Main Street Industry News - November 2017 by Cathy Klasi

ANNUAL HOLIDAY PARTY Benefiting

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December 13, 2017 Page 13

INSIDE Tax Reform — PIA & an Insurance Perspective » 7 The Future — It’s Here Now » 12 Mergers & Acquisitions — A Record Setting Pace » 16 Crystal Ball — 2018 Rates » 24 2018 Scholarship Applications » 26-28 Dodd-Frank Act — Leave Insurers Alone » 33

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November 2017 | Published Monthly

Andy Kraus, CPCU | Vice President of Agencies | 800.742.7433 | akraus@fmne.com

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Did you know that PIA’s company council, The PIA Partnership, has conducted nationwide research about the insurance buying preferences of small business owners? The research is encouraging because it found that small business owners strongly prefer independent insurance agents as they make choices in today’s online world. However, the results also serve as a wake-up call that agents must take steps to continue to demonstrate their value and also be more engaged online. PIA and the companies belonging to The PIA Partnership have created a public website that helps agents understand PIA’s findings. PIA members also have access to a private website containing a series of strategies and tools to help them stay ahead of online competition in commercial lines. To access the newest PIA Partnership project, Small Business Insurance & The Internet — The Voice of the Commercial Lines Customer, visit us at www.pianet.com/voiceoftheclcustomer. If you are not a PIA member and want to access all of the tools available through this program, contact us for a membership application or visit us online at www.pianet.com/joinpia.

National Association of Professional Insurance Agents 400 N. Washington St., Alexandria, VA 22314-2353 www.pianet.com | membership@pianet.org | (703) 836-9340

Tax Reform — PIA & an Insurance Perspective | 7 A budget will likely pass the Senate and one has already passed the House. Pundits contend once the Senate passed one, the two houses of Congress will come together and get the job finished. Will ObamaCare Really Collapse? Maybe Not | 8 No agreement on the bipartisan deal to continue the cost reduction payments to insurers appears to mean that the president’s order to stop the cost sharing reductions will stand. The Gig Workforce — Growing and an Opportunity | 10 More of us are doing our own thing these days. And by own thing we mean working for ourselves in a freelance capacity. The Future — It’s Here Now | 12 Nick van Dam is the global chief learning officer at McKinsey & Co. He says we are sitting on the cusp of the fourth industrial revolution. Is Lifestyle Simplification an Answer to Disaster | 14 Disaster is everywhere. Wildfires are all over the West and in particular in California where huge parts of whole cities were evacuated as fires raged around and through them. Mergers & Acquisitions — A Record Setting Pace | 16 OPTIS Partners tracks mergers and acquisitions. It said last week that 2017 is likely going to be a record setting year.

Special Report — Cyber Crime Update | 20 Cybercrime is epidemic. It’s not something you don’t already know. Crystal Ball — 2018 Rates | 24 Morgan Stanley is making a prediction that — if it comes true — will make insurers and agents and brokers happy. Dodd-Frank Act — Leave Insurers Alone | 33 The U.S. Treasury — charged with implementing and maintaining the financial reforming DoddFrank Act — says insurers are being squeezed by the law and want restrictions loosened. The Eternal Question — Salaries | 34 We all complain about our level of pay. Or at least a lot of us have the complaint.

PIA NE IA EVENTS Annual Holiday Party - Benefiting Toys for Tots on December 13, 2017 | 13 Professional Insurance Agents Nebraska Iowa - NEBRASKA - 2018 Scholarship Application | 26 Professional Insurance Agents Nebraska Iowa - IOWA - 2018 Scholarship Application | 28 Upcoming Events Calendar 2017-18 | 30

TOP STORIES

Tax Reform

PIA & an Insurance Perspective A budget will likely pass the Senate and one has already passed the House. Pundits contend once the Senate passed one, the two houses of Congress will come together and get the job finished. What makes this important is that tax reform is tied to the passing of a budget. Without a budget, the Republicans cannot pass tax reform with a simple majority vote. With one, reconciliation comes into play and under that it will take just 51 votes to pass tax reform.

The American Insurance Association (AIA), the National Association of Mutual Insurance Companies (NAMIC), the Property Casualty Insurers Association of America (PCI) and the Reinsurance Association of America (RAA) have issued a release supporting the reforms.

Word of tax reform pleases PIA National. The PIA supports creating a clear and simple tax code and reducing tax rates for small businesses. The association opposes the creation of any tax provision or regulations that may impede small business growth.

“The P&C industry is pleased to see the framework’s plan for reducing the corporate tax rate to 20% and eliminating the alternative minimum tax. The framework takes positive steps to address other business taxes in an effort to increase simplicity, efficiency, transparency, compliance and global competitiveness,” their statement said.

In a position paper PIA National promises to work on behalf of independent insurance agents to reform taxes. “Small businesses have been the backbone to this country’s economy for over 250 years; they stimulate the economy by creating jobs in our local communities and have a history of pulling this country out of recessions. Despite these significant contributions, they are hampered by overly burdensome laws and regulations. Taxes at the state and federal level represent a major cost of doing business and are especially harsh on small businesses,” the paper said. Other insurance groups are publicly supporting the reforms being pushed by the president and Republican congressional leadership.

A different insurance group — the 10-company Coalition for American Insurance — also supports the Republican tax reform efforts. “As the framework states, the current tax code incentivizes the offshoring of profits — even if they are generated here in the U.S. — to avoid paying taxes. This hurts consumers and businesses based here in America. That needs to change.” The companies include Berkshire Hathaway, Liberty Mutual Insurance and Travelers and their statement concludes “a simpler, fairer, modernized tax code is what’s needed to end the offshoring phenomenon and bring our nation’s tax code into the 21st century.”

