Insurance Business America issue 5.07

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BROKERS ON

CARRIERS Brokers sound off on which carriers are the best of the best

DEVELOP A NICHE IN ‘FUN’

Boost your business by insuring summer’s hottest activities

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THE LEADERS OF TOMORROW

How to attract and retain the next generation of talent – before it’s too late

A CHALLENGING ENVIRONMENT

Are your multinational clients properly covered for environmental risks?

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ISSUE 5.07

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CONTENTS

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UPFRONT 04 Editorial

BROKERS ON

CARRIERS COVER STORY

24

It’s time for terrorism coverage to evolve

FEATURES

THE NEXT GENERATION OF LEADERS

What can the industry do to better attract and develop new talent?

PEOPLE

INDUSTRY ICON

A look at the top business risks for 2017

10 News analysis

How multinational clients can protect themselves from the shifting sands of global environmental legislation

12 Intelligence

The challenge of covering older blue-collar workers

FEATURES

40

WINE NOT?

Vantreo Insurance Brokerage’s Joe Sucatre reveals how his agency developed its winery specialty

16 Technology update

If you’re not offering online rating capabilities, you’re behind the curve

23 Opinion

Why it’s crucial for agencies to foster collaboration between generations

PEOPLE 47 Career path

Whether in music or insurance, Eric Micheals has a passion for building things from the ground up

48 Other life

FEATURES

42

BUSINESS IN FULL BLOOM

As Americans head out to enjoy the summer sun, they bring with them increased risks for camps, resorts and sports venues

2

08 Statistics

14 Workers’ comp update

XL Catlin’s Joe Tocco discusses what the insurance giant is doing to remain relevant well into the future

20

How much regulation is too much?

This month’s big movers, shakers and new products

BROKERS ON CARRIERS

Brokers offer an honest take on their carriers’ performance in 10 key areas – and give advice on where they have room for improvement

36

06 Head to head

Chilling out with snowboarder Erik Gunderson

IBAMAG.COM CHECK IT OUT ONLINE

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Focused on solutions.

We are.

Inspiration to reach higher and create solutions unrivaled in the marketplace.

Industry leader with 35 years in the E&S business. nationwide.com/weare

E&S/Specialty A.M. Best rating of A+ (Superior), FSC XV FORTUNE 100 Best Companies to Work For ® 2017 Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2017 Nationwide Disclaimer: FORTUNE® and Time Inc. are not affiliated with, and do not endorse the products or services of, Nationwide Mutual Insurance Company.

FORTUNE and FORTUNE 100 Best Companies to Work For® are registered trademarks of Time Inc. and are used under license.

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UPFRONT

EDITORIAL

The changing face of terror

T

he official definition of terrorism – “the unlawful use of violence and intimidation, especially against civilians, in the pursuit of political aims” – doesn’t seem to do justice to the extent of the mayhem, devastation and tragedy its actions can cause. June alone saw eight people killed and 48 injured in the London Bridge attack in the UK; one killed and three injured in Melbourne, Australia, during a hostage crisis; one dead and 10 injured in the Finsbury Park attack in London; a failed attack in Brussels, Belgium, in which a bomb was detonated but caused no injuries; and a police officer seriously injured when stabbed at Bishop International Airport near Flint, Michigan. These examples, of course, happened just after the May explosion at a concert in Manchester, England, which killed 22 and injured 120.

With the rise in lone-wolf-style attacks, it’s clear that terrorism has changed from the days of the IRA, and even from the 9/11 plane hijackings. It’s no surprise, then, that with the rapid development of terrorism has come the need for a concurrent evolution in terrorism insurance. In an analysis published on

The insurance industry needs to offer a genuine solution that prevents clients from slipping through the cracks as they attempt to rebuild their lives Out-Law, Nick Bradley, Pinsent Masons’ insurance law expert, described how terrorism insurance is widely stuck in the past.

“Insurers continue to view terrorism risk as the risks of an organized plot or threat for doing damage to property,” he wrote. “The result is a recognized ‘insurance gap’ for business interruption arising from non-property damage.”

It’s a gap that needs to be addressed – the Manchester Arena attack provides a glaring example. While the real loss was to the families involved, canceled tour dates also represented huge expense, and the cost of business interruption was likely to be far more significant than that of property damage.

The insurance industry needs to react to the changing face of terrorism – to offer a genuine solution that prevents clients from slipping through the cracks as they attempt to rebuild their lives. The emphasis is on brokers, too, to stress the importance of this cover to clients who naively assume it “can’t happen to them” – and help them find real-world solutions to the worst of real-world events.

The insurance industry has often been criticized for being slow to change.

This is one time when it needs to prove it can move with the times – and quickly.

The team at Insurance Business America

www.ibamag.com MAY 2017 EDITORIAL Managing Editor Paul Lucas Journalists Sam Boyer, Jordan Lynn, Lucy Hook, Bethan Moorcraft, Ryan Smith, Nerine Zoio News Writers Lyle Adriano, Louie Bacani, Mina Martin, Gabriel Olano Staff Writers Tim Garratt, Hannah Go, Libby McDonald, Joe Rosengarten, Heather Turner Copy Editor Clare Alexander

CONTRIBUTORS Scott Rogers

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

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

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

Editorial Inquiries paul.lucas@keymedia.com Subscription Inquiries subscriptions@keymedia.com Advertising Inquiries cathy.masek@keymedia.com, chris.wills@keymedia.com chris.anderson@keymedia.com, megan.roth@keymedia.com

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tel: +1 720 316 0151 www.keymedia.com Offices in Denver, London, Toronto, Sydney, Auckland, Manila, Singapore, Bengaluru

Insurance Business America is part of an international family of B2B publications and websites for the insurance industry Insurance Business Canada john.mackenzie@kmimedia.ca T +1 416 644 874O Insurance Business UK jonathan.connelly@keymedia.com T +44 20 7193 0935 Insurance Business Australia peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business NZ peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business Asia peter.smith@keymedia.com.au T +61 2 8437 47OO 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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COM10

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UPFRONT

HEAD TO HEAD

Is the insurance industry overly regulated?

Regulation is a familiar and widespread bugbear for the industry – but has it gone too far?

Daniel J. Kaufman

Peter J. Staddon

Alan Merten

Senior vice president H.W. Kaufman Financial Group

Managing director Managing General Agents’ Association

Financial services partner Deloitte

“Insurance industry regulation varies widely across the globe. With regard to the US, the federal government has mostly opted out of regulating insurance, with each state responsible for regulation based on local needs. It is a responsive and accountable system that relies on the expertise of individual state regulators, and it has worked well for more than 70 years.

My expectation is that the federal government will maintain a policy of minimizing unnecessary regulation. While some regulation provides important consumer protections, over-regulation has the potential to limit product development or stall innovation. We will continue to advocate for a balanced approach.”

“Many would say yes, but I think there is a little more to this question. I do not believe the industry is over-regulated.

Many of the rules handed down relate to good business practice. These allow us to stand on a global stage and say that our industry is among the best in the world, and both investors and clients are protected.

Perhaps the more pertinent question is: Are we paying too much for regulation?

The answer to that is, emphatically, yes.

Intermediary costs can be equivalent to employing an additional member of staff – and in some cases, two.”

“The increased attention on conduct is placing resource pressures on the industry as it works to demonstrate the value of creating safe, sustainable products and services that highlight the industry’s duties to policyholders and are fit for purpose for the longer term.

The long-term nature of insurance relationships and the transformational changes in the industry, together with the regulatory constraints on changing insurance contracts, do create complexity for both regulators and insurers. However, both parties are determined to ensure that products, practices and behaviors maintain the best interests of policyholders, not just for today, but also into the future.”

RULES OF ENGAGEMENT Regulation has been a matter of tremendous concern to the global insurance industry in recent years, according to PwC’s Insurance Banana Skins Index, a survey that tracks the greatest risks (or ‘banana skins’) facing the industry in the near to mid-term future However, the latest survey was the first in four years where ‘regulatory risk’ wasn’t present among the top five concerns. PwC attributes its absence to a ‘business as usual’ mindset setting in as recent regulatory upheavals – including the EU’s Solvency II initiative, which was implemented last year – become the norm.

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7/07/2017 4:36:28 AM

UPFRONT

STATISTICS

Risky business

NORTH AMERICA 1. Cybercrime 2. Damage to reputation/brand 3. Failure to attract or retain top talent

When it comes to business risks, nothing’s more dangerous than a headline-grabbing brand misstep

THE INTEGRITY of a brand’s reputation is the top-ranked risk for businesses globally across numerous geographies and industries – and unlike many other threats, it is insurable. Cyber risk is also gathering pace as a top concern: Although it only entered the top 10 in 2015, cybercrime was ranked by risk management professionals surveyed by Aon as the fifth most pressing issue faced by businesses today.

93%

Companies with revenue of $1 billion or more that have a risk management department

54%

Companies with revenues of less than $500 million that have a risk management department

Business interruption also made the top 10, following a year in which economic losses from natural catastrophe events topped $210 billion and business interruption costs from such disasters have grown proportionally higher than they were a decade ago. Political uncertainties also re-entered the top 10 after a tumultuous year that saw volatility pervade typically stable developed nations.

71%

Companies that engage in cross-functional collaboration of risk management

76%

Companies that have adopted an approach to risk management at the board level

4. Regulatory/legislative changes 5. Economic slowdown

Insurable Uninsurable

Partially insurable

TOP 5 RISKS BY REGION The top-ranked business risk globally – damage to reputation or brand – was the primary or secondary concern for business leaders in almost every region of the world. Reputational risk also cuts across industries; it was named as the number-one risk for fields as varied as beverages, hotels and non-aviation transportation manufacturing.

Source: Global Risk Management Survey, Aon, 2017

THE GLOBAL TOP 10

LACK OF PREPARATION

High-profile scandals, product recalls and the viral spread of news on social media helped catapult reputational risk to the number-one spot.

Aon found that overall, businesses are less prepared to face their biggest risks than they were two years ago. The average readiness for the current top 10 risks has exhibited a significant downward trend, dropping from 58% in 2015 to 53% in 2017.

Damage to reputation/brand Economic slowdown/slow recovery Increasing competition Regulatory/legislative changes Cybercrime/hacking/viruses/malicious codes Failure to innovate/meet customer needs Failure to attract or retain top talent Business interruption Political risk/uncertainties Third-party liability (including E&O) Source: Global Risk Management Survey, Aon, 2017

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% OF COMPANIES PREPARED FOR THIS RISK 100% 2015

2017

Failure to Failure to Business Political innovate attract or retain interruption uncertainties top talent

Third-party liability

80% 60% 40% 20% 0

Damage to reputation/ brand

Economic Increasing Regulatory/ Cybercrime slowdown competition legislative changes

Source: Global Risk Management Survey, Aon, 2017

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7/07/2017 4:40:28 AM

ASIA PACIFIC

EUROPE

1. Damage to reputation/brand

1. Economic slowdown

2. Regulatory/legislative changes

2. Damage to reputation/brand

3. Increasing competition

3. Increasing competition

4. Failure to innovate

4. Regulatory/legislative changes

5. Economic slowdown

5. Failure to innovate

MIDDLE EAST AND AFRICA 1. Economic slowdown 2. Political risk

LATIN AMERICA

3. Failure to innovate

1. Damage to reputation/brand

4. Failure to attract or retain top talent

2. Business interruption

5. Damage to reputation/brand

3. Economic slowdown 4. Third-party liability 5. Social responsibility/sustainability

Source: Global Risk Management Survey, Aon, 2017

REGIONAL READINESS

RISKS OF THE FUTURE

In regional terms, the level of risk preparedness has gone up in Asia-Pacific, in contrast to all other regions, which reported lower levels of readiness than they did two years ago.

