IBAMAG.COM ISSUE 3.05
THE
NEXT GENERATION How to attract them, train them – and keep them working for you
OIL & GAS HOW THE PRICE FALLOFF IS AFFECTING PRODUCERS
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KEEP MORE REVENUE A SIMPLE SOLUTION FOR BOLSTERING YOUR RETENTION RATE
COMMERCIAL AUTO CAPITALIZE ON A NEWLY REVVED-UP MARKET
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FEI-I/B JU
ISSUE 3.O5
CONNECT WITH US Got a story, suggestion or just want to find out some more information? twitter.com/InsuranceBizUS
CONTENTS
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UPFRONT 04 Editorial
The industry’s talent woes
FEATURES
32
PERSONAL LINES REVENUE
COVER STORY
24
ATTRACTING THE NEXT GENERATION
Solid tips for increasing your retention rate
Will Nepal’s earthquake underline the need for earthquake insurance?
10 News analysis
Federal premium increases could bolster the market for private flood insurance
14 Technology update
How mobile technology can help producers up their game
34
PEOPLE
As the economy recovers, so does the market for commercial auto insurance
LIFE IN THE FAST LANE
16 Workers’ comp update
The problem with rising pharmacy costs
18 Opinion
Adam Mitchell explains why technology isn’t a passing fad
FEATURES 38 Agency insight
New Jersey’s Scirocco Group
PEOPLE
Mike Pilla made Technical Risk Underwriters into a success by never losing sight of the people behind the numbers
2
08 Head to head
This month’s big movers, shakers and new products
FEATURES
20
Market predictions for the second half of the year
12 Intelligence
Millennials have largely avoided careers in the insurance industry – here’s how you can change that
INDUSTRY ICON
06 Statistics
44 Producer profile
When he’s not selling insurance to beekeepers, Kevin Rader is shaping policy in the Florida State House
FEATURES
40
SURVIVING THE SWAMP
What does the soft oil & gas market mean for insurers in the space?
47 Career path
Canadian Keith Doan outlines his path to the US insurance industry
48 Other life
Luke Mongin is on the hunt – for ducks
IBAMAG.COM CHECK IT OUT ONLINE
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F E
FEI-I/B JUNE 2015 - Trucking.qxp_Layout 1 5/21/15 3:43 PM Page 1
A&E Architects & Engineers
EIL Environmental Impairment Liability
HMA Hazardous Materials Trucking
O&G Oil & Gas
FFX Follow Form Excess
LEL Lender Environmental Liability
PPL Products Pollution Liability
HMA
ECC Engineers Consultants & Contractors
Hazardous Materials Trucking
Freberg Environmental Need environmental coverage? At Freberg Environmental all you have to do is pick your program. From Architects & Engineers, to Environmental Contractors, to Lender Liability and Products Pollution, we have the environmental insurance program you need. With nearly 25 years of environmental expertise, we are not the new kid on the block. Freberg underwriters are among the best in the business and they get things done. Quickly. Over the years, Freberg Environmental has become the “go-to” environmental market for innovative solutions to all kinds of environmental risk. We have earned our reputation by providing the fast, friendly and knowledgeable service you have come to expect. Pick your program.
A&E Architects & Engineers EIL Environmental Impairment Liability O&G Oil & Gas FFX Follow Form Excess LEL Lender Environmental Liability PPL Products Pollution Liability ECC Engineers Consultants & Contractors EIL Environmental Impairment Liability
Call Freberg Environmental.
Freberg Environmental Insurance 2000 South Colorado Boulevard Tower II • Suite 800 • Denver, CO 80222 Toll Free: 800.377.4152 • Fax: 303/623-8101 FEIinsurance.com In CA dba: FEI, Insurance Services
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UPFRONT
EDITORIAL
The industry’s internal struggles
T
he insurance industry is facing a hiring crisis, which, for most, is hardly a secret. Given the aging workforce and little consideration of insurance as a viable career option among job hunters, agencies and brokerages are facing a tall order in adequately preparing for the future. And so far, the industry’s performance has been seriously lacking. A recent study from Reagan Consulting reveals that agencies are posting a troubling 56% success rate in hiring new employees. Even more concerning, many agencies are not hiring at all – 55% to 60% of firms are ‘under-hiring,’ or failing to bring on enough new producers to achieve their growth targets and perpetuate their business successfully. That trend was reflected again in this month’s Next Generation survey by Insurance Business America. A full 62% of readers told us their agency was not prepared to address the oncoming talent gap, while 25% said they currently have no employees under the age of 35. From there, it’s not difficult to make the leap to a perpetuation crisis in the near future.
A recent study … reveals that agencies are posting a troubling 56% success rate in hiring new employees After all, hiring, developing, training and mentoring a producer to become an agency owner is difficult and costly. And, if industry reports that such attempts are successful just a quarter of the time are correct, a very different independent agency landscape will emerge – one marked by continued M&A activity, greater consolidation and a shrinking agency workforce. More immediately and personally, it could affect agency valuation for those who choose to sell out when they retire. Values paid for agencies and brokerages have never been higher – deal multiples are up more than 10% in the past year and a half – but the fact remains that no one is going to want to buy an agency filled with aging assets. The most valuable agencies today are those that could perpetuate themselves, even if they choose not to. To maximize their value to the greatest degree, agency owners must get younger talent in the system. With our Next Generation series, IBA hopes to help agencies achieve that goal by honing in on some of the key challenges independent agents are facing and the innovative solutions some are taking to solve them. We hope you find it useful as you prepare for the future. The team at Insurance Business America
www.ibamag.com JUNE 2O15 EDITORIAL Senior Journalist Caitlin Bronson Journalists Ryan Smith Tim Garratt Donald Horne Jordan Maxwell Copy Editor Clare Alexander
CONTRIBUTORS
SALES & MARKETING Vice President Cathy Masek Media Sales Managers Chris Wills Chris Anderson Marketing and Communications Manager Lisa Narroway
CORPORATE
Samantha Wright
Chief Executive Officer Mike Shipley
ART & PRODUCTION
Chief Operating Officer George Walmsley
Design Manager Daniel Williams
Chief Information Officer Colin Chan
Designer Joenel Salvador
Human Resources Manager Julia Bookallil
Production Manager Alicia Salvati Traffic Manager Kay Valdez
EDITORIAL INQUIRIES caitlin.bronson@keymedia.com
SUBSCRIPTION INQUIRIES subscriptions@keymedia.com
ADVERTISING INQUIRIES
cathy.masek@keymedia.com chris.wills@keymedia.com chris.anderson@keymedia.com
Key Media 78O7 E. Peakview Ave., Suite 115 Centennial, CO 80111, USA tel: +1 720 316 0151 www.keymedia.com Offices in Denver, Toronto, Sydney, Auckland, Manila
Insurance Business America is part of an international family of B2B publications and websites for the insurance industry INSURANCE BUSINESS AUSTRALIA peter.smith@keymedia.com.au T +61 2 8437 47OO
INSURANCE BUSINESS CANADA john.mackenzie@kmimedia.ca T +1 416 644 874O
INSURANCE BUSINESS NZ peter.smith@keymedia.com.au T +61 2 8437 47OO Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss
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5/7/15 10:37 29/05/2015 5:06:44 AMAM
UPFRONT
STATISTICS
Realities of the market
A major annual study reveals areas of growth and decline in the market for the rest of the year AS WE near the mid-point of 2015, certain market realities are becoming self-evident. Lines of cover in some sectors have shown an increase in turbulence over the previous months, and a major annual study, the Willis Marketplace Realities 2015 Spring Update, has revealed what we can expect over the remaining months of the year. In his introduction to the report, Matt
Keeping, chief broking officer for Willis North America, compares the current market in most lines of businesses to a river meandering downstream, ”with some approaching whitewater rapids and others possibly headed for a waterfall.” So, which sectors are headed for the dreaded waterfall, and which will float on the surface of decline?
CYBER RISK BY THE NUMBERS
$400 m
Highest limit available in the cyber risk market
10% to 100%+ Increase in primary premiums for companies with point-of-sale exposure
761
Number of unique cyber breaches throughout 2014
83,178,279
Total number of individual records compromised by cyber breaches throughout 2013 Source: Willis Market Place Realities 2015 Spring Update
ENERGY CAPACITY CONTINUES TO GROW
WHERE THE GROWTH IS
Capacity in the energy industry continues to reach record levels; Willis predicts an accelerated soft market for both upstream and downstream
Willis predicts each of these insurance markets will see growth over the next few months
Downstream capacity levels
Upstream capacity levels
7 billion
MARKET
7 billion
5.5 billion
5.5 billion
4 billion
4 billion 2012
2013
2014
2012
2013
2014
Sources: Willis Marketplace Realities 2015 Spring Update; Willis Energy Market Review April 2012, 2013, 2014, 2015
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INCREASE
Cyber for point-of-sale retailers
+125%
Errors and omissions, poor loss experience
+20%
Environmental combined with casualty
+15%
Environmental – PLL/EIL not marketed
+10%
Kidnap and ransom
+10% Source: Willis Marketplace Realities 2015 Spring Update
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THREE KEY AREAS OF RISK FOR 2015 Matt Keeping, chief broking officer for Willis North America, highlighted three key areas of risk that need to be monitored over the coming year:
1 2
Cyber-related losses – a matter of if, not when Global markets bring global risks – political risks from unstable nations around the world are unavoidable in a global business
3
Changing climate – even with cat losses down in the aggregate, changing climate brings potential for “widespread catastrophe” in increasingly populated areas
EXPECTED DECLINES
PROPERTY LOSSES CONTINUE DECLINE
One aspect of environmental insurance looks set for a collapse in the near future
With rates expected to take a dip over the coming months, worldwide property losses continued to drop over the previous 12 months.
MARKET
DECREASE
Environmental – PLL/EIL 5-year renewal
-25%
Property cat-exposed risks
-15%
Property non-cat-exposed
-15%
Trade credit
-10%
Marine
-10%
$65 billion
$64 billion $45 billion
Source: Willis Marketplace Realities 2015 Spring Update
$34 billion
2012
2013
2014
10-year average
Source: Willis Marketplace Realities 2015 Spring Update/2013 Spring Update
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NAPSLO
UPFRONT
HEAD TO HEAD
Will Americans get serious about earthquake insurance? Could the major earthquake that hit Nepal on April 25 refocus clients’ attitudes toward earthquake insurance?
Robert Hartwig
Jamie S. Darris
Glenn Pomeroy
President Insurance Information Institute
Account manager Roanoke Trade Services
CEO California Earthquake Authority
“No matter where they occur, deadly earthquakes ... prompt many Americans to assess their quake risk, and whether their properties are covered. California is where the likelihood of a major earthquake is the greatest, yet only around 10% of California’s homeowners have an earthquake insurance policy. I attribute this to the complacency that has set in since 1994, when California was last hit by a major quake. Perhaps Nepal will serve as a much-needed wake-up call.”
“The reason why most Californians are uninsured is not price as much as it is the deductible. I’m the treasurer for my condo association, and we’ve looked at procuring earthquake insurance for our building. However, our building is worth over $1 million, and a 10–15% deductible holds us back from recouping on the insurance. Why pay premium when you can’t meet the deductible? At the very least, we would have to come up with $10,000 per owner. We don’t have that kind of cash on hand.”
“The earthquake in Nepal certainly heightens the level of awareness of people in the States, and usually we can measure a slight increase here in California after a month or two. It was a horrible catastrophe, and events like that – or ones we’ve seen with Japan, Haiti and China in recent years – bring up concerns. That said, it’s not an easy sell, but there are strong signs pointing to an increase in interest once the effects of the Nepalese earthquake can be fully measured. ”
WHAT AMERICANS CAN LEARN FROM NEPAL A 7.8-magnitude earthquake struck Nepal on April 25 near the capital city of Kathmandu, followed by a 7.3-magnitude tremor on May 12. The death toll has now exceeded 8,000 victims, according to BBC News. The US Geological Survey has placed preliminary estimates the costs of damages between $100 million and $10 billion, whereas IHS predicts that the recovery could exceed $5 billion, or 20% of Nepal’s GDP. This earthquake may serve as a cautionary tale for the US. New research from the US Geological Survey indicates that 143 million Americans live in an earthquake-prone area, and potential losses could average $4.5 billion.
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NAPSLO_BIA_fullpg_print3.qxp_Bus Ins Amer 5/18/15 12:39 PM Page 1
Finding the safety valve can be easy.
NAPSLO members are specialists who create innovative solutions for nonstandard insurance risk. Count on them to deliver custom, cost-effective solutions that are expertly tailored to meet your specific insurance needs. NAPSLO members...where complex risk meets innovative solutions.
