlying digital asset to retain control over the NFT image’s accessibility, and properly reviewing the NFT licensing agreement to understand allowed reproduction abilities. Overall, she says, this space is in its very early
177,048 Number of active NFT wallets worldwide in the second quarter of 2021 (a new record high) Sources: DappRadar, NonFungible, Bloomberg
stages, and the surrounding legal, regulatory, tax and insurance implications will take some time to work out. Lawrence adds that other areas of concern in the NFT marketplace are counterfeit and custody risks. “For example, hackers have recently conducted tests to expose how a bad actor can create highly sophisticated counterfeit NFTs that appear legitimate on the blockchain,” he says. “As a result, conducting due diligence on NFT artwork will help mitigate some of this risk. With respect to custody, solutions that address decentralized storage, backups and mitigation of risks associated with a user’s private key will help prevent loss or theft.”
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UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Brookfield Reinsurance
American National Group
Brookfield’s acquisition of the century-old life and general insurer is valued at $5.1 billion
Gallagher
R.J. Riordan & Co.
R.J. Riordan is a retail P&C brokerage serving the Chicago area and specializing in the construction and transportation sectors
HUB International
Hiles-McLeod Insurance; Risk Point Consulting
Florida-based Hiles-McLeod provides commercial and personal insurance in the Pensacola area; Risk Point Consulting is a Georgia-based firm specializing in coverage for professional and college sports
IMA Financial
Diversified Insurance Group
The deal gives IMA more than 400 technology and life sciences clients, mostly based in Utah
IVANS
Ask Kodiak
The acquisition of the commercial lines insurtech will bolster IVANS’ commercial lines connectivity capabilities
Moody’s
RMS
Ratings agency Moody’s has forged a deal to buy the international risk modeling firm from Daily Mail and General Trust for around $2 billion
MS Amlin
InQlusiv
MS Amlin has taken a minority stake in MGA InQlusiv, which focuses on serving LGBTQ-, female- and ethnicowned businesses
The Hilb Group
Health Quote
The purchase of Medicare specialist Health Quote will further expand The Hilb Group’s Medicare business
Travelers
Fidelis
Travelers has purchased an undisclosed minority stake in the Bermuda-based property, bespoke and specialty (re) insurance provider
Moody’s acquires international catastrophe modeling firm
Moody’s has signed a deal to acquire risk modeling business RMS for approximately $2 billion from Daily Mail and General Trust. With more than 400 risk models covering 120 countries, RMS will add nearly $500 million in revenue to Moody’s insurance data and analytics business. The acquisition will accelerate the development of Moody’s global integrated risk capabilities, enabling it to meet the next generation of risk assessment. “Within Moody’s, I’m confident RMS will be able to accelerate technology and model innovations while combining with Moody’s core data and analytics offerings for powerful, holistic solutions,” said RMS CEO Karen White. “The team and I are excited to bring new value to customers as we transform how we are able to understand and mitigate the future of risk.”
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Hippo enters commercial insurance with HOA product
Insurtech Hippo has expanded into commercial insurance with the launch of a tailored product for homeowners’ associations (HOAs). Hippo’s HOA package includes coverage for commercial property, fidelity, inland marine, data breaches, general liability, combined D&O and employment practices liability, hired and non-owned auto liability with physical damage coverage, and available excess liability. The product is currently only available in Arizona, but Hippo plans to expand it to Nevada, Oregon, Utah, Colorado, Michigan, Illinois and Tennessee later this year.
HUB International debuts cannabis benefits captive
HUB International has launched a new captive for cannabis benefits, built in collaboration with Berkley Life and Health Insurance Company. The HUB Cannabis Benefits Captive is a medical stop-loss offering for cannabis organizations that’s designed to provide an alternative to traditional employee benefits programs, better reflect the profile of a cannabis company’s employees and offer greater control over healthcare costs. The program is designed for cannabis employers with more than 50 insured employees, stable claims experience and predictable cash flow.
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PEOPLE Measured Insurance launches Lloyd’s-backed cyber cover
Measured Insurance has launched a new product, CyberGuard, backed by Lloyd’s of London syndicates. Available to small and medium-sized US businesses, CyberGuard gives companies access to Measured’s full range of breach management services, including a team of cybersecurity and legal experts, threat monitoring, and pre-breach remediation services. According to Measured, the underwriting capacity from Lloyd’s will enable it to accelerate its deployment of technology and modeling to help companies evaluate their exposure and assist brokers in pricing cyber risk.
CrossCover expands into excess & surplus property
MGU CrossCover Insurance Services has established a partnership with Orchid Underwriters Agency to write middle-market excess & surplus property coverage. CrossCover will offer limits of up to $50 million per location through a panel of A.M. Best-rated carriers and reinsurers. According the CrossCover founder and president Scott Hanson, the MGU plans to leverage wind and earthquake capacity and write diverse E&S accounts across the nation to spread risk across its portfolio, thereby reducing carriers’ volatility and reinsurance costs and improving their return on capital.
Sompo Global Risk Solutions unveils pandemic cover
Sompo Global Risk Solutions has launched a new insurance solution for epidemic and pandemic risk. Triggered by a civil authority restriction resulting from an international public health emergency declared by the World Health Organization, the Sompo GRS Epidemic and Pandemic Protection Program provides coverage for loss of income, extra expenses, debt servicing, supply chain disruption and other fixed costs. The program will initially offer limited capacity to Sompo clients in the real estate, hospitality, financial services, professional services, technology and life sciences industries.
NAME
LEAVING
JOINING
NEW POSITION
Aileen Mathieson
Aberdeen Standard
Aspen
Chief investment officer
Andrew Cross
Coalition
Resilience Cyber Solutions
Vice president
Caroline Emmet
INSIGHT2PROFIT
MarshBerry
Vice president of digital marketing
Chris Carlson
Aspen
CRC Group
Director, property practice
Florian Beerli
N/A
Beazley
Head, specialty risks and US programs team
Hamid Mirza
N/A
Liberty Mutual Insurance
President and COO, Global Retail Markets, US
Jeremy Frumkin
Ironshore Insurance
Resilience Cyber Solutions
Vice president
Kathryn Smith
N/A
Jencap Group
Managing director, marketing
Marilyn BlattnerHoyle
AIG
Swiss Re Corporate Solutions
Global head of trade finance
Paul Orlando
N/A
Jencap Group
Managing director, sales
Rich Wirth
N/A
Sedgwick
Senior vice president, risk services group
Richard Bayman
Chubb
MS Amlin Underwriting
Head of aviation reinsurance
Samuel Hess
N/A
Millers Mutual Insurance
Vice president and chief information officer
Steve Wolfenberger
McGriff Insurance Services
Liberty Company Insurance Brokers
Vice president
Stuart Ganis
N/A
Liberty Company Insurance Brokers
Executive vice president
Liberty Mutual appoints head of global retail markets
Liberty Mutual Insurance has appointed Hamid Mirza as president and chief operating officer of its Global Retail Markets (GRM) arm in the US. In his new role, Mirza will lead the operation that provides insurance to personal lines customers and small businesses in the US under the Liberty Mutual and Safeco brands. Mirza has been with Liberty Mutual since 2009, most recently serving as GRM’s executive vice president and chief product and innovation officer. “[Hamid] has the skills and ability to both anticipate and react to the competitive insurance market, and I know he will excel leading GRM US,” said GRM president Jim MacPhee.
Millers Mutual names VP and chief information officer
Regional P&C carrier Millers Mutual has promoted Samuel Hess to the role of vice president and chief information officer. As CIO, Hess will work with Millers Mutual’s business units to identify, develop and implement IT capabilities that enable the company’s strategic direction, support its dayto-day business operations, and position it favorably with stakeholders, agencies and regulators. Hess joined Millers’ IT team more than five years ago and was promoted to chief information security officer in 2020. “Sam’s commitment to self-development and his leadership skills have proven he is up to the challenge,” said Millers Mutual president and CEO Jonah Mull. “We are confident he, with the input of all those around him, will help lead us into the future.”
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UPFRONT
WORKERS’ COMP UPDATE NEWS BRIEFS OSHA revises safety handbook for small businesses
OSHA has collaborated with the National Institute for Occupational Safety and Health (NIOSH) to revise its Small Business Safety and Health Handbook. The updated handbook emphasizes the benefits of establishing a safety and health program, offers self-inspection checklists for employers to identify workplace hazards, and provides resources on workplace safety and health for small businesses. It also includes self-inspection checklists for processes such as fire protection, hazard communication, permit-required confined spaces, respiratory protection and walking-working surfaces.
Employers paying more than $58 billion a year for injuries
The 10 most serious types of workplace accidents are costing employers more than $58 billion in annual medical expenses, according to Liberty Mutual’s latest Workplace Safety Index. The top five causes of workplace injuries – overexertion, same-level and lower-level falls, being hit by objects, and awkward postures – accounted for $40.4 billion of that total. “Understanding the top risks in the workplace is the first step in better protecting employees and the bottom line,” said Jamie Merendino, general manager of risk control services at Liberty Mutual.
MEMIC adds three new underwriters to its team
Workers’ comp carrier MEMIC has made three new hires on its underwriting team: senior production underwriters Diane Firster and Scott Richards and senior loss-sensitive underwriter Sunny Jarrard. Firster, a three-decade
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industry veteran, moved to MEMIC from Philadelphia Insurance Companies, where she served as a product manager. Richards joined MEMIC from Nationwide; his previous industry experience also includes stints at The Hartford and Travelers. Jarrard came to MEMIC from Safety National, where she most recently managed underwriting for Florida, Georgia and Tennessee.
Ohio BWC offers businesses workplace wellness grants
The Ohio Bureau of Workers’ Compensation (BWC) is accepting applications for its Workplace Wellness Grant Program. The grants are designed to help employers create and implement a workplace wellness program, including conducting health risk appraisals and biometric assessments and designing programs to address risk factors. The grants offer up to $300 per participating employee over a four-year period, up to a maximum amount of $15,000 per policy. The program is open to employers that currently do not have a wellness plan and meet various other eligibility requirements.
Enstar, ProSight complete loss portfolio transfer deal
A subsidiary of global insurance company Enstar Group has completed a deal to provide reinsurance to ProSight Global for 2019 and prior-year business. The reinsurance comprises a groundup loss portfolio transfer of ProSight’s discontinued workers’ compensation and excess workers’ compensation lines of business, along with adverse development cover on ProSight’s diversified mix of general liability business. Enstar’s subsidiary assumed net loss reserves of about $500 million and will provide an additional aggregate limit of $250 million.