By 2020, risk management professionals believe reputational risk drop significantly in importance.

% OF COMPANIES PREPARED FOR THE TOP 10 RISKS

2017

2015

2013

Change from 2017

PROJECTED TOP 10 BUSINESS RISKS, 2020 Economic slowdown/slow recovery

Asia Pacific

Increasing competition Failure to innovate/meet customer needs

North America

Regulatory/legislative changes Cybercrime/hacking/viruses/malicious codes

Europe

Damage to reputation/brand Latin America

Failure to attract or retain top talent Political risk/uncertainties

Middle East and Africa

Commodity price risk 0%

10%

20%

30%

40%

50%

60%

70%

80%

Source: Global Risk Management Survey, Aon, 2017

Disruptive technologies/innovation Source: Global Risk Management Survey, Aon, 2017

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UPFRONT

NEWS ANALYSIS

Environmental minefield An intricate nexus of regulations around the globe is making coverage for multinational corporations increasingly complex – and under the glare of public scrutiny, the stakes are higher than ever

THE GLOBAL environmental regulatory landscape is a patchwork quilt of complexities, from the EU’s sweeping Environmental Liability Directive to the Comprehensive Environmental Response, Compensation and Liability Act (Superfund) in the US. For multinational businesses, operating in multiple countries is a balancing act that requires navigating an intimidating amount of legislation.

“From the multinational side, it’s incredibly important to make sure the policy is responding to local laws,” says Glenn O’Halloran, Chubb’s environmental risk manager for the UK and Ireland. He says

Regulation across various jurisdictions can be “wildly different,” says Neil Beresford, partner at Clyde & Co. Some markets, such as China, India and some countries in Europe, have compulsory insurance programs in certain areas, and it’s no coincidence that those jurisdictions tend to see the highest claims activity.

Alongside this complex global landscape, there is an ever-increasing level of public scrutiny on companies – meaning the stakes are high when it comes to potential reputational damage resulting from an environmental incident.

“There’s increased pressure in how

“There needs to be a greater awareness that this is not just confined to manufacturing or oil & gas sectors – it is everybody” Neil Beresford, Clyde & Co. that at last count, there were around 17,000 different pieces of environmental legislation globally. “So when businesses do have an event, it’s important to have a local contact point within the certain territory where these losses occurred and to ensure that the policy is structured appropriately for that territory.”

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[firms] operate and how they manage their environmental exposure,” O’Halloran says, explaining that this is driven in part by rising public awareness, as well as the ability of news to spread quickly in the digital age.

“Something that might have been a relatively benign issue can quickly become serious

from a reputational damage perspective.”

But despite the weight of the risks, clients typically don’t understand the extent of their environmental exposure, and among those that do, there is a common misconception that property and general liability policies will be enough to cover the majority of any losses.

“The market is in a very similar place to where D&O was, say, 15 years ago, or where cyber was five years ago, in that there’s not sufficient understanding of the generality of the risk,” Beresford says. While a great deal of work was done in the cyber market to help businesses understand that cyber exposures are not just limited to technology companies, he explains, there remains a lack of awareness in the environmental space.

“If you look at the claims data across

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7/07/2017 4:48:36 AM

GLOBAL REGULATIONS AT A GLANCE

US

Superfund liability legislates that any company potentially responsible for pollution may be held liable for the entire cleanup of a site, including all government costs, damages to natural resources and any human health concerns.

EU

The Environmental Liability Directive, which came into force in 2009, imposed new liabilities for environmental damage on many companies operating within the EU, requiring not only the prevention of damage but also restoration after an event.

China

The country amended its Environ­ mental Protection Law in 2014, heightening liabilities for wrongdoers and broadening the government’s power to crack down on noncompliance, including measures such as seizure of polluting equipment. industry sectors, you’d be surprised at how many claims are accounted for by real estate businesses, retail businesses and construc-

ronmental legislation – including the EU’s Environmental Liability Directive – the responsibility to remediate falls not just on

“A multinational client must not rely upon a single master policy to appropriately insure their overseas exposure” Glenn O’Halloran, Chubb tion businesses – they’re all facing quite significant claims,” Beresford says. “So there needs to be a greater awareness that this is not just confined to manufacturing or oil & gas sectors – it is everybody.”

One aspect in particular that is not well understood is that under some envi-

the polluter, but the landowner too.

“About half the cases that we see are cases where a landowner has been required to remediate for something that someone else has done,” Beresford says. “It’s the fact that the landowner is responsible for the acts of others that makes environmental

risk of such general application.”

With such a complex landscape to navigate, how are clients – especially those facing exposures in multiple territories – best supported? O’Halloran stresses that both brokers and insurers must recognize that the differing requirements in different territories create a need for local policies. Brokers should draw not only on multi­ n ational insurers’ knowledge of global environmental exposures, but also on their capabilities in providing local services to clients.

“The common theme here is that a multinational client must properly structure their environmental insurance policy to respond to unique risks in each territory,” O’Halloran says, “and they must not rely upon a single master policy to appropriately insure their overseas exposure.”

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7/07/2017 4:48:43 AM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Arrowhead General Insurance Agency

TriCoast Insurance Services

TriCoast provides access to earthquake and hurricane insurance products

Arthur J. Gallagher

Ann Arbor Business Advisors

Ann Arbor Business Advisors provides retirement plan services for institutional clients

Arthur J. Gallagher

Armstrong/Robitaille/ Riegle

The acquisition gives Gallagher a brokerage with Michigan- and California-based clients

Brown & Brown of Tennessee

Spann Insurance

The Nashville-based agency will become part of Brown & Brown's profit center in Brentwood, Tennessee

CBIZ

Slaton Insurance

The addition of Slaton complements CBIZ’s expansion in South Florida

Seeman Holtz Property and Casualty

Vincent, Urban, Walker & Associates

The purchase of the Wisconsin agency suits the Floridabased company’s plan for geographic expansion

Worley Claims Services

Apex Claims Service of New England

The purchase of Apex is Worley’s fifth acquisition since 2015, enhancing its Northeast growth

Association offers smallbusiness cyber product

The Independent Insurance Agents & Brokers of America [the Big “I”], is offering a new commercial cyber coverage product for smallbusiness clients. The coverage is available through Big “I” Markets [BIM], an online market access system available exclusively to Big “I” members, featuring no fees, no volume commitments and competitive commissions. BIM has partnered with RGS Solutions to launch the product, which offers $100,000 worth of coverage and is available for businesses with up to 50 employees and less than $20 million in annual sales.

Gallagher scoops up two Michigan-based agencies Brokerage giant Arthur J. Gallagher shows no signs of slowing its acquisition activity, recently announcing the purchase of two agencies based in Ann Arbor, Michigan: Armstrong/Robitaille/Riegle and Ann Arbor Business Advisors. The twin acquisitions give Gallagher an insurance brokerage that offers employee benefits, retirement planning, life insurance and human resource consulting, as well as a company that provides retirement plan services for institutional clients.

“Armstrong/Robitaille/Riegle has earned a reputation for superior client service, which closely mirrors Gallagher’s own approach,” said J. Patrick Gallagher Jr., Arthur J. Gallagher’s chairman, president and CEO, in a statement announcing the acquisition.

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Markel debuts new liability endorsement for PEOs

Markel Global Insurance has introduced a new management liability endorsement for professional employer organizations, providing liability coverage for clients of the insured PEO. PEOs provide comprehensive back-office solutions for small businesses, including payroll, benefits, HR and tax administration. “Offering coverage enhancements to PEOs – who in turn can better serve their members – is a good example of how we listen to our customers and respond with an improvement to the policy,” said Sal Pollaro, managing director of management liability.

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7/07/2017 4:38:17 AM

PEOPLE XL Catlin launches contractor’s pollution product

XL Catlin has introduced a new contractor’s pollution liability express program designed to provide small to mid-sized firms with a streamlined environmental insurance underwriting approach. Aimed at construction firms with $50 million or less in projected revenue, coverage includes pollution conditions created or exacerbated at the contractor’s job site, during the course of transportation, disposal of waste at a non-owned disposal site, and as a result of a sudden and accidental pollution incident on the contractor’s scheduled property.

Oscar Insurance ramps up Obamacare offerings

Despite a potential healthcare shakeup, insurance startup Oscar Insurance has said it will begin selling health plans on the Affordable Care Act marketplace in Tennessee in 2018. The company also plans to expand its offerings in Texas, California, New Jersey, Ohio and New York, according to CEO Mario Schlosser. “We’re confident that when the dust settles, the market for health insurance will stabilize in time for 2018,” Schlosser said in a recent blog post.

“For all of the political noise, there are simply too many lives at stake for representatives in Washington, DC, not to do what’s right for the people.”

Next Insurance receives $35 million in new funding

American Express’ venture capital arm has become the latest investor in insurtech startup Next Insurance, bringing the company’s current round of funding to $35 million. Other major investors included Munich Re’s HSB Ventures. Next Insurance, which uses data to create customized insurance products for small business owners, plans to use the injection of capital to increase the products it offers and target new business sectors. Since it was established last year, the startup has amassed 5,000 customers and underwritten more than $1 million in total premium.

NAME

LEAVING

JOINING

NEW POSITION

Wanda Becotte

Southern Insurance Underwriters

tKg

Senior underwriter, small business

Jessica E. Clark

State Auto

GuideOne

CEO

Paul Collins

Willis Towers Watson

HUB International

Northeast president and CEO

Jessica Dekermanji

N/A

Liberty Mutual

SVP and chief underwriting officer, specialty energy unit

Kyle Domire

Burns & Wilcox

Worldwide Facilities

Head of Utah office

Dan Gaynor

N/A

Main Street America Group

SVP and chief underwriting officer

Debra Goldberg

Markel Corporation

Ryan Specialty Group

Chief underwriting officer, medical professional liability

Nikki Toon

N/A

Combined Agents of America

Production director

Alice Underwood

N/A

Willis Towers Watson

Global head, risk consulting and software business

John Watkins

Liberty Mutual

Chubb

Head of casualty claims, North America

Chubb makes former litigator head of casualty claims Chubb has appointed John Watkins as senior vice president and head of casualty claims for its North America claims organization. In his new role, Watkins will be responsible for managing approximately 325 casualty claims examiners.

Watkins has more than 27 years of claims management experience, most recently as senior vice president of complex claims for Liberty Mutual’s commercial insurance business. A former lawyer, Watkins joined Liberty Mutual as head of its litigation group after serving as national claims counsel for Allmerica (now Hanover).

Prior to that, he had a career in private practice in Connecticut and Boston.

Liberty Mutual taps new CUO for energy business

Jessica Dekermanji has been promoted to senior vice president and chief underwriting officer of the national insurance specialty energy unit at Liberty Mutual.

Dekermanji has been with the insurer since 2002, serving in a number of senior commercial insurance field operations, product management and underwriting positions, most recently as senior underwriting manager in the specialty energy area.

In her new role, Dekermanji will lead an experienced team of dedicated underwriting, risk control and account services professionals focused on expanding products and integrating technology to help energy clients better manage their overall cost of risk.

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7/07/2017 4:38:23 AM

UPFRONT

WORKERS’ COMP UPDATE NEWS BRIEFS Insurer battles porn stars’ HIV claims The California State Compensation Insurance Fund claims it has no obligation to cover adult movie studio Cybernet Entertainment in defending lawsuits from three male performers who claim they contracted HIV during video shoots. According to The Hollywood Reporter, Cybernet had workers’ compensation insurance via the state fund during the period in which the alleged injuries occurred, but while the state fund accepted the claim, it argued that it has already paid “appropriate medical expenses” and would not pay for additional negligence-based causes of action in the performers’ lawsuits.

