The CHART Exchange March-April 2017 by The CHART Exchange

IN THIS ISSUE 6

CHART’S THIRD ANNUAL EVENT: BALTIMORE, MD OCTOBER 8-10 2017 The 2017 Event will be held October 8-10 at the Four Seasons Hotel in Baltimore MD. This elegant venue serves to reinforce the notion that we are an exclusive organization.

AS CHART ENTERS ITS THIRD YEAR, ARE WE ON TRACK FOR OUR GOALS? Our team believes CHART is beginning to make an impact on the U.S./London marketplace.

5 STEPS TO CREATE A PRODUCTION CULTURE IN YOUR BUSINESS The entire industry forgot how to sell value. Sadly, staff who began their careers in the past 15 years have never known anything other than selling on price.

BLOCKCHAIN TECHNOLOGY – WHAT IS IT AND HOW IT WILL TRANSFORM THE GLOBAL ECONOMY! By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet.

FAILURE TO TIMELY NOTIFY RESULTS IN ENFORCEMENT ACTION AND SIGNIFICANT SETTLEMENT When a health care institution is subject to a potential breach of PHI, that entity is required under HIPAA to provide notice within 60 days of discovery of the incident.

NEW REHABILITATION AND TRAINING CENTER FOR BLIND VETS NOW OPEN The Lloyd’s Patriotic Fund has supported the construction & refurbishment of a new rehabilitation and training center for blind ex-service men and women.

The Four Seasons Hotel has a total of 246 guest rooms. CHART has reserved EVERY ONE OF THEM for the threeday Event. We invite you to join us in Baltimore. Registration opens on April 28, 2017.

HARNESSING DIGITAL TECH FOR INCREASING THE VALUE OF MGAS AND PROGRAM ADMINISTRATORS This Millennial generation (born in the last two decades of the 1900s) now is the largest living generation in the US, with significant buying power and market influence.

LLOYD’S RETAINS ITS SUPERBRAND STATUS FOR 2017 Influential annual Superbrands listing features, Lloyd’s amongst the UK’s strongest business-tobusiness brands- and top of its category; Insurance, Pensions and Risk management.

Cover Image Credit: Wikimedia Commons

CHART EXCHANGE

TOP TIPS FOR FINANCIAL SERVICES FIRMS SEEKING TO GROW Few businesses would turn down the chance to add revenue to their bottom line. By redirecting revenues away from outside sources and back toward your company, you’ll be amazed at the financial incentives to switch to the model we’ve developed.”

ATRIUM INSURES SATELLITES! A new record for the most number of satellites launched on a single rocket was set in the early hours of the 15th February, 2017; 104 satellites on a single launch.

WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?

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Publisher: CHART Exchange Glenn W. Clark, CPCU Membership Services Matt Basile Advertising: Matt Basile Managing Editor: Matt Basile Contributing Editor: Frank Huver Layout, Design & Circulation: Ron Manera AdMax Corp., Inc.

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info@chart-exchange.com 3001 Philadelphia Pike Claymont, Delaware 19703 www.chart-exchange.com 302-765-6001

Carriers will lose interest quickly if they perceive that the underwriting entity’s main selling point is that they can offer lower pricing than the going market rate.”

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I’m Matt Basile, Managing Editor. I handle CHART Exchange Advertising. Call me at 302-765-6016 and let’s have a conversation.

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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

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MESSAGE FROM THE EARLIEST ADOPTER

CHART’S THIRD ANNUAL EVENT: BALTIMORE, MD OCTOBER 8-10 2017 Glenn W. Clark, CPCU Publisher & Earliest Adopter

Plan On It!

he 2017 Event will be held October 8-10 at the Four Seasons Hotel in Baltimore MD. This elegant venue serves to reinforce the notion that we are an exclusive organization.

The hotel’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. Our meeting agenda will provide a number of workshops and forums that address issues of interest for the attendees. These breakout sessions will be moderated by

6 March 2016

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CHART EXCHANGE

recognized leaders in the topic to be discussed. The 2017 meeting will also feature the Risk Taker lounge – an event feature that provides a forum through which insurance agents can submit new program ideas to London Syndicates. The

assured your place and so we can get to work on your behalf well in advance to fill your sessions with meaningful connections. The first three CHART Exchange events have been held in October. This will change beginning in 2018, when the annual meeting will

The agenda will also include time for the participants to get together and discuss the CHART Exchange and the state of the U.S./London marketplace. These general sessions will include keynote addresses delivered by leading industry experts.

schedule for this facility will be controlled to minimize conflict with the workshops and other networking activities.

he Four Seasons Hotel has a total of 246 guest rooms. CHART has reserved EVERY ONE OF THEM for the three-day Event. We invite you to join us in Baltimore. Registration opens on April 28, 2017. We encourage early sign up so that you are

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move to April. This rescheduling – prompted by feedback from the group membership – reduces the possibility of conflicting with religious holidays or other industry events.

Glenn W. Clark , CPCU CHART’S Earliest Adopter

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CHART-NEWS

AS CHART ENTERS ITS THIRD YEAR, ARE WE ON TRACK FOR OUR GOALS? By Glenn C. Clark, CPCU CHART’S Earliest Adopter

Our team believes CHART is beginning to make an impact on the U.S./London marketplace. We fully expect the magnitude of the organization’s involvement to increase as we continue to promote the benefits of doing business with the world’s oldest insurance brand.”

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n 2015 we introduced the concept of the CHART (for CoverHolders And Risk Takers) Exchange. Our goal was simple: to grow the U.S./ London marketplace through the surfacing and pursuit of new business opportunities. We looked at some rather non-traditional methods to accomplish this objective. In our opinion, business relationships that span long distances are best initiated through inter-personal contact. Our meetings provide a forum conducive to dialogue and interaction between domestic insurance brokers and London Syndicates. As we enter into our third year of existence, it is fair to ask the question: Are we on a path to accomplish our goal? Let’s take a look at the results we’ve seen so far for the answer. FACILITATING DIALOGUE

CHART has hosted two national events in the United States so far. The inaugural meeting – our “Declaration of Interdependence” – was held at the Pennsylvania Convention Center. Last year’s session was held at the Marriott Baltimore Waterfront Hotel. In 2016 we also took our message on the road, traveling to the U.K. to hold TABLE OF CONTENTS

our “CHART Goes To London” (CGL) event. Nearly 800 representatives from U.S.-based insurance agencies, London Syndicates, and select Vendor Partners have participated in our sponsored meetings. These sessions are characterized by informative general sessions (with industry leading keynote speakers), workshops addressing a number of relevant insurance topics, and ample networking opportunities. Duncan Dale, Chief Executive of Lloyd’s Syndicate Dale Underwriting Partners, described his experience at the 2016 Baltimore meeting this way: “CHART is refreshing because we are having lots of conversations with people that have an interest in the London market. It is quite dynamic.”

he 2017 Event will be held October 8-10 at the Four Seasons Hotel in Baltimore MD. This elegant venue serves to reinforce the notion that we are an exclusive organization. The Hotel has a total of 246 guest rooms. Unlike previous years, CHART has reserved every one of them as a means of guaranteeing a more intimate setting for the meeting.

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CHART MEMBER INTERVIEW

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interviews, identifying Syndicates with compatible risk appetites, and The Market Finder Facility was preparing meeting presentations. introduced in 2015 and has become a significant feature within CHART. Simon Hall (Director, C.J. Coleman) This initiative was designed to match offered these insights after the program proposals submitted by Baltimore session: “We were domestic insurance agents with delighted to attend our second the risk appetites of the London CHART Conference and our team of seven people attended the Syndicates. event of one-to-one meetings and Our Broker Partners are tasked networking, well attended by both with the responsibility of assisting U.S. agencies and syndicates which domestic insurance agents in we helped to recruit. We organized preparing the presentation to the multiple appointments for agencies London market. They are uniquely with the sole aim of bringing new positioned to fill this role, as they premium into the Lloyd’s market possess the necessary expertise, rather than churning existing industry contacts, and access to the business, the beauty of the CHART concept, and, one of the key selling value-added services. points for Lloyd’s syndicates”. INTERACTION BETWEEN AGENCIES AND RISK TAKERS.

