IN THIS ISSUE 6
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CHART MARKETS: IMMEDIATE ACCESS TO MULTIPLE LONDON PROGRAMS A significant new goal for the CHART Exchange in 2017 is the capability of promoting our member agencies and their London programs.
INTERVIEW: JOE WHEELER, JR. OF NORTHWESTERN RISK “Program business is really for the insurance nerds... The attraction to program business is knowing that the extra care and knowledge is necessary to understand the nuances.”
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CHART SYNDICATES AND BROKERS CONSIDERED FOR INNOVATION AWARDS FOR 2016! The 2016 Innovation Award winners provide fantastic examples of the innovation going on across the Lloyd’s market. As the world changes like never before, it is important to recognize the companies and people that are leading the way, creating truly innovative insurance products for this digitalized, globalized, interconnected world of new and emerging risks.”
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AFFINITY GROUP UNDERWRITERS ANOTHER CHART COVERHOLDER SUCCESS STORY “Had I not accepted Glenn’s invitation to Philadelphia, I have no doubt that we would never have pursued being a Coverholder on our own,” Wyss says.
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If we do a good job of communicating our uniqueness, CHART Markets will become an easyto-use tool for anyone wishing to get immediate access to multiple London programs sourced and managed by CHART member agencies.”
THE UPCOMING THIRD CHART CONFERENCE WILL SHOWCASE ALL WE’VE LEARNED FROM THE FIRST TWO Someone once observed that “experience is a hard teacher. She gives the test first and the lessons afterwards.”
WEBSITE OPERATORS MUST COMPLY WITH NEW DMCA AGENT REGISTRATION PROCEDURES OR RISK COPYRIGHT INFRINGEMENT If your website lets users post content, the Digital Millennium Copyright Act (DMCA) can protect you from possible copyright infringement liability.
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THE CLAIMS PROCESS: A FEW PRACTICAL OBSERVATIONS ON ROLES PLAYED BY THE MGA It is important for the MGA, therefore, to maintain detailed documentation on the underwriting process. Contemporaneous written notes and communications as to what was intended can move the MGA from being a participant to merely a confirming witness.”
Cover Image Credit: Wikimedia Commons
CHART EXCHANGE
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THE CHART DEFENDER: INNOVATIVE E&O FOR COVERHOLDERS Agencies securing their E&O coverage through the CHART Defender initiative can also utilize Wilson Elser to assist them in establishing sound business practices within their firm. A proprietary risk mitigation hotline will be available to our policyholders.
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LLOYD’S PREPARES FOR BREXIT In a recent interview with Yahoo finance Editor-InChief Andy Serwer Lloyd’s CEO Inga Beale discussed what Lloyd’s will be doing in response to the UK leaving the European Union.
LLOYD’S TO OPEN INDIA BRANCH IN ADVANCE OF APRIL REINSURANCE RENEWALS Lloyd’s Chairman John Nelson said: “This is a watershed moment in Lloyd’s international strategy. We have now cemented our access to the world’s largest, fast-growth economies, those most in need of the specialist insurance to protect their expanding asset base.”
www.chart-exchange.com
JAN-FEB 2017 VOLUME 2 - ISSUE 1
Publisher: CHART Exchange Glenn W. Clark, CPCU Membership Services Matt Basile Advertising: Matt Basile
INSURANCE AGENCY MERGER AND ACQUISITION 2016 ACTIVITY In 2016, the merger and acquisition appetite for independent insurance firms has continued at a strong pace, with the leading private equity sponsored firms continuing to drive large number of deals and high valuations.
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Managing Editor: Matt Basile Contributing Editor: Frank Huver
22 NEW! ROCKWOOD’S E&O PROGRAM DESIGNED SPECIFICALLY FOR COVERHOLDERS HERE
Layout, Design & Circulation: Ron Manera AdMax Corp., Inc. CHART Exchange
info@chart-exchange.com 3001 Philadelphia Pike Claymont, Delaware 19703 www.chart-exchange.com 302-765-6001
Last Issue:
PREFER TO READ IN PDF FORMAT? DOWNLOAD THE PDF VERSION HERE
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OUR TEAM IS THERE FROM THE START TO THE FINISH NSM Insurance Group Comprehensive Insurance Coverage for: Social Services I Addiction Treatment I Professional Liability Staffing Firms I Workers' Compensation I Collectible Vehicles Coastal Condo Associations I Breweries and Wineries Sports and Wellness I Specialty Aviation
888-235-3525 www.nsminc.com
NEVER MISS AN ISSUE OF CHART
EXCHANGE SUBSCRIBE NOW
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MESSAGE FROM THE EARLIEST ADOPTER
CHART MARKETS: IMMEDIATE ACCESS TO MULTIPLE LONDON PROGRAMS
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significant new goal for the CHART Exchange in 2017 is the capability of promoting our member agencies and their London programs. Through the benefits of group association we are able to more efficiently recruit retail producers to access our member’s programs.
The plan is to build a shared marketplace via the domain www.chartmarkets.com. Our e-magazine is distributed to over 100,000 independent agencies monthly. We will utilize a number of marketing techniques to drive traffic both to the marketplace (the shopping mall) and to the individual London programs (store fronts owned by CHART members).