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TOP STORIES PCI senior vice president Robert Gordon put the insurance tax situation in perspective and shows why these reforms are important.

makes our companies more competitive and less costly, less burdensome for consumers, is going to be very helpful,” he said.

“P/C insurers represent 0.86% of the U.S. (gross domestic product), but 3% of the federal corporate income taxes. We also pay significant state premium taxes, so our industry is severely overtaxed compared to our percentage of the U.S. GDP, so anything that significantly

Gordon — like many conservatives — thinks tax reform will eventually be bipartisan and that it will pass. Sources: PIA National, Business Insurance

Will OBAMACARE Really Collapse? MAYBE NOT No agreement on the bipartisan deal to continue the cost reduction payments to insurers appears to mean that the president’s order to stop the cost sharing reductions will stand. Or will they? John Bies served eight years in the Obama Justice Department as Attorney General Eric Holder’s right hand man and is chief counsel at American Oversight. He wrote an op-ed piece for The Hill and said Trump cannot — legally — stop the CSR payments. “Section 1402 of the ACA requires insurance companies to reduce the amount that eligible, low-income policyholders have to pay outof-pocket for health-care expenses such as co-payments and deductibles. By law, the insurer has no choice but to make these price cuts: the statute says they ‘shall’ reduce those costs,” he wrote. The same section of the law also requires the federal government to reimburse insurers for those reductions. Quoting the law he said, “An issuer of a qualified health plan making

reductions under this subsection shall notify the Secretary [of HHS] of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.” Bies said if insurers sue the federal government to continue those payments, they’d win. “No one has sued the government over the CSR payments yet, but if the insurers chose to do so, they would win. The Affordable Care Act requires them to make premium reductions and obligates the government to reimburse them, and if the president refuses to do so, they would simply recover from the Judgment Fund,” he added.

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TOP STORIES Meanwhile, Washington Sen. Patty Murry and Tennessee Republican Sen. Lamar Alexander — the ranking member and the chairman of the Senate Health Committee — and opponents on most everything — have reached across the aisle and developed a bipartisan deal to continue the cost sharing reduction payments to insurers so they can help those needing help to pay for health insurance. It’s not going anywhere. Alexander says he has 12 Republicans and 12 Democrats on board and co-sponsoring his bill — a bill that is not likely to see the light of day on the U.S. Senate floor. In a speech there the other day, Alexander said, “We’ve had about 50 votes, maybe more, and we lost them all. And we made thousands of speeches and we lost them all. I would ask what’s conservative about unaffordable premiums? What’s conservative about creating chaos so millions can’t buy health insurance?” In the end Alexander urged his Senate colleagues to embrace his compromise bill. It fell on deaf ears. The bill continues the cost sharing reductions and allows insurers to sell catastrophic insurance policies to all ages and to sell insurance across state lines. It also streamlines the process of states to get federal waivers to sell innovative health insurance plans. “It changes a law to make it easier for states like Iowa, Oklahoma, New Hampshire, Minnesota, Massachusetts, Tennessee, Alaska and many others to use their creativity to write policies that offer more choices and lower costs,” Alexander said. It’s not getting much support other than the 11. President Trump — at first — came out for the plan and then tweeted he’s changed his mind. “I am supportive of Lamar as a person & also of

the process, but I can never support bailing out ins co’s who have made a fortune w/ O’Care,” Trump tweeted. Alexander found that odd considering that 10 days before the president asked him to come up with a short-term deal to protect people from rising health care costs. Even if it passes — by some miracle — the Senate it faces certain death in the House. Rep. Mark Walker is the chair of the Republican Study Committee which comprises 150 House Republicans. He also tweeted, “The GOP should focus on repealing and replacing ObamaCare, not on trying to save it. This bailout is unacceptable.” Source: The Hill

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November 2017 | Main Street Industry News | www.pianeia.com | 9

TOP STORIES

The Gig Workforce Growing and an Opportunity More of us are doing our own thing these days. And by own thing we mean working for ourselves in a freelance capacity. The trend began with the great recession and all the changes that have happened in the workplace since. In 2014, there were 53 million freelancers in the U.S. The figure from 2016 is 55 million. Or — even more interesting — 35% of the workforce in this country is freelance. Those freelancers earned about $1 trillion last year.

This information comes from the third annual freelancing report from freelance gig website Upwork and Freelancers Union which is a resource and benefits provider. This year’s survey is titled Freelancing in America: 2016. Upwork’s CEO Stephane Kasriel said the $1 trillion figure makes independent, freelancing professionals a huge percentage of the income generated by U.S. workers. She said they have become an integral part of the workforce. “We should be addressing their interests or America will fall behind countries that are better equipping their evolving workforces. This discussion is tricky though because there is no

November 2017 | Main Street Industry News | www.pianeia.com | 10

TOP STORIES shortcut to understanding who a ‘freelancer’ is — the independent workforce is diverse given each individual’s freedom to create their own path,” Kasriel said. Cornell University School of Industrial Relations associate professor Louis Hyman agrees. “The freelance workforce is the fastest-growing component of the economy. Figuring out where it is going is the most pressing question of our digital age,” he said. Here’s some things found in the study: • 63% of freelancers say they are freelancing more by choice than necessity • That’s up 10% since 2014 • Most freelancers say they have a diversified list of clients and that having that list is more secure than having an employer • 73% say technology has made it easier to find work • That’s up 4% since 2014 • 66% say the amount of work picked up online in the last year has increased After revealing those facts, the study drilled deeper. • 79% of freelancers say they like freelancing better than a traditional job and the traditional employer • 85% of freelancers say they are “engaged” in their work • Just 68% of non-freelancers say the same thing • 50% of freelancers say no matter how much compensation is offered they’ll never go back to traditional employment Here’s what freelancers like about gig employment and it starts with freedom and