The risks of returning to the office While COVID-19 is top of mind, it’s far from the only thing employers should be worried about, according to one workers’ comp expert COVID-19 vaccines have given businesses some light at the end of the long, dark tunnel of the pandemic. Some businesses have even begun to allow their employees to gradually return to the office – all while taking reasonable steps to reduce the risk of virus transmission. But the return to work opens up new levels of risk for employers and employees, much of which has little to do with COVID-19. “Employers should be aware that new and deconditioned employees are statistically at higher risk of becoming injured on the job,” says Dorothy Riviere, chief clinical officer at workers’ compensation digital health partner Bardavon Health Innovations. “OSHA reports that 40% of workers injured on the job have been employed less than one year.” To prevent injuries, Riviere advises employers to assign their staff to positions based on their physical capabilities, train them on the proper use of the body during work activities and teach safety protocols in the first 30 to 60 days of work. She also suggests having a job analysis (JA) in place for each position. “JAs document the essential functions of a job and the physical demands required to perform those essential functions,” Riviere explains. “They play a key role in both hiring and injury
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management. JAs enable targeted placement of workers and ensure adequate training and safety programs are implemented.” Riviere points out that even after the COVID-19 pandemic has ended, workplace injuries will remain a major issue. “The nature of injury has not changed, pandemic or not. Employers need to be aware that musculoskeletal [MSK] injuries are costly and preventable,” she says, citing a Liberty Mutual study that found that MSK
“The nature of injury has not changed, pandemic or not” injuries cost employers more than $1 billion a week. “Employers need partners that proactively empower their teams to optimize quality care for their most valuable asset – their employees. If their workers’ compensation program does not include actionable clinical treatment data, predictive analytics for utilization, clear return-to-work goals based on functional outcomes and complete transparency throughout the life cycle of a claim, they will be unable to determine the value and quality of the care their injured workers receive.” Even self-insured employers need partners that can help them prevent injuries, Riviere adds. “Their risk managers, adjusters and physical therapy network need to work in concert so that when injury does occur, they can seamlessly deploy a treatment plan on behalf of the injured worker.”
Q&A
Amanda Granger Senior vice president, workers’ compensation claims ICW GROUP
Years in the industry 26 Fast fact Granger currently leads a team of more than 300 claim support professionals
The benefits of immediate care ICW Group just launched a nurse triage hotline for policyholders. What types of workplace injuries does this service address? Providing the best medical care for injured workers as quickly as possible is a primary driver for ICW Group. The nurse triage hotline is another tool in our service offerings that helps us deliver added value for our customers. If an employee is injured on the job, and it’s not an emergency situation requiring 911, the nurse triage hotline provides immediate access to a registered nurse who specializes in workplace injuries. The nurse will assess the injury over the phone and provide medical advice on the appropriate next steps. The initial response to an injury is critical to ensuring it’s properly treated.
How much can companies save if injuries are treated early? Are there other advantages to using the hotline? First and foremost, it’s about the injured worker and ensuring the proper steps are taken to treat the injury so they can get on the right path to recovery and back to work. When injuries are addressed quickly and correctly, positive outcomes are more likely. Additional advantages of the nurse triage hotline include the ability to deliver real-time information to both our policyholders and ICW Group’s claims department.
Has the switch to remote work led to a drop in injuries, or have you seen remote-work-related injuries? ICW Group did not see a significant drop in injuries during the pandemic year. We also have a diversified book of business, so many of our industries may not have had remote workers. If a business does have remote workers, we emphasize prevention measures to minimize injury. For example, conduct ergonomic evaluations of home offices to prevent injuries from an improper workstation setup, and establish a written remote work policy that communicates policies and procedures and identifies boundaries. Also maintain regular communication with remote staff and make sure they are doing well professionally and personally.
What are some other measures that employers should have in place to keep workplace injuries from becoming major claims? Getting proper care quickly is essential, and this is where the nurse triage hotline can significantly help. Ongoing safety training and education are important to reduce risk and avoid injuries in the first place. When an injury does occur, policyholders that have great employee relationships and foster a caring and supportive culture tend to have the best outcomes. ICW Group advises our policyholders to check in frequently, guide their employees through the claims process and show genuine care about their well-being. When your employee knows you care, in our experience, it makes a huge difference for them and for your company.
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UPFRONT
TECHNOLOGY UPDATE
Driving the future of usage-based insurance As consumers warm to the idea of UBI, auto insurers are looking to take the concept to the next level
was attracted to Noblr’s “proven culture of innovation and top-notch talent in the UBI space” – factors that can help USAA accelerate its digital experience opportunities. “While we already have a behaviorbased telematics product in SafePilot, with COVID-19, there was an increased focus on the usage-based insurance market, with our members feeling increasingly comfortable with sharing their data and a strong desire to participate in a UBI program,” Harris says.
“We can do more to engage and reward customers for sustaining the right behavior”
Usage-based insurance (UBI) has been touted as the next step in auto insurance, but concerns surrounding digital privacy have held it back from really taking off – until now. A consumer sentiment survey conducted by J.D. Power in 2020 found that 40% of auto insurance consumers were contemplating joining telematics programs, as the COVID-19 pandemic made people realize that they could have saved more by switching
NEWS BRIEFS
to UBI when they were driving less. With consumer interest in UBI poised to steadily grow, it falls upon insurers to start offering pay-as-you-go programs to capture this emerging market. USAA recently furthered its UBI capabilities through the acquisition of insurtech Noblr, which offers app-based telematics technology. According to Luke Harris, vice president of auto innovation for USAA, the company
Novidea partners with ACORD Solutions Group
Insurance platform provider Novidea has joined the ACORD Solutions Group’s Licensed Integrator Partner Program. The partnership gives Novidea a relationship with ACORD as it evolves its own data model and will enable Novidea to work more closely with the ACORD community to share insights and engage with other market participants. Novidea will also be able to learn firsthand where ACORD Solutions Group and its vendor community are trying to make changes in the market and be part of those changes.
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“Acquiring a UBI insurtech has allowed us to significantly accelerate our timing to bring a digital-first UBI offering to our members.” While interest in UBI is growing, Harris notes that there are ways to further enhance its value for consumers, including giving drivers regular reports on their driving behavior and score; offering customized alerts for things like speeding, street sweeping notifications and check engine light decoders; and gamifying the system to reward the safest drivers. “Insurers are already using UBI to reward good, safe driving behavior,” Harris says. “We can do more to engage and reward customers for sustaining the right behavior and continuous improvement.”
Lloyd’s unveils its latest Lloyd’s Lab cohort
Lloyd’s of London has revealed the insurtech startups selected for the seventh cohort of its Lloyd’s Lab innovation accelerator program: Sotera, Koop, ICEYE, Jungle, Falkonry, YEO Messaging, Hubvia, Merkle Science, Superscript and BirdsEyeView. Participants were chosen based on pitches geared toward three themes: claims, data and models, and cryptocurrencies. For the second cohort in a row, Lloyd’s also accepted wild-card entrants, which focus on areas like money laundering, robotics and construction.
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Q&A
Josh Darr Managing director and head of North America peril advisory GUY CARPENTER
Years in the industry 19 Fast fact In addition to his work at Guy Carpenter, Darr has been an adjunct professor at Northern Illinois University for the past 10 years
How to make risk modeling more accurate Guy Carpenter recently launched a suite of climate advisory and modeling services for companies. How did these services come about, and how do they work?
techniques strike a balance between actionable insights based on plausible shifts underway – or projected in the future – and a range of reasonable outcomes.
Climate resilience is a mega-theme across the Marsh McLennan enterprise. Each company is uniquely qualified to answer questions across the spectrum of risk areas to industry and business, whether it be investments, governance and regulation, or how a company efficiently deals with the coming transition to a low-carbon economy. At Guy Carpenter, we have augmented our capabilities for disclosure on climate and larger environmental/social/governance issues with our ratings advisory and business intelligence teams.
As the impact of climate change grows, what are the challenges in physical risk modeling?
How do you create a climate model that is not only easily understood by businesses, but also gives a more accurate representation of climate change over shorter timeframes? The first step is to inform risk measurements that accurately capture shifts that are likely already in progress. Techniques solely using an average of the last 50 to 100 years may not adequately reflect currentday risk for many perils. While adjusting frequency or severity in probabilistic catastrophe models is one way to project these possible outcomes, the adjustments may undermine the very correlations or assumptions used to build and validate the models. Guy Carpenter sees other techniques involving risk scoring, sensitivity studies, trend-over-time analysis and deterministic stress tests as equally valuable. These
Convr gains patent for AI-powered platform
Insurtech company Convr has received a patent for the technology underlying its d3 Intake platform, which virtually eliminates submission paperwork. The platform uses machine learning to automate the intake of documents related to loss history, credit score, employment history, salary verification, health inspection and more. “Convr is a leading innovator in the AI commercial underwriting space, and this patent is just the first of many we expect to be awarded,” said Convr co-founder and president Harish Neelamana.
The number of factors that are incorporated into physical risk modeling are numerous, ranging from many greenhouse gas emissions to the response of the ocean/atmosphere system as a result. Perhaps most challenging is modeling how society will invest in future solutions to mitigate these risks through private- and public-sector responses. As computational efficiency continues to increase, I think the industry – and society at large – still needs to maintain a healthy level of respect for what we both do know and what we yet do not know. As risk financing evolves, using a multidisciplinary approach to appropriately bind the levels of uncertainty will remain of critical importance, as a single approach based on one model, risk score or analysis will not suffice.
How can technology further improve the way businesses plan for catastrophic weather? Recent advances in remote sensing technology are providing unprecedented levels of observational data for the weather patterns and oceans of Earth. Guy Carpenter is fortunate to partner with academic institutions that are actively harvesting this data and create derivative models that will help us collectively model future scenarios with more confidence.
Agentero secures $13.5 million in Series A funding
Digital insurance network Agentero has raised $13.5 million in a Series A funding round led by Alma Mundi Ventures. Founded in 2017, Agentero combines insurance agents’ existing data with third-party information sources to identify new business and cross-selling opportunities. Agentero then connects agents with carriers to instantly quote and provides communication and automation tools to help them efficiently write more new business. The insurtech currently works with more than 800 independent agencies.
Setoo to merge operations with Pattern
Setoo, the embedded insurance pioneer that operates as an MGA in the UK and Europe, is merging with fellow insurtech Pattern, which is in the process of finalizing operation deployment as an MGA in the US. The merged entity aims to be a one-stop shop for embedded insurance products, enabling businesses to autonomously build and distribute personalized insurance offerings. The combined company will operate under the Pattern brand across Europe and the US, with offices in the UK, France and Israel.