National Association of Professional Surplus Lines Offices
www.napslo.org
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> FIND A
NAPSLO MEMBER
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UPFRONT
NEWS ANALYSIS
Wading into flood insurance Recent moves by FEMA have prompted more flood insurance offerings from private carriers ACROSS THE country, flood insurance customers are experiencing sticker shock. Thanks to provisions in the 2014 Homeowner Flood Insurance Affordability Act [HFIAA], April marked the rollout of premium increases ranging from 15% to 18% on primary residence properties, and up to 25% on secondary homes as well as homes that have suffered repeated losses. Policyholders must also deal with new surcharges: $25 for primary homes and $250 for all others. The increases are part of Congress’s attempt to pay down some of the $24 billion debt incurred by the National Flood Insurance Program [NFIP] after large losses
rates, the market for private flood insurance has never been stronger. For independent insurance agents, that means real options for assisting home and business owners in finding affordable coverage for a rising risk. Though there are no independent figures on the size of the private flood market, there are strong indications that the appetite among carriers and MGAs is growing. In the past year, companies like Affinity Insurance Services, The Flood Insurance Agency and WNC Insurance Services have released a range of products through the Lloyd’s market designed to address flood risk and serve as an alternative to NFIP policies. These policies fulfill flood insurance
“In the coming three years, a lot of interesting things will happen. The private flood market is about to burst” Dan Freudenthal, Agency Flood Resources from Hurricane Katrina and Superstorm Sandy. Premiums will increase 25% each year, reducing the number of NFIP policies receiving premium subsidies until they reflect the residence’s actual risk. The efforts to downsize the NFIP debt have had another effect, however – thanks to increasingly disgruntled policyholders and a move toward more actuarially sound
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requirements for homes financed through federally backed mortgages and, depending on the home or business’s location and risk profile, can be substantially cheaper than what is available through NFIP. Dan Freudenthal, president of Floridabased brokerage Agency Flood Resources, says the opportunity is great for both insurers and agents in such an environment.
“We are seeing that, as NFIP costs increase, people are picking up the phone, calling their agent and saying, ‘What do you have as an alternative?’” says Freudenthal, who notes that the recent premium increases are the highest he’s seen in 15 years. “In the coming three years, a lot of interesting things will happen. The private flood market is about to burst.” The road to such a dynamic and sustainable private market, however, is still fraught with obstacles. For one, the AIR and RMS modeling programs currently used by flood insurance underwriters are outdated and often deliver inaccurate information regarding the level of risk at a certain property. Without a high degree of certainty, many carriers aren’t too anxious to begin taking on flood risk – particularly in areas already exposed to flooding, hurricanes and other natural disasters. Second, NFIP rates are still too low to
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THE TOP 10 STATES FOR FLOOD INSURANCE CLAIMS New Jersey: 63,805 New York: 52,986 Louisiana: 10,574 Connecticut: 5,411 Florida: 3,096 Mississippi: 1,788 Texas: 1,527 Delaware: 1,252 Maryland: 1,237 Virginia: 1,147 Source: NFIP, 2012
FLOOD POLICIES CURRENTLY IN FORCE
1,701,039 Building coverage only
90,103
Contents coverage only
3,451,143
Both building and contents coverage Source: FEMA
entice many carriers to offer their own flood products. From 2003 to 2012, annual losses or paid claims through NFIP averaged $4 billion a year, while the average amount of premiums written was $2.6 billion.
real about pricing, the private market can’t compete for risks that currently flow through that program,” Kelley says. “That’s still quite a way off. There are still caps on rates, and a 25% increase doesn’t make them actuarially
“As the private market starts to develop, I envision new products and new solutions to flood insurance risks” Brady Kelley, NAPSLO Getting to rates where NFIP will break even is vital for a healthy private market, and NAPSLO executive director Brady Kelley doesn’t see that happening in the near future. “The NFIP rates have been woefully inadequate for a long time. Until NFIP gets
sound.” Yet that doesn’t mean there isn’t a future for a private flood market. NAPSLO is currently working to ensure the passage of a congressional bill that Kelley says may spur new solutions to flood risk.
The Flood Insurance Modernization and Market Parity Act of 2015 would correct an oversight in the 2012 Biggert-Waters Act, which failed to include E&S insurers as eligible to provide private alternatives to NFIP policies. Surplus lines carriers are not explicitly banned via Biggert-Waters – and thus far, they have not encountered opposition from regulators – but NAPSLO is hoping the clarification will preserve its members’ place as a provider of supplemental flood insurance. From there, a private primary market will be easier to grow. “A lot of innovation comes from the surplus lines market,” Kelley says, “and as the private market starts to develop, I envision new products and new solutions to flood insurance risks that may increase because of this bill and the Biggert-Waters Act.”
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PRODUCTS
UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Arthur J. Gallagher
Burns-Fazzi, Brock & Associates
BFB provides compensation consulting services specifically for credit union executives throughout the US
Arthur J. Gallagher
Integrated Healthcare Strategies
The healthcare HR organization has locations in both Kansas City, Missouri, and Minneapolis
Constellation
Arkansas Mutual
The medical professional liability insurance provider will become the third Constellation member company
Hub International Limited
The Holmes Organization
The Tulsa-based multiline property and casualty, employee benefits, and personal lines brokerage expands Hub’s Midwest presence
Integro
Kite Warren & Wilson
The UK-based firm specializes in marine hull and liability coverage and financial lines
Patriot National
Candid Investigation Services
Candid will become part of Patriot’s investigative services subsidiary, Contego Services Group
Risk Strategies
Northwest Comprehensive
The acquisition will strengthen Risk Strategies’ presence in the employee benefits space in Chicago.
Great American Insurance Group expands pollution capacity
Great American Insurance Group announced that it is expanding policy limits on its complete pollution product line. The new capacity will allow qualified risks to secure limits of $50 million per loss/$100 million policy aggregate limits of liability – some of the highest limits available in the environmental insurance marketplace. Great American’s environmental practice covers a variety of industries; products include premises environmental liability insurance, indoor air quality and mold liability insurance, contracting services environmental liability insurance and closure and post-closure financial assurance.
China’s Fosun International bids to take over Ironshore
Shanghai-based Fosun International made a move in May to take over US insurance company Ironshore. Fosun, which is controlled by Chinese billionaire Guo Guangchang, already owns a 20% stake in the property/casualty insurer and hopes to buy the remaining 80% for $1.8 billion. Fosun said the acquisition will bring “synergies for both parties in the prevention of currency risks, expansion of assets allocations and cooperation in reinsurance business.” Previously, the company – which is one of China’s largest and most aggressive private-sector acquirers – announced that the US insurance sector is a primary piece of its growth strategy. Fosun hopes to follow Warren Buffett’s strategy of taking an “insurance + investment” approach to business growth, allowing it to earn profit in both financials and assets.
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CNA launches new product liability coverage for life sciences
CNA Insurance has created a rare product liability policy for companies operating in the life sciences sector. The Life Sciences Products-Work Hazard policy is written in the admitted market and offers claims-made product liability coverage on a worldwide basis. With minimum premiums starting at $2,500, the CNA policy is available even to smaller risks. Limits of up to $10 million in the aggregate are available, and coverage can be expanded to include professional and technology liability on a combined, endorsed form.
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PEOPLE
PEOPLE ACE Group announces four new medical liability coverages
Multiline property/casualty insurer ACE Group has announced four new medical liability coverage endorsements available for skilled nursing facilities, assisted living facilities, independent living units and continuing care retirement communities. The new endorsements include media event expense, disciplinary proceeding defense, emergency evacuation expense and patient property damage coverages. The announcement on the heels of the US Department of Health and Human Services’ statistic that a whopping 70% of Americans aged 65 and older will need long-term care services.
Ironshore to lead umbrella insurance consortium
International property/casualty insurer Ironshore has announced that the specialty casualty unit of its European arm and its Pembroke Lloyd’s syndicate have joined with two others to form a new lead umbrella liability consortium. XXV Consortium will focus on underwriting commercial risk for USbased corporates through lead umbrella insurance, offering capacity limits of up to $25 million for occurrence, occurrence reported or claims-made policies. XXV Consortium will begin underwriting July 1, 2015 through Ironshore Europe Limited, and will be managed by Mark Hill, senior vice president of Ironshore Specialty Casualty.
NSM Insurance Group launches exclusive dentists program
NSM Insurance Group announced in April its new Insurance for Dentists [IFD] program. The program offers coverages including malpractice insurance, cyber liability, medical waste coverage, defense costs outside of the limit available, consent to settle, full prior acts coverage, new dentists’ credit and free tail at retirement. All coverage is provided as an exclusive program with Monitor, an admitted A+ XV rated carrier, and is available for all dental specialties and oral surgeons in practices of any size. IFD also offers risk management tools to insureds through Omnisure.
NAME
LEAVING
JOINING
NEW POSITION
Marvin Altamirano
N/A
Worldwide Facilities Insurance
Sean P. Connelly
Guggenheim Partners LLC
Arthur J. Gallagher
Chief information officer
John Connolly
N/A
Willis North America
Life sciences practice leader
George Daddario
N/A
JLT Re
Deputy CEO of North America reinsurance
John Davison
Euler Hermes UK
Equinox Global Ltd.
Head of claims
Ross Fisher
N/A
Surety & Fidelity Association of America
Vice chair of the board
Mark D. Greenberg
Carlton Fields Jorden Burt
Hinshaw & Culbertson LLP
Partner
Michelle Hoehn
N/A
Inland Marine Underwriters Association
Chairperson
Gardner Jones
Marsh LLC
ABD Insurance & Financial Services
Vice president of sales
Ulrich Kadow
N/A
Allianz Global Corporate & Specialty S.E.
Chief agent
Joseph Kucharz
York Specialized Loss Adjusting
Crawford & Co.
Executive general adjuster
John McClelland
AIG UK
American International Group
Head of portfolio solutions
Michael O’Connell
Aon Risk Services
Willis Group Holdings
Financial institutions industry leader for North America
Alicia Rawnsley
N/A
ID Federation
Business chair
Garrick L. Smith
Willis Re
Guy Carpenter
Managing director and US sales leader
Property broker
Marsh president takes on expanded roles
Marsh & McLennan announced in early May that its president and CEO, Peter Zaffino, has been appointed chairman of Marsh & McLennan’s Risk & Insurance Services segment, which includes Marsh and Guy Carpenter & Co. While Zaffino will continue to serve as Marsh president and CEO, his appointment represents a significant expansion of duties in the risk and insurance businesses of Marsh. Marsh said the appointment “further strengthen[s] the leadership team of our risk and insurance businesses” and praised Zaffino for outstanding management skills in retail and reinsurance.
Venture Insurance Programs gets a new CFO
Venture Insurance Programs announced the promotion of Chris Anciborenko to chief financial officer in late April. Promoted from director of finance for the programs business company, Anciborenko is now responsible for strategic financial planning and execution, budgeting and forecasting across all financial platforms, and change initiation and management. Anciborenko, who came to Venture in 2002 from Bankers Life and Casualty, also will oversee accounting and reporting, finance integration with operational management, and mergers and acquisitions and treasury management.
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UPFRONT
TECHNOLOGY UPDATE NEWS BRIEFS Insurance must adapt when driverless cars become the norm
Driverless cars are set to take the wheel in most instances by 2035, a new report from consulting firm IHS Automotive revealed. According to the analysis, the US can expect 11.8 million driverless cars on the road in the next 20 years. By 2050, IHS predicts, nearly all private and commercial vehicles will be selfdriving cars. This leaves limited time for the industry to settle complicated liability and rating questions, although proponents believe that insurers will be able to base auto rates as soon as 2030.
Insurers off the hook for IBM employee data breach
The Connecticut Supreme Court has ruled in favor of the Chubb Corporation subsidiary and Scottsdale Insurance Company, which were involved in IBM’s employee data breach back in 2007. Affirming the decision of a lower court, the judges unanimously decided that the insurers “were not obligated to defend or indemnify under their general and umbrella liability policies the loss of cyber data” resulting from 130 tapes containing employees’ personal information that fell off a truck in New York state.
US companies remain underinsured for cyber risk
The vast majority of US companies are significantly underinsured for cyber risk, according to a new report from the research firm Ponemon Institute, which found
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that companies are more likely to buy fire insurance than they are to buy a cyber policy. Much of that lack of market penetration has to do with ignorance surrounding cyber coverage. Many companies believe their general liability policies will cover cyber risk, while others mistakenly believe their companies are too small to be at risk of a data breach.
Google Compare to include agent support, insurer review tools
Google Compare for Auto Insurance is adding several new features to its site, including the ability for drivers to review their insurance providers, similar to popular ratings site Yelp. Because research suggests that consumers use the Internet as a springboard to speak with brokers on the phone or in person, Google Compare also will provide access to local insurance professionals who can assist with the application or renewal process. Google Compare also plans to launch a mortgage component to its site.
US-Canadian acquisition will create P&C tech powerhouse
Insurity, a provider of tech solutions for property and casualty insurers, has acquired Montreal-based insurance software firm Oceanwide. Insurity, which specializes in core processing applications and data integration, hopes to leverage Oceanwide’s vast client base, as well as its “proven rapid deployment and SaaS offerings.” The American solutions provider also believes Oceanwide’s expertise in specialty lines, small carriers and MGAs will complement its own experience as a large carrier.