Prisoners denied workers’ comp in West Virginia The West Virginia Supreme Court has ruled that inmates involved in workrelease programs are not qualified to receive workers’ compensation benefits. The Charleston GazetteMail reported that the court upheld a 2015 Workers’ Compensation Board of Review decision to deny workers’ compensation to an inmate who injured his hand in a wood chipper while working on a road in 2013. The court confirmed the board’s decision that the prisoner’s equal protection rights had not been violated, as he was working on a volunteer basis.

Ohio mayor says unauthorized immigrants need workers’ comp

James Wolf, mayor of Cincinnati suburb Mt. Healthy, has criticized state legislation that would deny workers’ compensation benefits for unauthorized immigrants who are

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injured on the job. “It will provide cost savings to employers who hire undocumented workers by allowing them to avoid workers’ compensation fees,” Wolf said in an opinion piece on Cincinnati.com. “In the end, companies that break the law and hire undocumented workers will save money while their workers lose protections and we cover their costs.”

Workers’ comp system “broken” in Guam Workers’ comp in Guam is a “broken system,” according to lawyers in the US territory. According to the Guam Daily Post, attorney John Bell has taken JoAnnalynn Fullerton, the administrator of Guam’s Worker’s Compensation Commission [WCC], to court, alleging that she has repeatedly swept claims under the rug. Under the island system, the WCC and the six-member panel at the Guam Department of Labor decide claims outcomes, but they meet only every six months or so. Delays in board decisions can subject workers to months without compensation.

Opioid bill introduced in overdoseplagued state

At least 4,600 Pennsylvanians died in 2016 from drug overdoses, according to data from the Drug Enforcement Administration. But recently introduced state legislation designed to curb the over-prescription of opioids could change that. The controversial bill calls for the state to develop a formulary for sanctioned opioids and other drugs for employees receiving medical and financial assistance under state workers’ compensation.

Non-sanctioned drugs would require written authorization from a doctor; insurance companies could challenge a prescription via the state’s existing appeals process.

Aging blue-collar workforce presents challenges As dockside workers get older, increased rates of injury are putting a strain on workers’ comp in this specialty area Shoulder injuries, back injuries, traumatic crushing injuries: Working on the country’s ports and waterways is physical, dangerous work – and as the workforce ages, these workers and their insurers are having to adapt to the challenges.

Workers’ compensation for dockside workers is a specialty area, regulated by the federal government under the US Longshore and Harbor Workers’ Compensation Act. American Equity Underwriters [AEU], part of the AmWINS Group, is one of the companies that specializes in USL&H insurance.

“We have a lot of welders, sandblasters, painters, guys who are carrying around heavy equipment,” says Will Scheffler, AEU’s senior vice president and director of claims. “You see a lot of shoulder injuries, back injuries, cervical injuries, in addition to the traumatic type events, where they may be pinned between two pieces of equipment and suffer a leg injury or something like that.”

As this workforce ages, those injuries – particularly the heavy-lifting injuries – are more prevalent than ever.

“It’s really an employer issue … but it presents problems on the claims side as well,” Scheffler says. “Because people are

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living longer, they’re working longer. And our industry is a blue-collar industry, so we’re dealing with a lot of people who are doing heavy manual labor jobs, and the people who are over 50 or 60 years old tend to get hurt more easily than a 20-some-

The relationship between carriers and Medicare also needs to be understood once an injured employee turns 65, points out Adele Hapworth, AEU’s chief operating officer.

“You’ve got to really think about what part of a retirement are we, as carriers, still

“We’re dealing with a lot of people who are doing heavy manual labor jobs, and the people who are over 50 or 60 years old tend to get hurt more easily” thing-year-old person.”

Aside from the older workforce being more readily injured when lifting heavy equipment, Scheffler says older workers tend to have existing diseases or conditions that can cause added compensation complications. In addition, injuries such as hearing loss often can develop late in careers from repetitive exposure.

responsible for, and what is Medicare going to pick up?” Hapworth says. “There’s a whole science about how you allocate what is related to the injury versus what is not – you’ve got to do it right; otherwise, it could cost a lot of money.

“We try to play a role ... in mitigating risk from a loss control and safety perspective,” Hapworth adds. “In the end, most people are

buying comp coverage for claims handling.

But what we’ve heard across our membership is what are we going to do with our aging workforce? Because we know the aging workforce will mean costlier claims.”

.®

www.summitholdings.com Policies are underwritten by Bridgefield Casualty Insurance Company and Bridgefield Employers Insurance Company, authorized insurers in AL, AR, FL, GA, IN, KY, LA, MS, NC, SC, TN and TX; BusinessFirst Insurance Company, authorized in FL, GA, KY, NC, SC and TN. RetailFirst Insurance company, authorized in FL; Retailers Casualty Insurance Company, authorized in AR, LA, MS and TX. ©2017 Summit Consulting LLC | 2310 Commerce Point Drive, Lakeland, FL 33801

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7/07/2017 4:39:51 AM

UPFRONT

TECHNOLOGY UPDATE

The importance of rating systems One tech expert says agencies need to adopt online rating systems in order to compete with disruptors

lead providers that are out there.”

By offering real-time live rating options from multiple carriers, an agency can actually enhance its sales rather than endanger them.

“It’s important that today’s agencies adopt that same technology [used by insurtech aggregators] and make sure that they use that to their fullest ability,” Rixford says. “A lot of people are researching online, and that research does include prices. Agencies should not shy away from providing prices because

“It’s important that today’s agencies adopt that same technology used by insurtech aggregators”

Every advantage helps in the modern insurance industry – and web-based rating systems can be a differentiator for independent agencies in appealing to consumers who want to do their own research, says Insurance Technologies Corporation president Laird Rixford.

“One of the key tenets of today’s consumer is being provided choice,” Rixford says. “[And] one of the key tenets of being an independent agent is that it allows you to have choice, to use carriers across the spectrum. The reality

NEWS BRIEFS

is that consumers are shopping online, and they’re used to buying the best-quality item … at the best price.”

Insurtech companies have invaded the industry in large part because they offer more choices through online aggregators. But agencies can do that, too. “The technology exists today – agencies can put real-time rating from multiple carriers directly on their website,” Rixford says. “And that allows them to compete with all the insurtech online aggregators and

Home-sensor company gets insurance investors

Notion, a Denver firm that added Liberty Mutual as an investor last year, has picked up more insurance investors for its home monitoring sensors.

The company reported it is now collaborating with “three of the top five home insurance providers,” though it refused to divulge their identities. Notion’s sensors, which can be installed on doors, windows and home appliances, can alert homeowners via their mobile phones when a door is opened, a washing machine is leaking, or a room is abnormally hot or cold.

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that’s the reality of what today’s modern consumer is looking for.”

Even after researching online, many consumers still want to deal with a broker directly to tap into their expertise, Rixford says, but only after deciding on a deal they like.

“Not many agencies are using online rating systems, and that’s a problem,” he says. “They have not embraced the internet, preferring to hold on to referral traffic, phone traffic and people coming to their office. They’re not looking to broaden their expansive reach, to reach out and find customers on ... the internet. By not having that available to their consumers, they’re missing out on a significant and growing piece of the market.”

New Mexico cops can refuse e-proof of insurance

New Mexico could soon be the only state in the US that does not require police to accept electronic proof of auto insurance during a traffic stop. Currently, individual officers can decide whether to accept e-proof or not; the New Mexico State Police is the only one of the state’s largest police agencies to formally instruct officers to accept the proof. Electronic proof advocates have decried the policy, claiming that the patchwork of enforcement will only create confusion and inconvenience for both New Mexican and visiting drivers.

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WHAT’S YOUR COMBINATION FOR SUCCESS?

Websites | Marketing | Rating | Management

Find your agency’s combination at GetITC.com

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UPFRONT

TECHNOLOGY UPDATE Q&A

Matt Reid

Using technology to drive sales

VP of marketing VELOCIFY

Fast fact Velocify is officially a teenager – the company has been helping accelerate sales results for its clients for 13 years

What can insurance companies do to better leverage customer data and insights for the most effective sales outcomes?

Standing out is becoming more difficult in an increasingly commoditized insurance world. With buying power continuing to shift to the online consumer, it should come as no surprise that the most successful insurance agencies are attracting new clients by investing in technologies that guide quicker, more informed decisions about marketing and sales execution.

A recent study by Velocify and Insurance Technologies Corporation found a strong link between marketing and sales technology investment and revenue growth. Marketing automation users sold 20% more policies per producer and 10% more policies per household, on average. Lead management users drove 43% more policies per producer and 13% more policies per household.

How important is it for agents to connect as quickly as possible with prospective clients who might be shopping online for policies?

Speed is critical when responding to leads. Velocify research has found that there is a significant first mover advantage in competitive industries like insurance. Our research shows that conversion rates more than double when leads are called in under one minute. Unfortunately, Velocify has found that only 7% of prospects received a call within the

Farmers introduces new roadside assistance tech

Farmers Insurance has implemented new smartphone roadside assistance that uses technology to locate customers quickly and efficiently, identifies and dispatches the closest service vehicle instantly, and provides real-time notifications and a progress map customers can follow.

Already available in Arizona, California, Idaho, Illinois, Indiana, Iowa, Kansas, Oregon, Nevada, Washington and Wisconsin, Farmers said the system has demonstrated excellent results, and it plans to roll it out to additional states throughout the year.

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recommended best practice of one minute, and most waited an average of 48 hours before they received a phone response.

When it comes to email, the correlation between speed and conversion rate is not as strong, but it’s important nonetheless. A significantly higher percentage of companies respond via email within an hour. This is largely due to the wide adoption and efficiency of marketing automation.

What can agents do to increase their lead conversion rates?

Agents can improve their initial impact on inbound sales leads by fine-tuning communication timing and frequency, and by putting more emphasis on persuasive and proven messaging. Our recent study on sales lead response found that most sales professionals were not only too slow to follow up, they were also not persistent enough. In fact, more than 33% of leads didn’t even receive a call.

And when it comes to creating the most effective first impression, the quality of your message is just as important as maintaining a consistent and disciplined follow-up process. A full 82% of voicemails and 92% of emails that were assessed needed improvement and failed to provide sufficient value for the recipient. The results of this study show that many insurers and other organizations are throwing money away by not responding appropriately – or at all – to high-value leads.

Startup launches smartphone insurance

SURE, an insurtech startup that offers on-demand personal insurance via an app, has added smartphone insurance to its lineup. SURE’s new Smartphone Protection product, developed in partnership with AmTrust subsidiary Warrantech, offers a flexible, affordable alternative to existing smartphone insurance offered by AppleCare and mobile network operators. The policy can be purchased at any time during a phone’s lifetime and uses patent-pending technology to test the health of a customer’s phone remotely before issuing a policy.

New law to allow autonomous cars on Texas roads

Self-driving cars have been given a tentative green light in Texas. In June, Governor Greg Abbott signed a bill that permits driverless vehicles on the roads as long as they satisfy certain conditions – namely, obeying traffic laws, carrying insurance and recording video.

The manufacturer will be liable for traffic violations and accidents as long as the self-driving tech remains unmodified, but groups such as AAA are calling for higher minimum insurance coverage than is present with conventional cars.

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Beyond Security®

“It Takes Discipline”

Marty Hacala Fitness Enthusiast General Star President & CEO

“Rolling out of bed at 5am every morning to work out requires discipline. It’s my way of getting the very most out of my busy day.

“At General Star, we strive to get the very most out of our wholesale broker relationships. As a member of the Berkshire Hathaway family of companies, our financial strength is unsurpassed. But it’s our disciplined approach to building and maintaining profitable partnerships with a select group of brokers that drives us.