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PEOPLE
INDUSTRY ICON
A BIG DEAL As group CEO of DUAL, Richard Clapham has overseen significant growth at the MGA – including a recent acquisition that will significantly expand its presence in the US
WHEN RICHARD CLAPHAM joined DUAL as group CEO in September 2016, he took the reins of one of the world’s largest international MGAs. With more than 30 years of experience on both the brokerage and underwriting sides of the industry, he was well qualified for the job. Clapham’s résumé includes a 12-year stint at XL Catlin, where he was a member of the group underwriting board, a director of Catlin Underwriting Agency and a member of the UK executive committee. He also spent five years at Markel International, where he led the professional indemnity division. Five years into Clapham’s leadership of DUAL, the MGA has only grown bigger and better. Throughout Clapham’s tenure, the company has been focused on building an organizational structure that is scalable, sustainable and leverages DUAL’s global collective wisdom. It has also successfully diversified its product range and engaged in strategic acquisitions – the latest of which is particularly meaningful. In August, DUAL announced it was acquiring Align Financial Holdings – a move that will expand its global gross written premium to more than $2 billion. A US-based insurance holding company that owns and invests in best-in-class specialist general agencies and underwriting management businesses, Align is one of the largest independent general agency platforms in the US, writing more than $630 million in annualized GWP through its commercial
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casualty, commercial property catastrophe, personal property and surety businesses. The deal will expand DUAL’s US market share from around $450 million to over $1 billion, making the US market home to roughly half of DUAL’s aggregate business written internationally. The acquisition will also further diversify DUAL’s product and program mix, enhance its distribution and cross-sell opportunities, and expand its partnerships with brokers and capacity providers.
Global scale Clapham describes the acquisition of Align as “classic” in terms of how Howden Group, DUAL’s parent company, likes to operate. “It’s all about finding the right partners … where both parties really want to be together,” he says. “And I think [Align CEO] Kieran Sweeney and I are both very happy to see the two organizations come together. That was really driven out of the fact that we have a very strong strategic and cultural fit between DUAL, Howden Group and Align. Another critical piece for us is finding likeminded specialist underwriting-driven businesses, and clearly, in DUAL and Align, we have that.” Since DUAL was founded in 1998, the business has expanded from a small financial lines operation in Spain to having the broadest geographic and specialist product distribution platform of any MGA, with operations across the US, Europe and Asia-Pacific.
PROFILE Name: Richard Clapham Title: Group CEO Company: DUAL Based in: London, UK Years in the industry: 30+ “This deal with Align is truly transformational for us because it sets us on the journey of creating a global platform that is unique in the market, and no others have it,” Clapham says. “The US is the largest MGU
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PEOPLE
INDUSTRY ICON
market in the world, with approximately $60 billion in GWP, and we felt that DUAL was not the size we would like to be in that market. By combining with Align, we’ve created an MGA that has over $1.1 billion of GWP in the US, which brings us certainty of scale and size. “Critically, we’ve also brought together two very talented underwriting teams in the US, as well as some very supportive broker partners and a very strong group of carrier partners. And I think they’re all going to see the real value of the talent and distribution we’ve brought together through this deal, because I think they’re going to have even
sale insurance brokerage market. For DUAL, one of the benefits of building such scale is the opportunity to unlock access to talent. “I think the scale of an operation is very much key in encouraging stronger and more talent to join the organization,” Clapham says. “Ultimately, both DUAL and Align are people businesses at their core. At Howden, we talk about people first, and for us, it’s really the talent that drives the business. “If you look at the flexibility and adaptability that we have across DUAL’s global distribution and global platforms, that enables our underwriters to come to work and do what they really enjoy, which is to get
“This deal with Align is truly transformational for us because it sets us on the journey of creating a global platform that is unique in the market … This really takes us to another level and puts us in an unrivaled position in the global MGA market” greater opportunities. The product diversification we now have in the US is significant, so I think our offering to our broker partners, together with the technology that both teams have, is really exciting.” DUAL operates in 16 countries worldwide and works with more than 7,000 brokers to distribute its products. With the promise of a much stronger foothold in the US market, the MGA is focused on “optimizing the collective knowledge and talent” of its extensive international network to improve its products and services across the entire business. “This really takes us to another level and puts us in an unrivaled position in the global MGA market,” Clapham says.
People first In the past few years, there has been considerable consolidation in the retail and whole-
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on and underwrite. I think we’re becoming more and more attractive to underwriting talent as we grow in scale in terms of the organization itself, our geographic footprint and the products we provide. And then we become an even more attractive proposition to carriers, which is obviously key to us, as that enables us to [participate in] more areas of business. It’s almost a virtuous circle, which is harnessing our carriers, our talent, our platform and our distribution. “Our ambition is to build a standout underwriting business of real scale globally that allows capital to back talent cost-effectively, combining specialist products with great distribution through our broker partners, whilst keeping our culture. This ambition is accelerated sharply by the acquisition of Align, and I very much look forward to working with the team.”
DUAL BY THE NUMBERS
1998 Year founded
16 Countries in which DUAL operates
700+ Number of employees globally
7,000 Number of broker partners
$1.1 billion Gross written premium for the 2020 fiscal year
Na Su iss All
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“At Nautilus, we thoughtfully invest in the right technology to deliver smart underwriting solutions. We analyze data and business trends, integrate this knowledge with our customers’ needs, and streamline our processes to provide an exceptional user experience.” Trish Buckhardt Executive Vice President, Chief Operating Officer & Chief Information Officer
SAVVY Contact Nautilus today.
General Liability | Property | Commercial Excess Inland Marine | Miscellaneous Professional Liability Privacy Breach | Crime www.nautilusinsgroup.com | 800.842.8972 Nautilus Insurance Group products and services are provided through various Surplus Lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed Surplus Lines brokers. Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus Lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. ©2021 Nautilus Insurance Group. All rights reserved. 08 | 21
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email iba@keymedia.com
The power of marketing tech In a competitive insurance market, automated tools that can optimize messaging, timing and channel are a must, writes David Greenberg IN A FAST-PACED, hyper-competitive industry, insurance companies require powerful marketing tools to engage, grow and build long-term brand loyalists. To meet this need, many insurance brands are turning to marketing automation. Let’s say an insurance company noticed someone browsing their website and looking at specific aspects of a home insurance policy. Now imagine if that person received a perfectly timed email detailing the coverage they had been reviewing and its benefits. Put simply, marketing automation technology analyzes customer behavior and sends customized messages crafted to garner the attention of an individual. Personalization and timeliness are the power of behavior-based marketing automation technology, and they’re a major reason insurance brands are leveraging it to set themselves apart. Let’s look at three ways insurance brands are supercharging engagement by using marketing automation.
1
Behavioral data
To better connect with their audience, insurance companies must have a deep understanding of their audience’s preferences and interests. As consumers navigate a company’s social media, website and apps, insurance brands can study their behavior to learn more about their interests and needs. By doing so, businesses can develop a strong grasp of who’s visiting their channels and what coverage offerings they’re looking for. They can then leverage the insights in conjunction with powerful marketing auto-
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mation solutions, like email and SMS, to craft personalized communications that reach their audience in a meaningful way.
2
Email marketing automation
Email marketing automation is a phenomenal lead-gen tool in an industry dependent on new policyholders. Once a person has given a company permission to message them, marketing teams can send automated emails designed to resonate with a lead wherever they are in the sales process. It’s essential that insurance brands understand their customers, their behavior and
executed well, these communications are a powerful tool in creating positive experiences with policyholders.
3
SMS marketing automation
Most consumers are on their phones for more than five hours a day. As such, insurance brands are strategically using SMS marketing to reach people in the place where they spend all their time: their mobile devices. SMS marketing is a highly effective way for insurance companies to instantly share information with their audiences, strengthen the value exchange and create positive brand experiences. Companies can use it to send surveys, important policy updates, promotional offers, alerts and reminders. For example, if a customer is eligible for a discount on their insurance due to years of good driving, an insurer could send them a message congratulating them and inviting them to reduce their rate. This technology empowers brands to maintain high-level communication with their customers. Like all marketing strategies, SMS is not limited to communicating with existing policyholders. Acquisition-oriented communication is key to sustaining a pipeline of new business, especially with younger consumers. If a
“Personalization and timeliness are the power of behavior-based marketing automation technology” their preferences so they can send messages that are relevant. Marketing automation can even send emails or text messages at the time that someone is most likely to engage. Marketing automation plays just as big a role in retention and upsell as it does in acquisition. Automated messaging can be used to help insurance brands stay on top of upselling and renewal activities by sending personalized, policy-specific emails to auto-renew, bundle or purchase additional products. For existing policyholders, marketing automation can send information about how to lower rates, promote new discounts and offerings, and maintain a high level of communication with customers. When
consumer has opted in to receive notifications, insurance brands can use SMS to entice them to purchase a policy for the first time. In a competitive market, insurance companies must engage their leads and existing policyholders with optimal messaging – at the best time and through the right channel. With automated marketing, companies can remove the guesswork and optimize customer communications at the same time. David Greenberg is the chief marketing officer at Act-On Software, where he oversees the company’s marketing and growth strategies. He has more than 20 years of leadership experience in high-growth marketing tech organizations.
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SPECIAL REPORT
2021
PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS IBA spotlights the program administrators and carriers that are offering top-of-the-line solutions for niche risks
CONTENTS
PAGE
Feature article............................................................ 20 Methodology ............................................................. 20 5-Star Award winners ............................................... 24 Profiles........................................................................ 26
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SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
BUILDING BETTER PROGRAMS WITH PROGRAM BUSINESS booming, the symbiotic relationship between program administrators and their carriers is more important than ever. While the former maintain an essential agent-facing role and dayto-day oversight, the latter deliver the financial stability and resources needed to keep coverage rolling through turbulent times. To celebrate this relationship, IBA surveyed scores of program administrators across the US to find out more about the unique ways they capture market opportunities and how they’re making the best of the latest technologies. The IBA research team also asked program administrators to rank the most important factors they consider when partnering with a carrier.
Bringing it all together So what does it take to be a 5-Star Program Administrator? According to Shawn Woedl, CEO of REInsurePro, “we always say that it’s not really what we do that sets us apart, it’s how we do it. With our extensive understanding of the real estate investment industry, and with ease of use as our primary focus, our program continues to grow and evolve to be the one-stop shop for investors and retail agents working with investors. We go above and beyond to provide solutions for agents who bring opportunities that may not fit nicely within our underwriting box and leverage our industry relationships to find a solution for those needs.” REInsurePro works with nearly 1,000
100%
WHAT ARE PROGRAM ADMINISTRATORS LOOKING FOR IN A CARRIER?