Mobile technology redefines insurance New evidence-based tools can help brokers deliver more promising results Mobile technology represents a fundamental shift for all organizations and has far-reaching ramifications that will disrupt traditional business models, provide new sources of data and insight, impact customer loyalty and drive bottom-line results. Marketplace data has identified five key trends, which have strong implications for the future of mobile. First, people are using mobile devices as their primary channel to complete a transaction. However, data also shows that enterprises are often not meeting peoples’ expectations. The mobile experience needs to transcend any single type of device, and attention to design and usability are paramount. As consumers increasingly use their mobile devices to complete transactions, vast amount of data are being collected – data that, when analyzed, provides valuable insights into customer behavior and preferences that could not be gleaned any other way. Mobile is not just about devices like phones and tablets. It’s about technology becoming more instrumented, interconnected and intelligent. Finally, mobile is not just about businessto-consumer interactions. Increasingly, it is playing a key role within businesses to increase productivity, reduce costs and keep back-office functions secure. Businesses just starting out in mobile often treat it as a supplementary transaction channel, but his kind of thinking misses the transformative potential of mobile to empower
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your workforce to execute their day-to-day activities, improve internal processes, reach out to customers more effectively and reduce costs while increasing sales. With insurance, mobile is key in helping organizations transform the overall consumer experience. New mobile capabilities – like new payment structures that turn the mobile device into a digital wallet and mobile applications
“Mobile is key in helping organizations transform the overall consumer experience” that measure driving behavior – allow insurers to build customer value, generate loyalty and regain trust. New solutions include Risk Inspect, an app that allows underwriters to price profitable businesses faster and more accurately. Another example is the Retention app, which provides agents with timely, prioritized alerts about the status of their customers’ accounts, helping them better deliver excellent service and timely follow-up. Mobile technology is not simply a passing fad, and while there are always risks associated with using new technologies, there are more risks in not taking advantage of mobile. Contributed by Christine Haeberlin, insurance business development executive, and Christian Corso, global business services partner, IBM Canada
MOBILE ON THE RISE Mobile is changing how we interact with each other, what we expect as consumers, and how we work. Consider these facts: The average mobile phone user checks his or her phone 150 times a day 85% of adults expect a mobile transaction experience to be better than when they use a laptop or personal computer 81% of employed adults use at least one personal mobile device over the course of their day to accomplish a wide range of work activities
Q&A
Adam Hamm Immediate past president National Association of Insurance Commissioners [NAIC]
Fast facts Hamm serves as the North Dakota insurance commissioner, is a member of the State Bar Association of North Dakota and once worked as a prosecutor for the Cass County State Attorney’s Office
New guidelines for cybersecurity How long have the NAIC’s Principles for Effective Cybersecurity been in the works? The first task undertaken by the task force was to establish a set of guiding principles. An initial draft of 18 guiding principles was released for public comment in mid-March 2015. The initial draft was based on the Securities Industry and Financial Markets Association [SIFMA] guiding principles. Once the task force received extensive feedback from written and verbal comments, the principles were revised, and some of the principles were combined. The Task Force then adopted a final set of 12 guiding principles on April 16, 2015.
What key objectives does the NAIC hope to achieve? These principles serve as the foundation for protecting consumers’ personally identifiable information that is held by both insurers and insurance producers. The principles also will guide the state insurance regulators with their oversight of the insurance industry. A copy of the guiding principles can be found on the NAIC website.
Ultimately, what will the impact of these principles be for agents? Several of the task force’s guiding principles involve insurance producers/agents as well as insurers. Principle 2 addresses the safeguarding of confidential and/or personally identifiable consumer information that is collected, stored and transferred inside or outside of an insurer’s, insurance producer’s or other regulated entity’s network. Principle 7 addresses the planning for incident response by insurers, insurance producers, other regulated entities and state insurance regulators. This is an essential component to an effective cybersecurity program. Principle 8 addresses insurers, insurance producers, other regulated entities and state insurance regulators to take appropriate steps to ensure that third parties and service providers have controls in place to protect personally identifiable information. Lastly, Principle 12 recommends periodic and timely training, paired with an assessment, for employees of insurers and insurance producers, as well as other regulated entities and other third parties, regarding cybersecurity issues.
What would be your advice to agents? The days of transmitting someone’s personally identifiable information in an unencrypted manner is quickly approaching its end, so agents need to be cautious when communicating with their clients. Emailing personally identifiable information in an unencrypted manner is unacceptable, as is texting or using any other type of electronic device.
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29/05/2015 5:54:09 AM
UPFRONT
WORKERS’ COMP UPDATE
Pharmacy costs to hurt workers’ comp? US employees are expected to see higher pharmacy costs, which could be bad news for workers’ comp
dispensing rates leveling off, and the robust pipeline of specialty drugs, including the new Hepatitis C treatments. If left unmanaged, these issues could have a significant impact in pushing these increases even higher.” The increased costs will likely mean a similar rise in workers’ compensation costs. Already, even generic drugs like antibiotics, antidepressants and opioid painkillers are pushing premiums higher. According to
“For 2015 and 2016, there will be more pressure than relief on pharmacy cost”
Active employees in the US, as well as preand post-65 retirees, are expected to see pharmacy costs rise by low double-digits come 2016, according to a recent analysis by Aon PLC’s Aon Hewitt group. “Pharmacy cost increases before plan design changes are projected to be 9.5% in 2015 and will continue to rise to 10% in 2016,” said the report. Researchers added that a similar rate of increase will be seen in 2017,
NEWS BRIEFS
when pharmacy costs may rise by 10.5%. “Medical cost increases over the past few years have offset some of the higher pharmacy costs in the short-term, but for 2015 and 2016, there will be more pressure than relief on pharmacy cost,” said Tim Nimmer, global chief actuary for Aon Health. “This is primarily due to high price inflation for brand and specialty drugs, a slowdown in blockbuster drugs losing patent protection, generic
State commissioner recommends 10% premium cut
The state with the highest workers’ comp rates in the nation may be in for a premium cut. California Insurance Commissioner Dave Jones recommended a 10.2% rate decrease this week, which would bring the state’s current rate of $3.48 per $100 of payroll down about 5% lower than the current industry average of $2.59 per $100 of payroll. While the law stipulates that insurance commissioners can only recommend changes to comp rates – not enforce them – carriers typically set rates in line with recommendations.
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congressional testimony from workers’ comp professionals, such medications used in comp claims saw price increases ranging from 8.5% to nearly 2,050% in 2014 versus 2013. Those testifying urged the government to take action in preventing cost increases, laying blame on lax regulations that allow excessive consolidation and artificially inflated pricing. “Manufacturers of generic drugs that legally obtain a market monopoly are free to unilaterally raise the prices of their products,” said a November article published in the New England Journal of Medicine. “The Federal Trade Commission will not intervene without evidence of a conspiracy among competitors or other anticompetitive actions that sustain the increased price.”
South Carolina introduces opt-out legislation
South Carolina lawmakers have introduced a bill that would allow organizations to opt out of conventional workers’ compensation coverage, joining Texas, Oklahoma and Tennessee in considering such legislation. Dubbed the South Carolina Injury Benefit Plan Alternative, the regulations would require that minimum benefits remain comparable to state provisions. Although death and injury benefits can be nullified as the result of intoxication or ‘willful intent,’ the plan is set to operate on a no-fault basis.
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29/05/2015 5:11:05 AM
Q&A
Rebecca Shafer, JD President Amaxx Risk Solutions
Michael Stack, CPA Principal Amaxx Risk Solutions
Fast fact Together, Shafer and Stack co-authored The Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%
Is the workers’ comp ‘grand bargain’ really dead? What was your initial reaction to the ProPublica report alleging that high costs and legal loopholes have gutted the so-called ‘grand bargain’ of the workers’ comp system? MS: It’s funny – as an industry, we don’t like to think about the claims that go wrong. We pretend they’re not happening, but obviously there are pieces to the system that are not desirable. Not all players are playing the game the correct way. I think a lot of the attention brought to these situations can be positive, but it’s highlighting the train wreck. RS: The thing I found most surprising is that the report doesn’t mention the fact that costs are only out of control for companies not engaging in the best practices. Lots of companies don’t have this problem. This is only half the story.
How much of workers’ comp costs do you believe are under employers’ control? MS: I would say at least 50%. When we go into meet with companies, some of the recommendations we make result in a 20% to 50% improvement in their costs. They may even be able to control 75% to 80% of their costs by following best practices.
How can employers go about securing these kinds of cost savings? RS: One way is to control a carrier’s vendors, whether adjusters, durable medical equipment
Utah to return $12 million to policyholders
Utah’s insurer of last resort has issued a $12 million dividend to be distributed to various workers’ compensation policyholders, including 19,000 businesses. The Salt Lake Citybased Workers’ Compensation Fund said organizations that receive a portion of the dividend are guaranteed 6% of their 2014 premium. “Policyholders are receiving a dividend because we had better-thanexpected investment and underwriting results in 2014,”said president and CEO Ray Pickup.
providers or medical providers. All of these vendors are focusing on making a profit, even if it’s not the best thing for an employee. Employers should know all about these vendors and their fees in the account instructions. Yet in a room of 100 employers, there are probably only 10 that have reviewed their account instructions. That’s why we support a vendor day, in which all parties – the employer, the carrier and the vendors – meet and discuss how claims are being handled and what is stopping an employer from hiring a different medical provider or utilizing local occupational clinics.
How much of a role can brokers play in supporting these kinds of reforms? RS: The broker should have a huge role in facilitating the development of the relationship between the employer, the insurance company and the adjusters. The best brokers are actively involved, facilitating meetings between vendors used by the carrier and the company’s risk management team. MS: Brokers are [the ones] companies go to as an expert in workers’ comp – this is something we should be thinking about. Overall, there has been a lot of negativity with this report and almost fighting between carriers and employers. Our perspective isn’t as negative as that – let’s use this as a trigger to make sure we are implementing those best practices.
Young Hispanics in construction most at risk
Young Hispanic workers at small construction firms face the greatest occupational challenges of any demographic in the United States, according to a new report by the American Society of Safety Engineers and the National Institute for Occupational Safety and Health. Immigrants were found to be particularly susceptible to injury, since they are “unfamiliar with the risks they face on the job, standard safety procedures in the US and the regulatory infrastructure that protects their right to a safe workplace.”
Texas issues penalties against DWC
The Texas Commissioner of Workers’ Compensation has issued several administrative penalties against the Division of Workers’ Compensation [DWC], including $487,800 in fines for insurance carriers and $40,700 in fines for healthcare providers. The Commissioner charged these entities with failing to pay appropriate benefits to injured employees, failing to notify DWC of benefit termination in a timely manner and failing to respond to medical bills promptly. These fines were levied for the time period spanning January 1, 2015 and April 30, 2015.
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29/05/2015 5:11:12 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email iba@keymedia.com
Wanna make a bet? Are you banking on the idea that today’s technology will eventually disappear? You might want to rethink that gamble, writes Adam Mitchell WE’RE BOOKIES. That’s what we do with insurance, after all. We take educated guesses to place financial bets for people. Every day you either write new policies or renew old ones for people and businesses and, en masse, you’re betting that only a few of them will pay out. The other bet many brokers are making at the moment is that this Internet thing is a fad. They are actively betting that email will soon go the way of the beta tape and we will be back to carbon copy paper, face-to-face meetings and hanging our hats on ‘quality underwriting.’ I have news for you: Most brokers are making bad bets and pointing their businesses in the wrong direction. If you think this toothpaste will go back in the tube, you’re wrong. People across the globe, both young and old, are becoming addicted to the wonderful online world, and if you’re not in that space, you soon won’t exist to your clients or prospects. To take it one step further, if you don’t exist on a cell phone, mobile or responsive web presence, you don’t matter to anyone under the age of 18. That might be a bold, sweeping statement but I, for one, would bet it’s closer to truth than fiction. All of the smart money in insurance has and continues to invest in digital technology, from marketing and communication to efficiency and optimization tools. One broker launched an even better product, blending fleet insurance rates with usage for a pricing advantage. Another broker built an online user portal where large fleets can add and remove vehicles and drivers, and now that
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broker has a competitive advantage to win business. Intact announced it is investing heavily in opening a digital center that will house user experience and digital analytics specialists, project managers, front-end developers, research and development teams, and other experts – proof that they’re making digital a
adept at finding useful information on the fly – the back button on a web browser is all too easy to push, and Uncle Google is always there for them. If you don’t start paying attention to your customers and communicating with them in the ways they want, you will lose engagement, and eventually, they will take a look around and find someone better to do business with. Using technology to the best of your ability means supporting – and often working with – customer-focused tools. Take the automobile industry, for example. Have you seen how quickly it’s changing? Hyundai has a fully automated vehicle that can be driven on highways. BMW is piloting a car that balances both the ultimate driving machine capabilities and the enjoyment of driving with the idiot-proof accident. These are not Jetsons-like predictions of what’s to come, light years away. No, this is a couple of iPhone updates away; it’s happening now. Business advisor, consultant and author
Look where the smart money is going, and make smarter bets. Stop resting on your legacy laurels and how business used to operate three generations ago – ‘in the good old days’ core part of their business. Look where the smart money is going, and make smarter bets. Stop resting on your legacy laurels and how business used to operate three generations ago – ‘in the good old days.’ Your customers and prospects are now: Connected: Via the Internet, they are operating 24/7, and it’s assumed that you are, too. Mobile: There are about 30 million people in Canada, and that means there are some 30 million cell phones in Canada, too. Mobile will make up 50% of your web traffic – assuming you have web traffic, that is. Social: Customers trust the feedback and ratings from friends and contacts. If you don’t satisfy these traits, your customers and prospects will go elsewhere. They know they have options, and they are
John Spence said the equation for business excellence involves a combination of talent, culture, extreme customer focus and disciplined execution. If you haven’t yet adopted technology, now is the time to start. All of us have had great experiences doing business with certain companies, and easy-to-use technology can help you get more of those great experiences for your clients. Whether you are disciplined enough to make the smart bet and actually use the technology available to you … well, that’s your bet to place. Adam Mitchell is a third-generation insurance broker and is president of the family-run Mitchell & Whale Insurance Brokers.