Glenn W. Clark, CPCU Publisher & Earliest Adopter
In addition to the e-magazine, our team has the expertise needed to generate inquiries from press ads (Rough Notes, ALM, Insurance Perhaps there is a parallel to the Journal, A.M. Best, etc) that are local shopping mall or town center. designed and purchased at group Customers are encouraged to visit If we do a good job of rates. If a member agency has a new a commercial center. Individual communicating our uniqueness, program or product enhancement, business owners will rent space at CHART Markets will become targeted e-ads can be purchased to the site and benefit from the group an easy-to-use tool for anyone promote specific storefronts. dynamic of multiple enterprises wishing to get immediate access to sharing the same advertising, multiple London programs sourced parking, customer traffic, expense and managed by CHART member reductions, etc. agencies.
Glenn W. Clark , CPCU CHART’S Earliest Adopter
Attendees Enjoying Networking Opportunities During October Conference
6 March 2016
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CHART EXCHANGE
If we do a good job of communicating our uniqueness, CHART Markets will become an easy-to-use tool for anyone wishing to get immediate access to multiple London programs sourced and managed by CHART member agencies.� SIMPLIFIED WORKFLOW
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CHART MEMBER INTERVIEW
INTERVIEW: JOE WHEELER, JR. OF NORTHWESTERN RISK
Program Business is really for the insurance nerds... The attraction to program business is knowing that the extra care and knowledge is necessary to understand the nuances.”
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he CHART Exchange Magazine recently had the opportunity to interview one of our newest Agency members – Joseph J. Wheeler, Jr. Esq. Mr. Wheeler is the Owner of Northwestern Risk, and the Managing Partner of The Wheeler Firm. 1. IN YOUR OWN WORDS, CAN YOU DESCRIBE HOW YOU CAME TO BE AN AGENCY OWNER?
I’ve always had the entrepreneur mindset so I always knew I wanted to own an agency rather than just be a Producer or an Agent. I spent half a year in London working with a Lloyd’s of London brokerage, and after that relocated to the Northwest part of US where I live now. When I made that move
to the Northwest I used it as a transition to start anew, open up shop and to start to offer niche products that would benefit small business owners like myself. 2. WHAT ATTRACTS YOU TO PROGRAM BUSINESS? WHAT KIND OF SPECIALIST ARE YOU?
Program Business is really for the insurance nerds. And I say that because when you are in that sector, and you write specialty programs, or have specialty business, you understand insurance on a different level than most others who just write business. The attraction to program business is knowing that the extra care and knowledge is necessary to understand the nuances. We specialize in small
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r. Wheeler is an insurance & business specialist. In 2010, Mr. Wheeler started his law school career at Southwestern Law School in Los Angeles where he received numerous accolades including a CALI Award for Administrative Law. Mr. Wheeler transferred to Seattle University School of Law for his penultimate year and graduated in December 2013, cum laude. With combined insurance and business knowledge, specialty and skill, Mr. Wheeler hopes to serve the vast business marketplace. Whether a small business owner looking to expand, an entrepreneur opening shop for the first time, or an insurance enterprise looking to expand their portfolio, Mr. Wheeler brings to the table a wealth of knowledge and know how to help serve clients.
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CHART MEMBER INTERVIEW
business insurance, specifically 5. IF YOU HAVE EXPERIENCE WITH cyber liability for main street USA. OTHER INSURANCE ASSOCIATIONS – 3. IF YOU HAVE A PROGRAM AND YOU’RE LOOKING FOR PRODUCERS, PLEASE DESCRIBE IT.
WHAT DIFFERENTIATES CHART FROM THEM?
I do, but really haven’t felt a close kinship with the other members Yes! Our Cyber Optimization of those associations. I haven’t Program is currently accepting been part of an association at this new agency appointments niche scale that really fosters to nationwide. We offer a the type of agency owner I am, comprehensive cyber liability and strive to be. I look forward to policy that can be added on to any the connections. BOP for a fraction of the cost of other market cyber alternatives. 6. WHAT DO YOU CONSIDER CRITICAL Our policy price is directly tied to TO YOUR SUCCESS? ANY ADVICE YOU revenue, and is truly designed for CAN BESTOW TO OTHER AGENCIES? the small business owner. For $500 Showing up. Half of the battle is bucks for the year small business taking the last phone call, staying owners will have coverage up to late, answering an email from $1,000,000 for cyber breaches your cell phone. Being there and that hurt their businesses. available is crucial to success. Taking the phone calls you do not want to take will make you a better business person. The advice I will give is to take risks, I’ve kept an eye on CHART since and do not be afraid to let others inception, making sure to get the know who you are and what you emails and newsletters. When want. You will never know what CHART first launched, I thought to opportunity exists, if you do not myself, finally, an association that go for it. ties US insurance to the London more information on market! It serves to connect For MGA’s, brokers, wholesalers and Northwestern Risk, and The others in the high end insurance Wheeler Firm and the insurance world to the London risk takers products offered, contact Joseph who write the business and want Wheeler at joe@thewheelerfirm. to continue to write business, com. Mr. Wheeler can also be reached by phone at 888-705sign me up! 6775, extension 1.