flexibility. This is what they like in order of importance: 1. They are their own boss 2. They have flexible work schedules 3. They have work location flexibility They also love the hours: • Most work — on average — 36 hours a week • 52% say that’s just the right amount of work Freelancing — they say — is evolving: • 60% think the freelance market has changed in the last three years • Of the 60%, a whopping 63% say freelancing as a career is becoming more positive • 46% of freelancers have raised their rates in the last year Not all is rosy or positive. The survey also got those doing freelance work to talk about their concerns. These are their biggest worries in order: 1. Being paid a fair rate 2. Income that is unpredictable 3. Debt 4. Benefits are also a worry — 20% say they don’t have health insurance 5. Those that do have health insurance say they’re paying more this year than last With no employer benefits, available or health insurance and a $1 trillion — so far — economy, the gig economy is a great place for a sharp insurance producers to find prospects. Source link: Insurance Journal

November 2017 | Main Street Industry News | www.pianeia.com | 11

TOP STORIES

The Future

IT’S HERE NOW Nick van Dam is the global chief learning officer at McKinsey & Co. He says we are sitting on the cusp of the fourth industrial revolution. The what? It’s — he notes — disruptive technology like — among others — artificial intelligence, machine learning, the mobile Internet and 3D printing. All of these are remaking a number of different industries. The remaking is opening up possibilities in jobs and markets. Van Dam says they will also lead to massive job losses as some of those industries cease to exist. How bad is it? Bad. Van Dam thinks about seven million jobs will go away between 2015 and 2020. We are already at the beginning of major job destruction. “Lifetime employment doesn’t exist anymore. Companies will only be around for so long,” he said. What’s sad, Van Dam added, is that too many people aren’t aware of the danger to their jobs on the negative and the potential opportunity on the positive. “This is the best time for people who have the right skills and right education because there are tremendous opportunities. It’s also the worst time in history for people with ordinary skills and education,” he said. And what are those needed skills? Here’s his list: • Complex problem-solving • Critical thinking

• Creativity • People management • Coordinating with others • Emotional intelligence • Judgment and decision-making • Service orientation • Negotiation • Cognitive flexibility In his explanation of what’s happening, Van Dam said, “It’s all about how we can do things differently. How can we come up with new products and business models and use technology to work smarter. It’s all about ideation, and ideation is driven by creativity.” He said people tend to stay in the workforce for 55 years or so. That means life-long learning is an important ingredient in maintaining a career in the future. Companies need to take the same attitude and turn the workplace into a learning space. “Companies, in order to stay relevant, need to step up and do way more in order to develop their people,” he said. By the way, he said people that are lifelong learners are much more successful professionally than those that aren’t. Source: Insurance Journal

November 2017 | Main Street Industry News | www.pianeia.com | 12

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TOP STORIES

Is Lifestyle Simplification an Answer to Disaster Disaster is everywhere. Wildfires are all over the West and in particular in California where huge parts of whole cities were evacuated as fires raged around and through them. Hurricanes attack the Gulf states and the East coast regularly. Tornadoes dot the South and the nation’s middle. Flooding is a huge problem, it has led to billions in damages. We’ve seen news reports from California, Texas and Florida about people who had to evacuate — and sometimes in a very big hurry — from those disasters. Many had to quickly decide what to take and what to leave. Some came home relieved that nothing was destroyed. Others returned to find everything gone.

That’s lifetimes full of photo albums, family videos, family treasures and gifts, furniture, sporting and exercise equipment, clothing and more. Gone. In some cases, gone in an instant. Now many of us are looking at what seem to be mountains of stuff stuck in garages, attics, basements and storage units. The Self Storage Association says 10% of us have outside the home storage units to store things we can’t fit into our burgeoning homes. We’re now asking ourselves, “How much do we really need?” Cris Sgrott-Wheedleton is a professional organizer who says calls to her office have increased big time with all the negative news generated from the disasters.

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TOP STORIES “I think the coverage has affected people. People are ready to begin the process. It reminds them to think, ‘What do I have in my house and how would I gather those things and put them in my car and leave?” she said. Some psychologists are saying people are now realizing stuff isn’t that important but SgrottWheedleton disagrees to a point. She calls our relationship to stuff complex. “I work with people who say they wish they could throw a match at their piles of stuff and let it all burn down and start fresh somewhere else. But do they really mean that?” she said.

7. Wind 8. Wildfire “We created this list to help the many people who are worried or fed up with the danger and recovery after natural disaster. Even just the threat of an event can be very disruptive, which can happen several times annually,” Sperling said. The conclusion? The safest place to live in the U.S. is Portland, Oregon and Texas and Florida are the least safe. 10 safest cities to live in to avoid disaster: 1. Portland-Vancouver-Hillsboro, OR-WA

What to keep and what to let go — she said — is a tough decision and one many are not willing to make.

2. Salt Lake City, UT

All of these disasters led BestPlaces — a firm that analyzes data — to look at damage from disaster around the country and pick the best and worst places to live if all this is a worry.

5. Seattle-Tacoma-Bellevue, WA

The report is Top 10 Safest Places and to get to the safest places, BestPlaces looked at 30-years of hazardous weather data and trends, and looked at eight risk factors and weighed them by severity and frequency. The data comes from NOAA, USGS and the NCDC Storm Events Database.