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Experience the Difference
“ Keith Schuler InterWest Insurance Services, Inc.
The Hanover is a ‘go-to’ market for us because of its broad, specialized, and innovative product portfolio, its selective distribution strategy, and its responsive local teams. The value The Hanover creates helps us achieve our goals and improve our economics.
“
THE HANOVER… Committed to Independent Agents since 1852 Listening. Solving. Executing.
hanover.com
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29/05/2015 5:11:39 AM
PEOPLE
INDUSTRY ICON
SOLID FOUNDATIONS Technical Risk Underwriters president and CEO Mike Pilla talks about standing out from the pack and never losing focus on people FOR AN economy still reeling from the global financial crisis, 2010 was a tough year in the US – and the construction industry was among those most severely affected. It’s a bit puzzling, then, why Mike Pilla chose that moment to begin operating his MGU, Technical Risk Underwriters, which specializes in complex property and construction risks. Five years ago, when Pilla asked respected industry leader Patrick G. Ryan about the right time to start the business, Ryan told him, “Now.” “I said, ‘Why now?’” Pilla recalls. “And he said, ‘Now is always going to be the answer because, if it is the right business, the time will always be right. The right time for the right business won’t be dictated by market cycles or economic cycles. A good business will always be a good business.’ That really hit home with me.”
see go by, quite frankly,” he says. He notes an abundance of new construction projects that have commenced in recent months. “It’s probably the result of lenders in the US loosening up a bit more and putting larger amounts of capital into play in a lot of areas that TRU’s very active in,” he says. “I think our offering of products really matches up with the needs of owners, developers, general contractors, and maybe as a result of that, we’re off to a great start. I’m expecting it to be a much better year than we had in 2014.”
classes of business without frictional costs for [those] partners, but also provide much-needed product, limits and services to clients that [don’t have] your average, vanilla, cookie cutter-type needs.”
Company underpinnings Among the TRU team’s achievements over the past five years is a sophisticated underwriting platform that collects engineering and analytical data and facilitates more accurate assessment of complex risks for TRU’s carriers.
“We’re able to provide carrier partners with data and analytics and other information that, from what we understand, is above and beyond what they would expect from a normal managing general underwriter”
Breaking ground Shortly thereafter, in January 2011, Pilla launched TRU; he remains at its helm today. An industry veteran, he celebrates his 40th anniversary in insurance this year. At the age of 17, Pilla became an underwriting trainee while working a summer job in an insurance company mail room – and he hasn’t looked back since. Speaking about TRU’s outlook for this year, Pilla predicts clearer skies than last year. “2014 was a year that I was happy to
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TRU is a part Ryan Specialty Group, owned by Patrick Ryan. Reminiscing about the business’ origins, Pilla says it was clear to him from the first time he met Ryan that the two shared a vision to bring insurance solutions to clients with more challenging needs and exposures. “I think we both believed that by building a consortium of carrier partners, we could [not only] help grow a profitable business for our carriers in the more complex
“The development of the platform began with a strong desire to improve upon traditional methods of underwriting and interacting with carriers,” Pilla says. “We’re able to provide carrier partners with data and analytics and other information that, from what we understand, is above and beyond what they would expect from a normal managing general underwriter.” As for its insurance offerings, products aimed at protecting catastrophe-exposed
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PROFILE Name: Mike Pilla Company: Technical Risk Underwriters Title: President and CEO Years in the industry: 40 Career highlight: Heading the development of Technical Risk Underwriters’ analytics underwriting system
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29/05/2015 5:12:30 AM
PEOPLE
INDUSTRY ICON property are an important part of TRU’s suite. Of course, insurance is only one part of the picture when it comes to safeguards against cat risks. More and more, owners of properties in cat-prone areas are encouraged to implement risk mitigation strategies as part of their efforts to protect those properties. “I believe the majority of insureds out there are really interested in risk mitigation strategies, and I think it really is a part of an underwriter’s role to engage their clients and their brokers in discussions about not only risk transfer, but also about loss prevention and risk mitigation. I believe this is where TRU really excels.” In the coming months, like many of his
to take advantage of the coverages in a policy. Just make sure, as you’re interacting with brokers and clients, [that you’re] thinking about what happens when a loss occurs and being sensitive to that possibility.”
Honest assessment Pilla says his four decades in insurance have reinforced the importance of being surrounded by the right people – for him, that means people who “share the same passion, people who have a true sense of ownership and have pride in everything they do.” He’s also no advocate of following the pack. “I think following what others do is
“Following what others do is the easy way to do things in the insurance business. Try to cut your own path. In underwriting, sometimes the best way to become the expert is to defy the experts” industry counterparts, Pilla will keep an eye on pricing trends and new entrants to the market. But he also says the buying decisions of clients are something on which he has a consistent focus. “If you can stay very close with that, it starts to inform you about where you should be, either in creating product or being ready to deploy product you’ve got,” he says. “Regardless of what some of the insurance trends are, what some of the pundits might say, I think the best way to stay relevant and active in the business in the right fashion is to pay attention to what your clients are doing.” But Pilla also takes pride in never losing sight of the fact that the business’ clients are real people. “As insurance people, we’re always talking about premiums and losses and financial positions of carriers, and I think sometimes what gets lost is the people who are actually buying the policies and why they’re buying a policy – and what happens when, God forbid, they ever need
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the easy way to do things in the insurance business,” he says. “Try to cut your own path. In underwriting, sometimes the best way to become the expert is to defy the experts.” Pilla’s advice to young people entering insurance is to actively seek out a mentor in order to understand and appreciate the breadth of opportunities the industry offers. “Find a mentor – someone who has experience, respect and influence in the insurance business – and focus in on trying to do that early in your career, because it really could change your career path and change the way you not only advance through the business, but how you even view and perceive the business,” he says. “The industry is so broad and so wide that it offers people with such a wide variety of skills and personality types an opportunity to be challenged every day and to have a great, long, fulfilling career.”
TRU AT A GLANCE
THE BEGINNING TRU was launched in January 2011
TEAM PLAYER The company is part of Ryan Specialty Group, an organization that offers insurance and risk management solutions through 10 managing general underwriters and agencies and a wholesale brokerage
HIGHLY RATED TRU is backed by an A+ rating from AM Best
NATIONWIDE PROTECTION TRU offers catastrophe coverage for commercial occupancies in all 50 states
GOING THE DISTANCE TRU has the capability to offer policy terms of up to 60 months for superior construction projects
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IB
Your Your Your Your favorite favorite favorite favorite insurance insurance insurance insurance magazine magazine magazine magazine isisnow isnow now available available availableon onyour your youriPad iPad iPad isDownload now available on your Download Download today today todayat at the the the app app appiPad store! store! store! Download today at the app store! How How How do dodo you you you want want want your your yournews? news?We We Wehave have haveyou you youcovered: covered: covered: ibamag.com ibamag.com ibamag.com ––desktop –desktop desktop&&mobile, mobile, mobile,daily daily dailye-newsletters, e-newsletters, e-newsletters, How do you want your news? We have you covered: monthly monthly monthly magazine, magazine, magazine,and and andnow now now–––tablet. tablet. tablet. ibamag.com – desktop & mobile, daily e-newsletters, monthly magazine, and now – tablet. The TheThe #1 #1source #1 source source for forfor the thethe commercial commercial commercialinsurance insurance insuranceindustry industry industry The #1 source for the commercial insurance industry IBA_About_FP_ad_PCI_Dec_2014.indd IBA_About_FP_ad_PCI_Dec_2014.indd IBA_About_FP_ad_PCI_Dec_2014.indd 4 4 4 20-23_Industry Icon-SUBBED.indd 23
13/12/2014 13/12/2014 13/12/2014 12:50:36 12:50:36 12:50:36 AM AMAM 29/05/2015 5:12:43 AM
FEATURES
COVER STORY: NEXT GENERATION
ATTRACTING THE NEXT GENERATION Recruiting millennials is critical to the future of the industry. But how good a job are producers doing? 24
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WHAT MILLENNIALS WANT FROM THEIR CAREERS Here’s what millennials are saying about what’s important to them in their professional lives:
92%
That a business’s success is measured by more than just profits
LIKE IT or not, the insurance industry is facing a hiring crisis. Most people in the insurance workforce are now over 40, and that number is even higher among the independents. According to data from MarshBerry, more than 40% of agency staff members are older than 51. In order to maintain the same number of producers through the end of the decade, according to MarshBerry, the average agency would have to take on three young hires for every current employee. At the same time, demand for insurance professionals continues to grow. A report by the Department of Labor Statistics projects that demand for insurance agents will spike 21% by 2020.
“The insurance industry is changing,” says Dan Epstein, CEO of insurance operations company ReSource Pro. “It’s evolving quite quickly. The kinds of risks we’ll be seeing in the future are going to be profoundly different risks than we’ve seen in the past. The structure of the industry is changing – how we capture data on those risks and how we utilize that data to evaluate how to price them. And how we run our business is going to change dramatically over the next 5 to 10 years. What we need is people who are nimble, flexible. And I think one of the things young people bring to the table is that they don’t look at the world as it is – they look at the world as it could be.”
84%
Making a difference
74%
Confidence in company leadership
31%
Working with creative colleagues Source: Business2Community
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29/05/2015 5:13:16 AM
FEATURES
COVER STORY: NEXT GENERATION
“Nothing recruits students better than those real-life stories of successful careers in the market” Brady Kelley, NAPSLO
WHAT KIND OF WORK INTERESTS MILLENNIALS?
45%
57%
Solving problems
Helping others
52%
Work they can do on their own schedule
IS YOUR AGENCY ADEQUATELY PREPARED TO ADDRESS THE ONCOMING TALENT GAP?
No
Yes
So the need for fresh blood is urgent, and most insurance professionals know it. Despite that urgency, however, just 38% of agency employees say they are prepared to meet the challenges of the impending talent gap, according to a new IBA survey. Respondents across the industry answered questions about their greatest challenges in hiring and retaining young employees. While admitting they were underprepared, agency owners and staff blamed the expense of recruiting and training, a lack of qualified applicants and a perceived lack of work ethic among millennials. No matter the reason, however, the end result is the same: Independent agencies are having trouble adapting their business models to recruit and retain the next generation of insurance professionals.