NEVER MISS AN ISSUE OF THE CHART EXCHANGE
4. WHAT DREW YOU TO CHART EXCHANGE? WHAT PURPOSE DOES IT SERVE YOU?
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NEWS
CHART SYNDICATES AND BROKERS CONSIDERED FOR INNOVATION AWARDS FOR 2016!
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he Lloyd’s Innovation Awards were launched in 2015 to celebrate and recognize the unrivalled talent and expertise that exists across the London marketplace. Inga Beale – CEO of Lloyd’s – had this to say about this year’s winners: “The 2016 Innovation Award winners provide fantastic examples of the innovation going on across the Lloyd’s market. As the world changes like never before, it is important to recognize the companies and people that are leading the way, creating truly innovative insurance products for this digitalized, globalized, interconnected world of new and emerging risks.” Several CHART Exchange conference attendees were runners up in the 2016 awards. Runner Up for Best Coverholder Innovation (whether product or otherwise) •
R&Q: SYNDICATE DTW 1991
DTW 1991 was established as a mixed capital syndicate in 2013, specializing in Coverholder business largely through exclusive arrangements with targeted Coverholders and MGAs internationally. Runner Up for Best Innovation (whether product or otherwise) driven by a market practitioner under 35 years of age •
PROSPECT BROKERS/ARK: JAMES GADBURY FOR UAV/DRONE INSURANCE
A market leading UAV / Drone Insurance product which covers the hull and liability of the UAV, a privacy and trespass coverage, A&H for the crew, professional indemnity and cyber liability. Runner Up for Best Non-Product Innovation (whether successful or otherwise) •
CHAUCER: AFRICAN PARTNERSHIP MODEL
A partnership between Chaucer and AXA which enables African specialty insurance business to be underwritten through Lloyd’s. Runner Up for Best Product Innovation •
AEGIS: MINER RESCUE
A new product which pays for the costs of locating and rescuing miners and contractors trapped underground in the event of a future catastrophe. •
BRIT: PAY OR EXPLAIN
‘Pay or Explain’ is dedicated to improving the speed of managing claims, with a commitment to pay a claim, or provide a roadmap for managing the claim, within 30 days of loss notification. www.chart-exchange.com
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COVERHOLDER SPOTLIGHT
AFFINITY GROUP UNDERWRITERS ANOTHER CHART COVERHOLDER SUCCESS STORY
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Since AGU’s inception in If not for the 1997, they have o r g a n i z a t i o n’s been a managing tenacity and Glenn underwriter for Clark’s (CHART’s program business Earliest Adopter) in the U.S., which personal request to is the domestic come ‘check it out,’ equivalent Wyss may never of being a have learned the C o v e r h o l d e r. benefits and value However, about of Coverholder three months Stephen Wyss, Managing Dir. status. Wyss credits after attending Affinity Group Underwriters CHART with teaching CHART’s inaugural what the event, Wyss and his By Wyss’s own admission, he him London Market is capable of and team at AGU decided they wanted attended the first CHART Exchange event skeptical of its value for his introducing him to people who to function more effectively and were ready to help him access it. believed they could by working business. with Lloyd’s. “Had I not accepted Glenn’s “I expected that CHART would be mostly Property & Casualty- invitation to Philadelphia, I have “It has become increasingly difficult focused, whereas we specialize in no doubt that we would never to partner with U.S. companies Accident & Life coverages,” Wyss have pursued being a Coverholder as they expand their use of matrix management structures,” says. “I’m happy to say that I was on our own,” Wyss says. Wyss says. “Getting to a decision about a new product with most U.S. companies is a very lengthy process that usually ends not in ‘no’ but rather no decision.” he CHART Exchange digital magazine profiled Stephen Wyss, CEO of Affinity Group Underwriters (AGU), in the April/ May issue of 2016. At the time, AGU was about half-way through the Coverholder process (initiated in January of that year). Roughly ten months later, AGU received their Coverholder approval from the Delegated Authorities office at Lloyd’s. The CHART team congratulates Stephen and his team on their success.
proven wrong.”
“On the other hand,” Wyss continues, “Risk Takers at Lloyd’s have the experience, the authority
See AGU Coverholder Success Pg 18 www.chart-exchange.com
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CHART EXCHANGE NEWS
THE UPCOMING THIRD CHART CONFERENCE WILL SHOWCASE ALL WE’VE LEARNED FROM THE FIRST TWO dedicated to the needs of the U.S./ London marketplace was first omeone once observed that launched about two years ago. We “Experience is a hard teacher. believe our education in this “school She gives the test first and the of hard knocks” will end up being lessons afterwards.” extremely beneficial for current and prospective members, both in 2017 The CHART Exchange staff can and beyond. vouch for the accuracy of that remark; a great deal was learned The inaugural CHART Exchange since the concept of an organization event was held at the Pennsylvania by Frank Huver, SVP
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The Four Seasons Hotel in Baltimore’s Cobalt Ballroom will house the Vendor Exhibit Hall. Spectacular views of Baltimore’s Inner-Harbor are available from almost every vantage point. The Ballroom will also serve as the venue for the Event’s nightly cocktail receptions and networking functions.