METHODOLOGY In June, IBA put out a call for nominations for the best program administrators in the industry. Nominees were scored based on their achievements and initiatives across a range of areas, including largest programs, expertise and stability, innovations in program development, and use of technology. Program administrators were also asked to provide feedback on the carriers they work with, which IBA used to determine the 5-Star Program Carriers. Carriers were evaluated on a scale of 1 (poor) to 5 (excellent) in 10 categories; those that received an average score of 4.00 or higher in a particular category were named 5-Star Award winners for that category.
Underwriting guidelines
100% Financial stability
96% Reputation
93%
Relationship management
86% of program administrators said financial stability is very important in a carrier
93% Exclusivity of working relationship
89% Internal program manager expertise
86%
Claims specialization
79% said it’s very important to have an exclusive relationship with a carrier
86%
Compensation Commitment to innovation Marketing support
39%
20
79%
71%
79%
of program administrators said a carrier’s reputation is very important
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“We go above and beyond to provide solutions for agents who bring opportunities that may not fit nicely within our underwriting box” Shawn Woedl, REInsurePro independent retail agents across the US and is poised to insure more than 140,000 locations by the end of 2021. Real estate is the company’s flagship program, and it offers a range of coverage, from earthquake and flood to tenant protection and equipment
breakdown. Its custom-built online platform empowers agents to propose, bind, issue and service clients quickly and easily. To deliver outstanding service, Woedl says REInsurePro concentrates on building productive relationships with underwriters
and carrier partners. “It is critical that the relationship is based on a solid foundation of trust in one another’s experience and expertise, as well as carefully set and agreed upon expectations for the relationship and the performance,” he says. “As such, we do excessive due diligence when evaluating a new carrier partner, studying and researching market trends and clearly understanding the carrier’s appetite for the risks they are taking on.” Another 5-Star Program Administrator, Risk Placement Services (RPS), launched its own programs division, RPS Signature Programs, in 2020. Chris Leisz, president of RPS Signature Programs, describes it as a
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SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
TOP 5 BENEFITS OF WORKING WITH A PROGRAM ADMINISTRATOR
Focus on niche markets Leaders in innovation
Responsiveness
Carrying the weight Access to an established market
Risk management
Source: Applied Client Network
“We seek out [program administrators that] have strong capabilities in providing data and analytics, sharing that, and working with us to improve their book of business” Paul Sullivan, Arch Insurance Company “go-to underwriting resource for specialized coverage. We’re a top-rated program administrator working with top-rated carriers across the country to design exclusive coverage for niche risks.” RPS Signature Programs offers 36 unique programs for a variety of industries, including public entities, education, healthcare, construction and sports. The division sets itself apart from the competition by maintaining deep industry expertise; its specialists often have 20 to 30 years of experience in their respective industries. Demonstrating its ability to adapt to changing market conditions, RPS Signature Programs helped replace Munich Re’s program administrator for its public entity program, including setting up an under-
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platform illustrates our continued commitment to think innovatively about how we distribute best-in-class insurance solutions,” Leisz says. “Since launching the digital LPL solution, we have been approached by other carriers looking to partner with us on bringing other digital solutions to market through our e-commerce platform.”
writing platform to streamline the rating process and launching a multi-channel marketing campaign. “Munich Re is one of our longest and broadest carrier relationships in RPS Signature Programs,” Leisz says. “We maintain a few active programs within the not-forprofit space and a unique brokerage solution. The benefits of our relationship were highlighted not just in our continued profitable growth with them, but also in their trust to launch a new primary public entity program with us in 2020.” RPS Signature Programs also puts a high priority on incorporating the latest technology and has rolled out new tech-enabled solution for the legal industry. “Our lawyers’ professional liability [LPL] e-commerce
Because carrier partnerships are essential to program administrators being able to deliver the best offerings, IBA also wanted to find out what the top program administrators care about when teaming up with a carrier. Their top priorities included financial stability, reputation, relationship management and underwriting guidelines – more than 90% of respondents named these factors as important when choosing a carrier to work with. Arch Insurance received high marks from program administrators in all of these areas, as well as for its compensation, internal expertise, commitment to innovation and exclusivity of working relationships. The company has more than 30 programs and over 10 program administrator partners. “The programs business is one of Arch’s original businesses,” says Paul Sullivan, executive vice president of P&C programs at Arch. “When Arch was formed in 2001, programs was one of those first businesses, and it has been the biggest part of Arch Insurance since our inception. We know it well, and we value it highly. And that is maybe different from some other carriers, where it’s a less significant part of what they do.” Sullivan attributes Arch’s success to conducting thorough due diligence to find the right partners and then engaging in outstanding relationship management. Ultimately, he says, Arch prides itself on maintaining a consistent relationship in both soft and hard markets. “Our consistency throughout those cycles is what has earned us that reputation,” Sullivan says. In addition, Arch stays competitive by
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keeping one eye on the future and leveraging the latest technologies through its program administrator partnerships. “We put a lot of stock in data and analytics,” Sullivan says. “We seek out those that not just have that expertise, but have strong capabilities in providing data and analytics, sharing that, and working with us to improve their book of business.” At Great American Insurance Company – which earned top marks from program administrators in all 10 categories, earning it the title of All-Star Program Carrier – “the secret to serving the program community is to understand that the ‘sauce’ is different for every program and the ‘sauce’ itself will
change over time,” says Carol Frey, divisional vice president of business development and marketing at Great American Alternative Markets. “Embracing change is critical to being the best in this space. The needs and the value associated with those needs are different and will evolve and change for every program and its administrator over time.” Frey says “focus, flexibility and fluidity” enable Great American to reprioritize based on trends, results and forecasts. “Unlike other program carriers, we even bend and flex when it comes to compensation and program structure,” she says. “From traditional to profit-sharing and even risksharing, this too can change over time. This
fluid partnership approach creates an environment of certainty that as things change in the marketplace, a program structure is not stuck with a ‘one-trick pony.’” Great American also embraces “thoughtful” technology, Frey says, making sure it’s not just chasing insurtech based on buzz. Frey says any technology must add value in a discipline such as claims, or be an enterprise-level technology that can foster growth. “At Great American, we are encouraged to experiment with new ideas and innovation,” she says. “This is our culture, and it encourages more creativity at every level of the division and positions us for great things in the future.”
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SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
2021
PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
PROGRAM ADMINISTRATORS Breckenridge Insurance
RPS Signature Programs
Phone: 855-728-8822 Email: solved@breckis.com Website: breckis.com
Phone: 866-595-8413 Email: contactrps@rpsins.com Website: rpsins.com/signatureprograms
Paragon Insurance Holdings
The American Equity Underwriters
Phone: 800-285-4081 Email: info@paragoninsgroup.com Website: paragoninsgroup.com
Phone: 866-238-8754 Email: aeu.marketing@amequity.com Website: amequity.com
REInsurePro Phone: 816-398-4080 Email: info@reinsurepro.com Website: reinsurepro.com
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JM Associates/Burnham + Company
Landmark Underwriters
Align Financial Holdings
Mathison Insurance Partners
American Specialty Insurance & Risk Services
McNeil & Co.
American Union Risk Associates (AURA)
MiniCo Insurance Agency, a Jencap Company
BDI Global
New Empire Insurance Services
Catapult Insurance Solutions
Preferred Property Program
Eydent Insurance Services
Quaker Special Risk, a Jencap Company
Freberg Environmental Insurance
Safebuilt Insurance Services (SIS)
Great Lakes General Agency
Tennant Special Risk
Gridiron Insurance Underwriters
VGM Insurance Services
IDEAL Agriculture & Marine Insurance
W.H. Greene & Associates
www.ibamag.com
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PROGRAM CARRIERS Arch Insurance
CLAIMS SPECIALIZATION
Phone: 201-743-4000 Website: insurance.archgroup.com
AXA XL
Allianz
Great American Insurance Company
AmTrust Financial Services
Liberty Mutual
AXA XL
Munich Re
Falls Lake Insurance
Glencar Insurance Company
COMMITMENT TO INNOVATION
FINANCIAL STABILITY Allianz Arch Insurance AXA XL Glencar Insurance Company Great American Insurance Company
Glencar Insurance Company
Arch Insurance
Liberty Mutual
Great American Insurance Company
AXA XL
Lloyd’s of London
GuideOne Insurance
Glencar Insurance Company
Munich Re
Liberty Mutual
Great American Insurance Company
Lloyd’s of London
GuideOne Insurance
Munich Re
Liberty Mutual
The Hanover Insurance Group
Munich Re
CARRIER REPUTATION Allianz Arch Insurance AXA XL Glencar Insurance Company Great American Insurance Company Liberty Mutual Lloyd’s of London Munich Re The Hanover Insurance Group COMPENSATION
EXCLUSIVITY OF WORKING RELATIONSHIPS
The Hanover Insurance Group MARKETING SUPPORT Great American Insurance Company RELATIONSHIP MANAGEMENT
Allianz
Allianz
Arch Insurance
Arch Insurance
AXA XL
AXA XL
Glencar Insurance Company
Falls Lake Insurance
Great American Insurance Company
Glencar Insurance Company
GuideOne Insurance
Great American Insurance Company
Liberty Mutual
GuideOne Insurance
The Hanover Insurance Group
Liberty Mutual
INTERNAL PROGRAM MANAGER EXPERTISE
UNDERWRITING GUIDELINES
Allianz
Allianz
Allianz
Arch Insurance
Arch Insurance
AmTrust Financial Services
AXA XL
AXA XL
Arch Insurance
Glencar Insurance Company
Glencar Insurance Company
AXA XL
Great American Insurance Company
Great American Insurance Company
Glencar Insurance Company
Liberty Mutual
Liberty Mutual
Great American Insurance Company
The Hanover Insurance Group
Munich Re
Liberty Mutual
www.ibamag.com
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27/08/2021 3:15:45 am
SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
Shawn Woedl, CEO
REINSUREPRO
R
EInsurePro’s residential real estate investment insurance program was developed specifically to meet the needs of investors and their insurance agents. The program packages property and liability insurance for tenant-occupied, underrenovation and vacant investment properties, with customized coverage options for each investor and portfolio. “The program began in 2008 with a primary focus on working directly with the end consumer – real estate investors – while at the same time partnering with a very select number of retail agent partners,” says REInsurePro CEO Shawn Woedl. “Beginning in January 2020, we enhanced our focus on growing our retail agent partnerships by offering a superior product that agents were searching for, allowing us to expand our footprint by leveraging their existing client relationships.” In addition to property and liability, REInsurePro offers a suite of coverage options for everything from earthquake to terrorism to equipment breakdown. In 2022, the company plans to roll out programs for niche property risks such as
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Phone: 816-398-4080 Email: info@reinsurepro.com Website: reinsurepro.com
cannabis growers and dispensaries, tattoo and piercing shops, artisan contractors, and self-storage facilities. Because non-owner-occupied properties are considered high-risk, REInsurePro goes the extra mile to vet its underwriting and carrier partners. “We take the time to walk them through our processes,” Woedl says, “making sure they buy into our technology and underwriting practices – how we determine what locations are and are not eligible – so they are fully on board with how the program works and won’t be surprised by some of the opportunities and losses they may see on their books. In turn, it is our responsibility to deliver results for them.” One of the ways REInsurePro keeps its carriers happy is through the use of advanced technology to underwrite a location completely, which removes the need to physically visit the property. The tools determine if the property is eligible for the program, what deductible options and coverage specifications are available, and helps select the carriers that are the best fit. Throughout the process, REInsurePro
collaborates with carriers to maintain a competitive edge. “It’s important that we are staying in tune with the rapidly changing insurance landscape, especially as it relates to our real estate investor niche,” Woedl says. “Their changing needs and evolving investment strategies mean we need to stay ahead of the curve. When we work with the best partners with a solid relationship, we are able to be creative with our policy options to adequately protect investors.”