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46%
Working with people
45%
Work that’s challenging Source: Business2Community
The need for fresh blood Like it or not, insurance isn’t a career a lot of people plan on. Ask the average insurance professional how he or she ended up in the industry, and many will admit they just sort of fell into it. Even John Nelson, chairman of Lloyd’s of London, spent most of his career in investment banking. So insurance isn’t necessarily an industry that’s had a history of selling itself well. But that needs to change if the industry hopes to attract millennials. Aged 34 and younger, millennials are 77 million strong and make up the most well-educated generation in history. These tech-savvy young people, expected to comprise 75% of the labor force by 2025, will be critical in adopting new technology solutions to take the industry to the next level. But that can only happen if they know about the opportunities. A 2012 survey by the Griffith Insurance Education Foundation and The Institutes found that only 5% of millennials are familiar with the insurance industry, and fewer than one in 10 expressed any interest in entering the business. That’s why the industry needs to do a better job selling
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itself, says Brady Kelley, executive director of the National Association of Professional Surplus Lines Offices [NAPSLO]. “It certainly is a priority of our organization to continue to recruit and attract new talent, at least to the surplus lines industry,” he says. “In our business, relationships and networking are paramount. For those who enjoy building and cultivating those relationships, this market’s full of incredible opportunity.” ReSource Pro also has taken that mission to heart. In fact, the company’s staff is close to 95% millennials, Epstein says. “We have 2,000 employees, of which the vast majority are millennials,” he says. “Of course, there are roles for which we need people with more experience, no question about it. But we believe deeply that you can bring people in at an entry level and teach them the business. Then you overlay onto that training additional training. We’ve built a corporate university with training in management skills. We want to build our own managers, and we have a lot of confidence in that process.” Selling the industry Many respondents to IBA’s survey said they felt the industry just wasn’t attractive to young people. But that’s an obstacle that can be overcome through education, Epstein says. “The challenge is to educate them as to the key dynamics of the industry and the key dynamics of individual businesses – but do it in a way that people feel they have enough autonomy to make a contribution,” he says. “That can be quite difficult in an industry that’s highly regulated, but within those confines, I think there’s tremendous scope for creating new capabilities and new competitive advantages. Those are things that young, talented people can bring to the table.” Kelley agrees that education is vital for attracting millennials to the business – and NAPSLO has been aggressive in bringing its message to young people. “We actually have at NAPSLO what we call our Career Awareness and Internship Committee. What it does is sponsors an internship program – what I would call a very robust internship program,” Kelley says. “Each summer, we as an organization select anywhere from 14 to 16 interns. We’re recruiting the best and the brightest out of the colleges and universities we recruit at for a nine-week internship
THE CHALLENGE OF ATTRACTING YOUNG PEOPLE We asked our survey respondents what other challenges they faced when trying to recruit younger employees. Here’s what some of them said: > “Companies continue to cut commission. How [do you] have an attractive compensation package in a falling commission environment?” > “Large numbers of younger employees cause a mentoring burden on existing employees” > “Low starting salary compared to other industries” > “There is no interest for insurance careers due to the salary base” > “Spending your resources in an effective manner. Do not waste dollars on young talent not willing to work” > “Young people are generally not very interested in sellingtype jobs” program. It’s four weeks at the broker firm, five weeks with the company. And they’re getting detailed information about the surplus lines industry and how to be successful in it. They get an unmatched experience working in those companies. We see most of those interns take full-time positions within our industry. They get involved, they love the work – and often times they’re highly sought after. Many of them move on to have what I see as the most successful careers in our industry.” But NAPSLO doesn’t just sell the industry to a few handpicked interns. There are several other programs the organization uses to get young people excited about insurance. “We also do a lot of outreach to colleges and universities. Last year we reached about 2,200 students doing 41 face-to-face presentations in classrooms,” Kelley says. “We’re putting professionals from our market in front of the classroom as presenters, providing very specific surplus lines education and information.
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29/05/2015 5:13:31 AM
FEATURES
COVER STORY: NEXT GENERATION
WHAT PERCENTAGE OF YOUR EMPLOYEES DO YOU EXPECT TO RETIRE IN THE NEXT 5 YEARS?
None 1-9% 10-30%
31-50% 51-70% 71-100%
“The third thing we do is a scholarship program – it’s actually our foundation, the Derek Hughes/NAPSLO Educational Foundation,” he continues. “That foundation has accumulated about $6.5 million. One of the things they
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do is provide scholarships every summer. Those scholarships are $2,500 per semester, so $5,000 per school year. I would say that’s another successful initiative. Since 1998, we’ve awarded about 199 of those scholarships, worth about $727,000 in tuition. Once we attract someone with that level of scholarship, you’ve got someone who’s very interested and energized about the opportunity.” But all the education in the world won’t help you retain employees – young or old – if you don’t provide a work environment that makes them feel valued, Epstein says. “A big part of it is the culture you build,” he says. “It’s not just about the business. It’s about the values you hold. We have values of corporate citizenship; all our employees do community service. We have values of ‘best self ’ – we encourage our employees to be the best people they can be. I think people want to feel that there’s a purpose to what they do, and that it’s contributing – not just contributing narrowly, but that it has a wider significance. The corporate philosophy is very important. People feel it makes a difference.” While any company can foster a positive corporate culture, not every business has the resources to launch a
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comprehensive recruiting drive. So what can smaller companies do to bring in younger employees? “In a world where people have a lot more choice, we have to work a lot harder to justify why our businesses are places where people can build meaningful careers,” Epstein says. “I think what [smaller firms] can offer is mentorship. This is a terrific industry for young people to go into, because this industry is on the ground floor of all the changes going on in the economy. Insurance is part of that. Any interest that you have, insurance covers it.” And just getting in front of young people and sharing what you love about the business can have profound effects, Kelley says.
MILLENNIALS’ PREFERRED COMPANY SIZE 50% 40% 30% 20% 10% 0%
Small (less than 100)
Medium (100-1,499)
Large (1,500+) Source: Geekwire
PENNSYLVANIA LUMBERMENS MUTUAL INSURANCE COMPANY INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY
PARTNER WITH AN EXPERT IN THE WOOD INDUSTRY. PLM/ILM IS THE PREMIER PROPERTY AND CASUALTY INSURANCE PROVIDER TO THE LUMBER, WOODWORKING AND BUILDING MATERIAL INDUSTRIES. Here are some of the benefits of partnering with PLM/ILM: • • • • •
Open Brokerage – No appointment required No Premium Commitments or Contracts Accept Standard Acord™ Applications A- Excellent A.M. Best Rating Commitment to the wood niche – We speak your customer’s language and handle claims effectively and efficiently
For a producer kit or to submit a risk, please contact us at 800.752.1895 or request a kit online at www.plmilm.com.
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FEATURES
COVER STORY: NEXT GENERATION
“What we need is people who are nimble, flexible. And I think one of the things young people bring to the table is that they don’t look at the world as it is – they look at the world as it could be” Dan Epstein, ReSource Pro “I think a key point from my perspective is when a student sees and hears the example of a real-life professional who’s been in the business and can share their career story,” he says. “Nothing recruits students better than those real-life stories of successful careers in the market. We’re lucky, because we have a number of members who are really, really passionate about bridging this talent gap – so it’s easy for us to find those real-life examples.” Overcoming objections So why aren’t more millennials entering the insurance business? Many respondents to our survey said they felt the industry just wasn’t attractive to young people. Among the main reasons producers felt young people weren’t interested in insurance was the commission-based compensation. “Young people are generally not very interested in selling-type jobs,” said one respondent. But even if that’s true, it shouldn’t keep young people
WHAT PROPORTION OF YOUR EMPLOYEES ARE UNDER THE AGE OF 35? 30%
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away from the industry, Kelley says. “I think anyone who says they aren’t interested because they don’t want a sales job doesn’t know enough about the number of opportunities that exist within the insurance industry,” he says. “We’ve got accountants, actuaries, attorneys – you need all types of experience to support what our industry does. It takes more than a sales force. Our membership is composed not just of brokers, but company folks – all kinds of expertise with varying backgrounds describing their success within the industry. It’s so much broader than just insurance sales.” A significant number of respondents – more than 22% – complained that millennials lacked a strong work ethic. But is that true – or just the typical carping of the older generation about the younger? “We don’t see that problem,” Kelley says. “I’d probably chalk that up to stereotype more than anything else. But I appreciate the question because it’s a real issue that we have to work through. We had a session at our mid-year forum focused on diversity in the workplace, and we really focused on the different generations – the differences between the generations, how they work well together and how they can make the workplace difficult. I say all that to agree that it’s a good question, but I think embracing the various generations and figuring out how to make them work toward a successful goal is what it’s all about.” Epstein agrees that the problem is more about how to mesh the generations’ differing styles of work. “I think millennials have a great work ethic,” he says. “You have to trust them. You have to give them the opportunity to prove themselves. My experience is that they rise to that, and in many cases will exceed your expectations. Obviously you have to find a good cultural fit for your organization, and that’s the more important part. If you have confidence that there’s something special about your
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PRODUCERS’ RECRUITING TIPS In our survey, we asked producers to name some of the ways they’re attracting young talent to their firms. > “Trying to bring college grads in as summer interns” > “Adapting technology, good producer contracts, work environment” > “Ads at local colleges” > “We mentor our young employees. We have some very talented young people who are a great resource now and will continue [to be]. They’re given education and YBC opportunities, and our office supports their efforts” > “A four-week, one-hour course introduction to the industry, with compensation and expectations discussions” > “Gym/workout room in the building. Things I heard from a producer under 35: Flex time, allowing fitness to be worked into the workday and acceptance of the ability to work from any place are critical to the industry surviving the shortage of employees who can ensure its sustainability” > “Allowing more flexible work hours, offering internships in areas like marketing and accounting, modernizing the office” > “Utilizing media and tech practices that make the work scope more in their comfort zone”
WHAT’S THE MAIN CHALLENGE IN ATTRACTING YOUNG TALENT TO YOUR AGENCY? Expense/ lack of resources No qualified candidates in my area Lack of work ethic among young people Young people not interested in an insurance career No plan in place to address the issue
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organization, that is unique to who you are, communicating that becomes easy.” Millennials, Epstein says, give their best effort when they feel they’re contributing to something important. “It’s not just about having a good work ethic; it’s about having meaningful work,” he says. “That applies to everybody – it’s just good management practice. … One of the things we always say at ReSource Pro is that the old Nike tagline of ‘Just Do It’ doesn’t apply anymore. What we need is a new paradigm. We call it, ‘Do What Counts.’ I think that speaks to millennials a lot more than ‘Just Do It.’”
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(855) 317-9654 www.EdInsuranceServices.com 29/05/2015 5:14:05 AM
SPONSORED FEATURE
PERSONAL LINES
KEEP MORE PERSONAL LINES REVENUE What is one point of PL retention worth to you? What would happen to your bottom line if you could improve your retention by 10 points? EZLynx’s Brady Polansky explains how you can make it happen IT’S NO secret that it is easier and less expensive to keep an existing policy than to acquire a brand new one. With most commercial lines agencies, there are well-defined renewal processes for the business insurance portion of the book; however, the same usually cannot be said for the personal lines department. It is not uncommon for personal lines service staff to place their accounts on autopilot. Of course, when a customer reaches out to the team, they still provide a great level of service. The problem is that this is typically a reactive service methodology rather than a proactive one. Agents believe this level of service is effective because they think they retain a high number of those customers with very little effort. However, when you ask an agency what its policy retention percentage is, producers often start by saying they have no idea, then they make up a number.
Retention is critical For ease of use, let’s go with the simple definition of retention to mean a count of policies in force. By using this simple metric, you eliminate the variability of premium increases and decreases to endorsements or rate increases. This becomes a true measure of policies that move from one term to another. Otherwise, agents can have a false sense of
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retention security when last year’s premiums are bolstered with rate increases. They may have lost two in 10 policies, but because of a modest rate increase, they may think they only lost one in 10 policies. In a recent in-depth survey of more than 1,000 agencies across the country performed by EZLynx, personal lines departments averaged policy retention of only 78%. Put another way, it is normal for an agency to lose more than one in five personal lines policies at each and every renewal. Making matters worse, personal lines is under direct attack from direct writers, captives, alternate distribution channels and other independent agents. One way for agencies to combat this challenge is to be smart about how they service policies and manage renewals to improve their retention. Agencies can no longer wait for a customer to call and complain about rate hikes at renewal. Instead, agencies need to quickly and efficiently identify, on a daily basis, those customers who are most at risk of being uncompetitive. Beyond the obvious importance of an agency to keep more of what they write, insurance companies tend to segment agencies on three key factors: growth, profitability and retention. An agency that can achieve all three is highly valued by any insurance carrier. However, it is easier said than done.
How to keep more The key to retaining more business is rather simple. Treat the customer the way you would like to be treated – be thoughtful, knowledgeable and transparent. Let’s be clear: When it comes to prices,
AUTOMATION IS KEY If your current agency management system isn’t automatically doing all of this for you, it may be time for a new system. The new EZLynx Retention Center uses patented automation and advanced analytics to analyze the changes at each renewal and help you quickly identify the customers who need immediate attention. Building on the EZLynx Policy Compare feature, the Retention Center analyzes your customers’ policy information so you can proactively communicate your recommendations, reinforcing your agency’s value. Since each insured is analyzed at both the account and the policy level, Retention Center provides your agency the tools to treat your customers as people rather than a collection of policies. How it works: • Each day, upcoming renewals are ranked in order of the customer’s risk of cancelation. • Each customer account and individual policy is analyzed for changes, which are displayed for review. • Your agency can quickly review the changes and communicate your recommendations, remarketing only when necessary.