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Convention Center in October 2015. The selection of this rather expansive venue was consistent with our grand vision of what CHART was going to be: a broad-based organization designed for any domestic insurance agency curious about Lloyd’s of London. Our initial meeting agenda was crammed with a various workshops, breakout sessions, and other activities designed to appeal to this diffuse audience. A number of vendors offering a diverse array of goods and services were invited to participate. The first CHART meeting was attended by 330 Agency, Risk Taker, and Vendor Partner representatives , not the original (yet very optimistic) projection of 400-500 attendees. We encountered much more resistance from the status quo coverholders than we ever could have imagined. However, what we discovered via our journey was an incredible unmet demand for those who were curious about London. Building an agenda for those who were not fully exploiting their www.chart-exchange.com
CHART EXCHANGE NEWS existing London connections and/ or had never done business with London before crystallized for us with the Second Annual Event held in Baltimore this past October. While fewer people attended the meeting, (by design this time) those who did participate were instrumental in helping us realize CHART’s core objective: to grow the U.S./London marketplace through the identification and pursuit of new business opportunities. Over 400 pre-set appointments between The agenda will also include time for the participants to get together and domestic agencies and Lloyd’s discuss the CHART Exchange and the state of the U.S./London marketplace. Risk Takers surfaced dozens of These general sessions will include keynote addresses delivered by leading potential programs. Few (if any) industry experts. of these opportunities would have been presented to London without We are better served supporting the number of workshops and forums CHART. needs of the real catalysts within our that address issues of interest for the unique niche – Agencies, Syndicates, attendees. These breakout sessions The 2016 meeting agenda was and Vendors who will be moderated by recognized more focused on are dedicated leaders in the topic to be discussed. The new business and to significant, The 2017 meeting will also feature the experience s u s t a i n a b l e Risk Taker lounge – an event feature contained less “distractions” from of the last growth of U.S.- that provides a forum through which our core theme and two years has taught based business insurance agents can submit new was promoted as a through Lloyd’s of program ideas to London Syndicates. us many valuable London. new an“insiders only” The schedule for this facility will be event. This more lessons. The most controlled to minimize conflict with relaxed environment Attendees at the workshops and other networking important lesson encouraged the next CHART activities. is: The CHART attendees to more meeting will have openly network Exchange is not for the opportunity to The Four Seasons Hotel has a total with peers, everyone.” see just how well of 246 guest rooms. CHART has conduct business we have learned reserved EVERY ONE OF THEM for the negotiations, and learn more about from our experiences. The 2017 three-day Event. We invite you to join the products/services available Event will be held October 8-10 at us in Baltimore. Registration opens through our Vendor Partners. the Four Seasons Hotel in Baltimore on April 28, 2017. We encourage MD. This elegant venue serves to early sign up so that you are assured The experience of the last two years reinforce the notion that we are an your place and so we can get to work has taught us many valuable lessons. exclusive organization. on your behalf well in advance to The most important lesson is: The fill your sessions with meaningful CHART Exchange is not for everyone. Our meeting agenda will provide a connections. www.chart-exchange.com
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ANALYSIS
WEBSITE OPERATORS MUST COMPLY WITH NEW DMCA AGENT REGISTRATION PROCEDURES OR RISK LIABILITY FOR COPYRIGHT INFRINGEMENT By Adam R. Bialek
websites and social media accounts. The limitations of liability had been nitiation of copyright premised on strict compliance with infringement claims on the certain preconditions. The process internet is becoming more for one of these prerequisites, i.e., prevalent with the increasing registration of a DMCA Agent with sophistication of software that lets the copyright owners scour the internet for infringements of images. If your U.S. Copyright Office, changed as of website lets users post content, December 1, 2016, and affirmative the Digital Millennium Copyright actions need to be taken by website Act (DMCA) can protect you from operators prior to December 31, possible copyright infringement 2017, or safe harbor protection will liability. The Act reflects a mutually be lost. benefitting compromise between the operators of websites and the An ISP is defined by statute, 17 U.S.C. owners of copyrights. 512(k), as “an entity offering the
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In practice, however, a covered ISP is essentially any interactive website that permits the user to upload content. The DMCA compliance guidelines are not mandatory but can limit and protect website operators from exposure to liability. THE PROCESS
To reap the benefits of limited exposure to copyright infringement liability, also known as “safe harbor protection,” the DMCA requires website operators to follow certain procedural steps, including: Informing website users that continuous copyright violation by transmission, routing, or providing offenders will result in terminated The DMCA is designed to protect of connections for digital online internet service providers (ISPs) from communications” or as “a provider access to the website liability due to potential copyright of online services or network access, infringing userinfringing content that website or the operator of facilities therefor.” Removing generated content if notified by users can upload or post onto
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dam Bialek is a partner in Wilson Elser’s New York City office. He is chair of the firm’s national Intellectual Property practice and a member of the Information Governance Leadership Committee. Adam is experienced with all facets of intellectual property law, internet law, data security and privacy, and cyber/media risk matters, including insurance coverage pertaining to these areas. He has extensive experience with cutting-edge internet-based issues and his success in using innovative tactics to enforce client rights. He also serves as outside general counsel to many of his IP clients.