REINSUREPRO AT A GLANCE
2008
Year founded
2
Number of offices
65
Number of employees
www.ibamag.com
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Chris Leisz, president
RPS SIGNATURE PROGRAMS
B
ased in Rolling Meadows, Illinois, and one of the largest MGAs in the country, Risk Placement Services (RPS) is a nationally focused wholesale insurance broker. The company has more than 80 branch office and satellite locations and four divisions: national brokerages, MGA/binding, standard lines and programs. The RPS Signature Programs division covers unique, new and niche risks, working with top-rated carriers to create custom coverage and leveraging the years of niche expertise unique to RPS. “Each one of our offices has staff members with specialized expertise in their respective industry vertical – anywhere from 20 to 30 years,” says Chris Leisz, president of RPS Signature Programs. “We provide a proprietary product with tailored underwriting for the industries we support, as well as customized business processes to optimize and facilitate the buying cycle and our agents’ sales and marketing approach in the programs we are offering.” Currently, RPS’ niche programs include an all-lines aggregate package for public
Phone: 866-595-8413 Email: contactrps@rpsins.com Website: rpsins.com/signatureprograms
entities, leveraging the company’s 30-plus years of experience in the space as one of the largest public entity brokers in the world. Its golf and country clubs package offers support for risks on the fairways and the rough patches of managing these unique leisure facilities. Its crane and rigging program delivers highly specialized and focused solutions to grow construction books. And its student accident coverage leverages the company’s 70-plus years of experience in the accident insurance space. All of this rests on a foundation of honesty, integrity and excellent service. “We are fully transparent and truthful in all matters, and that means you can trust us to provide global solutions at the local level,” Leisz says. “We will advocate on your behalf, negotiate in good faith and deliver those messages – good and bad – to you promptly and tactfully. That is how we do business, as we value our relationships deeply. In fact, many of our retailer relationships span decades. We have a service and claims staff in-house. That means we will always proactively communicate on new business oppor-
tunities and your renewals.” On the technology front, RPS Signature Programs distinguishes itself with customized online rate-quote-bind-issue platforms based on Instec technologies, enabling clients to bring new solutions to market. The division has created a lawyers’ professional liability platform that’s garnered a lot of praise across industries, which Leisz says is “a good example of our commitment to innovation.”
RPS AT A GLANCE
1997
Year founded
80+
Number of offices
2,500+
Number of employees
www.ibamag.com
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SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
“T
Ron Ganiats, CEO
PARAGON INSURANCE HOLDINGS Phone: 800-285-4081 Email: info@paragoninsgroup.com Website: paragoninsgroup.com
o be a 5-star Program Administrator over duration, the company must take a long view on the business and know when to deploy and pull capital from their underwriting practices,” says Paragon Insurance Holdings CEO Ron Ganiats. “The best program administrators are positioned to properly and quickly ebb and flow in their given underwriting practices based on market dynamics.” Formed as a broadly diversified MGA by leaders with more than 20 years of specialty insurance experience, Connecticutbased Paragon supports retail agents, insurance carriers and reinsurers with strong underwriting talent, broad capabilities, sophisticated operations and varied business interests. Paragon provides its clients with specialty programs and product facilities, a dedicated team of specialists, superior policy processing and service, broad technical expertise, streamlined workflows for increased productivity, and national distribution. “The landscape of who ‘owns’ the business is anything but static,” Ganiats says. “With the top 15 brokers all growing through significant M&A activity, it is critical for us to evolve if we are to provide compelling solutions for their business. Today, over 20% of Paragon’s business is derived from us offering these partners exclusive product. It is our way of giving them a value proposition that most traditional carriers can’t match.”
F
Adele Hapworth, CEO
THE AMERICAN EQUITY UNDERWRITERS Phone: 866-238-8754 Email: aeu.marketing@amequity.com Website: amequity.com
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or The American Equity Underwriters (AEU), establishing long-term partnerships with carriers and building trust with team members is critical to being a 5-Star Program Administrator. “Our carrier partners count on our underwriting team’s expertise in the marine market and trust that we fully understand the exposures of the accounts we want to write and can articulate how the exposures are controlled,” says AEU CEO Adele Hapworth. With extensive experience in the maritime industry, AEU has helped make safety a priority for waterfront employers for more than 20 years. AEU is the largest provider of USL&H to waterfront employers by insured count and has a 98.4% retention rate. Last year alone, AEU returned $24 million to its insureds for favorable claims performance and has been an award-winning employer for the past three years, earning recognition as one of the best companies to work for in Alabama. “We are a leading provider of workers’ compensation to the maritime industry and pride ourselves on building lasting relationships with our carriers, our insureds and our brokers,” Hapworth says. “Those relationships, combined with our deep understanding of the industry, allows us to see unmet needs in the market and respond accordingly.”
www.ibamag.com
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Dennis DiCapua, president, program division
BRECKENRIDGE INSURANCE
T
he program division of Breckenridge Insurance (formerly Blue River Underwriters) has proved that it can adapt quickly to challenging times and capture market opportunities. “With COVID-19, we adapted several programs to simplify the process for our agents and enhance our solutions based on the needs of the insureds,” says Dennis DiCapua, president of Breckenridge’s program division. “For example, as more people sought refuge in the great outdoors, we updated and improved our outdoors insurance program. We now offer workers’ compensation for this dynamic workforce and cyber coverage for owners who had to run their operations differently and the ability for those owners to readily pay their premium online. We also added the ability to cover gun ranges with or without retail operations to meet growing interest in this sector.” Overall, Breckenridge combines the strength of program underwriting specialists with brokerage and binding professionals to deliver competitive coverage solutions to independent agents and brokers across the US. With more than 100 employees in 15 US locations, Breckenridge supports 15 specialty programs, including contractors’ package
Phone: 855-728-8822 Email: solved@breckis.com Website: breckis.com
policies; workers’ comp; outdoor sports and leisure; E&S property; and cannabis, smoke and vape shops. Recent additions include cryotherapy and sports therapy, oil and gas consultants, fleet leasing, non-standard auto, and stop-loss self-insured healthcare benefits programs. DiCapua characterizes Breckenridge as a mid-sized intermediary with the size, resources and outlook to help agents and brokers support programs for middle-market accounts. “Breckenridge’s ‘secret sauce’ is its specialized underwriting expertise in numerous commercial classes,” he says. “That’s why carriers enjoy working with us.” Tim Anders, senior vice president of underwriting, adds that “Breckenridge is widely recognized by insurers for its underwriting integrity and as a reliable distribution partner with a proven track record. We have made a priority of developing deep industry underwriting expertise.” Over the next year, the company plans to leverage its expertise to “incubate” programs from business that has developed significant volume or wherever it sees opportunities in emerging trends. “We have the infrastructure, the capital and the selectivity to choose among partners
who are committed to growth,” DiCapua says. “We will continue to invest back into our business with each success to realize our vision of being a coveted ally to our agents and brokers.” David Jordan, Breckenridge’s CEO, adds that “the insurance landscape continues to change and evolve, and new opportunities are being created almost daily. There are now better, more efficient ways for us to do business – without the barriers and bureaucracy that limit innovation and potential – and we are embracing all of those ways in order to solve problems for our customers.”
BRECKENRIDGE INSURANCE AT A GLANCE
2009
Year founded
15
Number of offices
100
Number of employees
www.ibamag.com
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SPECIAL REPORT
5-STAR AWARDS: PROGRAM ADMINISTRATORS AND PROGRAM CARRIERS
Paul Sullivan, EVP
ARCH INSURANCE
A
rch Insurance is a leading insurance carrier offering a variety of property, casualty and specialty insurance for corporations, professional firms and financial institutions. Arch specializes in local underwriting expertise and offering out-ofthe-box solutions throughout the US. Its P&C programs division is led by executive vice president Paul Sullivan and is the largest net premium business unit in the group, with more than 30 programs and 10 program administrator partners. “Programs is a very important part of our business, and we’ve been doing it for a very long time,” Sullivan says. “Over half of our programs business is placed with program administrators that we have been partnered with for over 10 years. We don’t like to get in and out of a program. We do a lot of due diligence upfront. Others might do less work upfront and then decide quickly, if it doesn’t work out, to move on. Upfront diligence serves us well, and we have the track record
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Phone: 201-743-4000 Website: insurance.archgroup.com
to show that in terms of the number of partners we’ve been with for a very long time.” For Sullivan, it all boils down to relationship management. Arch values expertise and underwriting curiosity in program partners – a determination to improve programs and outpace the competition. That means finding the characteristics that make the best risks and focusing on writing more of those accounts. “We’re always trying to be curious and pursuing better together with them to find out more every day about what makes the best risks,” Sullivan says. “If the program administrator, and by extension Arch, is just providing another quote in an otherwise well-served industry, that’s not our strategy. We seek out industries that are underserved and program administrators that have expertise and a track record of superior results because of their knowledge of the industry. And that’s who we want to partner with.”
Sullivan says Arch puts a lot of stock in leveraging advanced technologies to gain an edge. When seeking partnerships, Arch values expertise in data and analytics and predictive modeling. The key, he says, is to consistently use granular data to improve risk selection and pricing. “That is definitely something we put significant stock in as a carrier.”
ARCH INSURANCE AT A GLANCE
2001
Year founded
23
Number of offices
1,400+
Number of employees
www.ibamag.com
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www.ibamag.com
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FEATURES
SECTOR FOCUS: E&S
THE STATE OF THE E&S MARKET The E&S sector once again enjoyed record levels of premium during the first half of 2021 – so how are things looking for the rest of the year and beyond?