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3 WAYS TO MAINTAIN A HIGH RETENTION RATE
customers don’t like surprises. In today’s information age, people want instant feedback on what is happening. The last thing they want is to receive an increase in their renewal premium without an explanation as to what happened. Agents should review the policy renewal for potential changes that might impact the premium. Beyond rate increases, it is not uncommon for carriers to remove discounts, change products or adjust the customer’s rating tier due to losses, credit or other factors. Customers would like to know that the agent is on top of things like this when they take place, not after the fact. Next, agents should find excuses to thank customers for their business as well as keep them informed about how they are doing relative to their peers. In other words, if a customer has a small rate increase, which is in line with his or her community, explaining
this goes a long way in building trust. Finally, always give customers options. This is one of the main differentiators for an independent agent. If their renewal price increased, let them know what else, if anything, you may have as an alternative. When given options, customers regularly opt to stay with their current program to avoid the pain of switching. When you earn their trust, they will say things like, “Let’s stay where we are, but keep an eye on it at next renewal. If it goes up like this again, we’ll switch.” The key to all of this is to be customer-focused and proactively reach out to customers when there is a change. Those agencies that shift from reacting to each customer to proactively reviewing the account and contacting each customer in advance will certainly keep more than those who wait for the phone to ring.
Policies per customer: The EZLynx survey found the average policies per customer to be 1.6. Captive agents achieve upwards of 5. Why is this important? Because one policy usually retains for about three years – the same time it takes to break even on the acquisition costs. A customer with two policies usually retains for five years, while three policies usually retain for seven years. Once an agency secures five or more policies for a customer, it makes in almost impossible for that customer to leave. Regular touch points: The majority of customers who move their policies away from an agency say they felt like they were not valued as a customer – that the agent took great care during the sale and then failed to maintain a relationship. Regular touch points with customers are critical. Competitive pricing: Contrary to what most people believe, while consumers demand a competitive price, they do not expect the cheapest price. In an analysis of 20,000 homeowners, more than half (57%) of consumers purchased a more expensive policy while paying upwards of 19% more for the value added. Automobile policies are more competitive; however, in reviewing 40,000 policies sold, virtually half of the customers elected to pay more (49%) than the lowest quote available.
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FEATURES
COMMERCIAL AUTO
LIFE IN THE FAST LANE As the economy picks up speed, commercial auto insurance is shifting into high gear HAVE YOU ever wondered how you can buy fresh raspberries in Colorado in the middle of December or Idaho potatoes in coastal Florida? Most likely, it’s thanks to the trucking industry. The trucking industry is the backbone of the US economy. At one time or another, almost everything has to be transported –
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whether across town, across the country or around the globe. And according to the American Trucking Association, nearly 70% of all the freight tonnage moved in the US goes on trucks. Last year, the US trucking industry generated $700.4 billion, according to the latest edition of American Trucking
Trends, making 2014 the first year in history the industry topped $700 billion in total revenue. And it is expected to grow another 21% in the next 10 years. Simply put – without trucks, America stops. And so does our economy. But without appropriate insurance coverage, those trucks aren’t going anywhere.
Focus on the wheels The insurance needs of the trucking industry are served by the commercial auto insurance sector, which can be broken down into
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to a bus or airport courtesy van) and business auto (individuals who are using their automobile for business but not freight-carrying purposes, such as contractors). Key insurance products serving the sector “tend to really focus on the wheels,” says Lou Welch, vice president of the motor carrier group at Scottsdale Insurance Company, part of Nationwide, and the nation’s fourth largest commercial auto insurance carrier. “The basic coverages are the auto liability – physical damage to the vehicle and damage to the cargo – and general liability as well, for vehicles that are not necessarily just freight
on the new venture kinds of accounts are significantly worse than more experienced kinds of accounts. They are finding it much more difficult to find an insurer that really wants to handle them at an attractive price, and they are getting pushed to other markets that want to specialize in the higher risk account.” Complicating matters, the federal government has tightened up its requirements for commercial driver qualifications just as there’s been a spike in demand, ultimately leading to a shortage of qualified drivers. The ATA pegs the current
“You have a number of insurance carriers that ... have developed predictive analytics to zero in on exactly the type of risks that they are looking for ...” Lou Welch, Scottsdale Insurance Company
three different segments of insureds that are all using vehicles for business purposes. For-hire trucking is by far the biggest piece of the pie, representing more than half of the commercial auto marketplace and moving 9.2 billion tons of freight annually, requiring nearly 3 million heavy-duty Class 8 trucks and more than 3 million truck drivers, according to the ATA. The remainder of the commercial auto sector is composed of public transportation (businesses that carry people rather than freight – anything from a taxi to a limousine
for hire – tow trucks and boom trucks, for example – where the truck is also a piece of equipment.” Welch sees the commercial auto marketplace going in a couple of different directions. “You have a number of insurance carriers that are fairly specialized and have developed predictive analytics to zero in on exactly the type of risks that they are looking for – it’s a competitive marketplace for these preferred or lower-risk accounts. What you wind up with on the other end are the carriers looking for the stressed or higher-risk, high-priced types of accounts that have kind of gotten shunned by the bigger carriers.” As more and more new ventures enter into the marketplace, “a lot of us are finding that they are falling very much into that higher risk category,” Welch says. “Results
shortage at roughly 25,000, and says it’s due to a multitude of reasons, ranging from demographic and regulatory factors to workplace hazards and the fact that over-the-road truck driving jobs can take drivers away from home for lengthy periods of time. “It’s a significant issue,” Welch says. “Pretty much everyone in the commercial auto sector is facing the question of, ‘Where do I find drivers that meet the government standards and that my insurance carrier will be enthused about underwriting?’” William Johnson Jr., vice president of underwriting at Pennsylvania Lumbermens Mutual Insurance Company, agrees. “In certain areas, you just can’t find drivers,” he says, adding that retaining experienced drivers is also becoming an issue as they get wooed away by higher-paying gigs at
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FEATURES
COMMERCIAL AUTO
WHAT DOES COMMERCIAL AUTO INSURANCE COVER? Basically, commercial automobile insurance provides the same major coverages private individuals purchase (usually at higher limits).. . however, there are many add-ons more suited for commercial driving, such as coverage for: Employees, including fellow employee coverage and broadened and blanket policies that protect additional employees or clients
“[Keeping personnel] is a concern of all our types of risk” William Johnson Jr., Pennsylvania Lumbermens Mutual Insurance Company
Equipment, including loading and unloading goods Business, which protects your assets in the event of a lawsuit Source: Department of Motor Vehicles
competing companies. “[Keeping personnel] is a concern of all our types of risk.”
Age of automation Welch is amazed at how much the commercial auto sector has changed over the course of his career. “Thirty-five years ago we were rolling policies through a typewriter – it was very much a process of individual underwriters looking at risk characteristics, whereas today, so much of that decisionmaking has become automated,” he says. In the near future, Welch predicts, the pricing of a policy may very well come down to in-vehicle telematics devices – so drivers who don’t use their vehicles as much, for example, won’t pay as much premium. “That type of thing will become more and more utilized in terms of determining final pricing on commercial insurance,” he says. Telematics also can measure risky maneuvers as they happen, relaying that data to a central web portal where it can be stored and analyzed. The Hartford’s FleetAhead program and Liberty Mutual’s Onboard Advisor, for example, are both capable of
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measuring speeding over the posted limit, excessive acceleration, aggressive braking, cornering, lane changing and at-risk behavior relative to surrounding traffic. The Hartford touts its program as “Preventive maintenance for your drivers, peace of mind for your fleet and risk managers, and more security for your bottom line.” Over time, Welch predicts, the technology will have a meaningful impact on shaping driver and operational behavior. “If I have an employee who drives a little over the speed limit, and my insurance rate goes up, I’m going to have a problem with that. And consequently it will translate to
changed behavior,” he says.
On the upswing The commercial automobile insurance segment was hard-hit by the Great Recession and has been slow to claw its way back to overall profitability. In 2013, Fitch Ratings issued a special report, “Commercial Auto Insurance Market Update: Underwriting Losses Accumulate,” finding that commercial automobile insurance segment of the US property/ casualty insurance industry had experienced its third consecutive year of underwriting losses – a function of “multiple years of
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significant price deterioration prior to 2011, combined with an erosion of underwriting standards to retain business in the economic downturn of 2008-2009.” The report found that increases in claims severity have also hit the sector hard. However, Fitch reported, there was significant underwriting gain for 2013 – the market’s best year since 2007. As economic conditions have picked up following the Great Recession, so has the demand for goods to be hauled from one place to another. That means there is also a lot of fresh demand in the insurance marketplace for commercial auto products, as new players enter the for-hire trucking business and established players expand their operations. The key to succeeding in the sector as a retail agent, Welch says, is to find a way to specialize in something, “whether it’s hazardous material haulers, moving and storage haulers, dumping and road materials haulers, freight carriers – whatever it happens to be. The best way to create a competitive advantage for yourself is to select a segment and become expert in that segment so you become the place where people want to go to get their business covered.” Pennsylvania Lumbermens Mutual Insurance Company has done exactly that. The company focuses solely on the wood niche – delivering commercial insurance products (including commercial auto coverage) to the lumber, woodworking and building material industries through an open brokerage arrangement with brokers across the country. PLM writes everything from personal vehicles to light, medium and heavy trucks, and “a lot of extra-heavy tractor trailers to carry product,” Johnson says. “We are not a generalist. We know this business and what makes it tick. When the building industry thrives, we thrive. And we are seeing a rebound. Commercial auto is a large and
“If I have an employee who drives a little over the speed limit, and my insurance rate goes up, I’m going to have a problem with that. And consequently it will translate to changed behavior” Lou Welch, Scottsdale Insurance Company
important segment of our book.” Not surprisingly, “there is more and more competition today than 10-12 years ago,” Johnson says. Ultimately, he says, customer service is the key to retention in such a climate. As such, risk management is a big part of what PLM offers to its clients. The company works closely with insureds to minimize losses in its top three areas of claim frequencies – accidents having to do with loading and unloading, accidents stemming from hitting stationary objects, and single-vehicle accidents. “When their losses start to improve, it’s harder for them to move their insurance to a different company,” Johnson says. But ultimately, the proof is in the pudding of a covered loss. “Our customers don’t realize the service they get until they have a loss,” Johnson says, “and then they say, ‘This company stepped up to the plate for us.’”
INSURANCE IN THE UBER ERA A hot topic in the commercial automobile insurance sector right now is the appearance of ridesharing services such as Uber, Sidecar and Lyft, and the debate over who will pay if something goes wrong during a trip or while a driver is on his or her way to pick up a passenger. Ridesharing companies have often said their drivers’ personal insurance policies should cover the claims, while the insurance industry has taken the stand that personal car policies won’t provide coverage and that drivers should buy (more expensive) commercial insurance in order to be covered when they’re driving for hire – and maybe even when they’re not. In some cases, insurance policies have been canceled when carriers find out an insured works as a rideshare driver. After a year or so of limbo and legal squabbles, Policy Genius reports that there are now several new insurance products being created in certain states to address the coverage needs of rideshare drivers. • Metromile, available for Uber drivers in California, Illinois and Washington, offers per-mile insurance (meaning that the more you drive, the more you pay) with a special dongle that tracks how far you travel. • Geico has developed a product for rideshare drivers in Virginia and Maryland that is cheaper than other commercial auto insurance policies. • Progressive offers a pilot program for Lyft drivers in the form of an affordable commercial auto insurance policy with rates adjusted based on the mileage driven as a rideshare driver. • USAA’s new rideshare insurance, available for drivers in Colorado and Texas, extends a driver’s existing personal policy for an additional fee of $6 to $8 per month.
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FEATURES
AGENCY INSIGHT
The Scirocco Group The Scirocco Group has grown from a small family agency to an awardwinning firm with more than 100 employees and annual revenues in excess of $20 million. IBA spoke with president and CEO John M. Scirocco, Jr. about carrying on the family legacy
How important do you think it is for an agency to have a commitment to specialization? Why does it matter? John Scirocco: Specialization for us is key, and we need to be doing more of it. We really do stress and try to build on specialization. There’s no question that the more we specialize and develop each industry niche, the greater our success be. The generalist book is very important to us, too, but over the last five to six years, we have been identifying and developing niches more.
How have you been able to build up your various specializations? How have you built this into your culture? JS: Specialization requires a passion, the technical stamina to handle the risk and to be trained on it, and you must be able to execute. One of our producers happens to be an avid camper. Three years ago, he started asking these campground owners, ‘Can I look at your insurance?’ And he went from having one campground to having 40 campgrounds as clients today. He now has the exclusive for our organization writing campgrounds for a national program within the states of Pennsylvania and New Jersey. We also have subsets of industry specialization. For example, we do a fair amount of scaffolding contractors and auto dealerships, with each need having its special risk characteristics.
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We’ve built specializations into our culture as part of daily operations where it just makes sense; it’s not because we are reading a playbook in the morning. We research and educate ourselves to better understand and service that industry niche.
What do you think makes you stand out as an agency? JS: Our organization starts its day literally at 6:15 in the morning. We are quick to respond as an organization. We are always engaged – putting out fires, working on client issues, taking care of carrier needs. It’s just the way we operate. I am a firm believer that we’ve got to have our boots on the ground consistently. We can’t be doing it just with the use of email and phone calls. The culture here is a can-do culture. I would have to say that 95% of the folks in the firm walk with a purpose. We are engaged, we are customer-focused, and we are also very carrier-focused.