CHART – in collaboration with its Broker Partners - has facilitated over 620 different appointments amongst agents, risk takers, and third-party specialists. In addition to the scheduling logistics, the Broker teams also put in a great deal of preparation work prior to the event. These activities included producer www.chart-exchange.com

BRINGING NEW BUSINESS TO LONDON

All of the work CHART has done promoting Lloyd’s within the domestic insurance agent community is beginning to pay dividends. To date, there have

TO CONTINUE TO RECEIVE THE CHART EXCHANGE!

See CHART: Meeting Our Goals Pg 21 TABLE OF CONTENTS

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ANALYSIS - TRIFIT BUSINESS DEVELOPMENT

5 STEPS TO CREATE A PRODUCTION CULTURE IN YOUR BUSINESS By Mike Shannon

here are many ways to make your insurance company grow: find a new market, buy or merge with another firm, become a Coverholder (CHART can help), expand geographically, or build a new program. But there is another way that can be even more fulfilling to you and your staff - stimulate ORGANIC GROWTH. If that is one of your goals in the years to come, read on. A survey of dozens of industry leaders over the past year revealed that the production skills of their staffs will ultimately determine their businessesâ&#x20AC;&#x2122; fate. Further, when discussing underwriting staff, three-quarters of respondents said 60% to 80% of an underwriterâ&#x20AC;&#x2122;s future success will be based upon their sales-marketing-production

competence rather than their technical underwriting ability.

qualifying the business opportunity of each submission, in addition to the technical risk? (To learn more, While insurance had historically contact Mike Shannon at mike@ been a relationship and consultative trifitbd.com to receive a copy of business, that approach began a free 30-minute webinar hosted shifting in 2004 with 30 quarters on March 28th titled Qualifying of declining rates. The result? The Underwriters Can Learn to Qualify entire industry forgot how to sell the Business Opportunity.) And value. Sadly, staff who began their while they having a qualifying careers in the past 15 years have conversation, what if they also never known anything other than used that occasion to discuss new selling on price. business? Recognizing that when you live by price you die by price, insurance businesses have struggled to reestablish a value-based mind-set among producers and underwriters. That is an especially daunting task when the mind-set of many brokers is shop for the best price, regardless of market or coverage. What if your producers and underwriters were effective at

In 2014 a 3-underwriter team within AmWINS implemented this very process. Within 3 months the number of submissions grew by 50% over their historical average. More notably, in 6 months they saw a 20% increase in quote-tobind success that resulted in 30% organic revenue growth in 2015 and

See Create Production Culture Pg 30

Mike Shannon is an industry-renowned business development expert focused on the insurance industry helping both sales and non-sales professionals such as production underwriters and their employers maximize their revenue and income. He leverages his thirty-five-year selling career to create sustainable, over-achieving business development organizations for his clients. His experience includes companies with sales from $1oM to over $10B. Mike is a published author including a book and numerous articles on developing sales organizations plus an on-line training curriculum. Mike is an Early-Adopter in the CHART-Exchange, has a BSME from the University of Delaware and a MBA from LaSalle University. www.chart-exchange.com

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NEWS

BLOCKCHAIN TECHNOLOGY – WHAT IS IT AND HOW IT WILL TRANSFORM THE GLOBAL ECONOMY!

Following on from our 2016 Lloyd’s of London Finalist Award for our work in developing Drone Insurance we are now keeping our eye on a new and exciting technology that will revolutionise the way the whole world currently pays and receives money and shares confidential information. That is rather mysterious world of Blockchain technology.

financial transactions but virtually everything of value.” Don & Alex Tapscott, authors Blockchain Revolution (2016) Blockchain networks can be private with restricted membership similar to an intranet or public like the Internet, accessible to any person in the World.

HOW DOES IT WORK?

If you can imagine a spreadsheet that has been duplicated thousands of times across a network of computers, then imagine that this network is designed to regularly update this spreadsheet then you have a basic understanding of blockchain.

BLOCKCHAIN VS BITCOIN

Blockchain was the brainchild of a person or a group of people known by the pseudonym ‘Satoshi Nakamoto.’ By allowing digital information to be distributed but not copied, blockchain technology WHAT IS BLOCKCHAIN TECHNOLOGY? created the backbone of a new “The blockchain is an incorruptible type of internet. It was originally digital ledger of economic devised for the digital currency transactions that can be Bitcoin but the tech community is programmed to record not just now finding a wide range of other www.chart-exchange.com

uses for it. Bitcoin is the first and most well known use of Blockchain technology. “Blockchain is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” Sally Davies, FT Technology Reporter.

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Information held on a blockchain exists as a share and continually reconciled database. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. A major advantage of this is that no centralised version of this information exists for a hacker to corrupt.

See Blockchain Technology Pg 24 MARCH-APRIL 2017

Image Credit: Creative Commons

e at Prospect as an innovative Lloyd’s of London broker are always looking for new opportunities to grow, become more efficient and improve our overall service to our stakeholders – clients, underwriters and other third parties in the chain. A big part of this is that we actively follow and engage in new disruptive technologies that could lead to us gaining an advantage over our competition by becoming an ‘early adopter’ of that technology.

NEWS

PRODUCT LIABILITY EXPOSURE REQUIRES CLAIMS EXPERTISE There’s no question that adequate coverage to protect from costly Product Liability issues is critical for manufacturers and other companies involved in the chain of distribution. But just as important: the claims handling expertise to help determine who is ultimately liable.

Image Credit: Creative Commons

housands of product liability lawsuits are filed each year against businesses large and small in state and federal courts all across the nation.

can prove costly; companies can be held responsible if they participated anywhere along the path of delivering a product to the end consumer.

They involve claims by consumers for injury or damage resulting from the use of a defective product – and what a jury or the courts can decide constitutes “defective” can surprise you. Awards can include medical and legal costs, as well as compensatory, economic and even punitive damages. Product liability damages can be substantial enough to ruin a company’s reputation and even drive them out of business. Simply being named in a product liability suit can be costly in terms of legal defense.

exposure is important, since a business might unknowingly perform an action in the course of everyday commerce for which they could be held liable or negligent in the event of a product liability suit. ACTIONS THAT CAN CAUSE CLAIMS OF LIABILITY OR NEGLIGENCE

Although the original manufacturer is often the first to come under scrutiny in a product liability matter (especially in cases involving obvious manufacturing or design defect), there are many other situations where a Case law has established that any business could be found liable or business in the‘stream of commerce’ negligent. can be held accountable for harm caused by defects in a product. This SOME COMMON EXPOSURES INCLUDE: can include manufacturers, product Distributors or retailers designers, material suppliers, • altering or modifying the design Many businesses underestimate trademark licensors, distributors, their product liability exposure re-sellers, retailers, advertisers of the product, its packaging or its with the mistaken belief that and other entities that play a part instructions/ warnings in any way. because they did not manufacture in overall production, distribution the product, they can’t be held and marketing efforts. liable or negligent if something See Product Liability Claims Pg 20 goes wrong. But that assumption Awareness of this potential 14

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NEWS

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 Lloydâ&#x20AC;&#x2122;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

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See Inga Beal Page 15 MARCH-APRIL 2017

ANALYSIS - WILSON ELSER

FAILURE TO TIMELY NOTIFY RESULTS IN ENFORCEMENT ACTION AND SIGNIFICANT SETTLEMENT

or the first time, on January 9, 2017 , the Department of Health and Human Services, Office for Civil Rights (HHS/OCR) settled a HIPAA enforcement action based on the untimely reporting of a breach of unsecured protected health information (PHI).

revealed that Presence failed to notify − without unreasonable delay and within 60 days of discovering According to OCR, on January the breach − each of the affected prominent media 31, 2014, it received a breach individuals, notification report from Chicago- outlets and OCR. Although the delay based Presence Health, indicating was due to a miscommunication that on October 22, 2013, the among Presence employees, failure organization discovered that paper to promptly notify the affected When a health care institution is records containing the PHI of 836 individuals delayed their ability subject to a potential breach of PHI, individuals were missing from one to take swift action to protect that entity is required under HIPAA of its facilities. OCR’s investigation themselves. to provide notice within 60 days of discovery of the incident.