9. Providence-Warwick, RI-MA

Also included in the data is the cost of living, crime, schools and other metrics. Bert Sperling of BestPlaces listed the risks from most dangerous to least: 1. Tornados 2. Hurricanes 3. Flooding 4. Earthquakes 5. Drought 6. Hail

3. Sacramento–Roseville–Arden-Arcade, CA 4. San Francisco-Oakland-Hayward, CA 6. San Jose-Sunnyvale-Santa Clara, CA 7. Minneapolis-St. Paul-Bloomington, MN-WI 8. Richmond, VA 10. Columbus, OH 10 riskiest places for natural disasters: 1. Miami-Fort Lauderdale- West Palm Beach, FL 2. Austin-Round Rock, TX 3. Oklahoma City, OK 4. Dallas-Fort Worth-Arlington, TX 5. Houston-The Woodlands-Sugar Land, TX 6. Birmingham-Hoover, AL 7. Memphis, TN-MS-AR 8. Tampa-St. Petersburg-Clearwater, FL 9. Phoenix-Mesa-Scottsdale, AZ 10. New Orleans-Metairie, LA Sources: The Denver Post, Insurance Journal

November 2017 | Main Street Industry News | www.pianeia.com | 15

TOP STORIES

Mergers & Acquisitions A Record Setting Pace OPTIS Partners tracks mergers and acquisitions. It said last week that 2017 is likely going to be a record setting year. OPTIS Partners Managing Director Timothy Cunningham said so far this year 457 transactions have taken place. That compares to 350 in all of 2016. “There’s no end in sight to the upward trend. The appetite of buyers is undiminished, as is the supply of agencies for sale. It’s absolutely certain 2017 will be another record-setting year for M&A activity. The activity is fueled by aggressive buyer valuations, in particular from private-equity backed buyers who are flush with cash. And there’s a plentiful supply of aging agency principals who need to complete their exit strategies,” he said. Here’s who’s selling: • P&C only insurance agencies • Agencies selling both P&C and employee benefits • Those selling employee benefits only

Who’s buying: • Private-equity backed brokers • Privately held brokers • Banks Looking at third quarter activity, OPTIS Partners partner Daniel Menzer said property and casualty agencies are the most popular to sell and purchase. There were 69 deals involving them in the third quarter. Employee benefits is second at 34. For those buying both there were 15 acquisitions and for the “other” category, another 15. “Sellers have a great opportunity today. If you are a potential seller, consider acting sooner than later while the irons are hot and the pricing is favorable. If you’re a buyer, do your homework on the potential seller. Fully evaluate their risk and growth potential. Look at the financials in depth and consider qualitative factors. Overpaying can be deadly,” he said. Source: PropertyCasualty360.com

November 2017 | Main Street Industry News | www.pianeia.com | 16

What’s New?

What’s Not?

Now a billion dollar company . . . and still growing! (Sales passed the mark in 2016.)

Secure financial strength that comes from being a member of the Berkshire Hathaway family.

Nationwide geographical scope.

Our A+ (”Superior”) A.M. Best Company Rating.

An increasingly robust product suite that features Workers’ Compensation, Businessowner’s Policy, Commercial Auto, Umbrella, and Professional Liability coverage.

Average annual growth in premium in excess of 25% per year for the past five.

Broader appetite for select risks (including Total Insured Property Values as high as $50 million for certain industries and risks).

Ongoing product and service enhancements to win renewals and keep a high retention ratio.

Our focus on being data-driven and using business intelligence to gain a competitive edge.

Higher A.M. Best financial size (i.e., “X”).

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Small Business Training Tax Credit

November 2017 | Main Street Industry News | www.pianeia.com | 18

TOP STORIES

Lots of talk these days about taxes and tax reform. Republicans in Congress and President Trump are pushing hard to do a total tax overhaul. They contend the plan — once settled and passed — will help the middle class and small business the most. Democrats — to no one’s surprise — are opposing just about every proposal being made. What isn’t being reported much is a bipartisan bill in the House that isn’t attached to tax reform. This one encourages small business to train its employees and gives a tax credit for that training. The Democrats cosponsoring the Career Advancement Through New Skills Act are Washington Rep. Derek Kilmer and California Rep. Mike Thompson. The Republicans are Rep. Randy Hultgren of Illinois and Rep. Bradley Byrne of Alabama. Hultgren said the plan is to create a 25% tax credit for the first $5,000 of training expenses with a limit of $1,250 per employee. The hope is training that closes the gap between what employers need and what employees know.

“One the greatest challenges facing workers today is connecting the skills and knowledge they have with the jobs that actually exist. Similarly, small businesses have trouble finding qualified applicants for the jobs of the 21st century. This bill encourages these employers to put resources toward training and educating workers for the jobs that exist now. Let’s help the backbone of our economy — small businesses — create opportunity for their workers in order to grow,” he said. Thompson agrees. “The nation’s skills gap is significant. Small businesses across the country report being unable to find qualified applicants and CEOs report shortages of workers for skilled, well-paying jobs.” Kilmer wrapped the thoughts up and said, “Giving seasoned employees the opportunity to learn and build new skills while on the job helps our economy grow. The federal government can and should be a partner in supporting classes and training offered by companies that can give more stability to their workers and put them in a position to earn more money.” Source: Insurance Journal

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Special Report CYBER CRIME UPDATE Cyber crime is epidemic. It’s not something you don’t already know. There are some new developments, however. The Department of Homeland Security and the FBI are warning of a new threat to the nation’s power industry and public infrastructure.

objects of attacks since May and more attacks are expected going forward.

In a rare warning by the federal government, the two agencies said nuclear, energy, aviation, water and critical manufacturing have been the

Cyber crime is a problem and the more it costs, the more people are starting to notice. Accenture and the Ponemon Institute just

The two agencies won’t say who but apparent hackers have succeeded and it will likely only get worse in the future.