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www.chart-exchange.com
ANALYSIS
the copyright owner Designating and registering a DMCA Agent to receive such infringement notices, also known as “takedown notices.” To designate an Agent, website operator must make certain contact information available on its website, and it must provide the same information to the U.S. Copyright Office where a master list of DMCA Agents is maintained.
electronic process has a financial advantage: governmental filing fees for designated DMCA Agents have been drastically reduced from the paper registration system.
the
system requires DMCA Agent renewal every three years. This forces a website operator to keep Agent information current, and encourages heightened efficiency in the online process.
If your website lets users post content, the Digital Millennium Copyright Act (DMCA) can protect you from possible copyright infringement liability. The Act reflects a mutually benefitting compromise between the operators of websites and the owners of copyrights.”
SUMMARY
Website operators already registered under the old system need to update previously published Agent contact information on their websites and complete online registration steps The DMCA Agent to maintain safe harbor registration process was status. For those website once a paper-based operators who have not system and directory, and taken advantage of this safe harbor, it required a one-time registration. In addition, the change has a liberal now is the time to do so. transition period: the Copyright On December 1, 2016, the process Office has allowed a 13-month We encourage all service providers changed and the Copyright Office grace period for service providers and operators who allow for the launched a new online registration who had previously registered posting of user-generated content system to ease the process of Agents with the paper-based to follow the aforementioned registering DMCA Agents. The new system to switch and re- register steps to ensure compliance with online system is exclusive, and the agents under the new online the modernized DMCA Agent Copyright Office will no longer system. If a website operator has registration process for continued accept paper registration. not transitioned to the new online legal protection and to have an system by December 31, 2017, appropriate policy posted on their The new process comprises two the paper-registered DMCA Agent websites. steps: website operators must (1) notice will no longer be applicable list the contact information of the and the safe harbor protection will Adrianna Bojrab (Associate-New appropriate DMCA Agent on the be lost. York) assisted in researching and website and (2) register this Agent drafting this Alert. with the online system. This new In addition, the new online www.chart-exchange.com
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COVERHOLDER SPOTLIGHT Continued From Page 13
AGU: COVERHOLDER SUCCESS and the willingness to cut through those bottlenecks.” Agencies seeking to secure delegated underwriting authorities from Lloyd’s must first go through a rigorous due diligence process. Areas that are evaluated include financials, management stability, operational efficiencies, systems/ automation, and licensing/ compliance. The business plan for the proposed new program is also reviewed. AGU completed the due diligence process in ten months. “I’ve joked with friends that they [Lloyds Delegated Authorities] want to know everything about the company and me, except my blood pressure,” Wyss says. Agencies new to the London marketplace may find the process of securing delegated underwriting authorities to be somewhat daunting. Fortunately, the CHART Exchange can help! Organizational members who have already attained Coverholder status can act as mentors – offering advice and suggestions when needed. The services our Vendor Partners 18
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provide – actuarial, legal, systems, marketing, compliance, etc. – can help firms satisfy outstanding requirements. We should note that once an agency is approved by the Delegated Authorities at Lloyds, it becomes much easier to attain additional programs. The program AGU landed this past October is Balance for Cyclist, a specialty-risk, niche market accident plan for the more than 12 million bicycle enthusiasts in the U.S. It provides substantial coverage, including a unique $50,000 benefit AGU created to address the risk of severe traumatic brain injury, plus supplemental expense cash paid directly to the insured to help offset the out-of-pocket costs of high deductible health insurance in the event of less serious injuries that may still result in a trip to the emergency room, an ambulance, hospitalization, and even physical therapy. “I credit and thank CHART for opening up this new frontier for us and facilitating the introductions we needed to get started,” Wyss says.
Stephen Wyss & AGU Staff
Programs like AGU’s are virtually impossible to insure through a U.S. carrier. Opening yourself to the opportunities CHART makes available could greatly aid your business. “We believe that being a Coverholder is going to open up an entirely new chapter for us and will be an integral part of the way
we do business in the future as we begin our second twenty years,” Wyss says.
Now that AGU is officially a Coverholder, they will use CHART To begin a conversation about as a resource to further their distributing AGU’s program please connections in the London Market contact: and find producers for their Tom Wyss programs in the U.S. Managing Director / Sales Phone: 804-273-9797 ext: 2000 The CHART Exchange distinguishes Email: twyss@affbc.com potential members by asking one Website: http://www.agu.net question, ‘Are you a specialist?’ TABLE OF CONTENTS
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Analysis
York Risk Services Group, Inc. is honored to be a Preferred Vendor Partner of the CHART Exchange. We are a premier provider of TPA Services, Specialized Loss Adjusting, Customized Claim Solutions, & Risk Control Services for Lloyd’s of London & the London company market. We offer:
Dedicated Binding Authority Adjusting Team Dedicated E&S/Specialty Lines Open Market Adjusters Back office team for banking, bordereau production, MI reporting Customized Physical Risk Assessments (Risk Control) Virtual Risk Evaluation Services To learn more, contact Aubrey Fountain, at 850.650.2380 or Aubrey.Fountain@yorkrsg.com.