“Discipline: Whether sticking with an early morning exercise regimen or standing firm with a limited number of valuable wholesale broker relationships, it remains the cornerstone of our success.”

To locate the General Star broker nearest you, visit our website at www.generalstar.com.

© 2015 General Star National Insurance Company is licensed in the District of Columbia, Puerto Rico and all states. General Star National Insurance Company has its principal place of business in Stamford, CT and operates under NAIC Number 0031-11967. Insurance is placed with General Star National Insurance Company by licensed producers. General Star Indemnity Company is an eligible surplus lines insurer in all states, the District of Columbia, Puerto Rico, and the Virgin Islands. It has the status as an unlicensed insurer in California and operates under NAIC Number 0031-37362. Insurance is placed with the General Star Indemnity Company by licensed producers and, for risk that qualify, by licensed surplus lines brokers.

Atlanta 404 239 6777

Chicago 312 267 8600

A.M. Best A++ XV

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Los Angeles 213 630 1930

S&P AA+

New York 212 859 3950

Stamford 203 328 5700

A Berkshire Hathaway Company

7/07/2017 4:52:36 AM

PEOPLE

INDUSTRY ICON

ALL IN, ALL THE TIME XL Catlin’s Joe Tocco discusses the leadership lessons he learned while working on nuclear submarines and what his company is doing to remain relevant in the modern insurance industry

JOE TOCCO is a veteran not only of insurance, but of the US Navy. Before joining the industry, he spent nine years as a nuclear field service engineer, the majority of that time on nuclear submarines. “I think it really did form a lot of my early thinking,” he says of his time in the Navy.

Tocco undertook several leadership roles during those years, but his Navy tenure also provided a valuable opportunity for him to observe and learn from other leaders.

“You quickly identify with some of the good leadership – there was a lot of that,” he says. “You also quickly learn from people in these positions who were horrible leaders. It really helped form the way I thought about leading people, working with people [and] building teams. Being on a nuclear submarine, your life at any minute is dependent on having the right people around you and being able to trust the people that you’re with. So, as you built your teams, you had to make sure that if you didn’t have people you could trust, you had to help train them and bring them along.”

Tocco has also faced many challenges as an insurance leader, including being on the ground in New York City during 9/11. “I was working at a different firm at the time … my office was downtown next to the World Trade Center,” he says.

Tocco lost four colleagues in the attacks,

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including his best friend.

“What ended up happening was I was promoted into my best friend’s role, which was, in my own mind, an incredible challenge to deal with and overcome,” he says.

“And then [I had] to be strong enough to provide the leadership that the team really needed back then, because everybody was at

to stand out in today’s fiercely competitive climate, Tocco says, “I really think it comes down to being absolutely excellent at everything we do. We need to … deliver on our promises and deliver excellent service from start to finish, including claims handling, payments, issuing policies and a lot of the basic blocking and tackling, but do it better

“It comes down to being absolutely excellent at everything we do. We need to … deliver on our promises and deliver excellent service from start to finish, including claims handling, payments, issuing policies and a lot of the basic blocking and tackling, but do it better than anybody” a loss. Nobody knew what we were going to do and if we were even going to be able to continue to work, if we could ever come back into Manhattan … [that] would probably be the biggest challenge that I think I’ve had to deal with throughout my career.”

Ensuring excellence Today, Tocco is chief executive of insurance in North America for the recently merged XL Catlin. For a massive carrier like XL Catlin

than anybody.”

He also acknowledges that staying on top in today’s insurance industry means investing in new technology such as artificial intelligence.

“If we’re able to improve our operations and leverage real-time data [and] drive underwriting decisions better with the use of artificial intelligence, I think that would be a real benefit for us,” Tocco says. “How we can maybe use that artificial intelligence to make us better as an organization as well is

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PROFILE Name: Joseph Tocco Company: XL Catlin Title: Chief executive, North America, insurance Based in: New York City Years in the industry: 21 Fast fact: Before taking on his current role, Tocco was XL Group’s chief executive of North America property & casualty insurance. He joined XL Group in 2011 after spending almost 15 years with Zurich in North America.

Photo by Barbie Schwartz

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PEOPLE

INDUSTRY ICON

certainly an opportunity for us.”

He points to XL Catlin’s internal innovation team, Accelerate, which works with each business unit to generate new opportunities through the use of new technologies, including AI. “That’s a fairly small team, but they’re moving very quickly and looking at all sorts of opportunities.”

According to Tocco, XL Catlin has been engaging in efforts to protect itself from disruptors for some time now – particularly through XL Innovate, its venture capital play.

with them to start learning what they were doing with autonomous vehicles – and for us, in turn, to share with them insights on how we are going to work together to enable this technology to actually advance, because they’re going to need insurable solutions in order for this to really get mass appeal and for people to buy into this,” Tocco says. “For us, the advantage is really being on the cutting edge of the new trends associated with autonomous vehicles and how we can use that and apply that not only with Oxbotica, but obvi-

“We make investments in a lot of different startup operations. We ultimately might buy those outright, bring them in-house, sell them off or maintain our investment and let things play out. But it gives us a seat at the table for all of this emerging technology” “We make investments in a lot of different startup operations,” Tocco says. “We ultimately might buy those outright, bring them in-house, sell them off or maintain our investment and let things play out. But it gives us a seat at the table for all of this emerging technology and emerging trends.

It’s been quite exciting to see that play itself out, and there are a number of examples where we’ve been very successful.”

Specifically, Tocco mentions XL Group’s 2015 acquisition of New Energy Risk, an insurance solutions provider for the renewable energy sector, which he says “has really been a great win for us.”

He also points to the insurer’s landmark agreement with Oxbotica, a spin-off from Oxford University’s Mobile Robotics Group, which focuses on the development of autonomous vehicles.

“They reached out and asked us to partner

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ously for all the other industries and manufacturers that will be using this technology.”

XL GROUP BY THE NUMBERS

7,000

Approximate number of XL Group employees worldwide

87

Number of XL Group offices around the world

30

Countries in which XL Group operates

Thinking ahead Tocco is excited to be part of a firm that’s embracing new ideas in order to maintain its relevance well into the future.

“One of our new values that we’ve added recently is to be future-focused,” he says, “and it’s really about preparing us for the next few decades and to make sure that we are incredibly relevant throughout that time.”

Tocco is confident that XL Catlin has the talent and the culture to make that happen.

“Our culture is one that’s very inclusive – people work to help each other and for us to be successful,” he says. “As we start to really leverage that going forward, bringing the talent across both XL and Catlin … to the forefront as one XL Catlin team in this market, I think we can’t be beat.”

2015

Year when XL Group completed its acquisition of Catlin Group

$9.7 billion

Gross premiums written by XL Catlin in 2016

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UPFRONT

OPINION

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

Blending generations As one generation retires from the industry, a quality transition is the key to professional survival, writes Scott Rogers IN 1969, Neil Armstrong and Buzz Aldrin walked on the moon, Woodstock debuted, and the internet was born. In 2019, scientists aim to send humans to Mars, Star Wars IX will be released, and one-fourth of insurance industry professionals are predicted to retire.

Most industries experience evolutions, but are we prepared? Without a plan in place to blend generations within the workplace – and to do so quickly – the quality of an agency will greatly decline.

As your workforce continues to mature in the coming years, one of the most critical business moves you can make is to focus on an effective generational transition strategy.

It can be difficult to create an agency culture that is both attractive to young agents and comfortable for senior staff, but that is what we all must do in order to keep our businesses thriving. We may have been able to rely on the same great producer types for the last several decades as the pillars of our business model, but what happens when these pillars no longer exist?

If the insurance industry does not modernize, become appealing to the next generation of professionals and develop a plan to make this transition go smoothly, the years of time and effort that past generations have devoted toward our industry will have been for nothing. It’s time to focus on what’s to come instead of dwelling in the past – corporately and culturally.

How can we do this? By finding what motivates each generation and leveraging it to produce greater output. While older

generations are motivated by proving themselves through their duties, I have found that younger associates find purpose in knowing their company serves the community. Our agency is deeply rooted in helping the local community; we believe this contributes to our overall success. We encourage volunteering and regularly extend this option during working hours. This shouldn’t just be a company belief – to be successful, it should be a personal belief.

to build relationships within an agency to leverage generational knowledge and share skill sets. Encourage mentoring – no, actually require it. By imparting knowledge from prior successes or failures, mentors can pave the way for other team members. These moments encourage continual learning and personal development for both the mentor and the mentee. The mentor/mentee relationship also breaks down judgments and barriers bred by generational differences in work style.

On that note, the success or failure of an associate shouldn’t be judged by the hours they keep, but by their ability to meet or exceed core objectives. This flexibility should carry over to management styles as well. I believe that being accommodating and flexible helps motivate employees, increase productivity, reduce turnover and lower acquisition costs.

At the end of the day, most of us want the same thing: the flexibility to work in a fashion and style where we are most productive, and to receive praise from other associates and management for our contributions. Recognize that while we might all have different styles of working, when it comes to defining productivity or work ethic, embrace each of your employees’

“It can be difficult to create an agency culture that is both attractive to young agents and comfortable for senior staff, but that is what we all must do” Antiquated tendencies skewed toward older generations will only add to the difficulties of combining generations within the agency. When an employment offer is made to a new team member, you must immediately recognize and identify the value they bring to the organization. As a management team, we look for ways to encourage and reward the unique strengths each associate brings to the table. Differences shouldn’t be thought of as hindrances, but rather as traits that provide team benefits. Instead of making associates conform, they should be encouraged to be unique. This attitude fosters a more positive work environment.

It’s equally important for managers

journey to reaching their full potential.

The insurance industry is experiencing this generational shift in an especially significant way, so it is critically important to focus on creating purpose, celebrating differences, developing relationships and remaining flexible. Being mindful of these tactics will help blend workplace generations and ensure that the insurance industry is able to continue successfully moving forward.

Scott Rogers is president of The Glatfelter Agency, a retail division of Glatfelter Insurance Group [GIG]. An employee-owned company, GIG is among the largest program managers and insurance brokers in the US.

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FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS

BROKERS ON Brokers name the best carriers in the industry – and share suggestions for where their carrier partners can improve WHICH CARRIERS are performing above the rest? For the fourth year in a row, brokers told IBA about their carriers’ performance in 10 different areas that are vital to the broker-carrier relationship, including claims processing, marketing support and competitive rates. Brokers rated their carriers on a scale of 1 (poor) to 10 (excellent), while also providing ideas for how their carriers can improve.

This year, carrier performance improved in all categories except one: quick quotes, where carrier performance dropped 4% from last year.

Carriers exhibited the most improvement when it came to competitive rates, notching an 8% increase in performance over last year, perhaps signaling an increased discipline in terms of commercial rates.

The overall carrier market greatly improved as well – 38 carriers were singled out as top performers this year, earning five-star status by receiving an average score of 8 or higher in at least one category. Out of those 38 carriers, 14 earned a five-star rating in all 10 categories, cementing their place as some of the best companies the industry has to offer.

HOW HAS CARRIER PERFORMANCE CHANGED? Across nearly all categories, carriers’ average ratings rose over last year, with several noteworthy increases. Carriers’ average score increased from 7.63 to 8.30 in the competitive rates category, while marketing support saw a jump from 7.00 to 7.63. One exception was quick quotes, where carriers’ average score took a nosedive from 8.06 in 2016 to 7.71 this year.