Gregory Bautista, as co-chair of Wilson Elser’s Cybersecurity & Data Privacy practice and a member of the Information Governance Leadership Committee, has embraced the concept of information governance, which melds the disciplines that exist in all businesses into a powerful enterprise-wide strategy. Greg is an experienced civil litigator with a focus on data breach response and e-discovery matters. Greg is a contributing editor to Wilson Elser’s ESI Case Law Update 2016, an annual compendium of cases dealing with issues and developments surrounding electronically stored information. Jeremy Merkel focuses his practice in the areas of cyber security and information governance in the context of the significant challenges presented by the management of data across the information life cycle. He helps client address regulatory requirements, privacy laws and litigation obligations, while leveraging their data in support of operational requirements. He also served as a legal intern on the executive leadership team in the Office of the Attorney General of New Jersey. Prior to joining Wilson Elser, he was an associate at a boutique civil litigation firm in New York City.

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ANALYSIS - WILSON ELSER

For its potential The settlement of violation of the HIPAA $475,000 is significant Breach Notification for an incident Rule, Presence agreed involving only 836 individuals to pay $475,000 and implement a corrective and represents OCR’s emphasis action plan, which on balancing the importance of includes revising its existing policies and timely breach reporting with the procedures related to desire not to discourage breach breach notification, reporting altogether.” distributing the updated the HIPAA Compliance Officer is policies among its workforce and providing employees critical to an efficient response and with training on such policies. investigation, which will translate The settlement of $475,000 is into a timely response. Any delay significant for an incident involving in identifying experts and starting only 836 individuals and represents the response process could be the OCR’s emphasis on balancing the difference between being “timely” importance of timely breach or “tardy.” The consequences reporting with the desire of being tardy could lead to a not to discourage breach significant financial burden due to a seemingly small issue. reporting altogether. Often, it takes entities time to recognize they have an issue that requires reporting. Having an incident response plan and an internal mechanism for reporting these issues to

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Wilson Elser’s Cybersecurity & Data Privacy practice has extensive experience guiding entities through data security incidents and the resulting regulatory investigation from OCR. If any of your clients need assistance, contact a practice team member for assistance.

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Bringing U.S. Entrepreneurship to the London Market The CHART/Wilson Elser strategic partnership combines the innovative underwriting philosophy of the worldâ&#x20AC;&#x2122;s oldest insurance brand with the entrepreneurial mindset of U.S. agencies. For close to 40 years, Wilson Elser has helped organizations to better navigate challenging markets and realize improved combined ratios. We provide London- and Europebased insurers with ready access to more than 60 discrete legal services delivered by nearly 800 attorneys in 31 strategic locations throughout the United States. Guided by a proprietary, systematic legal project management program, we help clients define strategies and achieve outcomes that align with agreed business requirements. We also implement dedicated Program Claim/Litigation Management services, creating value and driving efficiencies with respect to legal spend and indemnity. Wilson Elser is especially proud of its strategic partnership with CHART Exchange and our shared commitment to strengthening relationships between cover holders and risk takers on either side of the Atlantic.

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NEWS

NEW REHABILITATION AND TRAINING CENTER FOR BLIND VETERANS NOW OPEN

he Lloyd’s Patriotic Fund has supported the construction and refurbishment of a new rehabilitation and training center for blind ex-service men and women. In 2015, as Blind Veterans UK celebrated 100 years of enabling ex-Service men and women to discover a life beyond sight loss, Lloyd’s Patriotic Fund awarded a grant of £200,000 to support their flagship Life Skills for Independent Living project. Lloyd’s Patriotic Fund was the second largest donor after

the Ministry of Defence in supporting the construction and refurbishment of a new rehabilitation and training centre in Llandudno. The centre was opened today, Tuesday 28 February, by Her Royal Highness The Countess of Wessex GCVO. The project provides life skills rehabilitation and training to vulnerable, working-age blind veterans in accommodation that replicates the adapted home environment. Beneficiaries can stay for periods of between six weeks and six months and receive an individually tailored programme

that addresses their particular situation and challenges. At the time, Chief Executive of Blind Veterans UK, Major General (Rtd) Nick Caplin CB, said: “Blind Veterans UK is proud to be working in partnership with Lloyd’s Patriotic Fund to create a brand new training centre, specifically for our most vulnerable younger veterans. Lloyd’s Patriotic Fund’s generous donation will ensure that these men and women are able to access vital skills training in a specialised environment, putting them firmly back on the path to independent living.”

From The Lloyd’s Website: Lloyd’s Patriotic Fund provides support to a number of organisations with a particular focus on those who are disabled or face poverty, illness and hardship. The Fund spends all the income it receives each year and yet the need continues. Lloyd’s Patriotic Fund works with a number of long-standing partners through which funds are administered. Individuals wishing to apply for a welfare grant should contact their local branch of SSAFA Forces Help. The history of the first 200 years of Lloyd’s Patriotic Fund is recorded in a beautifully illustrated book, Unbroken Service, which is available from the Lloyd’s Shop. Historical records for Lloyd’s Patriotic Fund are held at the Guildhall Library - Tel: +44 (0)20 7332 1868/1870

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Analysis

Continued From Page 14

PRODUCT LIABILITY CLAIMS • A distributor or retailer may be held liable if they participated in any way in the design of a product deemed defective. • Exaggerated marketing claims that misrepresent a product – if a consumer relies on the statements or facts stated anywhere in the marketing or advertising of a product and harm occurs, those companies responsible can be held liable. • Likewise with sales and service personnel who speak directly with consumers. They should be sufficiently trained on the product’s proper use, limitations, and known hazards so not to misrepresent or misguide a potential customer. • Make sure that all product literature, instructions and manuals are complete and provide thorough warnings. Courts have deemed that companies have a ‘Duty to Warn’ when a product may pose a danger beyond how the average consumer might be expected to use it. • A company in the stream of commerce, while not the original manufacturer, had knowledge of a defect that caused harm. • If a company installs the product and harm resulted from the installation, there’s potential for liability. 20

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• Removing or altering safety, assembly or other informational tags or instructions from the product. • Retailers who sell the product beyond the manufacturer’s expiration date.

but it’s not enough to design products in a way that prevents foreseeable harm to users or to warn users against potential hazards in manuals and other documentation. Companies must also be able to produce evidence of vigorous quality control standards, including consistent product/batch testing and retention of all testing and distribution records. CLAIMS EXPERTISE CAN MAKE THE DIFFERENCE

But just as important as adequate coverage and good planning is having expert claims professionals on your side if a product liability lawsuit were to occur. It’s not uncommon for a plaintiff to name multiple companies in these cases, letting the court determine who should carry the burden of liability. Product liability juries will usually determine comparative fault and assign a percentage to each potentially liable party (including the plaintiff) based on the facts and documentation at hand.

MGAs, PAs and other risk management professionals understand the importance of adequate product liability coverage for clients participating in the path of production, distribution or marketing a product. While the level of product liability protection a business needs depends on many variables, at a minimum, product liability coverage would protect against the significant cost of mounting a strong legal defense.