November 2017 | Main Street Industry News | www.pianeia.com | 20

TOP STORIES Larry Ponemon said loss of information is the most damaging part of the attacks to 43% of those polled. “The foundation of a strong and effective security program is to identify and ‘harden’ the most-high value assets. While steady progress has been made in improving cyber defense, a better understanding of the cost of cyber crime could help businesses bridge the gap between their own vulnerabilities and the escalating creativity - and numbers - of threat actors,” said Larry Ponemon. He said the biggest shock in the study is the number of breaches experienced. The 130 per year is a huge number. It’s a 27.4% increase from a year ago. Financial services at $18.28 million a year and energy losing $17.2 million a year are the hardest hit. Kelly Bissell of Accenture Security said cyber attacks are taking longer to fix than they used to take. Malicious attacks involving insiders take up to 50 days while ransomware’s solutions average 23 days.

produced The Cost of Cyber Crime Study. It was done with 2,182 security and IT professionals in 254 organizations. The results show the cost of cyber attacks has gone up 62% in the last five years and some large businesses are seeing as many as 130 breaches per year. They end up costing about $11.7 million a year. A year ago in 2016 the cost was $9.5 million. The cost of those breaches has jumped 23% in a year. Malware is the highest cost to large business at about $2.4 million — on average — per attack.

“Keeping pace with these more sophisticated and highly motivated attacks demands that organizations adopt a dynamic, nimble security strategy that builds resilience from the inside out — versus only focusing on the perimeter — with an industry-specific approach that protects the entire value chain, end-to-end,” Bissell said. A different report from Hartford Steam Boiler Inspection and Insurance is a bit of a contradiction to the Accenture and Ponemon report. It said 53% of businesses — large and small — have experienced a cyber attack in the past year. Of those, 72% spent more than 5,000 to investigate each attack or to restore or replace software and hardware and deal with the consequences of the hack.

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TOP STORIES • 38% spent more than $50,000 to respond • 10% spent $100,000 to $250,000 • 7% paid more than $250,000 Hartford Steam Boiler’s Timothy Zeilman said, “In addition to the rising number of cyber attacks and related costs, businesses are increasingly anxious about protecting their data. Data is what drives a business and the loss or corruption of information can be devastating.” • 70% of executives worry data will be destroyed • 62% worry about equipment damage • 60% report data loss as the most common reported consequence of an attack • 55% say business interruption is the worst experience The most common attacks: • Malware — 53% • Viruses — 51% • Denial of service — 35% • Ransomware — 29% • Cyber extortion — 25% • Social engineering — 13% AIG recommends taking an inventory of how you protect yourself from cyber criminals and offers some tips. 1. Inventory your systems. In other words, outdated systems are an excellent way for cyber criminals to get into your infrastructure. Regularly take an inventory of every asset, application and software you use. 2. Maintain and manage your software. If a patch is sent out, then the product is vulnerable and you need to apply the patch.

Make sure you have a system to know about and apply patches when they become available. 3. Scan your system. Cyber criminals are constantly scanning your system so why shouldn’t you? 4. A user security policy is critical. Employees are your weakest cyber security link. Even though you love them, they share passwords, they open links that are suspect and visit unauthorized sites. Managing laptops, smartphones and installing and maintaining antivirus software is critical to the battle. 5. Do not share everything with everyone. Not everyone — even in very small companies — needs to know every password. 6. Network security solutions. Antivirus software has problems but it is better than nothing. You should also monitor networks 24/7 and put in third-party DDoS protection. 7. Segment networks. Separate the most critical assets and data from less critical assets and then keep them separate and keep access to those critical assets limited. 8. Make sure you have a good backup and the ability to recover. This is a no-brainer. AIG also offers a bonus suggestion. Have lots of cyber insurance. And if all that fails, perhaps a bill that has been introduced in the U.S. House of Representatives will pay dividends. Right now — believe it or not — it is illegal to retaliate and hack back or send a catastrophic virus back to a hacker. That could change if Georgia Republican Rep. Tom Graves and Arizona Democrat Rep. Kyrsten Sinema have their way. They

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TOP STORIES have introduced The Active Cyber Defense Certainty Act — or the hack back bill as it has become known. If it passes — which is a long, hard road at this point — then it will decriminalize retaliation. So, an individual or a large company can go after those that go after them and either A) steal their information back or, B) destroy the information that was taken. What it doesn’t let you do — at least at this point — is give you the right to send something to destroy the hacker’s computer or system. Graves said it doesn’t solve every problem

but it “brings some light into the dark places where cyber criminals operate. The certainty the bill provides will empower individuals and companies use new defenses against cyber criminals. I also hope it spurs a new generation of tools and methods to level the lopsided cyber battlefield, if not give an edge to cyber defenders.” Before a retaliation can take place — however — the FBI’s cybercrimes unit will have to be notified. Sources: TechRepublic, UPI, Insurance Journal

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November 2017 | Main Street Industry News | www.pianeia.com | 23

TOP STORIES

Crystal Ball 2018 Rates Morgan Stanley is making a prediction that — if it comes true — will make insurers and agents and brokers happy. The firm is looking at double-digit rate hikes in 2018. In making their optimistic prediction, Morgan Stanley said losses from catastrophes in September and October will propel rates upward. Referring to the $100 billion in losses from Hurricanes Harvey, Irma and Maria, the California wildfires and the two earthquakes in Mexico, Morgan Stanley said, “After record catastrophe losses in 3Q, P&C managements are more bullish on pricing” and “are more vocal on the need for improving pricing.” Rate increases are needed to drive earnings. “We estimate 1-5% rate increases could lift earnings by (approximately) 6-29% on average. Our scenario analysis indicates that 1-5% overall pricing increases could improve core combined ratios by 1-5 (points) which could lift earnings by (approximately) 6-29%. Companies with larger property cat reinsurance exposures could see higher overall pricing and greater earnings benefits,” Morgan Stanley’s statement noted. In the annual Homeowners’ ROE Outlook, Aon Benfield thinks homeowners rates will help drive profitability. And that in spite of a decreasing rate of return for insurers. Here’s why Aon is optimistic: • In 2016 homeowners premiums rose to $91 billion from 2015’s $89 billion • Premiums are expected to hit $93 billion in 2017