www. YORKRSG .co m
www.chart-exchange.com
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ANALYSIS
THE CLAIMS PROCESS: A FEW PRACTICAL OBSERVATIONS ON ROLES PLAYED BY THE MGA
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the MGA from being a
This article discusses the interplay participant to merely between the MGA, the retail a confirming witness.” agent and the wholesale agent in claims, and takes a practical look despite these at everyday situations and how to However, designations, insureds tend to send handle them. their notices to their own retail agent or broker. This puts the agent SENDING NOTICE – WHO or broker in the position of acting IS RESPONSIBLE? Typically, policies designate in as an intermediary with the burden the Declarations or Schedule of providing prompt notice so the who should receive the notice of insurer cannot assert a breach of claim. This can be the MGA or a conditions or late notice coverage third-party claims administrator, defense. Review of the policy 20
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conditions is crucial, especially if the policy provides for a specified time period within which to provide notice, in addition to a specific format. Some policies require written notice, so a telephone call will not comply with policy terms. Some require that the notice only go to the specified recipient of the notice, so although there is case law that may make any reasonable notice to the insurer sufficient, it is best to avoid possible disputes by following the procedure established by the policy. It is possible, however, that notice to a party deemed to be an agent of the insurer, such as the MGA or the London broker, could be interpreted as sufficient notice to Underwriters, even if the MGA or the London broker is not the designed recipient for the notice. As a result, these parties must be certain that the notice is passed on in a timely manner to the proper designee. Rather than having the MGA or London broker putting its judgment – and possibly its own potential liability - at issue, it should be left to Underwriters and their legal advisers to determine whether the notice is sufficient. www.chart-exchange.com
Image Credit: Creative Commons
or, in the case of a Lloyd’s policy, By Martin M. Ween, Esq. Senior of Counsel, Wilson, Elser, possibly the London broker. In the digital age, these also could include Moskowitz, Edelman & Dicker, LLP fax numbers and email or postal equests for coverage on addresses. insurers as to claims against insureds are part of the entire It is important insurance process, and some would for the MGA, say the most important part, as therefore, to maintain that is how insureds access the detailed and accurate protection against liability and loss they paid for in their premiums. As documentation on the in any process, however, there are underwriting process. different participants with differing Contemporaneous roles and obligations. In the context of insurance programs written and written notes and administered by managing general communications agents (MGAs), there can be even as to what was more complicated and overlapping intended can move responsibilities.
ANALYSIS THE MGA’S POSSIBLE ROLE IN CLAIM RESOLUTION
HOW CAN THE MGA GET INVOLVED IN A CLAIM?
therefore, to maintain detailed and accurate documentation Depending on the MGA on the underwriting process. agreement, the MGA on a Contemporaneous written notes program may have a role in and communications as to what handling claims, from strictly was intended can move the receiving and passing on notice, MGA from being a participant to as set forth above, to actually handling the claims and having a level of authority to resolve the claims. Even if this is not the case, however, there still may be a role for the MGA in a claims situation. Coverage issues come up frequently in claims situations, and many do not have any significant impact on the course of the claim. However, some issues can implicate or involve the role of the MGA, including in the underwriting process. This is especially the case where rescission issues are raised, such as material misrepresentations in the application or the underwriting intent, such as who is being insured and what possibly unclear endorsements were meant to accomplish.
When certain coverage issues come up during a claim, the MGA responsible for underwriting may become the (unwanted) center of attention.
merely a confirming witness. In that regard, the MGA responsible for underwriting is frequently The MGA responsible for the a witness testifying as to the underwriting of these policies underwriting. Having documents is likely to become involved, supporting the testimony is if not the center of attention, crucial to giving credibility to the in such circumstances. It MGA’s position and, in turn, the is important for the MGA, position of the Underwriters. www.chart-exchange.com
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Claims usually are resolved by the payment of money to the claimant. Where the MGA is involved by its agreement in the claims process, these payments are often negotiated and paid by the MGA. However, even where the MGA is not a formal part of the claims process, there are at times complicating factors that make settlement more difficult and require the MGA’s participation. One situation is the insured that is reluctant to settle. The reasons behind the reluctance can be diverse, ranging from a strong desire for vindication as he or she did nothing wrong, to an effort to retain a client, to a fear that a large settlement will result in a cancellation of the policy or a substantial increase in premium. Resolution of these issues often requires creative approaches, and the MGA responsible for underwriting and determination of policy terms and premiums can be called upon to fashion endorsements, renewals, cancellations and other aspects of coverage to ease the path to resolution. These are just a few situations that may involve the MGA in the claim process. Much depends on the scope of the MGA’s duties and responsibilities under the MGA agreement, and the attitude of the Underwriters to work with and trust the MGA to act in their best interests. JANUARY-FEBRUARY 2017
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PRODUCT NEWS
THE CHART DEFENDER:
INNOVATIVE E&O FOR COVERHOLDERS By Mark Lann, EVP, Rockwood Programs
CHART Defender. This innovative Errors and Omissions (E&O) product was designed by Coverholders – entities possessing delegated underwriting authorities from Lloyd’s – to address the unique professional liability exposures they face.