With so many parties potentially bearing responsibility in a product liability claim, having knowledgeable claims professionals with the experience and expertise to probe and uncover the facts can make all the difference for a company facing a potentially catastrophic judgment. Many times a particular company did not perform a specific action that would make them liable and a knowledgeable claims adjuster can help marshal the facts and get the Proactive planning is also important, lawsuit dismissed. TABLE OF CONTENTS

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CHART EXCHANGE NEWS York Risk Services Group has a Continued From Page 9 team of professionals with years of experience, well-versed in handling product liability issues and ready to take charge for clients in these often complicated matters. RESOURCES TO LEARN MORE:

CHART: MEETING OUR GOALS

Selective’s ‘Managing Product Liability Exposures’ Fact Sheet

been 57 different new program opportunities surfaced through our A good, basic summary of Product efforts. The vast majority of these Liability law from California State would never have been presented University Northridge to London without CHART. The estimated fully matured premium UNDERSTANDING THE LIABILITIES IN production through this business: PRODUCT MANUFACTURING $173 million. We do not expect all of Products Liability Risk Reduction this premium to successfully move from Norris McLaughlin and Marcus, to London but we DO think that P.A. we have “scratched an itch” that has previously not been addressed by the traditional ways new business ABOUT YORK RISK SERVICES GROUP has been generated between these York Risk Services Group, Inc., is a two groups. premier provider of risk management, claims handling, specialized loss adjusting, managed care, pool Our team believes CHART is administration, loss control and beginning to make an impact on other insurance services nationwide. the U.S./London marketplace. We York provides risk management and fully expect the magnitude of the involvement to managed care solutions to a variety of organization’s strategic partners, including insurance increase as we continue to promote carriers, self insureds, brokers, the benefits of doing business with wholesalers, MGAs, programs, risk the world’s oldest insurance brand. pools and public entities. The third largest TPA in the U.S., York delivers Positive feedback from new customized claims solutions for all lines members offers proof that CHART of business, including property, liability, is on the right track. For example, products liability, ocean and inland consider the input provided by marine, environmental, transportation Daniel Ginden, Managing Director and logistics, construction and workers’ of SLB Professional: compensation. Based in Parsippany, New Jersey, York and has over 90 “After putting a great deal of thought offices in the US and a strong into it, I finally decided to join CHART. international presence. Visit us on In the insurance industry, my feeling the web at www.yorkrsg.com. is that your relationships are the www.chart-exchange.com

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key to growth and survival. With that being said, CHART’s number 1 principle is to help “foster direct relationships between coverholders and risk takers”. With such a competitive marketplace, solidifying your partner relationships is key and I feel that CHART can help accomplish that. “ “Not only will CHART help enhance my network and solidify my current relationships, but I believe it will help broaden my knowledge with their monthly publications as well as keeping me up to date with current industry happenings, networking events, and skills workshops. I would recommend anyone in our industry to consider joining this organization to help assist themselves in growing and adapting to the marketplace”. If you are a U.S. producer, we can help you to connect face to face with the expert decision makers who attend our event. If you are a London syndicate we can help you to “hunt” for the new opportunities that will fuel your future growth. If you are a vendor partner with a unique strategy that is aimed at the U.S.-London marketplace we can help you to get your message out via the success stories of agencies you have helped to grow. Become part of our growing movement by joining us at the 2017 CHART Exchange Event! The next meeting will be held October 8-11 at the Four Seasons Hotel in Baltimore MD. Visit our website (www.chart-exchange.com) for more information.

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ANALYSIS - VALUE MOMENTUM

HARNESSING DIGITAL TECHNOLOGY FOR INCREASING THE VALUE OF MGAS AND PROGRAM ADMINISTRATORS

he value and purpose of Managing General Agents has varied throughout the years and today is as high as ever. MGAs originated 100+ years ago from east coast insurance companies expanding to the west without having to open offices there. As time progressed, the carriers did expand their resources – diminishing the roles of the MGAs. Today, the role of MGAs has expanded. MGAs are typically vested with underwriting, binding, issuance and policy life cycle authority from the carrier(s). Most are involved in specialty lines and possess the underwriting expertise. MGAs benefit carriers with their

expertise that may not be available within the company’s offices and would be more expensive to develop in-house.

at an early age’. This Millennial generation (born in the last two decades of the 1900s) now is the largest living generation in the US, with significant buying power Some MGAs and Program and market influence. Millennials Administrators are striving to are the first generation to include increase their worth in the insurance people who don’t remember a time value chain. Some are seeking to before the internet. diversify by developing new niche markets and implementing rate- According to the US Census quote-bind and policy lifecycle Bureau, the Millennial Generation processes that are in line with their – at 92M – is currently the largest customers’ needs. So who are the demographic of the US population. target customers and what are These Millennials have grown up in their needs? a time of rapid change, giving them a set of priorities and expectations THE ADVENT OF DIGITAL NATIVES sharply different from previous The world has changed. The generations. By 2020, 33% of Oxford Living Dictionary defines small businesses will be owned a digital native is a ‘person born by Millennials and 60% will be or brought up during the age of owned by Millennials & Gen Xers digital technology and is familiar combined. Millennials constituted with computers and the internet

See Harnessing Digital Tech Pg 33

ABOUT THE AUTHOR: Abhijeet Jhaveri is Chief Marketing Officer at ValueMomentum and leads ValueMomentum’s software-as-a-service business targeted at the MGA, Program Administrator and Coverholder markets. Abhijeet and his team works with MGAs, Program Administrators and Coverholders to deploy ValueMomentum’s iFoundry rating software with support for ISO, NCCI, AAIS and proprietary rate plans and extend these to agents, customers and employees with ValueMomentum’s BizDynamics Digital Experience Solution and App2Data ACORD forms processing Solution. 22

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ANALYSIS - BLOCKCHAIN TECH Continued From Page 13

currencies and money transfers, which are the obvious uses. Electronic voting, smart contracts and digitally recorded property assets to patient health records management and proof of ownership for digital content will be disrupted and improved by this technology.

BLOCKCHAIN TECHNOLOGY

technology that has the potential When a digital transaction is carried to change the global economy Really any industry that relies out, it is grouped together in a and global insurance market as we heavily on intermediaries will be cryptographically protected block know it. threatened – banking and finance, with other transactions that have academia, real estate, legal, occurred in the last 10 minutes Be enabling this digitisation health care, the public sector and and sent out to the entire network. of assets, blockchain is driving insurance! Miners (members in the network a fundamental shift from the with high levels of computing Internet of information, where Most companies are unsure about power) then compete to validate we can instantly view, exchange the technology and fighting the the transactions by solving and communicate to the Internet traditional battle to find out how to complex coded break down the problems. The The blockchain is an incorruptible digital potential impact validated block ledger of economic transactions that can be and relate it to of transactions the business as is then programmed to record not just financial transactions usual. For once t i m e s t a m p e d but virtually everything of value.” Blockchain the regulation and added to a networks can be private with restricted membership might not be as chain in a linear, slow to adopt chronological similar to an intranet or public like the Internet, and embrace accessible to any person in the World. order. New blockchain as blocks of one might think. validated Prospect has been working with transactions are then linked to of value, where we can instantly the Danish RegTech (regulatory older blocks, making a chain that exchange assets. A new global technology) company NewBanking shows every transaction made in economy of immediate value for a couple of years, the company the history of that blockchain. The transfer is coming, where big is part of the Blockchain and entire chain is continually updated financial intermediaries no longer cryptocurrency working group, so that every ledger in the network play a major role. An economy an official member of the EU– is the same, giving each member where trust is established through commission PSMEG (Payment the ability to prove who owns what consensus and complex computer system Market Expert Group). at any given time. code. WILL BLOCKCHAIN TRANSFORM THE INTERNET AND THE GLOBAL ECONOMY?

Blockchain is a highly disruptive 24

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The working group has successfully worked on getting the technology Blockchain has numerous adapted into the 5th AML (the applications that go way beyond 5th Anti-money laundry directive) obvious things like digital currently being finalized by the WHO WILL USE THE BLOCKCHAIN?