10.0 9.0 8.0 7.0 6.0

Carrier reputation and financial stability

Claims processing

Competitive rates

Underwriting expertise

Commitment to the broker distribution channel 2016

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Technology and automation capabilities

Quick quotes

Range of products

Marketing support

Education and training

2017

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S BROKERS ON CARRIERS

7 201

FIVE -S

R CARRIE R TA

CARRIERS WHAT ARE BROKERS LOOKING FOR IN A CARRIER? Brokers were asked to select the three most important things they look for in a carrier partner. Here’s what they said: Competitive rates 86%

Underwriting expertise 52%

HOW WELL DID CARRIERS PERFORM? Reputation and financial stability 8.66 Competitive rates 8.30 Underwriting expertise 8.23 Claims processing 8.25 Commitment to the broker channel 8.19

Claims processing 48%

Quick quotes 7.71 Technology and automation 7.66

Reputation and financial stability 40%

Range of products 32%

Range of products 7.63 Marketing support 7.63 Education and training 7.31

Technology and automation 17%

ALL-STAR CARRIERS Quick quotes 14%

Marketing support 8%

Education and training 2%

These carriers earned a five-star ranking in all 10 categories, earning them the title of All-Star Carrier.

Allianz Berkley BITCO Insurance Companies CapSpecialty Erie Insurance Everest National Insurance FirstComp Insurance Company

Great American Insurance Company Hudson Insurance Group Liberty Mutual Nautilus Insurance Selective Insurance Group United Fire Group Insurance USLI

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FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS WHICH CARRIERS EARNED FIVE-STAR STATUS? CARRIER

Reputation and financial stability

Claims processing

Competitive rates

Underwriting expertise

Technology and automation

Quick quotes

Range of products

Marketing support

Education and training

Commitment to broker distribution channel

Accident Fund Insurance Company of America Allianz AmTrust Financial Auto-Owners Insurance AXIS Capital Beazley Group Berkley BITCO Insurance Companies CapSpecialty Chubb CNA Colony Specialty (Argo Group) Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hallmark Specialty Insurance Company Hudson Insurance Group Liberty Mutual Markel Corp.

National General Insurance Nationwide, E&S/Specialty Nationwide Insurance Nautilus Insurance Navigators Insurance Company Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group RLI Corp.

Selective Insurance Group Sompo International (Endurance Specialty) Starstone Insurer Travelers The Cincinnati Insurance Companies The Hartford United Fire Group Insurance USLI Zurich Insurance Group

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S BROKERS ON CARRIERS

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FIVE -S

R CARRIE R TA

UNITED FIRE GROUP Headquarters: Cedar Rapids, Iowa Year founded: 1946 Number of offices: Six Leadership: Randy Ramlo, President and CEO

Insurance can be complex, but selecting coverages, issuing policies, making payments and settling claims should be simple – at least, that’s how they think at United Fire Group [UFG].

The Iowa-based insurer has been protecting the simple and complex things in life since 1946. The company offers commercial insurance, personal insurance and surety bonds through approximately 1,200 independent property & casualty agents across the US. To serve its customers, UFG employs more than 1,100 people at its corporate headquarters in Cedar Rapids, Iowa, and five regional offices in Colorado, New Jersey, Northern California, Southern California and Texas. A publicly traded multibillion-dollar asset company, UFG’s property and casualty subsidiaries hold a financial strength rating of A (excellent) from A.M. Best. In 2017, UFG was named one of America’s 50 Most Trustworthy Financial Companies by Forbes for the fourth consecutive year.

“At UFG, we choose to go beyond the complex side of our business and focus on the people side of our business because it’s the interactions we have with our insurance agents and policyholders that are most rewarding to us,” says UFG president and CEO Randy Ramlo. “We know we aren’t insuring nameless, faceless account numbers – we’re insuring individuals, families and businesses that serve customers, employ people and make a difference in their communities.”

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7/07/2017 5:39:59 AM

FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS REPUTATION AND FINANCIAL STABILITY

COMPETITIVE RATES

Carrier performance 8.66

Carrier performance 8.30

FIVE-STAR CARRIERS Accident Fund Insurance Company of America Allianz AmTrust Financial Auto-Owners Insurance AXIS Capital Beazley Group Berkley BITCO Insurance Companies CapSpecialty Chubb CNA Colony Specialty Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hallmark Specialty Insurance Company Hudson Insurance Group

FIVE-STAR CARRIERS Liberty Mutual Markel Corp.

Nationwide Insurance Nationwide, E&S/Specialty Nautilus Insurance Navigators Insurance Company Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group RLI Corp.

Selective Insurance Group Starstone Insurer The Cincinnati Insurance Companies The Hartford

Allianz AmTrust Financial Auto-Owners Insurance AXIS Capital Beazley Group Berkley BITCO Insurance Companies CapSpecialty Chubb Colony Specialty Erie Insurance Everest National Insurance FirstComp Insurance Company

Travelers

Great American Insurance Company

United Fire Group Insurance

Hallmark Specialty Insurance Company

USLI

Hudson Insurance Group

Zurich Insurance Group

Liberty Mutual

On par with last year, carriers performed best in the category of reputation and financial stability, where 36 out of 38 carriers earned a five-star ranking. In today’s competitive market, remaining financially stable is critical for a carrier’s longevity. For brokers, having dependable, stable carrier partners is crucial: Clients rely on their brokers to align them with a carrier that can pay a large claim when needed, making a carrier’s financial stability imperative to the broker-carrier relationship.

Clients rely on their brokers to align them with a carrier that can pay a large claim when needed, making financial stability imperative to the broker-carrier relationship This all ties in with a broker’s ability to trust their carrier. As one survey respondent noted, trust is an important aspect to consider when selecting carrier partners. One broker bragged about his carrier’s A++ rating, demonstrating just how much brokers value their carriers’ sound financial standing.

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Accident Fund Insurance Company of America

Markel Corp.

National General Insurance Nationwide, E&S/Specialty Nautilus Insurance Navigators Insurance Company Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group RLI Corp.

Selective Insurance Group Sompo International Starstone Insurer The Cincinnati Insurance Companies The Hartford United Fire Group Insurance USLI Zurich Insurance Group

The competitive rates category showed the biggest improvement in terms of carrier performance – carriers received an average score of 8.30 this year, compared to 7.63 last year, moving this category from seventh place to second in terms of overall performance. This is also the category that’s most important to brokers: 86% of brokers said competitive rates are a defining quality they look for in a carrier partner.

Perhaps the difference this year is that more brokers have accepted the status quo, recognizing that the price increases predominantly reflect market and regulatory changes rather than carriers’ individual decisions.

One broker candidly commented that there’s “nothing to mention with the current ACA laws,” suggesting that not much can be done except wait for the tides to turn. Another broker traced the problem to simply “not enough competition,” while others complained about pricing discrepancies in specific lines such as property and commercial auto.

Nevertheless, brokers remain hopeful that carriers will do more to improve rates, by either lowering prices or at least “upgrad[ing] to be more competitive.” A couple of brokers identified claims/loss control expenses as an area to target. Another suggested that management fees are too high due to the relationship between the carrier and their parent company, while another said that although “they have outstanding claims and loss control services [and] price accordingly, sometimes they price themselves out of the market.”

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CLAIMS PROCESSING Carrier performance 8.25

FIVE-STAR CARRIERS Accident Fund Insurance Company of America Allianz AmTrust Financial Auto-Owners Insurance AXIS Capital Berkley BITCO Insurance Companies CapSpecialty CNA Colony Specialty Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hallmark Specialty Insurance Company Hudson Insurance Group

Liberty Mutual Markel Corp.

Nationwide Insurance Nationwide, E&S/Specialty Nautilus Insurance Navigators Insurance Company Northland Insurance Company

FIVE -S

BROKERS ON CARRIERS

7 201

7 201

BROKERS ON CARRIERS

R CARRIE R TA S

S

FIVE -S

R CARRIE R TA

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The Hartford Travelers United Fire Group Insurance USLI Zurich Insurance Group

Brokers’ views on claims processing haven’t changed much over the past year. This remains one of the top priorities for brokers, and carriers’ performance increased slightly compared to last year’s, making the category carriers’ third best-performing area. A total of 33 companies received five-star ratings for their claims service.

Transparency and efficiency are crucial in claims, and brokers and clients want visibility and regular updates from the claims teams Claims processing is always a hit-or-miss topic. While a number of brokers have yet to experience their carriers’ claims process and therefore cannot accurately assess them in this area, those who have gone through it are either satisfied or visibly frustrated. One broker called for his carrier to “have advocates who actually can walk through a claim and extended treatment requirements without taking three to six months” – a stark contrast with another broker, who praised his carrier for having “95% of claims paid in two weeks.” One broker requested “less restrictive forms to allow [at least] a few claims to get paid,” while another complained about the lack of information and responsiveness simply because their representatives “are not nearby, do not know the area, and sub-claims adjusters are also not really close to the area.”

Several respondents pinpointed communication as a key area for improvement, specifically “better training for their claim representatives on client contact” and “better contact with client and agent to handle any possible issues.” Transparency and efficiency are crucial in claims, and brokers and clients want visibility and regular updates from the claims teams. Even brokers who have yet to experience claims issues said they would appreciate more information from carriers so they can be adequately prepared when the time comes.

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Our recently expanded BROADENING ENDORSEMENT includes blanket waivers of subrogation, blanket additional insureds, product withdrawal expense, and many other exclusive offerings. *NEW LOWER MINIMUM PREMIUM OF $3,500 AVAILABLE FOR MEMBERS WITH ANNUAL REVENUES OF $500,000 OR LESS View our website (www.csiplus.com) for our PROGRAM APPLICATION, FAQ PAGE, PROGRAM BENEFITS AND E-BROCHURE. CSI is the chemical industry’s leading risk retention group, providing chemical manufacturers and distributors with a financially stable source of liability insurance for over 25 years. We are the exclusive partner of The Consumer Specialty Products Association (CSPA - www.cspa.org), the industry’s leader for education and legislative advocacy. With membership in the CSPA, your clients can participate in CSPA’s Product Care stewardship and best practices program. CSI Policyholders that participate receive additional premium discounts. CSI is endorsed by CSPA and administered by Ames & Gough.

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FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS UNDERWRITING EXPERTISE FIVE-STAR CARRIERS Accident Fund Insurance Company of America Allianz AmTrust Financial AXIS Capital Beazley Group Berkley BITCO Insurance Companies CapSpecialty Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hallmark Specialty Insurance Company Hudson Insurance Group Liberty Mutual Markel Corp.

COMMITMENT TO THE BROKER CHANNEL Carrier performance 8.19

Carrier performance 8.23

FIVE-STAR CARRIERS National General Insurance Nationwide Insurance Nationwide, E&S/Specialty Nautilus Insurance Navigators Insurance Company Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group RLI Corp.

Selective Insurance Group Sompo International Starstone Insurer The Hartford

Accident Fund Insurance Company of America Allianz AmTrust Financial Auto-Owners Insurance AXIS Capital Beazley Group Berkley BITCO Insurance Companies

Nationwide, E&S/Specialty Liberty Mutual National General Insurance Nautilus Insurance Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group RLI Corp.

CapSpecialty

Selective Insurance Group

CNA

Sompo International

Colony Specialty

Starstone Insurer

Erie Insurance

The Cincinnati Insurance Companies

Everest National Insurance

Travelers

FirstComp Insurance Company

United Fire Group Insurance

Great American Insurance Company

USLI

Hudson Insurance Group

The Hartford United Fire Group Insurance USLI Zurich Insurance Group

Zurich Insurance Group

In terms of importance, underwriting expertise was second on brokers’ list: 52% noted it as a top quality they look for in a carrier. The category was fourth for overall carrier performance; carriers’ average score rose from 7.87 last year to 8.23 this year, and an impressive 33 carriers earned five-star ratings for underwriting.

A healthy broker-carrier relationship is essential to the success of both channels. Overall carrier performance in terms of commitment to the broker channel improved slightly over last year, and 36 carriers earned five-star ratings.