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he CHART Exchange was established for the express purpose of expanding the U.S./ London marketplace through the identification and pursuit of new business opportunities. The organization has launched a number of new initiatives Maybe not too surprisingly, coverage is being provided designed to help us achieve our goals since its through Certain Underwriters at Lloyd’s London. They founding in 2015. are rated “A” (Excellent) by A.M. Best. We’ve hosted two separate national events (the first in Philadelphia PA, and the more recent one in Baltimore MD), developed a Market Finder Facility to bring new program ideas to Lloyd’s, and offer mentoring support for domestic agencies interested in doing business with the world’s oldest insurance brand.
The product has been called the CHART Defender to underscore the most important differentiating factor of this E&O offering: policyholders will know in advance who will serve as their advocate in the event of a loss. Our Claims Administrator is Wilson Elser, a nationally recognized law firm with approximately 800 attorneys in 31 offices across the United States and in London. This entity has exceptional experience in aggressively and professionally handling litigation and other proceedings so that our insureds get the most effective defense possible.
We are not slowing down in 2017. As you read through the current edition of the CHART Magazine, you’ll see an article outlining the concept of CHART Markets. Another feature piece is dedicated to the organization’s third annual event, scheduled to take place October 8-10, 2017 at the Four Seasons Hotel in Agencies securing their E&O coverage through the Baltimore MD. CHART Defender initiative can also utilize Wilson Elser to assist them in establishing sound business practices There is one more new initiative being launched for the within their firm. A proprietary risk mitigation hotline benefit of agencies doing business with London – the will be available to our policyholders. This facility will
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bout the author: An acknowledged expert in professional liability insurance, Mark Lann is the Executive Vice-President of Rockwood Programs, Inc., managing the operation and growth of the Rockwood Brokerage Division. From 1993 to 2014, Mark was the founder and president of Modern Insurance Consultants, Homestead, Florida, one of the largest volume MGAs handling agent E&O before merging the company into Rockwood in 2014.
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PRODUCT NEWS be staffed by legal experts who can provide assistance on potential problems before they become claims. This hotline feature is free to our insureds. The CHART Defender E&O program will be “open for business” starting February 1, 2017. The product is being administered by Rockwood Brokerage – a division of Rockwood Programs. Firms interested in learning more should contact Mark Lann at 305-248-9495. Inquiries can also be submitted via e-mail at mark.lann@ rockwoodinsurance.com.
CHART DEFENDER COVERHOLDER E&O AVAILABLE 2/1/2017 Review some of the unique features of this new product offering:
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• Defense costs in addition to the limits of liability • Aggregate deductible • Coverage for unintentional breach of underwriting authorities • No insolvency exclusion • Broad definition of “Professional Services” to include Lloyd’s Coverholder activities, notary services, premium financing, and risk management/loss control activities. • Automatic coverage for Independent Contractors • Punitive damages (where allowable by law) • 50% reduction of deductible if claim resolved through mediation • Additional coverages included outside of the policy limit (separate sub-limits apply): defense costs for regulatory proceedings, litigation expense reimbursement, and subpoena expense reimbursement.
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Proud Sponsor of
Merger & Acquisition Services
serving the insurance industry Merger & Acquisition Services is a
specialist advisory and financial services
firm specifically to participants within the insurance industry. Our mission is to provide
concierge-level services and expertise
within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives. M&A Services is
solely focused on the insurance industry.
This allows our advisors to obtain critical industry knowledge and subsequently, provide clients with sound advice.
Our Services Agency M&A Transactions Carrier M&A Transactions Agency Financing Capital Raising Strategic Advisory Valuation Services Program Business Renewal Rights Fronting
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more than 100 transactions in 10 years and has earned continuous placement within the "Top 5 Financial Advisors in Insurance Underwriting" according to SNL Financial.
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ANALYSIS
INSURANCE AGENCY MERGER AND ACQUISITION 2016 ACTIVITY
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n 2016, the merger and acquisition appetite for independent insurance firms has continued at a strong pace, with the leading private equity sponsored firms continuing to drive large number of deals and high valuations. Even the larger private equity sponsors are active participants in realized investments and new investments in 2016. At the same time the private equity market continues its M&A tear, publically traded brokerage firms are trading near 52 week highs carrying EBITDA multiples in the 12 – 15X range.
decreased from 2015 to 2016, the top 15 acquirers have announced more closed transactions in 2016. The most active private equity sponsors have actually increased their number of transactions while overall transactions have decreased in 2016. Clearly, private equity remains very acquisitive in the insurance broker sector.