TABLE OF CONTENTS

www.chart-exchange.com

ANALYSIS - BLOCKCHAIN TECH Maltese presidency. According to Christian Visti CEO of NewBanking, first move on the blockchain could be the ability to implement KYC/ AML procedures shared by the members on a blockchain, thereby substantially lower the cost of KYC/AML. “ We don´t yet know the final impact of the blockchain technology – like we did not know it with the internet – but we believe that companies, working with different projects will gain a head start” Christian Visti CEO NewBanking WHAT NEW BUSINESS APPLICATIONS WILL RESULT?

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• Smart contracts: Distributed ledgers enable the coding of simple contracts that will execute when specified conditions are met.

• File storage: Decentralizing institution client verification, and at file storage on the internet brings the same time increase monitoring clear benefits. Distributing data and analysis effectiveness. throughout the network protects MAIN ADVANTAGES OF BLOCKCHAIN files from getting hacked or lost. TECHNOLOGY

1). Disintermediation and trustless exchange – two parties can exchange data without the oversight or intermediation of a third party, which cuts costs, potential for errors and time.

• Identity management: There is a definite need for better identity management on the web. The ability to verify your identity is the lynch pin of financial transactions that happen online. However, remedies for the security risks that come with web commerce are imperfect at best. Distributed ledgers offer enhanced methods for proving who you are, along with the possibility to digitize personal documents. Having a secure identity will also be important for online interactions — for instance, in the sharing economy. A good reputation, after all, is the most important condition for conducting transactions online.

• The sharing economy: With companies like Uber and AirBnB flourishing, the sharing economy is already a proven success. Currently, however, users who want to hail a ride-sharing service have to rely on an intermediary like Uber. By enabling peer-to-peer payments, the blockchain opens the door to direct interaction between parties — a truly decentralized sharing • AML and KYC: Anti-money economy results. laundering (AML) and know your • Governance: By making customer (KYC) practices have a the results fully transparent and strong potential for being adapted publicly accessible, distributed to the blockchain. Currently, database technology could bring financial institutions must perform a full transparency to elections or labour intensive multi-step process any other kind of poll taking thus for each new customer. KYC costs could be reduced through crosscreating trusted electronic voting. www.chart-exchange.com

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2). Empowered Users – who are in control of all their information and transactions. 3). High quality data – blockchain data is complete, consistent, timely, accurate and widely available. 4). Faster transactions – interbank transactions can potentially take days for clearing and final settlement, especially outside of working hours. Blockchain transactions can reduce transaction times to minutes and are processed 24/7. 5). Lower transaction costs – by eliminating third party intermediaries and overhead costs for exchanging assets, blockchains will greatly reduce or eliminate transaction fees. So to summarise, the technology is here and the advantages of blockchain are evident. I just hope the insurance industry as a whole isn’t as slow to embrace blockchain as they were to embrace the internet and e-trading. We at Prospect certainly won’t be! MARCH-APRIL 2017 25

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NEWS

which customers want and recognize. The main three key criteria they assessed brands against were: quality, reliability and distinction.

will remain admired and attractive to customers and market participants. A strong global brand and positive reputation makes Lloyd’s more attractive to talent, capital and clients. Confidence in the brand Stephen Cheliotis, Chief Executive encourages policyholders and of TCBA and Chairman of the brokers to choose Lloyd’s, creating Business Superbrands Council wealth for market participants said, “Iconic can be an overused and arguably greater security for word but in the case of Lloyd’s it’s wider society through wider use of totally apt. Lloyd’s is truly a British insurance for risk transfer. icon and a huge asset not only to loyd’s is delighted to be the insurance community but to Lloyd’s is therefore honored to be awarded Superbrands status the UK in general. It is no surprise voted a Superbrand once again for again in 2017 for the 11th year to see Lloyd’s rated as one of the 2017. and honoured to be the top of its nation’s strongest Business category for Insurance, Pensions Superbrands, nor is it a shock and Risk management’. The to see how consistently it has long-running annual survey has performed from a reputation been identifying the UK’s leading perspective over the years. business-to-business brands since 2001and is managed by The The brand embodies the Centre for Brand Analysis (TCBA). Superbrands’ traits of quality, To determine the Superbrands reliability and distinction and the TCBA questions over 2,500 is trusted globally. The high individual business professionals regard in which it is held by from across the UK, as well as both marketing experts and the independent and voluntary business professional alike Business Superbrands Council. cements our confidence that Lloyd’s will continue to endure This year the two audiences judged as a great UK brand for a long over 1,500 brands, voting for time to come”. Superbrands that have established the finest reputation in their field As part of Vision 2025 one of and offer customers significant Lloyd’s eight strategic priorities emotional and/or tangible is brand. Our objective is to advantages over its competitors, ensure that the Lloyd’s brand Lloyd’s Building on Lime St www.chart-exchange.com

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NEWS

TOP TIPS FOR FINANCIAL SERVICES FIRMS SEEKING TO GROW

f you own or manage a financial services business, you know there’s rarely a dull moment in your week. Financial services is an exciting industry with incredible professionals, but it requires diligence, planning and attention to detail. So if your organization is looking for additional ways to add profit to the bottom line, it can be a little daunting. Where are you possibly going to find extra hours in the day to map out a side business, get it off the ground and train the people you’ll need to run it successfully? If these fears have crossed your mind, you can rest assured we’ve heard them from other financial services professionals, too. Too many American workers in general feel they are working harder than ever, even more so in the fastchanging finance sector. We’ve got good news: By partnering with our team of experts, you can integrate a new profit center into your existing business without adding a lot of burdensome red tape. In fact, we can help financial services companies leverage their resources and maximize their time so they can focus on the task at hand.

is achievable, and it’s happening in more places than you might think. If you are considering such a business model and need some practical steps to move forward, we recommend taking advantage of the following tips.

Few businesses would turn down the chance to add revenue to their bottom line. By redirecting revenues away from outside sources and back toward your company, you’ll be amazed at the financial incentives to switch to the model we’ve developed.” FIND A BUSINESS PARTNER THAT UNDERSTANDS FINANCIAL SERVICES.

Too many startup financial companies make pitches that sound as if they were pulled from an “As Seen On TV” advertisement. We tend to advocate for the old rule of thumb that if it sounds too good to be true, it probably is. Our firm is committed If this all sounds too good to be true, to serving your business for the we’re pleased to report this is the long term. We’re not a fly-by-not exception. This type of arrangement operation. www.chart-exchange.com

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REVISIT THE BENEFITS OF PREMIUM FINANCING.

Your organization is already preparing premium financing. Why not take those efforts to the next level? We provide you with a completely turnkey solution. By turning the steering wheel over to the COST team for this portion of your business, you will free yourself up to do the important work of leading and managing the people on your team. DISCOVER ADDITIONAL OPPORTUNITIES.

PROFIT

Few businesses would turn down the chance to add revenue to their bottom line. By redirecting revenues away from outside sources and back toward your company, you’ll be amazed at the financial incentives to switch to the model we’ve developed. Best of all, our clients generally realize benefits of between $30,000 and $40,000 net profit per million financed. ADD EFFICIENCY WITH BEST-IN-CLASS TECHNOLOGY.