Several brokers voiced concerns A couple of brokers named specific over the growing trend of carriers areas for improvement, such as going direct large middle-market expertise and Most brokers were satisfied with the attention their carriers provided union contracts them, although several voiced concerns over the growing trend of carriers The responses from brokers, however, revealed rather mixed reviews of carriers’ performance in underwriting. Some brokers commended their carriers for setting the standard for others in the industry – one stated simply that “it’s what they do.” Another broker commented that the good relationship his agency has with their carrier has made its underwriting particularly effective.

Meanwhile, a couple of brokers named specific areas for improvement, such as large middle-market expertise and union contracts. And others remain dissatisfied with certain carriers, commenting that “underwriting is not strong” and that “[there’s a] shortage of underwriting talent.”

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going direct, hindering the broker-carrier relationship. One broker explained feelings of being undervalued by his carrier: “Companies need to realize the agents are part of the underwriting of a risk. When we as brokers [present] a risk to the underwriter, [they] should accept the risk as presented until proven that something is not correct.” Another broker shared a similar sentiment: “We’ve been asked to do more work all the way around for less commission.”

Despite the concerns, an overwhelming number of brokers agreed that their carriers were actively working to support the success of the channel. “We feel very confident of their commitment to the broker distribution channel,” wrote one respondent.

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S BROKERS ON CARRIERS

7 201

FIVE -S

R CARRIE R TA

QUICK QUOTES

TECHNOLOGY AND AUTOMATION

Carrier performance 7.71

Carrier performance 7.66

FIVE-STAR CARRIERS

FIVE-STAR CARRIERS

Allianz

National General Insurance

Auto-Owners Insurance

Nationwide Insurance

Beazley Group

Nationwide, E&S/Specialty

Berkley

Nautilus Insurance

BITCO Insurance Companies

Northland Insurance Company

CapSpecialty

Philadelphia Insurance Companies

BITCO Insurance Companies

RLI Corp.

CapSpecialty

Selective Insurance Group

Selective Insurance Group

CNA

Starstone Insurer

Sompo International

Colony Specialty

Travelers

Starstone Insurer

Erie Insurance

United Fire Group Insurance

Everest National Insurance

United Fire Group Insurance

CNA Colony Specialty Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hudson Insurance Group

Accident Fund Insurance Company of America

FirstComp Insurance Company

Allianz

Great American Insurance Company

Auto-Owners Insurance Beazley Group Berkley

Hudson Insurance Group Liberty Mutual Nationwide Insurance Nautilus Insurance

USLI

USLI Zurich Insurance Group

Liberty Mutual Markel Corp.

It’s no surprise that brokers had some strong words about their carriers’ quoting capabilities, considering that this category was the only one where carriers performed worse than last year. Although a few brokers were pleased with their carrier partners’ quote turnaround times, most expressed frustration in their carriers’ lack of speed.

Twenty-eight carriers earned five-star ratings in this area, but it’s clear that there’s still room for improvement. In an age when technology

Although brokers didn’t rate technology and automation as a top priority when selecting a carrier, with disruptors constantly banging on the industry’s door, carriers can’t afford to neglect this area. Only 22 carriers garnered a five-star rating in this category, the least out of all categories.

Even in the midst of constant news about the leaps and bounds tech giants have made in insurance, it seems there are many carriers that have yet to accomplish something that seems quite basic: having a good, functional website. A number of respondents slammed their carriers’ websites for being “very hard to navigate” or “full of glitches, bugs and slowdowns.” One broker remarked that a carrier’s faulty online platform could be a sign that “their IT department [is not] in tune with the underwriting business.” This confirms what industry leaders have been saying: that today’s underwriters can no longer perform effectively without substantial technological support, particularly on matters relating to data analytics.

In an age when technology reigns supreme and insurtech has evolved to offer a range of quoting software, It seems there are many carriers brokers expect more from carriers that have yet to accomplish something that seems quite basic: reigns supreme and insurtech has evolved to offer a range of quoting software intended to ease the process, brokers expect more from carrihaving a good, functional website ers.“[They] don’t have quick quote capability,” said one broker, while another complained that “too much information [is] needed to get a quick quote; [it] takes too long.”

Overall, carriers’ lack of flexibility and efficiency has contributed to brokers’ dissatisfaction. A few brokers pointed out wrinkles in the process that have slowed down turnaround times. “They have become a maze to get a quote out of – simplify the process,” said one. “Need to move the account faster – ask questions at the beginning, and then [don’t ask] more questions [at the end],” advised another.

But many carriers aren’t there yet. Some respondents commented on the lack of online submission and rating functions; for carriers that do have this option, brokers pointed out that systems often aren’t up-to-date, which makes it “slow and time-consuming to complete a submission online.” However, brokers did acknowledge that there are cases where it’s difficult for carriers to provide online processes, such as for certain product lines.

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FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS SPECIALTY FIVE-STAR CARRIERS Brokers were also asked to rate the carriers they use for various specialty areas. The carriers that earned an overall score of 8 or higher across all 10 criteria were awarded with a five-star designation for that specialty.

CARRIER

Catastrophe

Commercial auto

Commercial property

Construction

Cyber

Environmental

Financial services

Healthcare/ medical liability

Hospitality

Nonprofit/ social services

Professional liability

Workers' comp

Accident Fund Insurance Company of America Allianz AmTrust Financial AXIS Capital Beazley Group Berkley BITCO Insurance Companies CapSpecialty Chubb Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company Hudson Insurance Group Liberty Mutual National General Insurance Nationwide, E&S/Specialty Nautilus Insurance Northland Insurance Company Philadelphia Insurance Companies QBE Insurance Group Selective Insurance Group Sompo International (Endurance Specialty) Starstone Insurer The Cincinnati Insurance Companies The Hartford Travelers United Fire Group Insurance USLI Zurich Insurance Group

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FIVE -S

Despite 26 carriers earning a five-star rating for their product offerings, more brokers voiced dissatisfaction in this category than last year. As emerging risks hit the market at a record pace, brokers believe the need for new and innovative products has never been greater.

Most brokers agreed that their carriers needed greater appetites for new markets. Surprisingly, cyber coverage was lacking from a few carriers, an omission that more than a few brokers took notice of. Brokers also requested more product offerings for hail and federal crop coverage, tradesmen and specialty contractor coverage, and Subguard/OPPI insurance. They also expressed the need for more coverage in “large risk” areas that carriers often shy away from. “Stop cherry picking!” said one frustrated broker. “If you offer coverage for a market segment, then charge for riskier prospects – don’t decline.”

Although many brokers were happy with the range of products offered by their carriers, some felt the vast options hindered the specialized underwriting service. “They have a range of products but lack [the underwriting] knowledge and pricing flexibility,” said one respondent.

BROKERS ON CARRIERS

7 201

Carrier performance 7.63

S

RANGE OF PRODUCTS OFFERED

R CARRIE R TA

FIVE-STAR CARRIERS Allianz

Liberty Mutual

Auto-Owners Insurance

Markel Corp.

Berkley

Nationwide, E&S/Specialty

BITCO Insurance Companies

Nautilus Insurance

CapSpecialty Chubb

Northland Insurance Company

CNA

Philadelphia Insurance Companies

Colony Specialty

Selective Insurance Group

Erie Insurance

Starstone Insurer

Everest National Insurance

The Hartford

FirstComp Insurance Company

Travelers

Great American Insurance Company

United Fire Group Insurance USLI

Hudson Insurance Group

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FEATURES

SPECIAL REPORT: BROKERS ON CARRIERS MARKETING SUPPORT

EDUCATION AND TRAINING

Carrier performance 7.63

Carrier performance 7.31

FIVE-STAR CARRIERS Accident Fund Insurance Company of America Allianz AmTrust Financial Beazley Group Berkley

FIVE-STAR CARRIERS Hudson Insurance Group Liberty Mutual Nautilus Insurance Northland Insurance Company Philadelphia Insurance Companies

Allianz AmTrust Financial Beazley Group Berkley

Hudson Insurance Group Liberty Mutual Nautilus Insurance Northland Insurance Company Philadelphia Insurance Companies

RLI Corp.

BITCO Insurance Companies

CapSpecialty

Selective Insurance Group

CapSpecialty

Selective Insurance Group

CNA

The Cincinnati Insurance Companies

CNA

The Cincinnati Insurance Companies

The Hartford

Erie Insurance

BITCO Insurance Companies

Colony Specialty Erie Insurance Everest National Insurance FirstComp Insurance Company Great American Insurance Company

United Fire Group Insurance USLI Zurich Insurance Group

Carriers vastly improved in marketing support compared to last year: 23 carriers earned five-star status, a large leap from the zero that landed on the list last year. But despite the impressive gains in this area, brokers still felt their carriers’ marketing support was unnecessary or missed the mark.

Brokers who did take advantage of the marketing materials and resources available to them largely felt that more could be done on the carrier’s end, offering criticisms such as “no fliers to hand out to

Brokers who did take advantage of the marketing materials and resources available to them largely felt that more could be done on the carrier’s end businesses to tell them what we can offer” and “too expensive [with] small results.” Another broker said, “Nice marketing budget, but could be more flexible with independent agencies’ use of [money].” Several brokers mentioned co-op advertising as an area where they would like to see more carrier involvement.

The general consensus among survey respondents was that their carrier’s marketing support was underwhelming with few benefits. “We do not do enough to use what they have available,” said one broker.

“However, marketing rep could help more in this regard.”

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Accident Fund Insurance Company of America

Colony Specialty Everest National Insurance FirstComp Insurance Company Great American Insurance Company

RLI Corp.

The Hartford United Fire Group Insurance USLI Zurich Insurance Group

Similar to marketing support, carriers improved immensely in education and training category – 26 carriers received five-star status, up from zero in 2016. Carriers still performed the poorest in this area, though, with an average score of 7.31 out of 10. And even though brokers rated their carriers higher in this category than they did last year, they still weren’t impressed by the education and training offerings provided by their carriers. “I don’t think most companies are doing a good job with training,” said one respondent.

Even though brokers rated their carriers higher in this category than they did last year, they still weren’t impressed by the education and training offerings provided by their carriers Generally, brokers believed their carriers could do more to help the broker channel in terms of training and education. “More training on products would be helpful for younger people in our offices,” wrote one broker. Others offered suggestions on how to expand training, including “more training on products,” “[meetings] for agency producers,” “local representation to advise on coverage changes thoroughly rather than just online newsletters” and “better training programs – educators have limited agency experience.”

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A

S BROKERS ON CARRIERS

7 201

FIVE -S

R CARRIE R TA

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Risk Risk management management not isisnot game. aagame.

FEATURES

NEXT GENERATION

The next generation of leaders

As many industry leaders near retirement age, it’s crucial for insurance companies to attract fresh talent. But is the industry doing enough?

ATTENDING INSURANCE industry conferences is a great way to get out of the office and listen to the insights of industry leaders. As well as helping attendees get a better understanding of the people in positions of power and influence, it also highlights one hard-to-ignore fact: Most of the individuals in senior and executive positions are deep into their 50s and 60s. The leaders of tomorrow are more difficult to locate.

It’s no surprise that insurance has an aging workforce, but with many industry veterans due to retire in the next five to 10 years, the industry is under pressure to attract and develop fresh talent. “It is more important now than ever before for the industry to be proactive in recruiting and obtaining the next generation of leaders,” says Robert Sanders, president and managing member of Preferred Specialty. “This topic really is the talk of the insurance industry right now.”

Sanders studied insurance and risk management at the University of South Carolina before working as a reinsurance broker for a few years and then opening Preferred Specialty in 2003 at the age of 25. He maintains close ties with the university and is encouraged by the popularity of the program. Sanders often takes on interns from the same program he graduated from and recently

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asked one intern about what matters most to millennials when they apply for a job. Flexible work hours and competitive remuneration were at the top of list.