We balance the carrier relationship and client needs very delicately. We have a mantra in the organization that we don’t win with vinegar; we win with a lot of honey. We see that as paying dividends over the years. When there’s a problem, people know they can always knock on my door and freely pose a difficult question to [me] or the management team. That’s the collaborative aspect of how we operate as a firm.
What are you doing to attract and grow your talent? JS: On the production side, we have recently engaged one of the national consulting firms in the insurance arena to help attract new producers who are from outside the insurance industry but have got the entrepreneurial spirit. Growing our talent on the service side is a little easier because of our reputation in the market. We have been fortunate to be
HOW HAS YOUR AGENCY GIVEN BACK TO YOUR LOCAL COMMUNITIES? Scirocco Group and its member companies feel strongly about giving back. While each entity actively supports its surrounding communities, we also donate our time and funds to charities that are dear to our hearts. Many times the company will match donations raised by those within the organization. We have a group in the company called the Spirit Team, composed of eight individuals whose role is to determine which charities we will donate to each year, and to define who has a personal relationship with the organization.
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FAST FACTS Top specializations Auto dealerships Public entities Campgrounds Specialty contractors Life science
Year founded: 1950 Background: The Scirocco Group was founded by John Scirocco, Sr. in West New York, N.J. It is a third-generation family company headed by John Scirocco, Jr., who joined the company in 1980. His son, James Scirocco, joined the organization in 2014.
“We have a mantra that we don’t win with vinegar; we win with a lot of honey”
Number of employees: 100 Number of offices: Five in New Jersey in the New York metro area; one in Delray Beach, Fla. Headquarters/Location: Hasbrouck Heights, N.J. 2014 revenue: $22 million Number of policies written in 2014: About 10,000 Number of clients: About 3,500
known as a ‘Best Place to Work’ agency for the last four to five years, and that helps. On the HR side, we are very nurturing to our folks both personally and professionally in terms of training and continuing education programs – things we can do to help get them to the next level. I’m second generation and the third generation just started – my son joined the
firm after spending six years with a national insurance company. Three others his age have also joined the firm on the service side. That’s really the future for us, to try to get that young blood in here. That will help us to really be in a position to migrate books of business over from some of the seasoned producers as they start retiring in the next five to 10 years.
Premium volume: $120 million Kudos: The Scirocco Group is one of New Jersey’s four IIAWA 2013 Best Practices award winners. It has won Business Insurance’s Best Places to Work award four years running, and was the highest-ranked New Jersey firm in Insurance Journal’s Top 100 Agencies.
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FEATURES
OIL & GAS
SURVIVING THE SWAMP Declining oil prices may be introducing softness into the market, but oil & gas remains a huge industry in the US – with massive insurance needs PLUMMETING OIL prices over the past year have sent viscous ripples through the oil & gas industry – and the insurance sector that serves it – that can be felt in both predictable and surprising ways. North Dakota’s boomtowns on the fringe of the Bakken shale formation – where many oil workers had to sleep in their cars just a year ago – suddenly have a surplus of apartments to rent as jobs and development have dried up. Meanwhile, in Cushing, Oklahoma, the ‘Pipeline Crossing of the World,’ companies are busily stockpiling millions of barrels of oil per week, hoping to sell it when the market rebounds. Crude oil prices plunged nearly 50% from June 2014 to mid-December, driven, experts say, by fundamental imbalances of supply and demand, and have stayed down due to market pessimism that has remained in place through the first half of 2015. Yet in spite of the downturn, oil & gas remains a huge industry. “This world moves on petroleum,” says Brett Amick, assistant vice president and south central manager for Beacon Hill Associates, a specialty wholesaler writing pollution-related accounts in the energy, oil & gas sector. “And as much as anybody might want to argue about a cleaner and safer world without petroleum,
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until we can find an alternative, this industry is going to continue to produce.” And that means that most insurance buyers, risk managers, agents, brokers, underwriters, adjusters, attorneys and others who must understand, mitigate or insure the complex exposures in the oil & gas business will continue to keep plenty busy, even as they adjust to the soft market.
A vast industry with many niches The insurance customer base within the oil & gas sector includes risks of any size in the ‘oil patch,’ including operators, drillers, geophysical contractors, well servicing contractors, oilfield equipment and supplies, and manufacturers/distributors of oil field products – primarily crude oil and liquified natural gas [LNG]. “It’s an interesting industry – you’ve got so many people doing different little things,” says Michael Hill, the principal of Hill Program Managers, a Colorado-based managing general agent offering a program for oil & gas and other energy companies. “There are people who specialize in going out and grading the land for a new drilling site, people who put in roads, people who build fences, people who bring in water tanks, people who inspect the drill pipe, people who provide
security, the actual drilling companies, consultants who control the drilling, truckers, mud loggers, completion contractors, work over contractors, safety engineers, and safety consultants. It employs a lot of people” – all with their own unique insurance needs. Indeed, according to the US Bureau of Labor Statistics, the oil & gas sector employs close to 200,000 people in the US alone (although jobs are being steadily shed as oil prices fall). And the sector extends to a lot of different places – the US Energy Information Administration lists 31 states as producing oil or gas. Most of these states are in the West and Midwest and along the Gulf Coast, with the
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5 TRENDS IN OIL & GAS INSURANCE
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Business interruption: One of the most significant trends over the past five years has been the steady increase in business interruption claims as a proportion of the total loss arising out of an insured incident.
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Physical damage: Physical damage exposures also are growing in the energy sector, thanks to increased production/processing volumes, more sophisticated technology, larger scale equipment and bigger vessels that operate in more extreme environments.
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Impact of changing technology: Cutting-edge technology has always been present in the energy sector as companies look to drill deeper, better and longer - it’s a natural part of the industry’s development.
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Emerging territories and markets: The energy sector is becoming more global as emerging markets become more important as both consumers and producers. As a result, oil companies are operating in new, more challenging areas, such as deeper waters and more remote locations, which has implications for the cost of claims.
“As much as anybody might want to argue about a cleaner and safer world without petroleum, until we can find an alternative, this industry is going to continue to produce” Brett Amick, Beacon Hill Associates exception of Pennsylvania and West Virginia, which are being tapped for their Marcellus shale formation – the largest natural gas field in the United States and one of the largest in the world. In addition, “North Dakota, Montana,
Wyoming, Oklahoma and Texas are really hot right now, mostly with shale plays,” Hill says.
Key risks, products and carriers Insureds within the oil & gas sector typically fall within three categories – contractors, facil-
5
Catastrophe claims and large losses: Excluding natural catastrophes, which have not been a major concern in the energy sector in recent years, catastrophic claims appear to be increasing in severity. When it comes to energy claims, those can be very large numbers – the average claim in the energy sector is in excess of $25 million, according to Allianz Global Corporate & Specialty. Source: Chris Dye, Allianz Global, Oil & Gas Financial Journal
ities and transportation. Energy insurance coverages are normally arranged on a ‘package’ basis by specialist insurance brokers for upstream (production), midstream (transportation and storage) and downstream (refining) exposures – the latter sector dominating business interruption – noted Chris Dye of Allianz Global in a recent
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FEATURES
OIL & GAS
TOP CAUSES OF LOSS
By number of claims
Fire Blowout Machinery breakdown
Explosion CBI loss Other
By value
Fire Blowout Machinery breakdown
Explosion CBI loss Other
Source: Allianz Global Corporate & Specialty, 2009-2013
article published in the Oil & Gas Financial Journal. Energy insurance packages typically include covers for onshore property, offshore property, time element (business interruption), well control/redrill and third-party liabilities (including pollution cleanup). The sector, in a word, is “competitive,” Amick says. “Basically, it’s one of the few industries where there is a large overlap between admitted versus non-admitted carriers.”
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On the admitted side are standard carriers – such as Travelers, Berkley Oil & Gas, AIG Oil & Gas, Mid-Continent and Bituminous [BITCO] – that typically offer a sudden and accidental pollution product on their general liability policies. Non-admitted carriers, meanwhile, are split, Amick says, with some offering a sudden and accidental pollution product, and others offering broad form pollution coverage. While exposures vary between accounts and must be underwritten on a case-by-case basis, “action-over remains one of the largest exposures in the country,” Amick says. (This is a type of action where an employee or subcontractor is injured on a piece of property, and the contractor has, through contractual obligations, held the property owner harmless, so
drivers entering the mix. This phenomenon is underscored in Marsh’s United States Insurance Market Report 2015, which observes that fleet risk exposure remains an issue in the sector, judging by the large verdicts and settlements being reported by insurers. “And when you’ve got big trucks hauling gasoline, refined and unrefined products, you are always going to have a pollution exposure,” Hill says. “Unfortunately, big tankers full of oil tend to roll over only by rivers … that’s just kind of our rule of thumb.” The act of drilling for oil and gas is, by nature, dangerous. According to the Bureau of Labor Statistics, the industry typically sees a dozen or more workplace fatalities per year, a figure that spiked to 24 deaths in the boom year of 2012.
“It’s safer now than it used to be, but it’s pretty easy for employees to become injured or even exposed to fatal accidents” Michael Hill, Hill Program Managers the claim falls to the general liability of the contractor.) Products or completed operations exposures and pollution loss also are common in the sector. “The whole industry is full of environmental questions,” Hill says – including emerging concerns about controversial fracking and deep-well injection practices that have long been common in the industry, and a newly heightened underwriting focus on pipeline and rail exposure in certain sectors, given the rising prevalence of pipeline breaches and train fires. The remote nature of the upstream side of the industry also creates an inherent auto hazard – big trucks on small dirt roads can be a recipe for trouble, especially during boom times when there are a lot of inexperienced
“It’s safer now than it used to be, but it’s pretty easy for employees to become injured or even exposed to fatal accidents,” Hill says. “You’ve got things like sour gas and blowouts that can cause a lot of injury to a lot of employees really rapidly – five or six people killed with one event.”
Booms and busts After years of ramping up, the upstream (production) side of the oil business has spent the past year or so settling precipitously back down. Industry statistics show that the number of rotary rigs drilling for oil in the US hovered at around 660 in mid-May – more than a 50% decline from last October. Year-over-year oil exploration in the US was down 56.9%, gas
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exploration was down 31.6%, and the weekly average of crude oil spot prices and natural gas spot prices were 40.9% and 36.5% lower than last year, respectively. Such booms and busts are nothing new to the energy sector. “We saw this 20 years ago in the early ’90s – there was a big ramp-up, and then it settled back down,” Amick says. Due to the current ‘settling,’ the recently released Willis Natural Resources Market Review 2015 reports the softest market conditions in 15 years in some sectors of the oil & gas insurance industry, and observes that the collapse in oil prices “is beginning to have a detrimental effect of premium income levels, particularly in the upstream sector.” To make matters worse, some major buyers are cutting back on their risk management budgets. “Already in 2015, we have seen some major buyers dramatically reduce their policy limits and discard some of their insurers from their programs,” Willis reports. Hill has personally observed these factors playing out in the marketplace. “Primarily driven by the drop in the price of oil, we have seen a lot of small companies going out of business, and lots of the larger companies are reviewing their budgets and estimates because the work isn’t there,” he says. “A lot of the drilling is stopping. It’s going to be a pretty big ripple that goes through the industry, and it’s going to take a while to shake out. It is affecting renewal rates; we are losing accounts because of the price of oil.”
Gas is hot, but oil’s not In spite of the pain being felt on the upstream side, the midstream (transportation and storage of unrefined oil and gas) and downstream (refining) markets appear to be surviving the swamp. “When the production side slows down, they are still pumping out millions of barrels a day that have to go somewhere,” Amick says. “So they go into the midstream and they stay
“We have seen some major buyers dramatically reduce their policy limits and discard some of their insurers from their programs” Willis Natural Resources Market Review 2015 in the midstream until the refinery needs it. What you are seeing is an increase on the midstream side where it’s being transported and stored. Tanks get a little fuller; people are investing in buying barrels at lower prices and storing them until the price goes up, and turning around and selling them as a commodity to make money.” As industry experts describe the phenomenon, the oil market is in ‘contango,’ meaning that oil delivered in the future is worth significantly more than oil delivered today. At the same time, the LNG side of the industry is still booming, by all accounts. “The demand has actually grown, so we are seeing a lot more activity on the natural gas side – natural gas pipelines, storage facilities, the sweetener plants and that kind of stuff,” Amick says. “There is a lot of business to be had in that sector because of the demand for natural gas these days.” All of this means Amick and his colleagues are still finding lots to do. “Creativity is one of the biggest things you have to have,” he says. “There are lots of carriers, lots of insureds. It’s a very exciting industry to be in at this time. And one thing we know for sure is that the world will always need more crude oil until a different and better alternative is found.”
Visit Beacon Hill’s website for claim scenarios, exposure summaries, educational podcasts, and other environmental insurance resources.