Aon’s Greg Heerde said, “Given the year-onyear increase in premiums, US homeowners’ insurance can be considered a growth engine within the industry. However, we continue to monitor this line business carefully, as it is difficult to say at this stage whether insurers’ approved rate increases will be sufficient to match their loss and expense inflationary pressures of the future.” Those are the positives but Guy Carpenter & Co. says while the insurance industry is flush with capital and things are being viewed positively, economic and market-based problems are lying on the horizon. All this comes from the 2017 edition of Plotting a Path in a Changing Market. While saying insurance remains dynamic, Guy Carpenter North America President Tim Gardner says it also faces the challenge of an always changing economy and pressure in lines once considered stable. “On the surface, 2016 represented a recordsetting year for the P&C insurance industry, with surplus reaching its highest level in history. Rate reductions continued to moderate, and there was optimism following the 2016 election given the potential for tax cuts and deregulation. Yet red flags remained, and a closer look at the individual metrics contributing to the growth in surplus revealed interesting trends,” Gardner said. The report is all about risk and in 2016 those risks were: • • • •

Emerging risks The frequency of catastrophe The severity of catastrophe Shifting capital needs

• The top 20 homeowners insurers saw rate increases of 3% during the 18 months before August of this year

Those risks set up a 4% underwriting loss — the first since 2012.

• The highest rate hikes were 7% in Texas and North Carolina

Sources: Business Insurance, Carrier Management, Insurance Journal, Insurance Business America

November 2017 | Main Street Industry News | www.pianeia.com | 24

Utica’s Agents’ Errors & Omissions Program is all about…

CUSTOM POLICIES TO MEET YOUR NEEDS E&O Postcards 9A2132.indd 1

PIA of Nebraska & Iowa (402) 392-1611 www.pianeia.com

6/13/11 3:12

Professional Insurance Agents Nebraska Iowa NEBRASKA 2018 Scholarship Application

Scholarship Value $310 NEâ€”$315 IA

Scholarship Value $115

Scholarship Value $115 member/$140 non-member

Must be working within the P&C business.

Recipient must desire to complete all five CIC courses towards CIC designation. Scholarship is not limited to first time participants.

Recipient must desire to complete all five CISR courses towards CISR designation. Scholarship is not limited to first time participants.

Applicants from any NE or IA agency or company are eligible.

Recipient must desire to complete all three Insurance Success Seminars towards CPIA designation. Scholarship is not limited to first time participants.

Must register for CIC class of choice and pay registration fee. PIA will reimburse scholarship value after exam is taken. Reimbursement is not contingent upon exam results. May not be applied to Ruble Graduate Seminar.

Must register for CISR class of choice and pay registration fee. PIA will reimburse $115 after exam is taken. Reimbursement is not contingent upon exam results.

CIC Course Fees NE: $415 credit card/ $405 check IA: $420 credit card/$410 check

Professional Insurance Agents Nebraska Iowa continually educates members of the insurance industry by providing institutes and courses. Through the PIANEIA scholarship program, all levels of insurance professionals are financially supported in their efforts to advance their knowledge and designations.

Applicants from any NE or IA agency or company are eligible. Must register for CPIA class of choice and pay registration fee. PIA will reimburse $115 after class is completed. No exam for designation.

CISR IA Course Fee $159 credit card/ $155 check

CPIA NE IA Course Fee $155 member/$140 non-member

Applicants will be evaluated on their commitment to achieving designations.

Submissions accepted via MAIL: PIANEIA 920 S. 107th Avenue, Suite 305 Omaha, NE 68114

Application Deadline January 31, 2018

EMAIL: frontdesk@pianeia.com FAX: 402 392-2228

For questions, call 402 392-1611. Applicants will be notified via email by February 28, 2018.

Name and Designations_________________________________________________________________ Agency or Company____________________________________________________________________ Agency or Company Address_____________________________________________________________ City, State, Zip_________________________________________________________________________ Agency or Company Phone Number _______________________________________________________ Applicantâ€™s Email Address________________________________________________________________ Length of time in insurance industry_______________________________________________________ Please provide a description of the work, experience, commitment to professional advancement or other reasons for consideration. Limit to one page or less. May use space below or add additional sheets of paper if necessary. ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ The institute, class or seminar that I would like to attend or have already registered for is: Topic____________________________________________ Date_____________________________________________ Location_________________________________________ To View the 2018 Education Calendar, Please Visit www.pianeia.com

Professional Insurance Agents Nebraska Iowa IOWA 2018 Scholarship Application

Scholarship Value $310 NEâ€”$315 IA

Scholarship Value $115

Scholarship Value $115 member/$140 non-member

Must be working within the P&C business.

Recipient must desire to complete all five CIC courses towards CIC designation. Scholarship is not limited to first time participants.

Recipient must desire to complete all five CISR courses towards CISR designation. Scholarship is not limited to first time participants.

Applicants from any NE or IA agency or company are eligible.

Recipient must desire to complete all three Insurance Success Seminars towards CPIA designation. Scholarship is not limited to first time participants.

Must register for CISR class of choice and pay registration fee. PIA will reimburse $115 after exam is taken. Reimbursement is not contingent upon exam results.