“In addition to that, she talked about a wanting a relaxed working environment with a more liberal dress code and people who are easy to work with,” Sanders says. “Being able to move up quickly within a company is also an important attribute.”

The upcoming void in talent and experience is a realistic hazard for many leading insurance companies and brokerages. The decades of experience leaving the industry will not be replaced easily, and it’s imperative that organizations of all size take a proactive approach to seeking out their next generation of business leaders and innovators. It’s a situation that Sanders is well aware of within his own firm.

“It is important to me, and should be for the industry, to transfer as much knowledge as possible by working closely with the new talent joining the workforce,” he says. “We need an overlap between the generations that are retiring and the new generation that is coming in. Over the next five years, the industry needs to work hard on bridging that gap.”

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Building awareness A recent survey discovered that only 5% of millennials are familiar with the insurance industry, and fewer than one in 10 expressed any interest in entering the business. Although the image of the industry has changed in recent years, there is obviously a need to do more to influence the perception of insurance among young people.

Insurance may well be a dynamic, challenging industry that embraces innovation, but if younger generations aren’t aware of that, they won’t be attracted to the business. “The industry needs to do more as a whole to market and target millennials – not only as a future employer, but also from a consumer standpoint,” Sanders says. “The next generation accesses products and services through their smartphones; this is not going to be a checkwriting generation. I believe the insurance industry needs to continue to engage in social media and other nontraditional mediums to attract the atten-

tion of millennials.”

Participating in jobs fairs at colleges is a good way for insurance companies to get in front of younger millennials, but industry leaders may have to abandon their traditional approach to make these interactions worthwhile. An older insurance professional dressed in a suit is likely to be more intimidating than someone who is more casually dressed, and therefore more relatable and approachable to the younger generation.

“Millennials might relate better to a company rep with a faded screen-print T-shirt with a company logo on it,” Sanders says. “That might seem like a step too far, but we as an industry need to do all we can to relate and appeal to the next generation.”

At 32 years old, Josh Ammons falls firmly on the older end of the millennial spectrum. Ammons is currently a senior vice president and property broker at AmWINS in Charlotte, North Carolina, but in the middle of the last decade, he was a

WHAT DO MILLENNIALS WANT? Types of training they prefer

Industries they’re most interested in

100%

Arts and entertainment 40%

Education 36%

80%

Career planning 34%

Financial skills 47%

0%

Technical skills 54%

20%

Leadership skills 60%

40%

Personal development skills 38%

60%

Written and oral communications 28%

Technology 36%

Healthcare 31%

Industries they’re least interested in

7%

Construction, retail and manufacturing

4%

Insurance

3%

Wholesaling and utilities

Source: TheHartford.com

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FEATURES

NEXT GENERATION

student at Appalachian State University on an academic scholarship, with no real interest or knowledge of the insurance industry, particularly the commercial side.

That all changed when Steve DeCarlo, the current CEO of AmWINS, served as a guest lecturer for Ammons’ one and only insurance course, an introduction to risk management and insurance. DeCarlo spoke passionately about the insurance business – particularly the commercial side, with specific focus on excess & surplus lines – and the opportunities being created by the industry’s growing talent gap.

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“Once millennials hear about the travel, the client outings and that there is no ceiling on earnings ... they are ready to learn much more about what we do” Josh Ammons, AmWINS Group Ammons was impressed by what he heard. “Ten minutes after he finished his speech, I sent Steve an email saying I loved his talk and that I thought I could be really

successful in insurance,” Ammons says. “I was an arrogant 20-year-old, but he appreciated my email, and I ended up interviewing the next week and then interning with

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AmWINS that summer and winter. I’ve been with them ever since, coming up on 11 years.”

Ammons now plays an active role in preparing younger millennials to enter the insurance industry. As part of his role as an advisory board member for the Brantley Risk & Insurance Center at Appalachian State University, Ammons helps students become strong candidates for jobs in the real world of the insurance industry.

Along with a group of industry peers, Ammons also visits other universities across the country to enhance awareness about careers in insurance. He speaks with a wide range of college students, some of whom are not enrolled in an insurance or risk management program. When he tells a room full of 20-year-old college students that the industry is a people business and is all about relationships, they begin to get engaged.

“Once they hear about the travel, the client outings and that there is no ceiling on earnings if you are constantly bringing value to your clients, they are ready to learn much more about what we do,” Ammons says. “I’m also able to talk with them about the complexity of the deals we handle in the commercial and E&S spaces. I let them know it’s not just homeowner’s and auto insurance, like I thought when I was in their shoes more than 10 years ago.”

GIVING MILLENNIALS MORE FLEXIBILITY Two-thirds of millennials say their employees have adopted flexible arrangements such as:

69% Flexible time Employees choose when they start/ finish work

Flexible role Employees choose, within certain guidelines, what they do as part of their job

67%

64%

Flexible recruitment Employers offer different types of contracts, crowdsource talent, etc.

Investing in the industry’s future In order to succeed in his role at AmWINS, where his pay is performance-based, Ammons has adopted a ‘something more can always be done’ mindset, which he also relates to the industry’s efforts to attract the next generation of leaders. Although he sees firsthand the work insurance companies are doing, Ammons believes the industry can do better.

“In reality, millennials don’t bring much immediate value – they are not able to go out and convince a client who is twice their age that they know what they’re talking about at

68%

Flexible location Employees choose to work from the office, from home or from other locations

Source: 2017 Deloitte Millennial Survey

the beginning of their career,” Ammons says.

“So we need to think of millennials as a longterm investment, as the future of the industry.”

As well as a desire to be well compensated, to be able to use up-to-date technology and to join a company with a great culture, Ammons has noticed a strong desire among younger millennials to find mentors. It’s a demographic that is eager to develop and wants to learn - traits that will become crucial as older generations retire and take their experience and industry knowledge with them. Ammons

believes there’s no industry challenge more important and timely than that of attracting and retaining the next wave of talent.

“Perpetuation is a major focus of all successful firms, and we need to continue to highlight opportunities to these young people,” Ammons says. “We need to tell these millennials that if they stick around, work hard, be patient and ask the right questions, they are going to be leaned upon as a leader much earlier than the generations that came before them.”

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FEATURES

AGENCY INSIGHT

Vantreo Insurance Brokerage Joe Sucatre, vice president of Vantreo Insurance Brokerage’s wine division, shares how his agency developed a niche in California’s bustling wine insurance market IBA: How did you get your start in winery/vineyard insurance?

Joe Sucatre: I get challenged by things I don’t know, and I have a desire to keep learning. I’ve been in this business for 30 years, and there’s a point where it gets repetitive. In 2011, my brokerage started looking at new areas to get into, and we found that there really was no broker in Sonoma County that specialized in wineries. We thought, let’s take a look at what we can do to become that broker.

I went to UC Davis and took some agriculture classes and winery safety classes, and started the process of getting my AIFS designation. Once that was in process, we contacted the executive director of Sonoma County Vintners, and we began meeting with them in early 2012.

IBA: How did you build this business?

JS: We began by going to the board of Sonoma County Vintners and proposing an insurance audit for those members. We took their existing insurance policies and analyzed them to understand what was missing, what they have too much coverage for and what we could offer them.

After presenting our analysis to the

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board members, we earned their confidence and became the official endorsed broker for the association. We started talking with wineries in the area to learn about what their needs are and what they are looking to cover with their insurance policies. Today, we insure about 25% of the winery market in Sonoma County.

replied by saying that it’s about $3 million.

When I told him that his policy only covered $300,000 worth of the stock, he was shocked. So we wrote him a new policy, and it ended up costing him about 9% to 10% more to fully cover his entire stock.

IBA: Did you find anything interesting when analyzing the policies?

JS: There are two groups: the vineyardowning winemakers and the winemakers who buy grapes and produce the wine but own no land. The group that owns no land we call ‘virtual wineries’ because there is no land attached to them. This group tends to be younger and a little more sophisticated because they come from a business background and know a little more about what they need in terms of insurance coverage.

JS: We went out to a brand-new winery founded by a prominent vintner who started a small winery to produce fine wines. After looking through his policy, we found that he had coverage for $300,000 of wine in stock. When walking through his winery, I told him that his stock looked like a lot more than just $300,000 worth of wine. He

IBA: What are the challenges in working with wineries and vineyards?

BUDDING BUSINESS As California prepares to legalize recreational marijuana in 2018, related industries are facing new possibilities and growth. Business owners in wine country are finding new ways to harmonize the two substances and capitalize on the opportunities the cannabis industry presents. “Cannabis is in its infancy right now, but there are already rumblings of wineries and cannabis growers/sellers getting together,” Joe Sucatre says. “For the vineyard owner, the new temptation is to use some land for cannabis, as cannabis potentially will make more money per acre than grapes.” With all the new possibilities, California’s insurance industry will soon face complex insurance demands and novel risk concerns.

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FAST FACTS: VANTREO INSURANCE BROKERAGE

Industries served Wine business Agriculture Retail Construction Life sciences

“Often, wineries don’t see the need for cyber coverage because they rarely conduct business online; however, I now make sure that all clients are supplied with information regarding cyber insurance” On the other side, there is the farmer who has been farming his entire life and who is not very open to change. Insurance is a necessary evil to most of these farmers.

For us, the challenge is getting their confidence to the point that they allow us to look at their existing policy.

IBA: What are a few of the emerging risks you are seeing in this space?

JS: Cyber issues – data breach, privacy and more – are becoming more common. Often,

these industries don’t see the need for this coverage because they rarely conduct business online; however, I now make sure that all clients are supplied with information regarding cyber insurance.

Earthquake is always a factor in California, but in light of the recent earthquake in Napa, the risk has become more evident. Employment-related issues are probably next up on the ‘be aware’ list.

Wrongful termination, discrimination and harassment lawsuits are becoming an issue

Year founded: 2006 Number of offices: 3 Headquarters: Santa Rosa, CA Leadership: Lynne Wallace, president and principal; Timothy D. Chanter, executive vice president and principal; Tim Beglin, chief financial officer in the industry.

Also, something that is becoming more popular now is Airbnb. We are seeing a lot of people coming from the city who want to experience a farm or vineyard firsthand.

For example, we have one vineyard client who has a guesthouse that they rent out via Airbnb. Insurance companies haven’t really figured that out yet, so we had to go to surplus lines and connect with those wholesale brokers who will provide Airbnb liability and property coverage.

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FEATURES

SECTOR FOCUS: SPORTS AND LEISURE

Business in full bloom

As the mercury rises, so does participation in sports and leisure activities. But when people come together to have fun, the risks multiply SUMMERTIME IS in full swing, and people across the country are dusting off their sports gear and getting into the fun. Facilities like camps, campgrounds and resorts are swarming with American families who are eager to be active and entertained. It’s not all fun for the companies that operate these types of facilities, though – they face a wide and varied range of risk exposures that, if not properly covered, could lead to financial and reputational ruin.

compensation and various property coverages, including business interruption, equipment breakdown, and communicable disease and food contamination extensions.

“Campgrounds are usually based in very rural, wooded locations and are susceptible to incidents and claims associated with storm damage, tree fallings, wildfires and other environmental elements that Mother Nature seems to conjure up,” says Ron Norton, vice

“With all the wildfires and serious weather events, there have been cases where camps have been forced to evacuate ... Luckily, business interruption costs are covered under most good policies” Ron Norton, K&K Insurance Group Mother Nature’s risks The operators of camps, campgrounds and resorts require a broad range of general liability coverages, including fireworks liability, expanded bodily injury, non-owned watercraft up to 51 feet, personal and advertising injury, transmissible pathogens coverage, cyber liability, and crisis response coverage. They also need commercial auto, excess liability, workers’

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president at K&K Insurance Group. “Also, a lot of campgrounds have lakes and open water, and therefore have the risk exposure around campers or patrons who go swimming at night unsupervised.”