THERE’S NO STOPPING the positive momentum in the US excess & surplus lines insurance market. In recent years, the E&S market has gone from strength to strength, riding a solid growth curve that has resulted in high levels of premium and a strong financial position. The first six months of 2021 were no different. According to the 2021 mid-year report from the Wholesale & Specialty Insurance Association (WSIA), surplus lines premium exceeded $24 billion through the first half of 2021, marking a 21.9% increase over the same period in 2020. Premiumbearing transactions also increased, exceeding 2.6 million in the first six months of 2021, up 7.2% year-over-year. Each of the 15 state stamping offices, which collectively represent almost two-thirds of E&S premium volume in the US, reported premium increases through the middle of 2021, and all but one state reported increases in transactions – the first time transaction counts have increased since the 2019 report. Areas of growth for E&S markets include residential and commercial construction, excess liability, commercial property, management liability, and cyber liability. The market seems to be strong across
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the country, according to Davis Moore, vice chairman of brokerage at Amwins and the current WSIA president. “There are no significant regional differences, though natural disaster coverages do vary regionally,” he says. “For example, western states are seeing increased demand in wildfire coverages, but overall, most lines of business are up across the board without any dramatic geographical differences.”
“The pandemic has significantly impacted the global economy,” says WSIA executive director Brady Kelley. “WSIA members experienced, and are still working through, many of the same operational impacts of remote work that most industries experienced. The impacts on insureds and our industry partners have also varied widely for the last 18 months, so it has been important to communicate thoroughly and proactively
“The world is changing quickly with increased frequency and severity of weather events, social inflation and nuclear verdicts, resulting in many opportunities and increasing insurance needs” Davis Moore, Amwins Some of the growth in the first half of 2021 could be attributed to a rebound after the brief retraction caused by the COVID-19 pandemic last year. While the E&S market has continued its strong growth curve, it was not spared from COVID-related disruption.
to understand each unique situation and work toward solutions. “However, the wholesale, specialty and surplus lines industry is maybe somewhat uniquely suited to situations like this,” Kelley adds. “We excel at navigating through cata-
www.ibamag.com
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E&S PREMIUMS BY STATE, MID-YEAR 2021
WASHINGTON $685 million 70,619 items
MINNESOTA $407 million 26,374 items
IDAHO
$97 million
13,257 items
ILLINOIS $1.2 billion 77,497 items
PENNSYLVANIA $1 billion 119,779 items
NEVADA
$248 million 21,389 items
OREGON
$343 million
NEW YORK $2.9 billion 168,903 items
WEST
$7.8 billion
UTAH $254 million 29,548 items
38,779 items
MIDWEST
$1.6 billion
NORTH CAROLINA $630 million 99,220 items
CALIFORNIA $5.7 billion 395,818 items ARIZONA $483 million 47,936 items
TEXAS
$4.6 billion
527,430 items
MID-YEAR PREMIUMS BY REGION
MISSISSIPPI $337 million 97,619 items
SOUTH
$10.8 billion
NORTHEAST
$3.9 billion
FLORIDA
$5.2 billion
866,826 items Source: 2021 Surplus Lines Stamping Office Mid-Year Report, WSIA
strophic events, and we’re accustomed to responding and problem-solving in challenging times.” Since 2018, surplus lines premium growth reported by the stamping offices in the third and fourth quarters has exceeded premium growth in the first half of the year, and many market leaders see continued opportunity for expansion in the second half of 2021. “This industry serves as an innovator for new and emerging risks, and we’re trained to be creative and adaptive,” Moore says. “The world is changing quickly with increased frequency and severity of weather events, social inflation and nuclear verdicts, resulting in many opportunities and increasing insurance needs. I believe the E&S market will
“[The wholesale, specialty and surplus lines industry] excels at navigating through catastrophic events, and we’re accustomed to responding and problem-solving in challenging times” Brady Kelley, WSIA continue to be responsive and provide the right coverage for these exposures and see growth as a result.” In line with these growth opportunities, the E&S market has seen some new entrants
in recent years, as well as some consolidation. But according to Kelley, there’s “still a good balance” in the industry, and “there’s no doubt that consolidation shows the continued interest of capital in our segment.”
www.ibamag.com
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FEATURES
SECTOR FOCUS: E&S REGIONAL PERSPECTIVE
WEST
So goes the West, so goes the US? Perhaps. Home to seven of the 15 state stamping offices, the region remains a bit of a bellwether for the rest of the country. Two of the three offices with the greatest premium increases in the first half of 2021 were in the West: Oregon experienced a 36.4% increase in premiums, while Arizona had a 33% boost compared to mid-year 2020. The growth in Arizona is largely attributed to a building boom, while in other states, premium growth is being driven by casualty coverages. In addition, Idaho saw a 27% increase in transactions, spurred by filings in high-limit accident & health. “The E&S insurance market in the West region is experiencing positive momentum,” says Travis Blackford, regional president of the West Coast wholesale division at Hull & Co. “There is a noticeable uptick in submission count. Inventory provides opportunity, and we have a lot of it.” As a result, rates are increasing. Blackford says there’s been a 3% to 5% boost in the binding contract space and a 5% to 10% increase in the brokerage primary casualty space. “Excess is still a moving target,” he says, citing 10% to 15% increases on clean business and 20% on accounts with losses or tough classes of business, such as large fleet exposures. “The real issue right now is excess carriers’ change in appetite, along with limited capacity and shorter limits offered,” Blackford says. “The excess space can be best described as ‘cleanup on aisle nine.’ In brokerage property, we are seeing a 5% to 10% rate increase with tightening of terms and conditions. If a property is wildfire-exposed in the West, rates can be double.” Meanwhile, new residential and commercial construction has been booming on the West Coast. Blackford says his casualty team has been active writing wrap-up and projectspecific policies for retail partners. He also notes that cannabis has been a growth engine, not only in the West but also nation-
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MID-YEAR PREMIUMS: 2020 VERSUS 2021 2021
2020 $483 million
AZ
$363 million $5.7 billion $4.6 billion
CA
$5.2 billion $4.2 billion
FL $97 million $89 million
ID
$1.2 billion $1 billion
IL $407 million $312 million
MN
$337 million $256 million
MS
$630 million $470 million
NC $248 million $196 million
NV
$2.9 billion $2.4 billion
NY $343 million $252 million
OR
$4.6 billion $3.9 billion
TX $254 million $216 million
UT
$685 million $646 million
WA $0
$100m
$200m
$300m
$400m
$500m
$1bn $2bn $3bn $4bn $5bn $6bn Source: 2021 Surplus Lines Stamping Office Mid-Year Report, WSIA
“With all the wildfire activity the last few years, carriers’ risk tolerance has changed, and capacity has shrunk. As a result, our book of personal lines business has been adversely affected” Travis Blackford, Hull & Co.
www.ibamag.com
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Our Brokers Trust Us with Their Best Clients “The most important thing we can do to earn that trust is to perform. It is really easy to sell Safety National’s offerings because everyone here genuinely believes that we are providing the best products and services in the industry. I am able to tell people to trust us with their business because we live up to our promises.”
– Rob Leitner, SVP Business Development
Rob Leitner with members of Business Development
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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FEATURES
SECTOR FOCUS: E&S ally; Hull & Co. has seen 20% year-over-year growth in this market. The one dark spot, Blackford says, is personal lines in California. “With all the wildfire activity the last few years, carriers’ risk tolerance has changed, and capacity has shrunk,” he says. “As a result, our book of personal lines business has been adversely affected.”
REGIONAL PERSPECTIVE
MIDWEST
Compared with the slight gains in the first half of last year, the two Midwest stamping offices posted impressive numbers for the first half of 2021. Minnesota saw a 30.5% boost in premiums and a 6.4% increase in filings, while Illinois reported a 15.1% jump in premiums and an 8.7% increase in filings. In Illinois, strong gains in general liability,
“The wave of claims making their way through the court system right now is giving businesses concern about catastrophic claims” Kevin Doyle, Risk Placement Services excess general liability, E&O/D&O, cyber, umbrella, commercial auto physical damage and pollution have made up for retreating property categories, according to David Ocasek, CEO of the Surplus Line Association of Illinois. “The Midwest is trending along the same lines as the rest of the E&S marketplace across the country when it comes to rates and terms/conditions,” says Kevin
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Doyle, vice president for the western region and Chicago at Risk Placement Services (RPS). “Carriers are continuing to push rate increases and less willing to make exceptions on terms/conditions, and the severity of it is all based upon certain risk profiles.” Business classes like tough manufacturing and food accounts are seeing sizable rate increases in the property space, Doyle adds, while the casualty sector began to see a tempering of rates in the second quarter. Nationwide, Doyle says E&S growth is prevalent in sectors such as construction, transportation and manufacturing, as well as the umbrella, excess casualty and cyber product lines. “The past several years have brought many nuclear verdicts, and the wave of claims making their way through the court system right now is giving businesses concern about catastrophic claims,” he says. “This presents the umbrella market with a strong growth opportunity. On the cyber side, it’s challenging to go a week without hearing about a business that is coping with a cyber event. So the opportunity to provide consultation and help retail brokers and their clients transfer their cyber risk is increasing daily.” Plenty of challenges remain, though, which Doyle sees the E&S sector addressing with a consultative approach, as retailers and insureds tend to gravitate toward expertise. “Several professional lines remain very challenged, from public D&O to cyber,” he says. “On the casualty side, auto-related exposures also remain challenged because many carriers haven’t been able to profitably write transportation risks for a host of reasons.”