Automation is adding efficiency to many businesses and helping them keep track of increasingly complex data sets. Our team uses a valuable online quoting and management See Financial Services Tips Pg 39 MARCH-APRIL 2017

ANALYSIS - TRIFIT BUSINESS DEVELOPMENT production. Using an assessment tool pioneered by Objective Management Group (OMG), we 1. Perform a “sales DNA” assessment now can determine why the remaining 75% perform less of their current team. 2. Help producers and especially effectively. underwriters become more comfortable and competent This 45-minute online evaluation determines the “sales DNA” of regarding sales. underwriters, and 3. Train leaders to run a production producers, assistants. By understanding their organization. a 15% increase in 2016. The result 4. Recruit new staff who have the strengths, motivation, skills, and was $1 million in extra revenue in 2 natural “sales DNA” to succeed. weaknesses related to sales, we years! And those impressive results 5.Introduce prospecting can estimate the growth potential continue in 2017. accountability to the producers of each person, predict who will and underwriting staff so that have difficulty improving, create You too can implement the asking for new business becomes a customized development plan process AmWINS used to Create a habit. for the whole group, and calculate Production Culture, defined as an a return on investment (ROI) from organization in which everyone investing in formal training. knows their purpose is to: Recognizing that This process is akin to doing an when you live by price • Solve insureds’ problems MRI on your organization from you die by price, insurance a sales perspective and can • Satisfy agents’ needs • Achieve their carriers’ goal of businesses have struggled save years of frustration doing profitable growth to reestablish a value-based rehab on folks who are unlikely to improve. And in so doing generate the mind-set among producers additional revenue needed to and underwriters. That is 2. HELP UNDERWRITERS BECOME improve the company’s financial an especially daunting task MORE COMFORTABLE AND results and their personal when the mind-set of many COMPETENT REGARDING SALES income. While producers and marketing Continued From Pg 11

these 5 steps introduced by TriFit Business Development:

CREATE A PRODUCTION CULTURE

Creating a Production Culture, where everyone sees revenue growth as their responsibility and is comfortable being held accountable for performance, can now be a reality. Since 2008, MGAs, Wholesalers, and Program Administrators have become sustainable, overachieving production organizations growing organically year over year. They have each done so by following 30

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brokers is shop for the best price, regardless of market or coverage.”

folks have responsibility for finding new agents or insureds, production underwriters are truly the “force multipliers” in insurance. Underwriters are uniquely positioned to be 1. PERFORM A “SALES DNA” highly effective at qualifying and ASSESSMENT OF THEIR CURRENT TEAM prospecting because they are the Based upon over 1 million technical experts from whom retail evaluations, less than 25% of sales agents (or wholesale brokers) want staff are overachievers defined information. as being “above average” in TABLE OF CONTENTS

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ANALYSIS - TRIFIT BUSINESS DEVELOPMENT However, due to underwriters’ natural tendencies to be reserved and analytical, there are 3 primary areas that need development: mental conditioning, tactical skills, and prospecting. The information gathered in the OMG evaluation becomes the springboard for developing the mental fortitude to be successful. Other skills, such as building relationships, asking qualifying questions, listening, and following a structured approach to sales transactions, can all be learned. Additionally, prospecting can be accomplished by asking just 4 questions at every opportunity: on performance as producers or 1. Are there any insureds you don’t underwriters. When asked about write that we can go after together? running a production organization, 2. Who is sitting next to you that we these top performers frequently might also help? say yes, they’re 3. Did you know that certain they can, The single but admittedly we also offer ___ (fill b i g g e s t don’t in your up-sell/crossknow sell opportunity)? challenge facing the where to start. 4. What expiration insurance industry Yet experience dates are coming up has proven is the retirement of in the next 90 days? that the most as many as half of important person Sales training the industry over in creating your provided in the new Production the next 10 years.” right context and Culture is the firstcoached by engaged line supervisor. managers can improve producers He or she is the 1) Coach, 2) and turn desk underwriters into Accountability Master, and 3) true “production underwriters.” Motivator who must support this But the key to long-term change is change, and these leadership skills holding them accountable. can and must be developed! 3. TRAIN LEADERS TO RUN PRODUCTION ORGANIZATION

Virtually all managers are promoted to their positions based www.chart-exchange.com

In addition to uncovering the supervisor’s “sales DNA,” the OMG assessment provides insight into the above 3 critical salesTABLE OF CONTENTS

White Paper on Salesperson Selection), we can accurately identify those who will succeed in their production role based on their natural gifts and how those gifts will fit your specific sales culture. This approach enables you to recruit the right staff for your company, every time. 5. INTRODUCE PROSPECTING ACCOUNTABILITY TO THE PRODUCTION STAFF SO THAT ASKING FOR NEW BUSINESS BECOMES HABIT

“If you don’t inspect it, don’t expect it!” Truer words were never spoken, and when it comes to prospecting you must hold people accountable. Try measuring 3 things daily: 1. Attempts they make to talk about new business. 2. Actual conversations held.

See Create Production Culture Pg 39 MARCH-APRIL 2017

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ANALYSIS - VALUE MOMENTUM Continued From Pg 22

Digital is radically transforming The advancement in computing the way P/C insurance industry capabilities over the last few operates today. The recent decades and widespread proliferation of digital channels accessibility has made paradigm and devices are influencing buying shifts in how companies do business. behavior faster than the insurance It all started with the remarkable industry can keep up with. Agents, rise of personal computers in the employees and insureds have been 80s. Since then, there has been an conditioned in their day-to-day lives exponential growth in computing 34% of the workforce in 2015. to expect seamless and consistent power accompanied by rapid These Millennials are always digital experiences personalized to drop in personal computer prices connected, always networked via their needs when interacting with bringing computing capability to millions of households. Then came social media, are multi-taskers, their service providers online. the mobile phone and seek instant gratification and changed the way people value personal and relevant Digital is radically communicate forever. interactions.

HARNESSING DIGITAL TECH

Whether these constitute the end insureds, or producers & employees, coverholders, MGAs & program administrators must account for their preferences if they want to be successful with this important demographic! DIGITAL ENGAGEMENT IN THE ERA OF DIGITAL NATIVES

transforming the way P/C insurance industry operates today. The recent proliferation of digital channels and devices are influencing buying behavior faster than the insurance industry can keep up with. Agents, employees and insureds have been conditioned in their day-to-day lives to expect seamless and consistent digital experiences personalized to their needs when interacting with their service providers online.”

Coverholders, MGAs and Program Administrators must create relevant digital experiences for their distribution channels and employees keeping in mind the Millennials as a baseline. Some consider this as re-inventing themselves and making them easy to do business with. But they must keep in mind that just like everything else, the expectations have changed. Manual processes must be replaced by seamless digital experiences.

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HOW TECHNOLOGY GOT US HERE

We’ve talked about how MGAs and Program Administrators have evolved. Now let’s see how technology has evolved to get us where we are today and how the intersection of technology and MGA capabilities is moving forward. TABLE OF CONTENTS

We soon have billions of people walking around with smartphones, as powerful as PCs, which provide unprecedented ability to access communication channels anytime, anyplace. The most recent technological innovation, which is transforming businesses, is the Internet of Things, where computing capability is extended to trillions of physical ‘things’ like buildings, cars, machines, wearables, etc., indicating unfolding of a new era of connected devices. Digitally innovative companies are leveraging this highly prevalent computing capability to their advantage and brought waves of innovations to businesses disrupting See Harnessing Digital Tech Page 38 MARCH-APRIL 2017

NEWS

ATRIUM INSURES SATELLITES! by David Wade

One Night Two Rockets - 106 Satellites 89 Insured By Atrium!

new record for the most number of satellites launched on a single rocket was set in the early hours of the 15th February, 2017; 104 satellites on a single launch. This number far surpasses the previous record of 33 satellites launched on a Dnepr vehicle in June, 2014, and illustrates the proliferation of cubesats being adopted for commercial missions. Cubesats are very small satellites, typically weighing just 1 – 3 kg. At 03:58 GMT an Indian Polar Satellite Launch Vehicle (PSLV) lifted off from Sriharikota on the eastern coast of India. On board were a total of 104 satellites for institutions and companies in India, the US, Israel, the Netherlands, Switzerland, the UAE and Kazakhstan. This was the 39th launch of the PSLV and the 35th consecutive success.