Summer camps differ slightly from resorts and campgrounds in that children are left by their parents overnight in the care of the camp operator. Whenever children are involved, the

complexity of the coverage increases, and agents must have a higher level of knowledge. In order to be eligible for coverage from a reputable insurer, summer camps must be ACA- or CCCA-certified and have a system in place for personnel screening and criminal background checks, along with written sexual abuse and molestation procedures.

Camps are also required to carry a range of general liability coverages, including expanded bodily injury, camp director liability and employee/volunteer liability. Business interruption is also an important coverage feature.

“With all the wildfires and serious weather events that have occurred, there have been cases where camps have been forced to evacuate, which can lead to significant expense,” Norton says. “Luckily, business interruption costs are covered under most good policies.”

One such damaging weather event, Hurricane Sandy, had catastrophic consequences for an insurance carrier that had been operating in the campground space for more than 30 years. The carrier experienced severe loss activity in the aftermath of the hurricane and left the business altogether in 2015. “That created a vacuum for other carriers to capture risk types that were left with limited alternatives,” Norton says.

Tightening health and safety regulations have impacted many areas of insurance in recent years. State departments’ advocacy for claimants and public protection has caused carriers to raise prices to protect themselves from frivolous lawsuits or damages. However, different states approach and assess liability in wildly contrasting ways.

“When looking at a case in southern Indiana versus a case in New York City, the awards are going to be significantly different for the same type of injury,” Norton says. “That creates differences from a pricing perspective.

In less litigious climates, you see lower costs.”

Although Norton believes most agents are not necessarily well informed on the coverages needed by clients who operate facilities

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like camps, campgrounds and resorts, he does believe the space represents a lucrative opportunity. However, he urges caution for agents who are not specialists.

“Just because the quote summary says you have certain coverage, it does not mean you necessarily have it,” he says. “There are always conditions, so make sure you read the forms.

Ask for clarification on the policy, and make sure you know what you’re selling.”

High-octane fun In addition to participating in activities this summer, many American families will attend events as spectators. Motorsports is one of the most popular spectator sports in the country, but for obvious reasons, it’s also one of the most

CAMPS AND CAMPGROUNDS BY THE NUMBERS $18 billion Approximate size of the camp and campground industry 8,400 Number of resident (overnight) camps in the US 5,600 Number of day camps in the US 14 million Annual attendance by children and adults at camps in the US 1.5 million Number of camp staff members

THE RISKS 1.35 million Youths (ages 6 to 19) who suffered a serious sports injury from 2001 to 2012 20% Percentage of children who visit the ER for treatment of an injury caused by a sport $935 million Annual cost of medical treatment for sports-related ER injuries for kids ages 6 to 19 Sources: American Camp Association, Safe Kids Worldwide, National Safety Council

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FEATURES

SECTOR FOCUS: SPORTS AND LEISURE

THE INSIDE TRACK ON MOTORSPORTS COVERAGE Separate coverage is required by: RACE TEAMS • Automobile: Owned/hired and non-owned • Umbrella/excess liability: High excess limits available for both short-term and annual events • Inland marine: Blanket options provided for both rented and owned equipment • Participant accident insurance: High limits for accidental death/ dismemberment and medical expense • Workers’ compensation: Coverage in all states, including voluntary compensation for qualified risks SANCTIONING BODIES • Event cancellation/weather: Options available based on gross revenue and budgeted expense; weather insurance for snow, rain and wind RACE VENUES • Spectator liability • Personal injury liability • Abuse and molestation liability • Liquor liability

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dangerous. As a result, the venue, the sanctioning body and the race teams are all required to purchase their own separate coverage.

Claims resulting from a motorsports event generally fall into two categories: spectators and participants. For spectators, the most common types of claims result from slips and falls typical of any venue that hosts spectator sports. These can occur anywhere in and around the venue, including the garage area where the teams and racers congregate and work on the cars. Accidents involving spectators and golf carts, which are used to transport drivers and other race personnel around the venue, are less frequent but not uncommon.

“Some race teams also carry excess liability coverage for their owners and sponsors, which is unique to motorsports,” Carroll says. “It is excess coverage that protects the interests of the owners, sponsors and drivers for covered losses where limits might be insufficient for possible claims where they are named in a race-related incident – for example, after a tragic accident involving multiple spectators.”

Although there’s a steady flow of new race teams entering the space and requiring insurance, in most cases they are taking the place of a team that went out of business. As a result, the volume of business has somewhat stagnated in recent years.

“You have to work off a lot of shoe leather to get experience, but it pays off in the motorsports business” Scott T. Carroll, Take1 Insurance Among participants (any race team member at the track), the most common claims are workers’ comp claims resulting from generic manual labor related injuries.

“We don’t often see incidents where a pit crew member gets run over by a race car – the team members are professionals and know how to act in those areas not to get hurt,” says Scott T. Carroll, an underwriter and broker in the entertainment division at Take1 Insurance. “We also don’t often see driverrelated claims because drivers typically are not covered. They are independent contractors, so they carry their own coverage independent of what the team carries.”

In addition to needing an overarching general liability policy to cover their third-party exposures, race teams also need property and inland marine coverage to protect their costly equipment when it’s both in transit and at the race venue. Teams also need auto coverage, workers’ compensation, off-track and storage coverage (a bolt-on to inland marine), and an umbrella policy that sits over all of their liabilityrelated coverages.

Motorsports is also an extremely competitive marketplace, Carroll says, with very low rates. “It’s a cost-sensitive business because teams are running on thin margins,” he says.

“Rates continue to be tight, and a lot of people are willing to write this business, so supply and demand are also driving prices down.

Teams are probably paying less for coverage today than five years ago.”

Motorsports is a small, expertise-driven space, and most insurance carriers only want to deal with brokers who are specialists in the industry. It is, however, a space with few barriers to entry and few competitors for brokers and agents looking to boost their book of business. But, due to the size of the space, everyone tends to go for the same accounts.

“A broker looking to get into this space should start in the grassroots, with the smaller circuits and teams,” Carroll says. “If you can help those teams get coverage, you can build experience and a reputation, and that wins the day. You have to work off a lot of shoe leather to get that experience, but it pays off in this business.”

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4:17 AM

PEOPLE

CAREER PATH

STARTING FROM SCRATCH There’s nothing Eric Micheals enjoys more than bringing an idea to fruition

As a youngster on Long Island, Micheals showed talent with the guitar but was drawn to the world of business. These two dichotomies harmonized when, while studying both music and economics at university, he collaborated with a friend to bring their self-penned musical based on the life of Beethoven to the stage “I was technically the producer, handling the business end – it helped solidify my interest in business”

1995

FINDS BUSINESS AMIDST MUSIC

2001

FINDS INSURANCE A brief stint at an internet startup, brought to an abrupt end when the dot-com bubble burst, left Micheals seeking stability. He found it – and more – in AIG “I knew that I could have multiple careers in AIG while never leaving the company. My first job at AIG was similar to what I did at BMG, so it wasn’t so much a change in career as a change in company”

SPEARHEADS A PROJECT Micheals’ first job out of school, as manager of finance at BMG Music, blended both of his major interests, but the element that really sparked his interest was a project archiving both digital and physical material

“I got to build something from scratch – I’ve always enjoyed building things. BMG was the first time I got to bring something about from nothing” 2004 CROSSES INTO UNDERWRITING Micheals considers moving into the underwriting department via a competitive internal program his real entry into insurance. He went on to hold multiple underwriting roles across three business units, including heading up a tech product “I realized that for me to be successful at AIG, I had to touch the core of the business. As an underwriter, I was able to do different things and touch the core of the business”

2009 JOINS HISCOX Micheals’ tech background proved to be a perfect match for a job opportunity at Hiscox, where once again he was charged with building something from scratch “Hiscox was the first commercial insurer to sell to consumers directly online. I was the lead underwriter on that project; it was a hugely attractive opportunity. We were literally setting this business up from zero, and there was so much groundwork to do. I remember watching our first sale [on the platform]; it was a really big moment”

2017 WELCOMES A NEW OPPORTUNITY Earlier this year, Micheals was named Hiscox’s head of emerging solutions, a role focused on the dynamic and ever-evolving field of technology in insurance “We want to be a leader; we’re going to get in front of it. I see it as an opportunity – it’s about learning, but picking the right spots as an organization. We want to partner with the right companies so we can succeed and our partners can succeed”

1996

2012

TAKES ON A NEW CHALLENGE Micheals tackled another challenge when he took a position as the leader of a business unit centered on renewals “We had to prove ourselves; we had to show our worth – which we did. We improved the retention rates. I started the first year with just four underwriters; this year we had over two dozen”

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PEOPLE

OTHER LIFE

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

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Students of Gunderson’s who have competed at the national level

CHAIRMAN OF THE BOARD There’s nowhere Erik Gunderson would rather be than on a snowboard ERIK GUNDERSON has always felt at home on the snow – the Minneapolis-based insurance professional started skiing at age 3 and was lobbying his parents for a snowboard

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before he started elementary school.

Luckily for 6-year-old Gunderson, the “cheap, plastic, tie-dye” snowboard Santa left for him under the tree was perfect for riding the hill next door to his parents’ house. It wasn’t long before his passion for snowboarding had supplanted all the traditional sports his parents had signed him up for.

Attending college in Wisconsin gave Gunderson a suitable place to ride during the winter months, and it was then that he inadvertently stumbled into a job as a snowboarding coach.

“It was an accident – I was looking for a team to join so I could start competing,” he recalls, “and the team

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Number of snowboards Gunderson has owned in his life

7

Age of Gunderson’s youngest student, who won gold at Nationals

director said, ‘We work with competitive youth; we could use you as a coach.’ So it was by mistake that I ended up working with kids on the local, regional and national level for seven years.”

Today, Gunderson coaches three to five times a week during the colder months on the slopes or at a terrain park equipped with training jumps; in the summer, he runs a cross-training program for the athletes. But even in the midst of such a punishing schedule, Gunderson still finds time to ride the slopes himself every weekend.

“I love working with the kids and seeing them develop and improve and go on to bigger things,” he says. “To these kids, this is the most important thing in the world – and I can relate to that.”

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When the rubber leaves the road.

Motorsports comes in many forms, all of them exciting, all of them dangerous.

That’s why racing teams, facilities and sanctioning bodies need the financial safety margin that Take 1 Motorsport Insurance provides.

With unmatched experience and depth, we can cover it all, from on-track to off-road; on land or even in water; on two wheels or four; on an annual or single event basis.

For owners or sponsors of teams, clubs and associations, we can provide coverage for storage, shop, transport and race.

For owners or operators of permanent motorsports locations or venues, we have products for races or other related activities.

We have event coverage that can include participants and volunteers, prize indemnity and event cancellation — even liquor liability and fireworks shows.

No matter what your clients need, talk to Take 1. We’ll put together a Motorsports Insurance Program that’s just their speed.

Visit us at take1insurance.com and get a quote or call us at 800.856.7035.

Take 1 or take your chances.

© 2017 Take1 Insurance Take1 is a division of U.S. Risk, LLC., a specialty lines underwriting manager and wholesale broker headquartered in Dallas, Texas.

Operating 12 domestic and international branches, it offers a broad range of products and services through its affiliate companies.

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

For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com. Š2017 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157. Inclusion of BMW automobiles is fortuitous and not an endorsement of Applied by BMW.

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