CIC Course Fees NE: $415 credit card/ $405 check IA: $420 credit card/$410 check

CISR IA Course Fee $159 credit card/ $155 check

CPIA NE IA Course Fee $155 member/$140 non-member

Applicants will be evaluated on their commitment to achieving designations.

Submissions accepted via MAIL: PIANEIA 920 S. 107th Avenue, Suite 305 Omaha, NE 68114

Application Deadline January 31, 2018

EMAIL: frontdesk@pianeia.com FAX: 402 392-2228

For questions, call 402 392-1611. Applicants will be notified via email by February 28, 2018. November 2017 | Main Street Industry News | www.pianeia.com | 28

PIA NE IA EVENTS

Upcoming Events Calendar 2017-18 For information and to register Click Here or call (402) 392-1611. Date

Class/Webinar

Where

When

November 2, 2017

Certificates and Additional Insureds: Navigating the Maze

NE/IA

Webinar: 12:00PM - 3:00PM

November 6, 2017

FLOOD INSURANCE

Nebraska

Webinar: 12:00PM - 3:00PM

November 9, 2017

CISR: Commercial Casualty 2

Hiawatha

Kirkwood Linn Regional Center

November 9, 2017

Home Business vs. Home Insurance

NE/IA

Webinar: 12:00PM - 3:00PM

November 14, 2017

CISR: Insuring Commercial Property

Des Moines

Hilton Garden Inn Des Moines/Urbandale

November 14, 2017

How to be the Agent Advocate at Claim Time

NE/IA

Webinar: 12:00PM - 3:00PM

November 14, 2017

Leases & Contracts Vs. The Insurance Policy

NE/IA

Webinar: 8:00AM - 11:00AM

November 15-17, 2017

CIC: Life & Health Institute

Omaha

Hilton Double Tree Omaha SouthWest

November 16, 2017

Top 12 Coverage Countdown

NE/IA

Webinar: 12:00PM - 3:00PM

November 28, 2017

Regarding Ethics

NE/IA

Webinar: 1:00PM - 4:00PM

November 30, 2017

Commercial Property Claims that Cause Problems

NE/IA

Webinar: 12:00PM - 3:00PM

December 7, 2017

Street Level Ethics

NE/IA

Webinar: 12:00PM - 3:00PM

December 7, 2017

Tricks to Fix: Closing Coverage Gaps in Home, Work and Auto

NE/IA

Webinar: 8:00AM - 11:00AM

December 7, 2017

Street Level Ethics (NE)

NE/IA

Webinar: 12:00PM - 3:00PM

December 11, 2017

Commercial Liability Endorsements To Watch Out For

NE/IA

Webinar: 12:00PM - 3:00PM

December 13, 2017

2017 PIA Annual Holiday Party

Omaha

Happy Hollow Country Club

January 10, 2018

Insuring the Building Project: Builders Risk and Installation Coverage

NE/IA

Webinar: 12:00PM - 3:00PM

November 2017 | Main Street Industry News | www.pianeia.com | 30

PIA NE IA EVENTS January 11, 2018

Cyber Liability - the 21st Century Peril

NE/IA

Webinar: 8:00AM - 11:00AM

January 11, 2018

Regarding Ethics

Webinar: 12:00PM - 3:00PM

January 16, 2018

Current Trends & Changes: The Homeowner & Auto Marketplace

NE/IA

Webinar: 12:00PM - 3:00PM

January 23, 2018

And the CHAOS Continues

Webinar: 8:00AM - 11:00AM

January 23, 2018

Commercial Property Claims that Cause Problems

NE/IA

Webinar: 12:00PM - 3:00PM

January 24, 2018

Additional Insureds: The Quandry

NE/IA

Webinar: 12:00PM - 3:00PM

January 25, 2018

How to be the Agent Advocate at Claim Time

Webinar: 12:00PM - 3:00PM

February 6, 2018

Home Business vs. Home Insurance

NE/IA

Webinar: 12:00PM - 3:00PM

February 7, 2018

CISR: Insurance Personal Auto Exposures

Hilton Garden Inn Des Moines/Urbandale

February 8, 2018

Tricks to Fix: Closing Coverage Gaps in Home, Work and Auto

NE/IA

Webinar: 8:00AM - 11:00AM

February 13, 2018

Certificiates and Additional Insureds: Navigating the Maze

NE/IA

Webinar: 12:00PM - 3:00PM

February 13, 2018

E&O Loss Prevention

NE/IA

Webinar: 8:00AM - 11:00AM

February 14-16, 2018

CIC: Personal Lines Institute

Double Tree Omaha Southwest

February 14, 2018

**LAST TIME, NE ONLY** Executive & Management Liability

Webinar: 8:00AM - 11:00AM

February 15, 2018

**LAST TIME, NE ONLY** Man Vs. Machine (NE)

Webinar: 8:00AM - 11:00AM

February 20, 2018

Street Level Ethics

Iowa

Webinar: 12:00PM - 3:00PM

February 20, 2018

Street Level Ethics (NE)

Webinar: 12:00PM - 3:00PM

February 21, 2018

**LAST TIME, NE ONLY** Top 12 Coverage Countdown (NE)

Webinar: 8:00AM - 11:00AM

February 21, 2018

A Walk Around the Farm Farm Property Considerations (NE)

Webinar: 12:00PM - 3:00PM

February 21, 2018

A Walk Around the Farm Farm Property Considerations

Iowa

Webinar: 12:00PM - 3:00PM

February 28, 2018

CISR: Elements of Risk Management

Hiawatha

Kirkwood Linn Regional Center

November 2017 | Main Street Industry News | www.pianeia.com | 31

Define what’s really important, and have the courage to build your life around the answer.