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David joined Atrium in 2007 to head up the Atrium Space Insurance Consortium. He has over 20 years’ experience in the space sector, working in the space industry and space-related academia before joining the space insurance market in 2000. David holds a post graduate degree in Astronautics and Space Engineering and is a graduate of the International Space University. David’s recognition by his peer group has lead to him currently holding the position of Chairman of the Lloyd’s Market Association’s (LMA) Satellite Risks Committee, and was until recently the Chairman of the Space Risks Study Group (SRSG) of the International Union of Aerospace Insurers (IUAI). David also writes the space chapter of the Chartered Insurance Institute’s (CII) Aviation and Space Insurance coursebook.

MARCH-APRIL 2017

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Image Credit: Creative Commons

NEWS The main payload was Cartosat 2D, an Earth Francisco. Prior to last night’s launch, Planet had already observation satellite built by the Indian Space Research launched over a hundred satellites, 56 of which were Organisation (ISRO). Weighing 714 kg, Cartosat 2D still operational in orbit. The additional 88 satellites, is the fifth satellite in the once commissioned will series and will be used to allow Planet to achieve continue the monitoring their aim of being able of urban planning, rural to image the entire development, coastline surface of the Earth every erosion and water usage day, providing for the as well as, as its name first time, the ability to suggests, cartography. watch the planet evolve Alongside Cartosat 2D, on a daily basis. Until ISRO also launched two now imaging satellites 10kg satellites, INS 1a and had a revisit time of 1b which will be used as 8 – 15 days. With daily technology demonstration images available new missions and which carry applications for natural a simple space weather disaster monitoring, monitor. humanitarian crises and agriculture are expected To make full use of the to develop. PSLV’s lift capability, the surplus capacity was sold The PSLV launch was to a number of cubesat not the only launch of operators. In total 101 A CubeSat: Normally 10X10X11.35 cm Mass 1.33 kg or less last night. Earlier in the cubesats, housed in evening, at 21:39 GMT on cubesat dispensers, were mounted on the vehicle. the 14th February, the first Ariane 5 of the year lifted off Once on orbit, the dispenser doors were opened in from Kourou in French Guiana. On board the Ariane 5 sequence and the 101 cubesats pushed out by springs were two large geostationary communication satellites: to separate them from the launch vehicle and each Intelsat-32e and Telkom 3S. other. Three of the satellites were built by students from universities in Israel, the UAE and Kazakhstan and Intelsat-32e, also known as Sky Brazil 1, will be used to will give the students hands on experience of building provide satellite television services to South America, and operating satellites. Of the other cubesats, PEASSS and in particular Brazil. The satellite weighed 6,000kg was a scientific satellite built by a consortium of Dutch at launch and is expected to provide communication research institutes; DIDO 1 was built by SpacePharma services for a minimum of 15 years. Also atop the Ariane and will conduct microgravity research; 8 Lemur 5 was the smaller (3,500kg) Telkom 3S satellite for Telkom satellites for Spire Global will be used to measure Indonesia. Telkom 3S will provide satellite television temperature and humidity profiles in the atmosphere and other communication services across South East and 88 Dove satellites for Planet will be used to image Asia, Malaysia and the 18,000 islands that make up the the Earth’s surface. The 88 Dove satellites were insured Indonesian archipelago. Of the two satellites on the for the launch phase of the mission. Ariane 5 launch, ASIC insured Intelsat 32e. The Dove satellites are built and operated by Planet of San Please click here for a link to a video of the launch. www.chart-exchange.com

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ANALYSIS - M&A SERVICES

PROCEDURES FOR PLACING AN MGA PROGRAM by Paul Surdel

anaging General Agency (“MGA”), which is often used synonymously with the term “program administrator”, has certainly witnessed explosive growth in the program area in the past ten years. There were less than 15 insurance carriers back in 2007 that were dedicated to the MGA program space. That number has increased to approximately 60 carriers in 2017 depending on the line of coverage and the amount of authority that a carrier will grant a program administrator.

different. Wholesalers with binding authority contracts are not managing general agents or underwriters by definition. Recent estimates indicate there are approximately 2500 managing general agents that have Industry data with regards to the full underwriting authority on behalf number of existing managing of an insurance carrier. Managing general agents is a little more general agents create their own nebulous. Wholesalers with binding set of underwriting guidelines authority contracts will mistakenly and rating parameters. The carrier get lumped into the same pool signs off on what the managing with program administrators even general agent has developed and though the responsibilities for proposed. Conversely, binding the respective entities are entirely authority contracts are designed

and structured by the carrier and their aim is to partner with strategic wholesalers to sell their product. This article is written for wholesalers or retailers that have a specialty book of business, or have thought about becoming a program administrator. However, it could also be useful for managing general agents/ underwriters that may not have had to place their program for a few years. CARRIER ASSESSMENT

About the author: Mr. Surdel serves as Director of Program Insurance for Merger & Acquisition Services, specializing in the placement of insurance program business and creating underwriting partnerships between carriers and Managing General Agents (MGAs). He has 32 years of insurance and reinsurance experience, working with carriers and MGAs. Mr. Surdel began his career as a National Accounts underwriter with Travelers Insurance Companies and launched his reinsurance career two years later when he joined RFC Intermediaries. He remained with RFC for five years working with National Accounts underwriters assisting them with their facultative reinsurance placements.

MARCH-APRIL 2017

TABLE OF CONTENTS

www.chart-exchange.com

ANALYSIS - M&A SERVICES The first step in the process for a MGA to place a program with a carrier is to make a determination on which carriers they are going to want to approach with a submission. The chances are good that somebody embarking on locating a carrier may not have full knowledge of the companies that would be best suited to their needs. In this scenario, a program administrator may want to consider soliciting the services of an intermediary to assist them in the process. The broker will be able outline the critical components that will be needed to satisfy the carrier requirements. An intermediary will also have direct knowledge of the program appetites of each carrier that they approach on a program administrator’s behalf. One of the key components in placing a program will come down to the data that a program administrator will be able to share on their book of business. Most programs will not get off the ground if the carrier doesn’t receive sufficient data to evaluate the profitability of the business being submitted. A carrier’s actuaries will need at least three to five years of historical premiums and corresponding losses depending on the line of coverage. The loss history also has to have a current valuation date. Three years of data is the minimum and more years will be required on business with a long tail exposure. Start-up programs will undoubtedly not possess any historical information. In this instance, a program administrator will have to collect industry data to support their case. www.chart-exchange.com

network, their manuscript policy The next step in the process is form or pricing methodology. to create an Executive Summary Carriers will lose interest quickly if to send to the marketplace if the they perceive that the underwriting program administrator determines entity’s main selling point is that they can offer lower pricing than the going market rate. EXECUTIVE SUMMARY

Carriers will lose interest quickly if they perceive that the underwriting entity’s main selling point is that they can offer lower pricing than the going market rate.”

The Executive Summary should be sent to a number of carriers that meet the general requirements. For instance, a public livery program should not be sent to a carrier that has limited appetite for auto liability. The carriers will respond to the Executive Summary by either stating that they would like to receive a full submission or by declining to move forward. NON-DISCLOSURE AGREEMENT

that they have the appropriate information to meet the carriers’ information requests. An Executive Summary has also been referred to as a “teaser”. Generally, an Executive Summary will not even mention the name of the entity approaching the marketplace. This is especially important in situations where the entity does not want their existing carrier to know that they are exploring other alternatives. An Executive Summary outlines key items such as: class of business, overall performance of the book, existing competition, geography of the program, lines of coverage, policy limits required, etc. However, the key point of emphasis should be an explanation of how the entity’s product will differentiate itself from the competition. It could be things such as the entity’s distribution TABLE OF CONTENTS

The Executive Summary will generate a number of interested carriers. This results in the next step of the process which is putting NonDisclosure Agreements (“NDA”) or Confidentiality Agreements in place between the MGA and the interested markets. Most insurance carriers prefer to use their own version. The NDA is in place for one main purpose. The program administrator is being asked to share confidential information about the details of their program and they want to feel assured that the information will not be shared by the carriers with other parties. The exception to this would be if a carrier decides to purchase reinsurance on the program. They would be allowed to share

See Place MGA Program Pg 40 MARCH-APRIL 2017

ANALYSIS - VALUE MOMENTUM Continued From Pg 33

HARNESSING DIGITAL TECH the traditional models. The wave they brought first was in the form of Internet that provided easy access of information to everyone. Then came ecommerce that leveraged mobile and internet based-technologies, and revolutionized the way products can be bought or sold virtually all around the globe. And in the most recent time, there is the social media networking wave allowing people to connect with other people. These innovative companies are now leveraging Digital to bring innovations to the insurance industry. Digital is empowering them to bond with their customers, partners, and employees. This bonding is helping them to provide meaningful information to customers, serve them even better, deliver more benefits & advisories, and establish longstanding relationships. To thrive in the digital economy, it is pivotal that MGAs need to digitally engage the customers, agents, and employees whenever and wherever they want, across all touchpoints. This enables them to effectively compete and thrive in the insurance marketplace. So what are key capabilities required to digitally 38

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engage customers, agents and employees?

bind systems for faster turnaround of quotes.