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PEOPLE
PRODUCER PROFILE
Double duty From his niche insuring beekeepers to his seat in the Florida House of Representatives, Kevin Rader of CKP Insurance has no trouble staying busy
IT WAS late April, and Florida’s legislature had just collapsed into chaos due to a bitter impasse between House and Senate Republicans over Medicaid expansion. The State House Republicans had pulled the plug on the 2015 legislative session three days shy of its conclusion, leaving dozens of major bills dead, and Kevin Rader, a Democratic member of the Florida House of Representatives, suddenly found himself with time on his hands to chat. “We are just kind of taking a deep breath here,” Rader said the day after the fiasco. “We are done – we are allowed to go home now. Well, we are not really done, because we didn’t pass a budget. We’ll be back here probably in June.” In the meantime, he would be heading home to his wife, his four kids and his insurance agency in Boca Raton, Fla. Rader is one of a handful of Florida legislators juggling a second career as an active insurance agent. His agency, CKP Insurance, focuses on commercial business and residential insurance, with a niche specialty in commercial beekeeping. This may seem like an odd mix, but for Rader, it makes perfect sense. After all, Florida legislators only come to Tallahassee for three or so months out of the year, and most of them hold other jobs outside of the
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legislative session. “There are so many different issues and different facets that insurance agents touch,” he says. “I think the more insurance agents you have in elected office, the better it is for the citizens of that state.”
A phenomenal ride Rader’s dual career paths first intersected in 2000 when he made his original bid for the Florida State House. At the time, he was a computer consultant who had recently moved to Boca Raton when his wife, a rabbi, found a synagogue there. While he was running for office, he met an insurance broker/owner who suggested Rader would make a great insurance agent. “After I lost the election, I looked into it, and I agreed with him,” he says. “It’s not the way a lot of people find insurance, but it was the way I found it. And it’s been just a phenomenal ride.” Rader worked his way up the ladder – “hustling on the phone, going to all different types of meetings, building my book of business” – and eventually made partner before starting his own agency. Today, CKP insurance employs about 20 people, with Rader and his partner owner at the helm. Rader is active in the Florida Association of Insurance Agents (which presented him with the Outstanding
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Legislative Leadership Award in 2013) as well as in The Big “I” – the Independent Insurance Agents and Brokers of America. “I’ve really had some nice success business-wise, helping a lot of other people protect their assets,” he says. “It’s been enormously and personally satisfying.” And every time Rader sees the agent who pointed him in this direction, he says, “I thank him profusely.”
A sweet niche One of the keys to Rader’s success as an insurance producer has been to develop a niche writing insurance for beekeepers through his sideline business, Beekeeping Insurance Services. He works with beekeepers to maximize the benefits available to them for all of their property, casualty and other insurance needs. Rader got into the niche about five years ago, just at the time when the honeybee syndrome known as colony collapse disorder started making national headlines. This prolonged and mysterious die-off of the nation’s honeybees is believed to be caused by a lethal combination of parasites and pesticides – specifically neonicotinoids, used almost universally on some major crops in the United States, which are highly toxic to honeybees and have been banned in certain parts of Europe. “It is enormously awful for the bees,” Rader says. “In this country, we have an enormous problem – there are fewer bees today than there were 10 years ago, and fewer beekeepers today than there were 10 years ago. The bee population is dying.” And it just keeps getting worse. According to an annual survey released in mid-May by the Bee Informed Partnership (a consortium of universities and research laboratories), about 5,000 beekeepers reported losing 42.1% of their colonies in the 12-month period that ended in April 2015 due to colony collapse disorder – the second-highest loss recorded since year-round surveys began in 2010. Why should people care?
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PEOPLE
“For me, it was a natural progression. “Being an elected official is the definition of being active in your community, working with a lot of people and trying to help a lot of people”
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“‘If bees were to disappear from the globe, mankind would only have four years left to live,’” Rader says, quoting Albert Einstein. “We need to pay attention to what we are doing, because the things we are doing to our food supply that are affecting bees are a microcosm of what is happening to humans.”
Beeline for Tallahassee As Rader was busily fanning life into his insurance agency and cultivating his beekeeping specialty, his legislative career simultaneously took flight. He was initially elected in 2008 to represent Florida’s 78th District, where he served for two years before sitting out a two-year term after losing a bid for the state senate. During that time, the region he represented underwent redistricting and became the 81st House District, encompassing Boca Raton. He was re-elected to the State House in 2012 to represent this district, where he is now serving out his second term. “For me, it was a natural progression,” Rader says. “Being an elected official is the definition of being active in your community, working with a lot of people and trying to help a lot of people.” Rader’s professional background is especially valuable when the Florida legislature is debating issues pertaining to the insurance industry. In the most recent legislative session, for example, he and his colleagues almost passed legislation that would place insurance requirements on app-based transportation services like Uber and Lyft while also tackling attendant issues pertaining to limits and background checks of the drivers. The Florida legislature did pass a flood bill this year, creating a private market backed by the state of Florida for flood insurance. Rader voted against it. “It gets me nervous that the state of Florida will be the ultimate reinsurer, not FEMA,” he says. “I’m not trying to be partisan here at all – but if there is one thing that needs a federal backstop, it is flood insurance. I don’t see how the states or the insurance companies can underwrite it. I think the NFIP product
THE ABCs OF BEEKEEPING INSURANCE The United States Department of Agriculture considers apiculture (beekeeping) to be a form of farming. As such, beekeepers from around the country who have colonies located in an eligible state can take advantage of the benefits of USDA programs that provide a safety net for beekeepers’ primary income sources – honey, pollen collection, wax and breeding stock. The USDA’s Farm Service Agency also offers specialized insurance products to cover losses stemming from bee diseases. Aside from these specialized needs, beekeepers have the same types of general risk exposures as any other commercial business. They typically require general liability, property, homeowner’s , farm owner’s, automobile, worker’s compensation and life insurance. In Rader’s experience, risk exposures can run the gamut from a flatbed truckload of 400 beehives that tips over on the freeway to the theft of colonies to a forest fire sparked by a beekeeper’s smoker.
is the better thing for Florida.” While Rader’s background in the insurance industry helps him to cultivate a deep understanding of these kinds of complex issues, it has also caused critics to attack him on insurance issues and accuse him of catering to special interests. “That’s just politics,” he said. “You’ve got to have thick skin.” And while the insurance industry is a favorite whipping boy for both the people and the press, Rader feels blessed that his particular specialty is so compelling. “Bees are sexy,” he says. “People want to hear about them. They’ve been on the front page of every major newspaper and the most well-known periodicals in the country.” And for now, that means his career will continue to have plenty of buzz.
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PEOPLE
CAREER PATH
CANADIAN TAKEOVER
From the humble town of Waterloo, Ont., Keith Doan rose up the ranks to become one of the premier insurance brokers in North America 2014
MOVES TO US RISK INSURANCE GROUP Last year, Doan was appointed vice president and senior broker at US Risk Insurance Group “I’ve continued to grow throughout my career, and this is key for any insurance professional. Keep learning, keep growing, and pay it forward”
2011
WINS DIRECTOR’S CHOICE AWARD
2007
“I believe in giving back, so this was that kind of role for me. BECOMES SVP AT I was also able to be a mentor, which was good because AON RISK that’s really changed over the years. When I started, we had SERVICES nine weeks of training. These kids today do webinars, so I had a chance to pay it forward, which I’m all about”
2002
BECOMES ASSISTANT VP AT KEMPER INSURANCE
1997
IS RECOGNIZED ON CHUBB INTRANET
“This was really important for me. It was really instrumental to the success I’ve had in my career. Chubb was key in my growth, and that piece on the intranet took me to a new level in the industry” Doan, a Waterloo native, originally intended to study history but soon changed course “I was always interested in history, but there wasn’t much of a future in history at the time, so I chose to take management courses because I’d always been interested in business and political sciences. It turned out to be a good move, and when I graduated, I was ready to start working”
During his tenure as senior VP of casualty and professional lines underwriting at XN Financial Services, Doan won a Director’s Choice award from the Canadian-American Chamber of Commerce for being an advocate for business and cross-border relations “I didn’t know I’d win the award, and it was a bit impromptu in the way it was awarded, but it was an honor to win”
In his first leadership role, Doan was charged with driving growth at Kemper “Over that time, I grew the book of business from $13,000,000 to $31,000,000 in spite of downgrades and previous sales. We were recruited by people from Chubb Insurance, guys like Doug Batting and Gary Tully. It was the right time to move forward. We lost a lot of money, nearly $3 billion during 9/11, because we covered worker’s compensation for Twin Towers workers”
1990 ENDS UP IN THE US
1986
ATTENDS WILFRED LAURIER UNIVERSITY IN WATERLOO
After a series of moves (Toronto to Oakville to Toronto to Vancouver to Denver and to Chicago), Doan eventually ended up at Chubb Insurance in New Jersey “I left for the States in 1998, and it was a really intense job; I learned from the best mentors, people like Dino Robusto, Tom Warden, Udo Nixdorf and Rich Nobles. That experience was invaluable for me and made me a better underwriter”
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE! Email iba@keymedia.com
GETTING HIS DUCKS IN A ROW This Wisconsin producer always finds time to get out on the lake for a hunt
Luke
Sophie
dead ducks
LUKE MONGIN sells a mix of personal and commercial coverage out an independent agency in Green Bay, Wisc., along with his brothers, Steven and Joe, and their father, Carl. But come weekends or even early mornings, you’re likely to find him on (or in) one of the many lakes in the area. Mongin is a qualified scuba rescue diver, but his big passion is duck hunting. “With duck hunting, every day brings new opportunities – you never know when or what kind of ducks will fly in,” he says. “And it’s a social hunt – you can enjoy the camaraderie of friends.” And of dogs, for that matter. Over the past couple of years, his trusty hunting companion – a Boykin spaniel named Sophie – has only increased his love of the sport, and watching her retrieve birds “never gets old” (even though as a smallish dog, picking up geese can be somewhat challenging for her). Mongin often takes clients out on hunts, too. “Last year I took some customers out during severe weather – we had gale force winds, and eight-foot waves were breaking over the island we were on,” he says. “But we stuck it out and were able to shoot some ducks before we had to go back to the office.”
12
Age Mongin started duck hunting
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33
Weight, in pounds, of Mongin’s spaniel, Sophie
FE
24
Largest number of ducks shot in one trip
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Insurance Business America is the independent voice for the insurance industry, encompassing news analysis, expert opinion, exclusive interviews and business strategy advice for today’s sophisticated insurance brokers, agents and advice professionals.
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saying ution. the Agency are g today is not Insurance Distrib WHA Insurance agents are playin Producers at ago, specifically “The role that comfort zones. ding 20 to 30 years an, goodbye to their e, Ore., is expan they played ,” says Rob Hartm based in Eugen ping role on and pricing The agency, lines and develo in risk selecti commercial those lines: the report. line of its focus on co-author of lization within on the front be for specia to of buses, used undernew areas for taxis and “The agent of a policy, had n insurance transportatio riting and pricing tions of homes, knew very underw ity, did inspec Hartman. example. agents who were writing author business,” says , we have had stayed the rically they knew “Histo given that lization and the customer, for that today, areas of specia technology used to their ’s a lot less need singly in small information y 50 “There Vince Ada, lines—and increa to more of a there,” says ys approximatel all personal g which emplo s are movin in what in the task is director at WHA, ercial—carrier sit comfortably model, where You comm you can’t just or eight years. people. “But ox underwriting application and answer five black-b last the in an tely fill out you have done ries.” ss or 10 to 20 yees to accura multiple indust about the busine drive have to learn additional emplo 60 questions and how you the 50 to ly hired eight you and the car WHA recent that will help questions about technologies ers. enting are and is implem that’s it.” vely with custom by carriers t more effecti efforts it—and hannel or direct sales company interac up its marketing Multic insurance, which also stepping y, and auto ing commercial The agency is increasing steadil of premiums, is becom in personal and sales ncy. grow are also for 70% boost efficie in order to measures to says. Carriers is accounts d, Hartman matic of what lines, and is taking the industry commoditize ence is emble sively, with ze insurance ising. more aggres WHA’s experi small and mid-si US. Many marketing a year on advert are many $6bn at than happening carriers ng more across the ms were brokerages riven, spendi y personal auto, of all P&C premiu ndent lines, notabl agencies and nt, technology-d some s. In efficie more and broker written by indepe specialized. They competing with agents are becoming ercial lines and ting. agents 2013 2013, focused on comm new approaches to marke Share Report Source: Market ping pendent Insurance T CHANNEL are also develo able hole in A.M. Best/Inde little choice. Brokers of America the THE DIREC have punched a notice larger Agents & They may have economics of sales is growing signs that the unravel,” Direct al auto, and the hole to ing “There are model are beginn report, Agents person 2013 | 11 traditional agent ER/DECEMBER sey & Co. NOVEMB McKin a recent according to
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