REGIONAL PERSPECTIVE
SOUTH
All four of the stamping offices in the South posted healthy premium increases in the first half of 2021. North Carolina reported the second highest premium growth of all 15 state stamping offices with a 34.1% increase, which Geoff Allen, COO of the
North Carolina Surplus Lines Association, attributes to growth in commercial property, general liability, excess liability, D&O and cyber liability. Texas, meanwhile, saw a 16.2% spike in premiums, despite a minuscule decline in transactions. Even with recent challenges, it’s been a banner year for growth, says Matthew Brady, vice president and managing director for Burns & Wilcox in the Dallas/ Fort Worth area. After a string of major natural catastrophes – including wildfires, hurricanes and floods – the market was hit with the pandemic and then Winter Storm Uri in February 2021. Among other things, the storm helped shift the appetite dynamic from northern and western Texas to coastal areas, Brady says, leading to, for example, increased submissions in Houston. “We also expect a pronounced hardening in the marketplace as winter-related storm claims in February are closed out, potential
“The excess & surplus market in the South region continues to harden and shows no sign of changing soon” Chris Siegel, Burns & Wilcox rate increases on the admitted side are filed, reinsurance costs increase and profitability targets are reviewed,” he says. The pandemic has caused the professional liability market to harden and has adversely affected the hospitality and retail sectors, although Brady says they are continuing to recover; pricing is increasing as capacity is cut. But challenges remain in property and general liability for the hotel/motel sector, which “was hit with large losses due to the winter storms,” Brady says. At the same time, growth opportunities abound in personal insurance, he says,
www.ibamag.com
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particularly with homeowner’s and dwelling fire in the southern part of the state, as Houston and coastal areas are more attractive due to rate adequacy. In Florida, the stamping office also posted strong results for the first half of 2021, with a 25.5% spike in premium and an 11.9% increase in filings. “The excess & surplus market in the South region continues to harden and show no sign of changing soon,” says Chris Siegel, managing director for Burns & Wilcox in Florida. “Speaking specifically to Florida, we are seeing stronger underwriting positions and increases in rates on a weekly basis. This is across the vast majority of business lines written in the state.” Remote working, manufacturing slowdowns and pandemic-related business closures have provided relief for workers’ compensation. Lawsuits have hardened the casualty market. Losses and modeling changes have impacted property rates. And the turmoil in the London market and consolidation of MGAs and wholesalers has condensed specialty players to large, national firms and some smaller companies that are ripe for acquisition, Siegel says. Locally, tri-county aggregate (in MiamiDade, Broward and Palm Beach counties) is priced exponentially higher than last year and more than double from five years ago. The well-publicized collapse of a condominium building in a Miami suburb in June hit property & casualty markets and is expected to drive significant underwriting guideline changes going forward. The hospitality sector in Florida also continues to be challenging, due primarily to the shrinking of available markets. “We as an industry will continue to face these hard market conditions to make up for a number of years of aggressive capital influx, which drove prices to all-time lows,” Siegel says. “It is vitally important that our retail client partners recognize the value of placing their business with reputable MGA/ wholesale partners that continue to maintain sound underwriting principles sought out by extended partners in London.”
REGIONAL PERSPECTIVE
NORTHEAST
While Pennsylvania posted the most impressive premium growth in the Northeast in the first half of 2021 at 28%, New York – a bellwether for the region – is doing much better than last year. In 2020, New York had the lowest premium growth of any stamping office; in the first half of 2021, premiums in the New York E&S market grew by 19.4%, while filings were up 2.8%. The year-over-
increases and market movement. We’ve seen movement that suggests, in many cases, what might have been business in the admitted market three or four years ago is business in the excess line market now.” One growth opportunity Maher highlights is construction risk, which comprises a huge portion of the New York E&S market due to its danger levels and prohibitive New York state labor laws that add liabilities to owners and general contractors. Due to its unique risks, New York construction remains an E&S product, Maher says.
“We’ve seen movement that suggests, in many cases, what might have been business in the admitted market three or four years ago is business in the excess line market now” Dan Maher, Excess Line Association of New York year increase in premiums is approximately triple the increase from mid-year 2019 to 2020, says Dan Maher, executive director of the Excess Line Association of New York, who attributes the difference to the negative impact of COVID-19 in 2020. “Premiums per transaction clearly are higher,” Maher says. “We’re not necessarily seeing that many more transactions … and that is probably the hallmark of the market right now. There are lines of businesses like excess liability, umbrella liability, D&O and cyber where we’ve seen substantial premium
As for challenges, Maher points to social inflation driving claims into excess and umbrella layers. “Claims that historically probably would not reach those layers are starting to reach those layers based on jury verdicts and even settlement values,” he says. “In D&O, you have more class action lawsuits arising on IPOs or mergers and acquisitions. Cyber liability is being pressed by ransomware and other covered losses – so you’re seeing the cyber markets react, and it’s becoming a more mature marketplace.”
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FEATURES
BROKERAGE INSIGHT
Preparing for the next pandemic Martin South, president of Marsh US and Canada, is working with government stakeholders to figure out how to bolster pandemic resilience MARTIN SOUTH, president of Marsh US and Canada, has spoken out publicly about pandemic resilience and the necessity for public-private partnerships to address future health crises. On July 22, South served as a witness at the US Senate Committee on Banking, Housing and Urban Affairs’ hearing on how to address future pandemic risk. “COVID-19 has affected every one of us personally and professionally,” South said in the hearing. “While the pandemic is first and foremost a human tragedy, we are deeply concerned about its impact on the global economy and on our clients.” Marsh McLennan provides insurance brokerage and risk advisory services to nearly 170,000 businesses, nonprofit organizations and public entities in the US and Canada. The firm’s role, according to South, is “first and foremost to be an advocate for clients,” which is why Marsh McLennan is calling for a feasible public-private solution for pandemic risk. Marsh McLennan’s expertise in pandemic far precedes COVID-19, South pointed out. “We have a longstanding involvement with the World Economic Forum’s annual Global Risks Report, which has long warned of the likelihood and potentially high impact of a global pandemic. In 2017, our company helped the World Bank structure the firstever pandemic risk bonds. In 2018, Marsh developed an innovative insurance product,
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called PathogenRX, to provide pandemic business interruption coverage for key industries … We are also collaborating with international organizations to help mitigate the risk from vaccination programs for lowerincome countries and regions.” In addition, South said, Marsh McLennan has engaged in discussions with 40 governments worldwide since the start of the pandemic. “There is clear interest in many regions for government involvement in solutions at the country or even regional level,” he said, adding that it’s imperative to use the global experience from COVID-19 to help build stronger and more resilient economies ahead of the next pandemic. Over the past year, it has become clear that property and liability policies “are severely limited in their ability to respond to pandemicrelated losses,” South stressed. As such, many insurers are now excluding coverage for pandemic risk from all policies – and they’re
expected to continue to do so in the future. “The magnitude of global economic losses; the difficulty in predicting what actions governments will take to contain infectious disease; and the potential for rapid, drastic changes in consumer demand make pandemic risk impossible for insurers and reinsurers to assume by themselves,” South said. Marsh McLennan believes that certain parts of pandemic risk are insurable. South pointed to other catastrophic risks covered today by insurers, such as wildfire, earthquake, hurricane and the ever-increasing threat of cyberattacks. “If we create the right economic incentives for insurers, policyholders and the government, insurance can serve its traditional function of mitigating risk,” he explained. “Over time, the right risk program can spur new technologies, ways of working, services, insurance products and processes to ultimately chip away at the enormous losses associated
A CHORUS OF SUPPORT Martin South isn’t alone in calling for a public-private partnership program to address pandemic risk. Chubb chairman and CEO Evan Greenberg was one of the first to describe a global pandemic as “uninsurable for business interruption coverage by the insurance sector alone”; Greenberg testified along with South in the Senate hearing on pandemic risk. Zurich group CEO Mario Greco has also spoken out about the need for a government backstop, saying that a global pandemic “cannot be passed to the private sector alone [because] this is a global and undiversified event, which is typically something that insurance companies cannot face by themselves.”
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MORE ABOUT THE PANDEMIC RISK INSURANCE ACT OF 2020
SPONSOR Rep. Carolyn B. Maloney (D-NY)
DATE INTRODUCED May 26, 2020
LATEST ACTION Referred to the House Committee on Financial Services
“Pandemic risk [is] impossible for insurers and reinsurers to assume by themselves” with pandemics. That, in turn, can help make pandemic risk more manageable and enable our economy to build the necessary resilience it needs for the future.” South added that governments should leverage the insurance industry’s expertise to create a public-private partnership program that incorporates lessons learned from COVID-19 to build back stronger and protect against the future pandemics that will inevitably occur. “There are many past examples of how governments and the private sector have come
together to reduce risk and restore insurability, whether it be the establishment of fire brigades after the Great Fire of London of 1666 or the passage of the Terrorism Risk Insurance Act … in the aftermath of September 11,” he said, pointing out that the insurance industry and the government have a long and successful track record of partnering to enhance risk management techniques and increase society’s resilience. Although pandemics have occurred many times, South noted that “the economic impact of COVID-19 has been of a different
WHAT IT WOULD DO The program would provide compensation to insurers if they incur losses as a result of coverage related to pandemics and disease outbreaks; it would be triggered when aggregate industry insured losses for participating insurers exceed $250 million magnitude.” The potential severity of future pandemics once again calls on government action to create a public-private partnership program, he argued. “The key to building a more proactive and agile response to the next pandemic will be an insurance and risk management partnership with the government that helps facilitate coverage, aligns the desires of both insurers and policyholders, and requires mitigation practices,” he said. “An efficient and effective pandemic insurance program will accelerate recovery and build resilience.”
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SPECIAL PROMOTIONAL FEATURE
PROGRAMS
Making programs stand out Niche programs need and deserve exclusivity and specialty claims to build a solid foundation for profitable growth. Leaders from Great American Alternative Markets tell IBA why their program model is a notch above other program carriers
THE ALTERNATIVE MARKETS division of Great American Insurance Group is passionate about exclusivity and specialty claims. “If you don’t have exclusivity, you don’t have a program,” says Rich Suter, divisional president of Great American Alternative Markets.
as building their book of business and delivering high-quality service, while preventing their own carriers from ‘cannibalizing’ their programs. In addition, exclusivity can mean territorial and/or class exclusivity. “There’s also exclusivity in terms of product and service offering,” Suter says. “We
“If you don’t have exclusivity, you don’t have a program” Rich Suter, Great American Alternative Markets By exclusivity, Suter means providing a specialist underwriting approach and closed distribution model to help prevent multiple quotes and confusion, as well as a strict program delineation. With it, program managers can focus on important tasks, such
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very often develop unique forms and coverages for programs that only they can get. And oftentimes, we’re introducing some type of unique approach to claims that only they have access to. We can also provide exclusivity in how we tailor and customize the
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coverages and services provided.” In one example, Great American created an exclusive program for Heritage Insurance, a Pennsylvania-based insurer of musical instruments. “We created a new, unique form to meet their customers’ specific needs,” Suter says. “And no one can get that form other than Heritage – that’s exclusive to that agency.” In another example, Kona Ice CEO Tony Lamb established an exclusive relationship with Great American when he signed on to a captive risk-sharing insurance arrangement for his franchise owners in 2019. Until then, he’d been collaborating with his insurer, Cornerstone Insurance, to help cover his North American franchisees by leveraging a variety of underwriters in different states. The program through Great American concentrates on primary admitted property & casualty policies and workers’ comp coverage. “It’s been great as far as their underwriting experience, working with a single underwriter,” says Mike Roaden, the co-founder of Cornerstone. “They know the market. We brought everything to them in the beginning. They researched it; they underwrote it.” Roaden considers the exclusive relationship between Kona Ice and Great American to be a great way to stabilize rates while improving coverage and getting the best value for franchise owners.