Another key expectation from digital natives and others alike is that they want to be guided Whether coverholders, MGAs or through the rate-quote-bind Program Administrators are seeking process – such that marketing to launch products based on ISO/ content, help and information NCCI/AAIS or implement rate plans associated with insurance concepts provided by their carrier markets can be surfaced during the process or Lloyds syndicates, these need and not be available in a separate to be extended digitally to agents, static website with brochures. brokers and employees. This requires modern rating systems that They may want to check appetite understand what have out-of-the-box support for the upfront, bureaus, the ability to rapidly setup coverages are ideal for a risk type, get recommendations for rate plans and modify these plans. coverages and limits, and so on. ENABLING CUSTOMERS, AGENTS AND Finally, preparing quotes and EMPLOYEES TO BE ABLE TO DIGITALLY sending these quotes electronically ACCESS THESE PRODUCTS AND in the channel they want is also a key expectation, with a mechanism MARKETS for them to share with their Further, these products and plans customer to electronically sign a need to be extended to any proposal. channel or device sought by agents, customers and employees to provide CONCLUSION a truly omni-channel experience – that is seamless across devices and Savvy coverholders, MGAs and program administrators will channels. recognize that they must harness Let’s look at this a bit closely – an agent technology to effectively increase may be at the point of sale capturing the value of targeting niches, details about a business, and may marketing to them, engaging seek to submit directly to the agency them through the buying journey of choice or convenience. Or the and servicing them in the manner agent may seek to email an ACORD they want. Cloud-based modern application. The agency’s employees software is readily available today must then have ready access to the for rapid deployment to meet some submission without having to rekey of these needs and importantly, the data – and today’s technologies should be able to evolve to meet easily allow extracting the data from these ever changing expectations ACORD submissions into electronic fueled by rapidly changing forms that can prefill the rate-quote- technology. LAUNCHING NICHE PRODUCTS AND ENABLING SEAMLESS RATE-QUOTEBIND EXPERIENCES

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ANALYSIS Continued From Pg 31

CREATE A PRODUCTION CULTURE 3. Number of promised submissions that resulted. Shifting to a Production Culture is not for the faint of heart. It will involve change throughout the organization, and unless you have the required expertise in-house, there will be an investment cost involved. But keep in mind the submission growth of 50% in 3 months and the 20% increase in new business binding success rate mentioned near the beginning of this article is not the exception. It is attainable. Are you ready for your business to grow organically this year, and to continue for years to come? Then shift to a Production Culture of accountability with the right sales DNA among your team. If you want to begin the process by learning how to qualify better, contact Mike Shannon at mike@trifitbd.com to

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NEVER MISS AN ISSUE OF CHART EXCHANGE

SUBSCRIBE TO CONTINUE TO RECEIVE

Continued From Pg 29

TIPS ON GROWING YOUR FINANCIAL SERVICES FIRM

THE CHART EXCHANGE!

system thatâ&#x20AC;&#x2122;s not only easy to learn but also easy to use and apply to your receive a recording of a 30-minute individual situation. Our tech vendors webinar hosted on March 28th, are top-notch and can customize Qualifying - Underwriters Can Learn the platform to help your premium to Qualify the Business Opportunity. financing business succeed. Mike Shannon is the founder and CEO of CHART Exchange-member TriFit Business Development and the author of Hooked on Hopium, an inspiring parable about a successful insurance producer. For 10 years TriFit has been helping insurance companies grow organically through the process described in this article. Contact Mike at mike@ TriFitBD.com or 610-331-0610 to receive a recording of for the webinar or to learn more.

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REWARD CUSTOMERS OUTSTANDING SERVICE.

WITH

The true test of any business is the care and concern it shows for its clients. Premium finance is a breeze with our suite of customer-facing benefits including electronic billing, online management tools for accounts, around-the-clock phone support and payment capabilities online or via phone. If your financial services business is interested in pursuing a better kind of premium financing program, our team at COST Financial Group would be happy to walk you through the kinds of partnerships we can establish. Contact us at 800-844-2678 or via email at info@costfinancial. com. MARCH-APRIL 2017

ANALYSIS M&A SERVICES Continued From Pg 40

PLACING AN MGA PROGRAM information in that instance. The NDA holds even more importance at the point when the financials of the program administrator are provided to the carrier.

Keep in mind that insurance carriers will only feel comfortable granting underwriting authority to individuals that demonstrate they have a better understanding of the business they are underwriting as well as a larger distribution network than the actual carrier itself. The process will usually entail additional information requests as the process evolves. Bringing a program placement to conclusion will usually average 6 to 9 months depending on the nature of the business and the preparedness of the program administrator in gathering the information.

SUBMISSION PROCESS

The submission process commences once both parties have signed the confidentiality agreement. The submission is the critical part of the process where programs move forward or not. The submission needs to include the following: a history of the program or business, an overview and background of the program, historical loss and premium information, rate level changes over the course of the program, coverage forms, underwriting guidelines, and resumes of the key underwriters and executives. NOTE: It will be nearly impossible to place a program if the carrier perceives that the program administrator does NOT employ underwriting expertise. Premium volumes in and of itself will not suffice. The program administrator has to demonstrate that they employ an underwriter or team of underwriters that have an expertise in the class of business that they are quoting. 40

MARCH-APRIL 2017

Insurance carriers will only feel comfortable granting underwriting authority to individuals that demonstrate they have a better understanding of the business they are underwriting as well as a larger distribution network than the actual carrier itself.â&#x20AC;? Admitted programs will take longer depending on the states where rates need to be filed. The carrier will also have to do at least one physical audit whereby they will review files to make sure that they are being documented properly. Office procedures for underwriting, accounting and claims will all be analyzed. The program TABLE OF CONTENTS

administratorâ&#x20AC;&#x2122;s operating system will also be reviewed to make sure that they can properly handle the responsibilities of rating, quoting, binding and policy issuance. A carrier may suggest using their own system to simplify the process but they will make sure that the program administratorâ&#x20AC;&#x2122;s system is compatible with their own and that it can populate the required data requests. CONTRACT

Assuming that everything goes well on the audit, the carrier will present a contract to the program administrator. The contract will outline the key responsibilities for both the carrier and the program administrator. Terms of compensation will also be identified and underwriting guidelines will be outlined. It is highly recommended that the program administrator solicit the services of an attorney that specializes in insurance contract law. Very rarely do agreements get signed without some additional negotiation or clarifications. In conclusion, this article is a basic outline of the procedures and steps that are involved in placing a program. Each step referenced above could well have its own dedicated publication with much more detail but hopefully this overview will provide a flavor of the expectations that a program administrator can expect to face if they are considering approaching an insurance carrier about a program placement. www.chart-exchange.com

LLOYDâ&#x20AC;&#x2122;S OF LONDON

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MARCH-APRIL 2017 41 Image Credit: Creative Commons