The combination of private equity appetite, readily available inexpensive debt, and relatively high stock Looking specifically at the most acquisitive firms valuations has made 2016 a great year for the market for 2015 and 2016, Acrisure, Hub International, and for insurance firm M&A activity and pricing. Assured Partners announced the most transactions in While the overall number of announced deals has
See M&A 2016 Activity Page 31
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histopher M. Hughes serves as Managing Director of Insurance Distribution for Merger & Acquisition Services, specializing on insurance agencies, MGAs, MGUs, E&S agencies, wholesalers, and ancillary insurance businesses. Mr. Hughes comes to Merger & Acquisition Services, Inc. with over 10 years of insurance and legal experience, working on engagements with Property / Casualty and Life / Health insurance distribution businesses. He previously served as an advisor for a boutique firm in CT where his exclusive focus was on insurance distribution companies. In addition, Mr. Hughes spent 7 years as a senior product manager for Hartford Financial Services Group (“HIG”) with full P&L accountability for specialty products, and as director of HIG’s internal retained asset and structured settlement departments. Prior to The Hartford, Mr. Hughes practiced commercial litigation in Boca Raton, Florida. Mr. Hughes was honorably discharged from active duty in the United States Marine Corps (USMC) in 1992, after serving with E Company, 2nd Battalion, 8th Marines, 2nd Marine Division. While in the USMC, he served as an infantryman in the 1991 Northern Iraq operations: Provide Comfort, Encourage Hope, and Force Hope. Mr. Hughes has earned a J.D. degree from Northern Illinois University, a M.B.A. from the University of Connecticut, and a B.A. from the University of West Florida. www.chart-exchange.com
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NEWS
LLOYD’S TO OPEN INDIA BRANCH IN ADVANCE OF APRIL REINSURANCE RENEWALS INSURANCE REGULATORY DEVELOPMENT AUTHORITY OF INDIA GRANTS FINAL APPROVAL
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loyd’s, the specialist insurance and reinsurance market, announced plans to open a reinsurance branch in India, in time for the April major reinsurance renewals, following final regulatory (R3) approval from the Insurance Regulatory Development Authority of India (IRDAI).
Lloyd’s Chairman John Nelson said: “This is a watershed moment in Lloyd’s international strategy. We have now cemented our access to the world’s largest, fast-growth economies, those most in need of the specialist insurance to protect their expanding asset base.” “Lloyd’s will bring expertise and specialist capacity to India’s insurance market and work in partnership with local insurance businesses to develop innovative solutions that meet the unique needs of the growing economy.” “Lloyd’s will help to share and develop expertise across the industry to position India as an international centre for insurance and reinsurance. A strong and diverse reinsurance market will dewww.chart-exchange.com
risk the economy and enable its entrepreneurs and businesses to take risks and thrive. “A local presence in India will bring Lloyd’s closer to clients and risks enhancing understanding and the ability to develop new solutions for the needs of the Indian market with a particular focus on agriculture, infrastructure and disaster management.”
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Serving coverholders’ needs since the 1930s … and into the future Bespoke solutions Packaged lines Enhanced commissions Web-based platforms US domiciled marketing office Access us through 170 Lloyd’s brokers
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NEWS
LLOYD’S PREPARES FOR BREXIT By Matt Basile
the right place with the right infrastructure, right regulatory n a recent interview with environment, right regime that Yahoo finance Editor-In-Chief understands the complexity of Andy Serwer Lloyd’s CEO Inga the nature of the risk that we take Beale discussed what Lloyd’s will on.” The Continent represents be doing in response to the UK 11% of Lloyd’s revenue. leaving the European Union. Lloyd’s of London Chairman “The EU is a very important John Nelson in an interview with market to Lloyd’s, and we’re going Reuters answered the question of to lose access, we’re going to lose when we will be hearing about those trading rights to those the location of the new Lloyd’s EU countries once the UK exits subsidiary by saying, ”We will be the EU,” she said discussing the ready to make an announcement importance of the EU marketplace in relation to our move to Europe to Lloyds. To address the problem in Q1, certainly by Easter.” Lloyds will be looking for a European city in which it looks to Five cities are currently in the establish a subsidiary. being considered for the new Lloyd’s subsidiary. Dublin has Beale said, “We want to find been included as an option by all
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insurers looking to place business in the EU. This is because of the tax and regulatory systems, as well as the language and convenient location. In the long run Beale does not believe that Brexit will have an overwhelming affect on the financial well being of Lloyds or its standing as one of the world’s leading financial institutions. “Lots of Lloyd’s business, for instance, comes from elsewhere in the world,” she said. “The US is our single biggest market—over 40% of the business that we write in the Lloyd’s market comes from the US. That’s not going to change with the Brexit. So London is still going to have a very important part to play.”
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For More Information, Contact NetRate Systems at 517.347.4900 30
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ANALYSIS Continued From Page 25
2016 M&A ACTIVITY both years. In both 2015 and 2016 these three firms accounted for 22% of all announced transactions, consummating 101 and 90 deals in each respective year. In 2015 and 2016, many of the Private Equity Sponsors have also realized their investments. • • •
Genstar Capital sold its position in Acrisure; GTCR realized its investment in Assured Partners; Kolberg & Co. divested its position in the Risk Strategies Corp; BHMS sold its stake in the Hilb Group.
• • And, then private equity sponsors put their capital to work again: •
Apax Partners invested in Assured Partners; • Genstar Capital invested in the Alera Group; • ABRY Partners invested in Hilb Group; Kelso & Co. invested in Risk Strategies Corp. In 2017, we can expect to see continued consolidation of the insurance brokerage marketplace as private equity continues to its aggressive roll up strategy of independent insurance firms to meet its return on investment goals. The high valuations that we have now seen in 2015 and 2016 will likely continue in 2017 as private equity capital’s appetite remains.
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LLOYD’S OF LONDON
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