Life-Changing Education The Certified Insurance Counselors (CIC) Program is a professional commitment to the industry. The CIC Program is not for the weak. In fact, many agents don’t pass all five institutes the first time around. However, the dedicated ones who earn the designation also earn respect and more money. Studies published in the Producer Profile publication show CICs earn 30% more than their competitors. Enjoy the raise; you’ve earned it! Get started today attoday www.TheNationalAlliance.com Get started at www.PIANEIA.com

TOP STORIES As Dodd-Frank now reads, banks and some financial companies with more than $50 billion in assets are automatically dubbed systemically important financial institutions (SIFI). Insurers AIG, Prudential and MetLife all got that tag through MetLife — via court action — got the SIFI designation removed. AIG has also seen its SIFI designation removed but that was because the company downsized considerably and its assets no longer fit the Dodd-Frank regulatory scheme.

Dodd-Frank Act Leave Insurers Alone The U.S. Treasury — charged with implementing and maintaining the financial reforming Dodd-Frank Act — says insurers are being squeezed by the law and want restrictions loosened. A report has been issued saying the Financial Stability Oversight Council (FSOC) needs to pay more attention to insurer activities and not the size of the company. For that to happen, Congress will have to act. “Treasury’s position is that entity-based systemic risk evaluations of insurance companies are generally not the best approach for mitigating risks arising from insurance. Instead, insurance regulators should focus on potential risks arising from insurance products and activities, and on implementing regulations that strengthen the insurance industry as a whole,” the report said.

The House Financial Services Committee has approved a bill that ease bank regulations on those with more than $50 billion in assets. To get that easement a bank must prove it is focused on regional business and not on global business so it doesn’t pose a threat to the world’s financial system if a collapse is imminent. The effort to do something similar in the Senate is a bipartisan effort. Georgia Republican Sen. David Perdue and Missouri Democrat Sen. Claire McCaskill have introduced a bill in the Senate Banking Committee to make DoddFrank banking changes. Sen. Mike Crapo — an Idaho Republican and the committee chairman — and ranking Democrat Ohio’s Sen. Sherrod Brown both agree a bipartisan regulatory reform deal is needed. They support one that will clarify the Volcker rule that bans banks from making risky trades with their own capital and that exempt mid-sized regional banks from the strict oversight of Dodd-Frank. Gary Cohn — the White House’s chief economic advisory — said a deal is in the making that will likely pass that will raise the $50 billion threshold. Sources: Insurance Business America, The Hill

November 2017 | Main Street Industry News | www.pianeia.com | 33

TOP STORIES

The Eternal Question Salaries

We all complain about our level of pay. Or at least a lot of us have the complaint. It’s hard to imagine Warren Buffett complaining but it’s pretty easy to understand that about ourselves or for the person in the next office or cubicle. PayScale is a compensation analysis firm and it did a survey of U.S. workers and found 90% think they’re underpaid. That conclusion comes from collecting the salary data of 500,000 people and then asking 7,700 of that number to rate their employers on pay transparency and fairness. Those who find their employers to

be fair and transparent in determining pay are happier at work than those who are just paid the going rate for their job. PayScale’s Chris Martin said the satisfaction of the former group is 5.4-times higher than the latter. “Companies are determining pay in this kind of behind-the-curtain way. Employees are forming opinions and think they are getting a raw deal,” he said. Martin said employers use a variety of factors to determine pay and a lot of those factors are highly subjective. Complaints by women and non-white races say transparency will force employers to be more transparent and face the inequities that exist in their pay structures.

November 2017 | Main Street Industry News | www.pianeia.com | 34

TOP STORIES Many groups representing women and minorities want: • Laws against asking candidates for jobs what they were paid at previous jobs • Workers to be informed about what other workers in similar or the same jobs earn When this happens — Martin said — companies find and correct pay gaps. It is — however — an uphill battle. PayScale said just 6% of the 7,700 employers surveyed say they make all salaries public. Half say they will only tell an employee what they make and will not give them information on the salaries of others. What the PayScale survey did find to be true is that most of us are not underpaid for what we do. Source: Insurance Business America

November 2017 | Main Street Industry News | www.pianeia.com | 35

Help Protect Your Family’s Financial Security With The PIA Trust

Basic, Voluntary & Dependent Term Life Plans TERM LIFE COVERAGE DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees have access to high-quality, competitively priced Term Life plans through the PIA Services Group Insurance Fund.

Mortgage payments, education, healthcare and daily living expenses continue for your family if something happens to you or another family member. That’s why it makes sense to seek financial protection with PIA Trust’s Term Life insurance plans. Term Life coverage available through the plans includes: Basic Term Life - no medical underwriting necessary up to guaranteed issue limits (only available with 100% group participation & employer paid premiums)

Voluntary Term Life - flexible face amounts of up to $300,000 for you and your employees Dependent Term Life - coverage amounts up to $100,00 for spouses and $10,000 for children

For more information about PIA Trust Term Life insurance plans, please contact your local PIA Affiliate or call the Plan Administrator at (800) 336-4759. Additional information is also available on-line at www.piatrust.com. PIA SERVICES GROUP INSURANCE FUND

* PIA National membership, when required, must be current at all times.

Policies or provisions may vary or be unavailable in some states. Policies have exclusions and limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Association Administrative Address, P.O. Box 17828, Portland, Maine 04112-8828, under Policy Form ALI-3001-A (UIC). Insurance Program Administered by Lockton Affinity, LLC.

Cathy Klasi

Published on Nov 1, 2017

Main Street Industry News - November 2017

PIA of Nebraska and Iowa, Main Street Industry News

Main Street Industry News - November 2017

Published on Nov 1, 2017

PIA of Nebraska and Iowa, Main Street Industry News

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