Specialized expertise Great American Alternative Markets is equally enthusiastic about specialty claims. Whether it’s musical instruments, shaved ice, elevators or other specialty niches, the company goes out of its way to find and hire specialists in each industry to handle claims for that industry. Referring to an elevator program Great American launched in 2016, Suter says that
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SPECIAL PROMOTIONAL FEATURE
PROGRAMS
“it was very important for the agency to be involved in claims upfront – more involved than many of our other agents want to be. They have a lot of unique experts and attorneys who have backgrounds in elevator and escalator mechanics and understand all of the technical aspects of that industry.” Then there’s Kona Ice. Prior to its relationship with Great American, the company was reliant on geographically dispersed carriers and multiple claims specialists, so Lamb says it wasn’t unheard of for trucks to be sent to generalist repair shops.
the same thing. He says that once body shops realize that they’re dealing with someone who knows what he’s talking about, things go smoothly. “I think that’s why our claims handling really sets us apart from the rest of the marketplace,” Naber says. “All we do are specialty programs, so our claims handlers are program-minded people. Because we have dedicated claims teams and adjusters for each program, they know the ins and outs of each program, so we don’t have the issues that generalist adjusters have.”
“Because we have dedicated claims teams and adjusters for each program, they know the ins and outs of each program, so we don’t have the issues that generalist adjusters have” Paul Naber, Great American Alternative Markets “So we would have to rely on the latest and greatest claims agent who would take it to ‘Jimmy’s Auto Body’ – a $130,000 ice cream truck,” he says. “And [Jimmy] didn’t know where to start. It was just tremendously archaic work to get this done.” By contrast, Great American was able to find just the right specialist to take on these and other auto challenges: Paul Naber. Helping to oversee the fleet of trucks that comprise the Kona Ice enterprise, as well as handling classic car claims for Grundy Insurance, Naber is a natural. Now in his 40s, he’s been working in and running auto body shops since he was 15. Unlike many claims adjusters, he’ll notice if body shops are adding filler charges or charging twice for
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Roaden agrees. He saw firsthand how Great American went to Kona Ice and figured out how each of the trucks and trailers were made and how to fix them. “The good thing is that we have great communication between Kona corporate’s repair team, and their equipment is so proprietary that we need specialized knowledge for a positive claims experience,” Roaden says. “And it’s just been very, very good.”
Creating stability That’s exactly what Great American Alternative Markets is looking for – lasting relationships with promising enterprises. “We’re striving to be a long-term
ABOUT GREAT AMERICAN INSURANCE GROUP Great American Insurance Group’s roots go back to 1872 with the founding of its flagship company, Great American Insurance Company. Based in Cincinnati, Ohio, Great American Insurance Group is engaged primarily in property & casualty insurance, focusing on specialty commercial products for businesses. Great American Insurance Company has received an A (Excellent) or higher rating from A.M. Best for more than 110 years; its most recent rating evaluation was A+ (Superior) on January 28, 2021. The members of Great American Insurance Group are subsidiaries of American Financial Group (AFG), also based in Cincinnati, Ohio. AFG’s common stock is listed and traded on the New York Stock Exchange under the symbol AFG. Policies are underwritten by Great American Insurance Company, Great American Alliance Insurance Company, Great American Assurance Company, Great American Insurance Company of New York and Great American Spirit Insurance Company, which are authorized insurers in all 50 states and Washington, DC.
player that provides stability to profitable programs,” Suter says. “Otherwise, you’re dealing with a constant churn of markets coming in – a whole lot of business – and they create a whole lot of underwriting loss and get shut down. Whether it’s a department or a company, we are very picky about who we deal with. And that focus on profitability is good for all involved because it creates stability and staying power in the market.” To learn more about Great American Alternative Markets, please contact Savannah Hayes at 513-412-9407 or shayes3@gaig.com.
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Is your program feeling cramped? Enjoy program exclusivity & room to grow with Great American.
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Great American Insurance Group, 301 E. Fourth St., Cincinnati, OH 45202. Policies are underwritten by Great American Insurance Company, Great American Assurance Company, Great American Alliance Insurance Company, Great American Insurance Company of New York and Great American Spirit Insurance Company, authorized insurers in all 50 states and the DC. © 2021 Great American Insurance Company. All rights reserved.
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SPECIAL PROMOTIONAL FEATURE
TECHNOLOGY
The big data differentiator Leaders from Nationwide outline how the company is leveraging advanced technology to gain an edge in the E&S marketplace
IT’S AN EXCITING time in the E&S market, where several dynamics are creating opportunities and challenges. In times like these, a competitive advantage like Big Data – the ability to digitally sift through millions of lines of information and identify trends – can allow E&S insurers to discover those opportunities and mitigate the challenges. Jude DiBattista, chief casualty underwriting officer for brokerage individual risk at Nationwide, attributes the current boom in the E&S space to three factors: poor historical portfolio performance, new catastrophetype losses and social inflation. He says these factors have led to a pricing correction across E&S, particularly in segments such as real estate, construction and transportation. “These factors allow us to be innovators in areas that are in need of creative solu tions,” DiBattista explains. “Meanwhile, the COVID-19 pandemic gives the industry an opportunity to help businesses reopen and provide loss control recommendations, among other things.” “This is probably the most unique market environment that I have ever experienced,”
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adds John Anthony, vice president of E&S contract commercial P&C at Nationwide. “So many different compounding factors, from COVID implications, legislative and social inflation issues, and capacity changes within the marketplace – whether it’s an influx or a repeal of capacity – are creating opportunities within the E&S space. It seems like it’s changing more rapidly than I’ve ever experienced.” These conditions create an environment where leveraging data can mean the difference between staying stagnant and being prepared to seize opportunities that may catch others off guard.
Harnessing the power of data Known for nurturing specialists rather than generalists, Nationwide thrives on identifying challenges and opportunities and leveraging the latest technologies to make the most of them. DiBattista says this provides a deeper understanding of the industries Nationwide focuses on and enables it to improve efficiencies to make faster and better decisions. “The use of this Big Data is really going to
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help us reshape how we underwrite, evolve in the market, and identify new products and emerging trends,” he says. “It will also allow us to obtain a forward-thinking view of our portfolio and the market. Historically, we always relied on analyzing the past in order to predict the future – studying five-year loss trends – but it’s really that forward-thinking view that will allow us to be successful and preserve long-term profitability. This is the value-add we can bring to our customers, and it enables us to address the challenges and opportunities we’re seeing today and into the future.”
existing and potential partners. “Within the contract space, we’ve developed what we refer to as our underwriting insights team, which is the nerve center of our contract P&C and excess underwriting department,” Anthony says. “This team is leveraging advanced analytics and modeling to empower all our internal underwriters and our agency partners with the data and information they need to make better decisions. In the end, this helps us optimize our portfolio and match exposure to premium.” At the same time, DiBattista has been using Big Data and technology to sift
“We have 38 years of E&S-specific data that is unmatched anywhere else in the industry, and our ability to glean information from that data is a differentiator for us and our policyholders and partners” John Anthony, Nationwide Meanwhile, Anthony says the opportunity to leverage Nationwide’s commitment to investing in data and analytics, predictive modeling, machine learning, and artificial intelligence is a key component of what drew him to the company. “We have developed an entire advanced analytics team,” he says. “We have 38 years of E&S-specific data that is unmatched anywhere else in the industry, and our ability to glean information from that data is a differentiator for us and our policyholders and partners.”
Forging data-driven solutions At Nationwide, data is driving a forwardthinking strategy to provide value to both
through submissions and study the overall market, including trends and developments. This allowed him to identify a potential need to bridge the gap between primary and excess coverages. He applied Big Data to this question to study and find a creative solution for specific classes and segments. “With Big Data, we can really provide creative solutions and obtain deeper understandings of the niche segments we focus on,” DiBattista says. “This enables us to differentiate both on the underwriting side and across our entire organization – from our loss control services that help keep our policyholders safe and reduce the risk of a claim, to our claims experts, who are experienced, responsive and deliver fast claims service.”
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SPECIAL PROMOTIONAL FEATURE
TECHNOLOGY
Anthony doesn’t take Nationwide’s capabilities for granted. He says most players in the E&S marketplace strive for sophistication in their approach to risk selection and appetite construction and have a data-driven decision-making mentality. But he says few are committed to deploying the resources and organizational structure to be successful.
An appetite for mutual success The unlimited potential of data is creating boundless opportunities for the insurers that leverage it alongside more traditional relationship-building strategies. “We talk a lot about digitization within our industry, and it really is the future of our world and our industry in particular,” Anthony says. “We’re committed to providing dynamic and adaptive digital experiences at Nationwide, and we’ve made a large investment of both time and resources to ensure
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“Historically, we always relied on analyzing the past in order to predict the future, but it’s really that forwardthinking view that will allow us to be successful and preserve long-term profitability” Jude DiBattista, Nationwide we’re optimizing the ability to offer products in a digital environment. At the same time, we understand that ultimately, this is a people business. We’re committed to people and the relationships all the way throughout the transaction as we move forward and evolve as an organization.” Both Anthony and DiBattista view Big Data and advanced technologies as a way to
facilitate the ultimate goal of delivering an optimal customer experience. “That’s why we’re invested heavily in those analytical tools and resources,” Anthony says. “To differentiate our engagement with our partners is our number-one focus, and establishing the deep relationships between our underwriting teams and agency partners is the cornerstone of our company.”
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email iba@keymedia.com
Drewry’s 1964 Pontiac GTO was his first muscle-car purchase
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Years Drewry has owned his 1964 Pontiac GTO
17
Number of cars he currently owns
14
Drewry’s age when he began working on cars
DRIVEN TO EXCEL Auto insurance specialist Rick Drewry’s passion for vehicles is evident both in the office and in his garage RICK DREWRY lives and breathes cars. In addition to his work as a senior specialist for collector vehicles and motorsports at American Modern Insurance Group, he also spends a lot of time restoring cars. “I grew up in a car family, so I really couldn’t escape it,” Drewry says. “Both my
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passion for collector vehicles and my mechanical aptitude to restore them came from my dad. Now I’m even buying project cars for my kids, who are just as passionate as I am about the hobby.” Drewry adds that working on cars for most of his life has taught him valuable
lessons. “Car restorations rarely go exactly as planned,” he says. “In fact, I can’t think of a single one that actually went smoothly. Being able to quickly adapt and think through how to solve an issue or problem is a skill I’ve learned through car restoration that also applies to my everyday life.”
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